Crowd Funding

Crypto Market Musings

There are two things driving the market right now: FTX collateral damage and potential interest rate hikes. Every time an FTX domino falls — like BlockFi declaring bankruptcy a few days ago — crypto prices fall. But crypto prices have been rallying on the news that the Fed will shift to smaller interest rate hikes as it tries to bring inflation under control. As of this writing, bitcoin is trading close to $17,000, and ethereum is trading close to $1,275.

This push and pull will likely continue over the short term. There will be more FTX dominos to fall (speculating is irresponsible, but there are a few that we’re keeping an eye on). And if it looks like progress is being made on the inflation front — and the economy doesn’t go completely in the tank — investor confidence will pick up.

That makes the bottom of the market incredibly hard to predict. From a macro standpoint, it feels like we’re getting closer. From an FTX standpoint, it feels like we’re far away. It’s incredibly frustrating. But that’s crypto. I believe the market will rebound at some point next year. The key now is finding buying opportunities while the market sorts itself out. (Click here to sign up for First Stage Investor and get information on potential spots to buy into a crypto position).

What Vin Is Thinking About

Almost a year ago, I spent a few days hanging out with some massive money managers and hedge fund types. And they all missed the credit markets from the late 1980s and 1990s. These markets were crazy, incredibly risky and enormously profitable. They’ve also largely disappeared due to a combination of regulations designed to eliminate risky trades and an extended period of incredibly low interest rates (until recently) and incredibly low inflation (until recently).

Decentralized finance (DeFi) reminds me a little bit of the credit markets back then (well, at least the parts in the mid-1990s when I was starting my career). DeFi has its fair share of relatively simple financial instruments that can generate income streams. But it also features some incredibly complicated and risky financial instruments as well. And when you combine complicated and risky with leverage, things can spiral out of control quickly when something bad happens.

Many of the problems we’re seeing right now in the crypto markets are what happens when a massive failure scores a direct hit on the intersection of lending and leverage. The DeFi system, much like credit markets of the past, is dealing with shock poorly. And if DeFi is going to mature into a robust ecosystem, it needs to be more resilient in the face of adversity.

And Finally…

Tired of talking about Sam Bankman-Fried and FTX yet? If you are, hit me up on Twitter (@vinistic) and let me know what you’d like me to write about.

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What DeFi Needs to Mature Into a Thriving Ecosystem Republished from Source https://earlyinvesting.com/what-defi-needs-mature-into-thriving-ecosystem/ via https://earlyinvesting.com/feed/

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When the World Health Organization declared the coronavirus a global health emergency in January 2020, we had no idea how long-lasting COVID’s impact would be. Almost three years later, we’re still feeling the effects of the pandemic. People are still catching COVID. And the damage COVID did to the economy continues to linger. The pandemic crippled the global supply chain — and by extension, the global economy. Plants that made key parts, components and all sorts of products idled due to lockdowns. And shipping companies cut how much they planned on shipping because they thought demand would fall. But demand didn’t fall.

Stuck at home and flush with some extra cash from the U.S. government, Americans turned to e-commerce. Everything from ordering takeout to buying groceries to attending doctor’s appointments happened increasingly online. E-commerce sales grew from $602 billion in 2019 to $763 billion 2020 and $871 billion in 2021. 

When demand skyrocketed, the supply chain couldn’t keep up. Disrupted shipping lanes and labor and material shortages wreaked havoc. 

The supply chain is still feeling the effects today. Shipping officials in California just triumphantly proclaimed the end of a container ship backup at the ports of Los Angeles and Long Beach that lasted for two years. 

The backup started in October 2020 thanks to sky-high demand for imported goods in the early months of the pandemic. By February 2021, the backup grew to 42 ships. It dropped down to nine ships a few months later. But as peak shipping season hit, the backup swelled through the end of 2021 to reach 109 ships by January 2022. 

Most people don’t think about supply chains when they buy something. They don’t think about the massive cargo ships transporting products across vast oceans. They don’t think about the workers who pack, label and load the boxes in warehouses around the world. And they don’t think about how broken our global supply chain really is. 

But it’s very broken. And we need to reimagine it. 

Shipping Solutions

That’s where startups come in. One notable shipping and logistics company is Arka. (We wrote extensively about Arka for our First Stage Investor members. If you’re not already subscribed to First Stage Investor, click here to sign up.) Arka works with third-party logistics providers (3PLs) to help streamline the packaging and shipping process. Its software integrates with 3PL warehouse management systems, monitors packaging quantities and automatically notifies packaging suppliers when the quantities fall below a certain threshold. 

Arka’s solution seems like a no-brainer. It’s hard to believe that 3PLs haven’t already adopted technology like this. But 3PLs — like many other parts of the supply chain — are still very much stuck in the past.

LaneAxis is another startup that’s trying to improve the supply chain. Its platform connects shippers and trucking companies (or carriers). Using its app, carriers can receive alerts from shippers, bid on deliveries and negotiate directly. LaneAxis also provides a scoring system for driver and carrier performance, which helps shippers assess risk before choosing a carrier. LaneAxis even uses artificial intelligence to pinpoint available capacity and limit wasted miles of driving with empty trucks. And it tracks the entire shipping process using an immutable blockchain ledger. 

SharedChain is an e-commerce and fulfillment platform that’s focused on physical fulfillment infrastructure. It aims to revolutionize the supply chain much like the internet revolutionized information. The company says its platform can link manufacturers, suppliers, producers, service providers, retailers, end customers and others. SharedChain aims to leverage local markets to create network or consolidation effects in fulfillment.

All three startups bring something unique to the supply chain. Whether or not they’ll be successful remains to be seen. But the way I see it, the wider variety of solutions, the better. 

Something for investors to keep in mind this holiday season.

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Startups Could Revolutionize the Supply Chain Republished from Source https://earlyinvesting.com/startups-could-revolutionize-supply-chain/ via https://earlyinvesting.com/feed/

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Crypto Market Musings

The impact of the FTX scandal continues to shake the crypto world. The exchange filed for bankruptcy last Friday after its rival Binance stepped back from saving it. And news of FTX’s corruption and bad investments just seems to keep coming. As of this writing, bitcoin is trading below $17,000 and ethereum is trading below $1,200. For the past week, bitcoin, ethereum and other coins have suffered following the FTX liquidation crisis. The fall of one of the largest crypto exchanges means crypto investors’ confidence — especially new crypto investors’ confidence — is low.

The market has been very volatile in the past few days. Although bitcoin and ETH are still trading lower than they were just a month ago, bitcoin experienced a slight recovery this week when it hit $17,000 after trading below $16,000. Sentiment might have temporarily improved because Binance released a crypto emergency fund to help other projects facing liquidity crises.

Nevertheless, the future of crypto is uncertain. Prices have suffered and seem to keep heading down. But it seems that multiple tokens’ loss is another token’s gain. While the crypto market suffered, Trust Wallet Token (TWT) has surged by more than 90% in the past week. TWT is a crypto hot wallet app that gives users control over their coins. But that’s not to say it’s a good investment, since its price only rallied the past week after the FTX collapse. So this may just be a short-term surge.

What Yasmin Is Thinking About

Last week, I attended Equity Crowdfunding Week. One of the events focused on the future of blockchain and crypto. Despite the crypto winter (or what some have started calling “the ice age”) and FTX news, all panelists were bullish on crypto. For them, this year is the year of builders and creators. Interestingly, they viewed the collapse of one of the biggest crypto exchanges as weeding out bad players, scammers and unnecessary technology. 

So while the FTX collapse is not good, it’s helping to get all the junk out. To a lot of crypto believers — including me — FTX is a black spot in crypto history that crypto is going to recover from sooner or later. Some have been comparing the FTX crash to the Lehman Brothers collapse of the 2008 financial crisis. And while we’re not likely to see the ripples extend into the mainstream financial markets, there is a good lesson in the comparison. The stock markets have recovered and grown since the 2008 crash, which means those who invested during the crash have reaped the rewards. Crypto investors could be facing a similar opportunity right now. 

The FTX collapse has a lot of implications for the crypto market. The fear of contagion is spreading. On Wednesday, Gemini saw a $485 million outflow. This was mainly due to the exchange pausing withdrawals from its yield-generating Earn program, which is powered by Genesis Global Trading. So it is no surprise that almost all crypto fear and greed indexes are showing “extreme fear.” 

With the current panic selling from exchanges and reduced investor confidence, I worry that crypto might become less accessible in the future. As much as I believe crypto should stay decentralized in all ways, centralized exchanges have made crypto investing easy and fast for the average user. The FTX collapse may scare investors away from exchanges, which could in turn hurt or shut down smaller exchanges — like BlockFi — and leave investors with even fewer options for crypto trading or investing. 

I think the market will recover over time. Similar to the dot-com bubble, there will be lots of players and enthusiasts dabbling and exploring different projects. And that means we’ll continue to see projects and ideas that look promising but ultimately fail. For investors, as Vin Narayanan always says, if you believe in crypto long term, then dollar cost averaging is your best friend. Crypto could regain its stability in the future. But for now, I think crypto traders can take advantage of this volatility.

And Finally…

“Not your keys, not your coins” has been the motto circulating around lately after the FTX scandal. Many people lost wealth they will never recover. However, I think this hammers home the reality that the whole purpose of crypto is decentralization. Having crypto in a centralized entity seems rather paradoxical. I’m sure that Vitalik Buterin is having an “I told you so” moment right now. 

The bitcoin supply on exchanges has fallen sharply in the past week amid calls and reminders to transfer crypto to hardware wallets and keep complete ownership of it.

However, it is important to keep in mind that hard wallets are also not 100% safe. Users can get phishing attempts through email, Twitter or Discord. So always be cautious and always remember it’s better to be safe than sorry.

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The Silver Lining of the FTX Collapse Republished from Source https://earlyinvesting.com/silver-lining-ftx-collapse/ via https://earlyinvesting.com/feed/

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