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FOMO And FUD: Two Catalysts No One Is Talking About
Two major catalysts hanging around that no one is talking about and a look at Bitcoin's historical performance in September
Jonathan Morgan
August 30, 2024
OVERVIEW
FOMO And FUD: Two Catalysts No One Is Talking About
Before we dive in, here’s today’s crypto market heatmap:
Source: Santiment
And here’s a look at crypto’s total and altcoin market cap YTD:
Most bullish/bearish symbols on Stocktwits at the close: 📈 $XMR, $SUI, $LTC, $DAI, $CRO, 📉 $FLOKI, $IMX, $BONK, $HNT, and $BIT
*If you’re a business and want to access this data via our API, email us.
NEWS
SEC Crosshairs: Centralized Projects with VC Backing Could Be Next 🫢
I don’t want to be an alarmist here - but there’s one ugly thing hanging out in the fallout of the SEC vs. Ripple case from earlier this month that’s been bothering me, and it’s been lost to the victory laps all of us in crypto have taken after Ripple’s ‘win.’ 😨
As a reminder, this is the TL;DR of the results of the case that most crypto people are focused on:
$XRP, the token, is not a security by itself. Also, sales of it on secondary markets (exchanges) do not make it a security.
However, the court ruled that Ripple's sales of XRP to institutional investors violated securities laws. Why? Because those transactions looked an awful lot like the traditional investment contracts that fall under the SEC’s definition of a security.
VC Money Might Be Bad
Many altcoins, especially those with centralized leadership and ownership making all the big decisions, fit this mold. They’ve raised funds from VCs with the promise of building something bigger, better, and more valuable. 💵
That’s exactly what the SEC considers when deciding if something is a security: are investors buying in with the expectation that the project’s team is going to do all the heavy lifting to make those investments pay off?
This outcome gives the SEC a significant tool for future enforcement actions. The ruling suggests that tokens sold directly to institutional investors, particularly through private sales or agreements, are more likely to be considered securities. 😱
That’s bad news for projects that have leaned heavily on venture capital funding or other exclusive sales rounds to get off the ground. If your favorite altcoin had a cozy relationship with VCs, it might be next on the SEC’s hit list.
Why does that suck?
How will those entities pay for the legal fight? Probably by selling their crypto/tokens. Will the VCs/investors want to diamond-hand through the whole legal FUD, especially after seeing how long it lasted with Ripple? They might want to GTFO ASAP. 🏃
The days of unchecked token sales might be over, and the SEC seems more than ready to take down projects that don’t play by its rules. So, if your altcoin portfolio is stacked with tokens that match this description, you might want to keep an eye on the SEC’s next move.
If so, those altcoins could soon find themselves in the same position as Ripple—fighting the SEC in court. 👩⚖️
NEWS
The New Accounting Rules: Bullish For Crypto 🐂
This is an article about accounting - but it’s a good article about accounting. I might even say it’s a fun article about accounting. How is an accounting article fun? 🤔
Because companies that hold digital assets, like Bitcoin, get to change how they account for their digital assets - in a very, very bullish way.
The Old Rules: They Sucked
Under the old accounting standards, crypto assets on the books sucked. Here’s what companies had to deal with:
Impairment Testing: Imagine you bought a XYZ for $50, but then the price dropped to $30. Under the old rules, you had to officially say XYZ was only worth $30 now.
No Reversals of Impairment: Let’s say after a while, the price of XYZ goes back up to $50, or even higher. Too bad! You weren’t allowed to update the value back up—it was stuck at $30 on your list. Once they wrote down the value, they couldn’t write it back up.
Historical Cost Measurement: When you bought your XYZ, you paid $50, and that’s what you wrote down as its value. Even if XYZ became really popular and rare and worth $100, you still had to say it was only worth $50 because that’s what you originally paid.
The New Rules: A Modernized Framework
ASU 2023-08 flips the script, introducing a more market-aligned approach that could be a game-changer for companies with significant crypto holdings:
Fair Value Measurement: Now, imagine you get to update the price of XYZ every time you check the market. If the value goes up to $70, you can officially say it’s worth $70. With the new rules, companies can now update the value of their crypto assets to match the current market price every time they report their finances. No more getting stuck with lower values just because the market dipped temporarily.
Enhanced Disclosure: With the new rules, companies have to tell everyone more about their crypto assets. It’s like if you had to tell your friends exactly which games you have, how much you paid for them, what they’re worth now, and if you traded or sold any.
Effective Dates: These new rules start for companies at the end of 2024, but if they want to, they can start using them earlier.
Why This is Bullish
These changes are a big deal for companies holding crypto assets and are likely to have positive effects:
More Accurate Reporting: Companies can now show the real value of their crypto holdings, which is great news if the market is doing well. This can attract more investors who are looking for accurate and up-to-date financial information.
Greater Transparency: With more detailed information about their crypto assets, companies can build trust with investors.
Simplified Accounting: The new rules make it easier for companies to manage and report their crypto assets, reducing the stress and complexity of the old system.
A good chunk of companies start their fiscal year in Q4 - it will be interesting to see how things change and who adds digital assets to their books in the near future. 👍️
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BITCOIN
Bitcoin’s Historical Performance In September 📆
Here are some facts about how $BTC has performed in the month of September. 🍂
Positive Months: 4
Negative Months: 9
Average Gain (Positive Months): 6.98%
Average Loss (Negative Months): -12.76%
Overall Average Gain/Loss: -5.16%
Third worst month for average losses.
Second worst month for average overall performance.
In other words, September is like Bitcoin’s annual case of the Mondays. But hey, 2024 might just throw a curveball—after all, Bitcoin loves to keep us guessing. 🎢
BITCOIN
Quarters By The Numbers 🔢
As August ends and September begins, we’re getting close to the last chunk of 2024. Here are some interesting data points on how Bitcoin has historically performed in prior quarters. #️⃣
When Bitcoin is Up 📈
Q4: Average Up 44.61%
Q2: Average Up 47.33%
Q1: Average Up 34.34%
Q3: Average Up 15.97%
Winner: Q4 by a nose, but Q2 is right there as a strong contender.
When Bitcoin is Down 📉
Q2: Average Down -13.47% (Least painful)
Q3: Average Down -12.18%
Q4: Average Down -17.71%
Q1: Average Down -18.04% (Most painful)
Winner: Q2, for those who prefer to avoid the deep red. Not Q3 because Q3 is historically ‘meh’.
Overall Average Performance 📊
Q2: Overall Average 22.64%
Q4: Overall Average 23.14%
Q1: Overall Average 12.05%
Q3: Overall Average 0.57%
Winner: Q4 for excitement, but Q2 for consistency.
Final Rankings 🏆
Q2: The most consistent performer, balancing gains with fewer severe losses.
Q4: High highs, low lows—exciting but risky.
Q1: A decent start to the year with moderate performance.
Q3: The most underwhelming, often a quiet quarter for Bitcoin.
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Author Disclosure: The author of this newsletter holds positions in USDC, USDT, MATIC, SHIB, COIN, SOL, and APT. 📋
