BITCOIN AND CRYPTO UPDATE University of Adelaide, MBA Alumni Webinar June 2020 RYAN KRIS. 1
TODAY’S WEBINAR Keep in contact! 1. Crypto Economy Ryan Kris 2. Bitcoin - post-halving Senior Manager, Technology Advisory 3. Stablecoins ryan.kris@bdo.com.au 4. Infrastructure & Institutions @RyanJKris 5. Trends ryankris.com linkedin.com/in/ryankris/
BDO DIGITAL ASSET SERVICES We provide services for businesses planning to use, or currently transacting with crypto, and those developing products using cryptoassets and blockchain technology. Audit & Assurance Advisory Asset Smart Security Risk Strategy Financial Ownership Contract IT risk and control Security audits for AML/CTF Independent Asset backing audits Services for discovery Cyber security health system audits. Risk assurance and reviews Proof of ownership and smart contract code and capture of checks, security management and Process controls review reserve base. Reviews to blockchain use cases. architecture and identify and assessments when and assurance reports Blockchain analysis for Digital product design, roadmaps. Threat risk eliminate bugs and using crypto. SOC2 Financial statement accurate and complete prototype and product assessment. Penetration reporting and internal vulnerabilities external audit services reporting data build. testing and vulnerability control frameworks AFSL compliance Pre and post Finance and capital assessment. Incident development engagements deployment analysis raising to support new Response Planning initiatives. 3
CRYPTO ECONOMY
Source: Cambridge Centre for Alternative Finance
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BITCOIN POST-HALVING 8
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BITCOIN ECONOMICS RECAP 10
WHAT IS BITCOIN’S VALUE? Source: https://charts.woobull.com/ 12
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BTC, STILL THE BEST PERFORMING MACRO ASSET 14
CRYPTO FEAR & GREED 15
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WHY ALLOCATE TO CRYPTOCURRENCY? Bitcoin risk - reward ” At the end of the day, the best profit-maximizing strategy is to own the fastest horse. Just own the best performer and not get wed to an intellectual side that might leave you weeping in the performance dust because you thought you were smarter than the market. If I am forced to forecast, my bet is it will be Bitcoin.” – Paul Tudor Jones, May 2020. Source: https://www.scribd.com/document/460382154/May-2020-BVI-Letter-Macro-Outlook 17
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STABLECOINS 22
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STABLECOIN GROWTH, WHY? 1. Increase in the amount of investors holding stablecoins as “dry powder” in anticipation of a new bull run. 2. Others have proposed that it’s a reaction to a shortage of U.S. dollars, or a general rush to safety. 3. Another theory is that Asian OTC traders are pouring money into stablecoins as an onramp to crypto markets. 25
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INFRASTRUCTURE & INSTITUTIONS 30
ARE THE INSTITUTIONS COMING? • Crypto lenders, like Nexo, providе ‘Earn • Grayscale's Bitcoin Trust bought in 62,972 Interest’ services on crypto, debunking BTC over the past 12 weeks. Over that Goldman Sachs’ claim that Bitcoin and same time frame, 125,368 coins were gold cannot generate cash flow. mined. • While Goldman Sachs warns against BTC’s volatility of 76%, they endorse the far more volatile Tesla (116%). Strong investment in flightier, innovation- • centered assets, like cryptocurrencies, will always require good risk management. 31
AGREE OR DISAGREE? YAY? NAY? June 9th, $2 trillion asset manager Fidelity Goldman Sachs recently begged to differ. Investments released its second annual survey In a client call conducted on May 27th, the of institutional investors on digital assets. analysts said that they don’t think Bitcoin has a The found 36% of institutional respondents have place in a balanced portfolio. They argued that some sort of exposure to the crypto market. digital assets don’t provide diversification The reasons why Wall Street sees promise in benefits, don’t rally due to inflation, and don’t this market. They are as follows: produce cash flow like equities. Cryptocurrencies are largely uncorrelated • "We don’t recommend gold on a strategic or with other asset classes tactical basis for clients’ investment portfolios. Cryptocurrencies and blockchains are “an • We don't recommend bitcoin on a strategic or innovative technology play” tactical basis," was the presenters’ conclusion • Digital assets have "high potential upside" on BTC. 32
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TRENDS 39
OPEN FINANCE VS TRADITIONAL FINANCE Function Traditional Crypto DeFi Trading Commsec Ind Reserve / Uniswap BTC Markets Lending CBA, Westpac BlockFi / Compound Celsius Stablecoins AUD Tether, USD DAI Coin Derivatives IG Bitmex Synthetix DyDx Investing Clover Bitwise Set Open by default Protocol Closed by Global Non-custodial default High liquidity Programmable User experience Permissionless Fiat on-ramp Speed Source: Bankless, BDO.
INTEREST ON CRYPTO Source: Loanscan 41
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BTC ON ETHEREUM Source: The Defiant 43
DEFI BUGS, HACKS & PROTOCOL RISK Source: DeFi: Dependency Hell Meets Finance 44
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