Clanzenomics: Inflation, privacy coin crackdowns and market movements

In this week's market wrap for Friday, August 12, Dr. Mike Kollo discusses inflation, crackdowns on privacy coins and the best and worst performing coins this week.

Highlights

• Where are we with #inflation?📈📉
• Tornado Cash 💵
• #Privacy and #Monero 🔓

In other news

As Government Takes on the Tornado Mixer, It May Reap a Whirlwind‍

Ether surges to a two-month high after ethereum inches closer to long-awaited upgrade

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Transcript

Hi, everybody. This is Mike Kollo from clanz.com, coming to you on August 12th, 2022. So it was 41 years ago today, in fact, in 1981, that the first IBM computer hit shelves. Here's a picture of it here, I just thought I'd start off a little bit of what's been going on in the world of crypto with a little look back on history. all been about inflation — everyone's talking about inflation. The news about inflation; is inflation high? Is it low? Is it left or is it right? Just to get us going.

So it's been a funny week for crypto, it's all been about. Inflation, inflation, inflation, inflation. Everyone's talking about inflation. The news about inflation. Is inflation high? Is it low? Is it left or is it right? It turns out that US inflation came a little bit below expectations. Everybody got really happy, right? 8.5% came in July. The question of course, that this leads to is global inflation now easing the week. Essentially. actually everywhere, the same kind of story, gasoline prices finally me coming off. Grain prices, food prices finally coming off and so on. And inflation's a funny beast, because it takes a while to update. So basically on the back of this idea that maybe this could be an inflation story, we've seen stocks go upwe've seen markets go up, we've seen technology go up, and sure enough, we saw crypto go up as well. Keep in mind, this is the US only. A couple of stories below there; Japan is still trailing well above expectation, Australia is probably going to peak is usually a bit later than everybody else, probably by the end of the year at about 7.7%. And Eurozone is still very much in danger at 8.9%. And that number really varies around the different countries.

So, if we want to look at actually some of the bigger components of inflation and what's been driving the story. We've got Brent crude prices here. And this is kind of been the story really of that rise up from $70 to $120, or just about, and now easing back to below a hundred dollars, which is generally good news. And again, how this filters into prices at the a gas pump for consumers or for transportation costs takes a while to get through. But this a really good story. This says about wheat. Wheat has been a big story since that it was the Ukraine-Russia conflict, and that's really sent wheat price a soaring. So, we saw them from 800 to upto 1200 and beyond. It's a 50% increase in some of the kind of food stuff that like countries rely upon. And we've seen those prices come right back down as grain shipments of again begun. Still very precarious situation, still could go the other way, but that's a really good sign for inflation and where things might go.

The other big story for cryptos this week has really been around crackdowns. So it's been crack downs around Tornado Cash, and the money laundering. Tornado Cash was a kind of a protocol that allowed you put some money in, mix it around lots of different wallets and spread it out to lots of places. Essentially money laundering in the fiat currency terms, but in crypto terms, privacy preservation, or I call what you want. Of course, Circle lined up closely with government, as one of the biggest stable cash kind of offering companies and soon enough they blacklisted all of the ones that were dealing with Tornado Cash.

So, this kind of raised this whole question about data privacy. Generally, Tornado Cash was a privacy preserving element in some extent, and now that's been banned, so what does this really mean? So, I want it to kind of touch a few moments on what does it mean to privacy and privacy coins in the world of crypto. And I want to start with probably one of the biggest privacy coins by certainly by market cap, which is Monero. Monero is a privacy decentralized currency that's actually so good in terms of encryption that the IRS or the internal revenue service of the USA, put I think a bounty on it in 2020 or sometime around that. For just over half a million dollars for anybody who can crack Monero. So you can see that it's a big deal and they're trying to get to the bottom of it. Monero in terms of investments, have kind of peaked. It started up in 2017, and had a great run, like everybody else it had this lul in the middle, kind of ran up again at beginning of COVID with everybody else and it's been kind of shifting down again with the market. We've seen a lot of volatility, this is a highly volatile, not a sure bet at all. But, it's an interesting, kind of thing to look at. On the one hand, thematically, it could be really attractive as data privacy and privacy generally becomes very important in cryptocurrencies. So, Nero, Zcash, for example, is another one. Something to kind of keep an eye on is a kind of an interesting theme that's developing within markets. But, a little bit about a close up on Monero, that's about 3 billion in market cap. In the past returns, over the last month it's made about 24%. Last one day or five days has been pretty lackluster, and just about above zero. In our models, it's got okay forward expectations, like slightly positive a little bit like what it's been. But, it ranks somewhere in the 32 out of 46, cryptos that we track on a real time basis. So, I would say it's somewhere in the bottom of 25%, so, it's not necessarily the biggest. In terms of its risk and correlation, something good to keep in mind. Keep in mind Beta, think about it as a multiplier. So, every time the markets do 1%, and that times the Beta, is what you expect this thing to do as well. So, the US market does 1%, thing thing should do 1.84%. Like a lot of cryptos, it's leveraged into it versus Bitcoin is about one-to-one. So it's not much difference there. A little bit leveraged into tech, a little bit leveraged into growth as well. But, not as much as a lot of the other cryptos are as well.

And in fact, if we kind of turn back to a crypto models and abroad expectations for the market as things are today, keep in mind that these are one set of models that we run at Clanz, and this is really based upon statistical patterns that we see looking back over five years as an algorithm behind that configures a similarity to past statistical patterns and draws out what we expect to be in the future. So, some of these forward returns estimate, are just that, they just coming out of the model. But, in terms of their relative ranking, we've got Quant, Helium, HEX at the top of the pops in terms of what we think. It's interesting story with Helium, Helium is not what it has been doing, but some of the patterns are really attractive. That we see, but a lot of the other cryptos are easy to kind of think; yeah, HEX and Quant have a great run for the last month, could they continuing to go as well.

In terms of the Beta is to NASDAQ, that's a great measure of risk, and what you expect to take on as well here. Thor which we talked about a little bit, with a high beta of 2.6, that really goes, right? If the markets go, Thor goes really hard as well. Similarly with Helium aswell normally. Although again, hasn't really been demonstrating that over the last month. But, Decentraland, we've talked a lot about, that's really the kind of the Metaverse theme. You've got Binance Coin and Crypto.com Coins interesting, again, exchanges come back once crypto moves. So I'm not really surprised by what we see there.

And the bottom five lists we have Filecoin. Filecoin has just had a terrible, terrible time. It's been really badly beaten up as a coin. And, you know, it's had a fantastic resurgence over the last month, but it's bouncing from such lows that it's a relief more than anything else, a relief rally. But unfortunately, Algorand and Filecoin, our model doesn't feel very optimistic over the next at least. Ethereum Classic has a brilliant run, 160% up, we think that's probably overrun a little bit and going to come back. And interesting enough, Bitcoin finds itself here as well as the most liquid cryptocurrency. It's interesting to see at the bottom of the list.

Well, thanks so much for paying attention and trade safety.