Do you know who comedian Jeff Foxworthy is? He’s the guy who does the “You might be a redneck if…” jokes. This week, I experienced the investment version of that joke. You know you’re an investor if you Google “fred” and the top result is the Federal Reserve Economic Database (FRED) instead of these guys.
Why was I Googling “fred”? Because I was writing about FRED collecting and publishing cryptocurrency data for the first time. This is huge news for crypto investors. FRED is part of the St. Louis branch of the Federal Reserve, which means the U.S. central bank has essentially given bitcoin and other cryptocurrencies its stamp of approval. And history shows that when the government does that, good things usually follow (Early Investing).
The FRED announcement was the biggest news of the week. But it wasn’t the only news of the week. To the News Fix!
What’s Going On With Gold?
For many investors, cryptocurrencies have replaced gold as a hedge against economic uncertainty. Yet as the price of bitcoin has struggled this year (it’s down about 56% this year as of this writing), so has gold. The spot price of gold was $1,354.95 in late January. And as of this writing, the spot price was $1,269.15. It even hit “death cross” territory this week.
This is a curious trend. You wouldn’t expect gold to sink like Germany at the World Cup at the same time bitcoin is struggling. In fact, you would expect some of the weaker hands fleeing bitcoin to go back to gold. But our own Andy Gordon summoned Occam’s razor to offer the likely explanation.
“Bitcoin is just too small to affect the price of gold right now,” Andy said. “In a few years, we may see something different. It will be interesting to track how bitcoin and gold prices affect each other.”
Japan Does the Right Thing
Mt. Gox creditors and former customers finally received some good news. The defunct crypto exchange has been mired in bankruptcy proceedings since a hacker stole 850,000 bitcoins from its coffers in 2014. But this week, a Japanese court halted bankruptcy proceedings so it could return assets, including 200,000 “found” bitcoins, to former customers and creditors (Fortune).
The best part of this story is that creditors and former customers can get the actual bitcoins back – not just the 2014 cash equivalent (which was the original plan of the bankruptcy court). According to Fortune, the estate currently has about 170,000 bitcoins and 170,000 bitcoin cash tokens. Its estimated worth at today’s prices is $1.2 billion. The original value of the stolen bitcoin was $473 million.
A trustee for Mt. Gox isn’t going to make it easy for claimants to get their money. The trustee wants to see proof (which seems fair enough) that a claimant is owed money. But at least the courts are doing the right thing. And we should all celebrate that.
Facebook Likes Bitcoin (Sort of) Again
Back in January, Facebook banned ads that promoted cryptocurrencies, initial coin offerings and binary options. “There are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith,” said Facebook at the time (TechCrunch).
Now, Facebook seems like it’s willing to dip its toes back in the crypto waters. Earlier this week, Facebook announced it would allow “pre-approved” advertisers to promote their cryptocurrency-related businesses and services (Recode).
So why is Facebook back in the crypto advertising game?
- There’s a lot of money to be made by accepting ads from cryptocurrency services. Facebook really doesn’t want to leave any money on the table.
- Facebook never intended the ban to be permanent in the first place. Its initial ban was “intentionally broad” to give the company time to calibrate its advertising policy while protecting its members (Adweek).
Isn’t it refreshing to see a company actually mean what it says?
Crypto service providers that want to advertise on Facebook now have to fill out a short form. The social media company will use the information provided on that form to “vet” the company and decides whether it’s worthy of advertising on Facebook. We don’t yet know what criteria are being used. Hopefully, that will be shared at some point.
New Crypto Fund Launched
For months we’ve been talking about the institutional boom that’s about to hit the crypto markets. Andreessen Horowitz, one of the world’s top venture capital firms, just provided more evidence that we’re getting close to that tipping point. The top VC announced this week that it’s creating a $300 million crypto fund. Given its track record in picking winners – Facebook, Lyft, Coinbase, Airbnb, etc. – pretty good things in the crypto space are about to happen. (Read more about this in Adam Sharp’s Early Investing column.)
Cannabis Gaining Steam
Canada’s recent decision to legalize recreational marijuana (CNN) has reignited interest in the business side of cannabis. And there’s been a slew of interesting developments.
The FDA approved a cannabis-derived treatment for two rare forms of epilepsy this week (CNN). It’s the first time the FDA has approved a drug derived from marijuana.
California has passed new guidelines that regulate the quality of marijuana in the state. Those guidelines take effect this weekend. As a result, there are steep discounts on existing marijuana inventory, which can’t be sold after June 30 (NBC).
And Massachusetts is getting ready to license its first recreational marijuana dispensary (Boston.com).
As this industry grows, so will the opportunities to invest in it. From growers to transportation, logistics and shops, there will be many potentially lucrative investments to be made. And as always, we’ll keep an eye out for the best of them.
Google Calendar is finally getting an out-of-office feature. It will automatically decline meetings for times you’re out of the office and generally signal to others when you’re not available. In fact, it’s time for me to go set my out-of-office status so I can enjoy the weekend.