CryptoEQ recently announced a partnership with 7investing to help traditional investors get a better, more consolidated view of the opportunities in both cryptocurrencies and equities. 7investing provides its top seven stock market recommendations every month based on its team’s research and analysis of the markets.

Below are some take-aways from a look back over the last month in crypto, equities, and markets overall. If you’d like to gain access to future shows, please consider becoming a subscriber by visiting 7investing.com/subscribe or cryptoeq.io/#memberships.

El Salvador Adopts BTC as Legal Tender

Rayven Moore, CryptoEQ: “El Salvador is now making Bitcoin its legal currency...Every business in El Salvador will have the opportunity to accept Bitcoin as legal currency. And if you know a little bit about El Salvador and their current economic situation, they’re currently using the US dollar as their primary currency. And now it is Bitcoin and the US dollar.”

Originally announced at the Bitcoin 2021 conference in mid-June and days later made official, El Salvador officially became the first country to approve Bitcoin as legal tender. El Salvador’s president, Nayib Bukele, now a widely popular Bitcoin figure, submitted the proposal to the Legislative Assembly calling for the country to "regulate Bitcoin as unrestricted legal tender." El Salvador’s legislative body passed the law making both the US Dollar and Bitcoin recognized legal tender. Legislature members passed the bill with a supermajority vote, receiving 62 votes for the bill out of a possible 84. 

This law means Bitcoin can be used to pay taxes, businesses are obligated to accept Bitcoin for payment, and converting Bitcoin into other currencies will no longer be subject to capital gains tax. Additionally, the El Salvadoran government will be giving out $30 in Bitcoin to adult citizens that download the Chivo e-wallet and go through KYC. 

With El Salvador breaking the ice, fellow South American countries may soon follow suit. The next Bitcoin domino to fall could be the country of Panama. The congressman Gabriel Silva is hoping to have a similar Bitcoin legal tender bill in the Panamanian National Assembly “within a month.” Additionally, the national deputy of Paraguay, Carlitos Rejala, gave public statements urging his government to embrace Bitcoin in a manner similar to El Salvador.

Finally, while not recognizing Bitcoin as legal tender, QR Capital’s Bitcoin exchange-traded fund (ETF) started trading on the Brazil stock exchange in June under the ticker QBTC11. Brazil is one of only a few countries that has permitted a Bitcoin ETF. The product aims to give investors safe exposure to Bitcoin without the worries of private keys.

Bitcoin Price Crash and Mining Shake-up

Simon Erickson, 7Investing: “So we saw Bitcoin fall pretty hard after it was reported that the FBI had successfully seized about $2.3 million in Bitcoin, that were paid as ransom by the pipeline operators. And more likely is not that the security of Bitcoin itself failed, but sloppy password storage.”

The whole crypto market continues to trade ~50% down from its peak of $2.6T nearly 2 months ago. Bitcoin’s tumble has been triggered by multiple news events including negative attention brought on by Elon Musk and Tesla, the ransomware attack mentioned above, and two negative news items coming out of the Chinese market.

The People’s Bank of China (PBOC) reiterated its earlier commitment to restrict commercial banks from providing banking services to crypto businesses. While the law is not new, the strict enforcement is, especially concerning the over-the-counter (OTC) desks and crypto exchanges. The PBOC has taken swift action to curb what they deem excessive speculation, capital flight, and the financing of illicit activities. 

Secondly, nearly all miners within Chinese borders have been ordered to shut down and/or move their operations outside of China. Even the province of Sichuan, known for being the hydroelectricity epicenter of China, was ordered to stop servicing 25+ mining farms. The Cambridge Centre for Alternative Finance has reported that Sichuan is the 2nd largest Bitcoin mining province in the country. 

This exodus of miners from China is poised to birth new Bitcoin mining hubs outside China, removing the long-lasting criticism that “China controls mining.” However, it will take months for the miners to relocate and successfully come back online. Until then, the Bitcoin hashrate will remain ~50-70% of what it once was. The network’s hash rate is down ~35% since May 14th and currently sits at around ~100 million terra hashes per second (TH/S), having been as high as ~180 million TH/S in mid-April.

Image credit: TheBlock

Coinbase Allows 401k to Invest in Cryptocurrencies

Steve Symington, 7Investing: “Coinbase actually announced that they were teaming up with a company called ForUsAll, Inc., It was a 401k provider. They’re pretty small. To be clear, I think they’ve got $1.7 billion in assets, they’ve got 400 clients, they haven’t specified, actually, how many of those clients have signed up yet, but they’re teaming up with this 401k provider to allow 401k owners to invest up to 5% of their portfolios in cryptocurrencies. And that’s a pretty interesting development. And it would be very, very interesting if Coinbase could use this as a segue to convince larger 401k providers — you know, this is a $20 trillion plus assets under management group — to convince those larger providers to eventually sign up for a similar agreement.”

Starting this quarter, employees in plans administered by ForUsAll will have the ability to invest up to 5% of their contributions into cryptocurrencies. Coinbase (COIN), the leading US crypto exchange, will execute the trading and custody through its institutional division. Prior to this announcement, exposure to cryptocurrencies in retirement plans has been very limited, with the most popular alternative being the Grayscale Bitcoin Trust (GBTC). This close-end fund, which oftentimes does not track spot prices, works slightly differently than an ETF or directly buying cryptocurrency in your retirement account. 

Currently, the GBTC product trades at a discount of nearly -15%, according to The Block's Data Dashboard. Recently, Digital Currency Group, parent company of Grayscale, announced its intent to buy up to $750 million in shares of GBTC in order to close the discount. However, that effort doesn't seem to have helped GBTC much as it continues to trade at a discount for over four months. 

Image credit: TheBlock