The Crypto Comms #60; a large powder keg - a short fuse

The United States is pushing the concept of ‘borrowed time’ to its absolute limit. As it steamrolls towards the inevitable, the downstream consequences of financial decisions being made today are already in play, and Bitcoin and Litecoin are at the base of it all.

In this issue

• US National Debt Increases over $1 trillion in one month
• Forbes changes its tune
• Bitcoin analysis
• Hard to ignore data
• Latest happenings
• Listening material

US National Debt Increases over $1 trillion in one month

In just 34 days, the US national debt increased by $1 trillion after the debt ceiling was suspended in June. The debt ceiling rose 3.2% from $31 trillion to $32 trillion. The cap on debt has been removed until January 2025, which means capital misallocation will be both promoted and emboldened. If the US leads by example, the trickle-down effect for the rest of the global economy is set in stone until entropy really kicks in. That means more wasted money, more funding for dead and politically expedient projects, and for those who exist solely to enrich themselves at the expense of actual progress.

https://www.usdebtclock.org

At current rates, the US national debt will surpass $43 trillion by 2027, with the debt to GDP ratio reaching around 150%.

The debt clock organisation uses growth rates to arrive at these numbers. However, these rates may change dramatically in a short time-frame. $1 trillion per month would mean that 2027 target would be reached by this time next year. Put into the context of a US-led recession, increasing disability claims, a labour shortage and commercial property on the precipice, besides skyrocketing interest payments on debts due to high interest rates, it isn’t hard to see how cracks have already turned into fissures.

https://fred.stlouisfed.org/series/GFDEBTN/

The event horizon has been eclipsed. Runaway debt creation is already in progress and very few realise how quickly the situation can escalate.

This is the consequence of an overextended US-led financial system which has nowhere to turn except to the money printer. And this comes at a time when it’s no longer obvious that the US is the cleanest dirty shirt in the laundry. US administrators are pushing ahead with Central Bank Digital Currency rollout via FedNow. The same is true of Europe and elsewhere. A cabal of colluding governments which enforced lockdown scams in a bid to slowdown the economy, print trillions, enrich themselves and their crony friends in finance, with nowhere left to turn. It is irrelevant whether this was done consciously or as a consequence of bad decision making — the outcome is the same.

While some political candidates appear better than others, there is no way to fix the system fundamentally without renegotiating the global monetary standard. BRICS nations are not innovating. Western nations are not innovating. The only fundamental monetary innovations today are Bitcoin and Litecoin.

Forbes changes its tune

Seemingly out of nowhere, Forbes appears to have changed its tune on Bitcoin following the BlackRock ETF filing announcement.

Now that BlackRock is involved, Bitcoin has become greener, is a means to help third-world countries and certainly isn’t used by the ‘bad guys’ anymore! Indeed, these things might have already been true, but now that BlackRock is getting an all-too-familiar fear-of-missing-out, they’re even more true!

Narratives are downstream from the money.

Bitcoin analysis

Bitcoin/Dollar is consolidating at $30,400 at the time of writing. The Relative Strength Index on the weekly time-frame has printed a negative divergence, such that price is creating higher highs against an RSI that’s printing lower highs.

This is a bearish signal and may indicate looming selling pressure in the weeks ahead. If sellers push prices lower, local support can be expected at $28,000 and $27,500, respectively. Conversely, last week’s upside targets remain zones to expect supply to come in should renewed buying pressure materialise. That said, the entire move down from $40,000 to $25,000 on the back of the Luna implosion in 2022 was inefficient and illiquid. per volume profile (VPVR) data. Low liquidity could result in an explosive move.

Hard to ignore data

Interestingly, the Grayscale Bitcoin Trust discount has narrowed significantly since BlackRock’s spot Bicoin ETF filing. GBTC’s discount to NAV has reduced from 42% to 26.7 percent, suggesting the market is beginning to price in the likelihood of the ETF being approved.

Meanwhile, traditional financial institution, Standard Chartered expects Bitcoin to head towards $120,000 by 2024. Interestingly, Blockstream CEO Adam Back expects this price-tag to be reached in 2023, which could be part and parcel with the melt-up scenario projected in my pinned post.

As Bitcoin liquidity drains, data from CryptoQuant shows that USDt (Tether) reserves on exchanges has increased. These liquidity dynamics could have long-term implications. Specifically, demand for ‘stable’ assets is on the rise, possibly due to the weak economic backdrop in TradFi and most alternative crypto coins. It also signals that users are less likely to exit directly into fiat, but would rather remain in stablecoins due to ease of access to cryptofinance.

As mentioned, Bitcoin availability on exchanges is still plummeting, which reflects a growing trend of self-custody. The legal troubles and uncertainty of Binance and Coinbase certainly help to spur this behaviour too. In this environment, even a modest uptick in demand would nudge prices up and to the right fairly quickly. All in all, it seems as though the powder keg is ready and the fuse is short; which is no surprise considering that markets tend to switch from ‘hesitant’ to ‘trigger happy’ overnight.

As an aside note, keep in mind that the human spirit and perseverance are an indominable force, and arguably transcendental. Make peace with the worst possible outcome and move stoically forward.

Cheers.

Latest happenings

• Bitcoin: Standard Chartered Predicts $120,000 BTC by 2024
• SEC Says Coinbase Knew That Securities Laws Applied Before Lawsuit
• Lightning Labs Unveils tools for Bitcoin-Powered AI Products
• Meta to Launch Data-Harvesting Twitter Competitor Amidst Censorship Accustions
• CFTC Concludes Alex Mashinsky Broke Rules Before Celsius’ Collapse
• CBDC Tracker Shows 130 Countries Working on Capital Controls
• Litecoin Resurgence Speaks to its Resilience Amidst Market Uncertainty

Listening material

• The Pragmatic Apocalypse with Balaji Srinivasan

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. I am not perfect and this is not a science — nor is this newsletter analysis a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.

Thank you for reading.

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