☀️☕️ Bitcoin on its "last gasp before the road to irrelevance”

1 December 2022

Happy (gulp) December🎄!

📊 IN THE MARKETS

• US "Softish landing"; Hang Seng Index rally; Post-Brexit UK banks

📝 FOCUS

• Bitcoin on its "last gasp before the road to irrelevance”

• Twitter Hellscape started a week ago

📊 IN THE MARKETS

Huge day in US markets after Fed Chairman Jay Powell's lunchtime speech. The large-cap S&P 500 index closed out November up 5.4% after rocketing 8% in October with the tech-heavy Nasdaq up 4.4% after 4% last month. Traders glommed onto his comments that while interest rate hikes would definitely continue, it may be appropriate to slow the pace.

In other words, instead of 0.75% again in December (after four consecutive hikes of that size,) the Fed may hike by 0.50%. He also said that the Fed had “more ground to cover” in fighting inflation and not to read too much into the lower-than-expected October inflation data as it was just one month. Basically almost nothing new as it was what he already said after the last hike or what other Fed officials had been saying over these last few weeks. "Almost" as he did add in the Q&A that there “is a path to a softish landing” 🎓 which suggests new confidence that inflation will ease without a recession and severe job losses.

After a 15% drop in October, HK's benchmark Hang Seng Index finished with a strong 2% gain on Wednesday for a huge total rebound of 27% in November, its biggest monthly gain since October 1998. Traders completely ignored an official survey showing factory activity in China contracting at a faster-than-expected pace in November. HSBC, carmakers and property developers led the way.

The HSI is still just over 20% down for the year, and "bulls" (investors expecting markets to go up) are betting the zero-Covid policy exit trade will continue regardless of official proclamations to the contrary, still inadequate vaccinations and the recent surge in Covid-19 cases (along with the accompanying protests and crackdowns.)

Meanwhile, the UK is using “Brexit freedoms” to boost the competitiveness of London's financial sector by relaxing "ringfencing" rules on some big banks. Basically, after the 2008 financial crisis, European banks with retail and investment arms were required to split into separate entities to reduce risk and prevent banking collapses. Doing this needs consumer and non-consumer parts of the bank to have separate pots of capital that are large enough to absorb and contain potential losses, but critics argue that this is inefficient.

📝 FOCUS

Bitcoin on its "last gasp before the road to irrelevance”

The Director General of the European Central Bank said that bitcoin's recent stability at $16-17k (from all-time highs this time last year of over $60k) is the result of manipulation and that it's on its "last gasp before the road to irrelevance.”

The post argues AGAINST making crypto legit by regulating the industry, specifically citing bitcoin as a hotbed of illegal transactions. Since "bitcoin appears to be neither suitable as a payment system nor as a form of investment, it should be treated as neither in regulatory terms and thus should not be legitimised.”

ECB President Christine Lagarde had said in May, during the terraUSD implosion, that she thought cryptocurrencies were "worth nothing." (Perhaps crypto bros feel the ECB is on its last gasp before irrelevance?)

Meanwhile, in non-FTX crypto news (as far as we know) the Kraken exchange announced it would fire about 30% of its workers, or 1,100 people, because of "significantly lower trading volumes and fewer client sign-ups" because of macro and geopolitical factors. Coinbase kicked off sector layoffs in June, also axing 1,100 employees or 18% of its workforce, with layoffs then spreading to others, like Dapper Labs and BitMex.

Data from The Block show crypto exchange volumes down to US$659 billion in November from US$841 billion in January. Crypto bros may be dismayed at the 22% drop, but a more dispassionate observer might be impressed that it's held up as well as it has, considering the crypto winter that led to the distress or bankruptcies of leading players like Voyager, Celsius BlockFi, terraUSD/Luna and 3AC all the way up to and including (and beyond) FTX.

Twitter Hellscape started a week ago

“Twitter obviously cannot become a free-for-all hellscape,” Musk wrote in his letter to advertisers as he (finally, finally) took control of the company.

And now, Twitter says that for the last week it has stopped enforcing its policy on misleading information about Covid, having previously suspended more than 11,000 accounts for it since 2020. Expect more. Last week, Elon Musk announced a general amnesty for suspended Twitter accounts after holding a Twitter poll that went 72% in favour of a general amnesty to accounts provided they have not “broken the law or engaged in egregious spam”.

“Superspreaders of hate, abuse and harassment will be the only people to benefit from this latest decision by Twitter,” said The Center for Countering Digital Hate, a campaign group, calling for more advertisers to yank their marketing dollars.

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