Friday, Apr 28, 2023

Stagflation and banking stress are very bad, but bitcoin should benefit

“Everyone has a plan 'till they get punched in the mouth.” – Mike Tyson ||

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Today’s email is shorter than usual since I have a schedule squeeze, but I doubt anyone will mind getting some time back! Tuesday’s daily will do some catching up.

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Programming note: This newsletter will not publish on Monday, May 1, for Labour Day (I’m not quite sure why we celebrate working by not working, but I’m not complaining!). 🌻

WHAT I’M WATCHING

• Stagflation. Yesterday’s data leaves no doubt that it’s now firmly entrenched. This is not good, but bitcoin should benefit. More on this below.

• Signs of weekend drama. Actually, there aren’t any, which is interesting. More on this below.

• Solid crypto ecosystem growth. I don’t have concrete data just yet, but crypto venture investments and institutional-grade service building sure seem to be picking up very nicely. We know that they didn’t stop even during last year’s drama, but the headlines this month have a jauntier tone and are flashing higher numbers. One area I’m seeing a notable amount of activity in is crypto custody. More on this below.

• Hong Kong. The Hong Kong Monetary Authority issued a circular yesterday urging banks to support regulated digital asset businesses with their banking needs, and encouraging lenders to train staff about crypto assets. This is not new – we had already heard that banks in the region were being encouraged to work with crypto firms – but the additional detail and the reaffirmation ring loud in the current environment.

MARKETS

The worst of both economic worlds

We are so in stagflation territory now. ☹ Yesterday’s preliminary reading of US Q1 GDP came in at 1.1%, much lower than expectations of 2.0%, which were already lower than Q4’s 2.6%. Bear in mind this is before the banking crisis-induced credit crunch. Nothing to celebrate here.