Wednesday, June 7, 2023

Coinbase misconceptions...

“The most basic question is not what is best, but who shall decide what is best.” – Thomas Sowell ||

Hi all! Hard to believe it’s only Wednesday…

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WHAT I’M WATCHING

The SEC sues Coinbase. The market is relieved. More on this below.

A market floor? Yesterday’s bounce suggests that sellers are exhausted, bad news is largely priced in and investors are now looking at the longer-term. There’s always more bad news around the corner, but prices eventually reach a point where the risk-adjusted probability of more losses is less than that for gains.

Stagflation warning. The OECD’s latest Economic Outlook report forecasts weak economic growth for the next two years, with persistent inflation. But let’s not use the word “stagflation”, okay? Higher interest rates for longer in theory is not good for hard assets such as gold and bitcoin, but hard assets could outperform in stagflationary environments since they are not tied to the economy and hold value better than deflating currencies.

The space race. We need an occasional distraction from all the hand-wringing and screen scrolling, so I bring you satellites. The US Space Force is planning to launch a constellation of satellites this summer to monitor Chinese and Russian activities in space. Yes, the “space war” is heating up, and now involves private commercial participants as well. This is relevant for blockchain development because all of these satellites will need a way to communicate and probably also transact with each other that does not depend on any one set of servers or currency issuers. This is all a very long way off, yes, but it is something I’m watching, and it’s a refreshing respite from the current terrestrial stress.

MARKETS

Another shoe drops

Just as I pressed “send” yesterday on my comment on the SEC’s Binance suit, news dropped of the SEC’s suit against Coinbase. I confess I did think Gensler would marshal resources and focus on Binance for a bit before going for another whammy with Coinbase, and I still find the strategy of issuing these notices back to back perplexing.