Wednesday, May 24, 2023

What the political divide and central bank manipulation of LIBOR has to do with bitcoin; investors don't seem to be worried enough; and more...

“To have a right to do a thing is not at all the same as to be right in doing it.” – G. K. Chesterton  ||

Hi everyone! Apologies this is so late today, circumstances beyond my control… ☹ And I couldn’t get my tablet to work for the stick figures… How’s your day going?

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WHAT I’M WATCHING

• Political distrust. A deal on the debt ceilings looks a bit further away today as the Republican Party is questioning the numbers given by Janet Yellen’s Treasury. This is just one sign of a deepening political divide and growing distrust in society, which may sound like it would be good for hard assets such as bitcoin but really isn’t good for anyone. More on this below.

• Binance. Yesterday, Reuters published an article alleging that the crypto market’s largest exchange in terms of volume has been comingling client funds and company revenue, which of course Binance has denied. The exchange has survived many allegations of wrongdoing over the years, and it is likely to survive this one as well – but the chorus of accusations does not help the industry’s reputation in the eyes of regulators, and the company’s continued withdrawal from key markets could end up further hurting overall market liquidity and access.

• Where’s the panic? Stocks corrected yesterday, but only down to where they were a week ago. Investors don’t seem too worried. More on this below.

• China. The iShares China Large-Cap ETF is down more than 3.3% on the month, and 5.4% year-to-date. This doesn’t sound like a market excited about its growth prospects, and this matters for the lift we were all hoping China would give to a slowing global economy.  

• Crypto and AI. The Solana Foundation has created an open-source reference implementation that lets users interact with the Solana network directly from ChatGPT. I won’t claim to fully understand this yet, but I have been wondering how crypto networks will integrate with advanced machine learning networks. For more on this, I recommend following Jesus Rodriguez (@jrdothoughts) and reading his writings on the topic.

MARKETS

Where’s the worry?