Wednesday, May 31, 2023

Risk-on narratives, crypto evolution, watch the exchanges, populism, NFT finance and a touch of the sublime...

“The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd; indeed in view of the silliness of the majority of mankind, a widely spread belief is more likely to be foolish than sensible.” – Bertrand Russell ||

Hi everyone!

I owe you all an explanation as to why I had to miss yesterday’s newsletter: I had my first chemotherapy session and it was a long one (stage 2 breast cancer, excellent prognosis and I’ve already had the surgery). Going forward, I may have to miss some more days since I have no idea how I’m going to feel over the next three months, but I can promise you I’ll be writing as much as my energy levels allow. Markets may be oddly quiet, but in the back room, in the halls of global power and in investor narratives, there is so much going on!

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WHAT I’M WATCHING

The tech rally is not necessarily about “risk assets”. There’s another story playing out, that shines a light on how the crypto market has evolved over the past few years. More on this below.

Populism and crypto. Two elections this past weekend – Spain (municipal and regional) and Turkey (general) – show the rise and growing entrenchment of populism. In Turkey, President Recep Tayyip Erdogan extended his 20-year rule despite a damaged economy with 43.7% inflation and constricting civil liberties. In Spain’s municipal and regional elections, the far-right Vox party more than doubled its vote (to a still-low but not inconsiderable 7%), and the right-leaning PP surged in the polls to 31.5% from 22% four years ago. Combine this with last year’s election of Giorgia Meloni in Italy, far-right leader Marine Le Pen’s recent surge in popularity, Trump’s strong hold on the Republican Party, and many other examples besides, and you get the sinking feeling that the polarization of politics we’re seeing around the world is going to produce – at best – a widening in the global gap of inequality. Directly, this has nothing to do with crypto markets other than hint at tougher controls and restrictions. Indirectly, it’s a reminder of why bitcoin was created – to offer unfettered access to financial activity – and it hopefully sets the stage for a different type of resistance for those who find their savings manipulated and their economic participation unreasonably restricted.