Awkward Truths

The News From Planet Ruby—Friday, February 9, 2024

• Signal: COPA
• Noise: CSW

Don't Mention The Debt

This week, Fed Chair Jay-Pow admitted US debt is unsustainable. The US debt is currently growing faster than its economy, and interest payments are over $1 trillion per year. Debt is forecast to increase from $34 trillion today to $52 trillion by 2033.

Powell is in a tight spot. The Fed held rates at 525-550 bps in the last FOMC meeting due to the continued threat from inflation, and likely won't start cutting until mid-year. However, these higher rates also mean higher payments on the debt.

The S&P doesn't care, pushing a new all-time high of 5,000, even as the dollar strengthened (usually a stronger dollar means a headwind for everything priced in dollars).

Chinese stonks recovered after another terrible week, when the authorities put in place measures (such as a ban on short selling) to prop up the markets. It remains to be seen whether this sticking plaster will prevent further bleeding, or whether traders will realize that outright manipulation won't solve the serious problems facing the economy and stock markets.

BTC Breaks Out

After spending weeks consolidating in that $42-44k range, bitcoin finally made its move on Wednesday, breaking upwards and confounding traders who were waiting for lower prices.

At this point in the cycle, bitcoin often makes a 30% correction, and prices in the mid-$30k region would have been entirely normal. Following the crash from $49,000 on ETF launch day, many analysts believed this pattern would repeat, based on history and various on-chain metrics that have, in the past, proven reliable.

It was not to be. Although there is still the chance of a crash (as ever), BTC broke decisively out of that narrow range and promptly continued through the $45,000 resistance. It's currently trading around $46,400. Consolidating above $47k would be bullish, followed of course by reclaiming the local peak and pushing past it to the psychologically-important round number of $50k.

My Lord, The Expert Is Wrong

This week's big news has been the COPA trial. Craig Wright took the stand to attempt to defend his claims that he is Satoshi, and that he therefore has the right to demand the wrong people stop using his IP.

Wright has not acquitted himself well on the stand, possibly due to the vast weight of obviously-forged evidence he is being forced to defend. He has done this with denial and obfuscation, attempting to cast doubt on the experts (who the court de facto views as reliable), and the judge was clearly not impressed with his testimony.

Inflows into the new ETFs have now surpassed Microstrategy's holdings (190,000 BTC), and they did it in less than a month.

Grayscale's selling is down to "just" tens of millions of dollars worth of BTC per day, from a peak of over $600 million on January 22, though a new tranche of GBTC selling may come from Genesis in due course.

Miners have been selling to position for the upcoming halving, but that downward pressure on the market appears to have eased for now too.

Solana suffered yet another outage on Tuesday, as block generation halted for five hours. The network suffered serious outages in its early days, though this is the first since February 2023.

What's New In The SKALEVERSE?

Ever wanted to know more about how SKALE manages to deliver record transaction throughput while maintaining high security and zero gas fees? Check out the upcoming Engineering Update/AMA this Monday!

That's all for this week!

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