The News From Planet Ruby—Friday, March 31, 2023
We continue to watch Planet Earth with interest. The apes appear to be coalescing into two polarized factions. The first represents the centralized status quo, which will do whatever it can to suppress any threat to its hegemony.
The second faction represents the path of decentralization, openness, and enlightenment. The battle lines have been drawn and the intentions are clear. We maintain our policy of covertly equipping the decentralized faction with technology, in our effort to encourage the apes' evolution to a higher plane.
Deutsche Bank Still Standing
After the storms of last week, there's an uneasy calm over the global markets. To the disappointment of some in the crypto world, Deutsche Bank has not gone the way of Credit Suisse. The banking system appears to have stabilized, at least for now.
That might have something to do with Treasury Secretary Janet Yellen's shotgun closed-door meeting with regulators over the weekend, unless that was about stitching up Binance. (We don't know for sure because the door was closed.)
Of course, the root problems have not gone away. Potentially hundreds of banks are insolvent, victims of their brilliant strategy to lock up capital in long-dated government bonds before the Fed's sharpest interest rate hike in history, which has left them with a total of $2 trillion of unrealized losses.
The stage is set. The money printer has been valeted, serviced, and fitted with a new supercharger. It now sits gleaming in the Federal Reserve, idling, J-Pow's twitchy toes hovering over the gas pedal.
And then there's the latest episode in Operation Choke Point 2.0.
CFTC Swings For Binance
The big crypto news of the week was the CFTC's lawsuit against Binance and CZ over regulatory violations.
The lawsuit accuses Binance not only of offering its services to US customers unlawfully, but of widespread insider trading, market manipulation, facilitating terrorist/illegal activity, ignoring regulators, being generally obstructive to the authorities, and just about anything else the CFTC could think of.
One interesting point in the complaint is that the CFTC considers that BTC, ETH, and LTC, as well as USDT and BUSD, are commodities, setting them at odds with the SEC and planting a flag in territory they consider their own.
While the lawsuit could potentially be fatal for Binance US, CZ's response was brief but robust. TL;DR "We've been industry leaders on compliance, have cooperated extensively with law enforcement, and our so-called 'insider trading' is actually us selling crypto to pay bills. Oh, and thanks for suing us after we've worked closely with you for two years."
On the subject of lawsuits, a white knight may have emerged. Cooper & Kirk, the Washington law firm who successfully challenged the original Operation Choke Point (a secretive campaign by federal bank regulators to shut businesses they deemed unfavorable out of the financial system, without due process), has taken on the cause of Operation Choke Point 2.0—albeit for now only in a white paper.
Bitcoin closed last week at $28,000. News of the CFTC's action knocked it down $1,000 in a single 4h candle, but there was no sign of a serious rout in the markets. Three months ago, while FTX's collapse was still raw, this kind of development would have put BTC into intensive care. Now? Not so much.
Bitcoin recovered quickly and put in a new local high above $29,000. Ahead of the crucial monthly close in a few hours, it is currently trading back around $28,000.
The next strong support line is at $25k, which was decisively broken two weeks ago when the banks started falling over. The 200-week moving average stands at around $25,500, the 200 daily MA a little over $20,000. The key resistance level to overcome is around the $30,000 mark.
Big Players Place Their Bets
In other news...
- Stock exchange operator Nasdaq announced plans to launch its own crypto custody solution within the next three months.
- The insatiable and irrepressible Michael Saylor bought another 6,455 BTC, bringing Microstrategy's total to 138,955 BTC (0.66% of total supply), worth nearly $4 billion. His average purchase price is now $29,817/BTC, putting Microstrategy a mere $250 million underwater.
- Bitcoin's Hashrate spiked to an all-time high, at one point touching almost 400 EH/s (400,000,000,000,000,000,000 H/s).
- Away from Bitcoin, Polygon launched its long-awaited zkEVM on mainnet, a major development for Ethereum scaling solutions.
That's all for this week!