The News From Planet Ruby—Friday, May 12, 2023
The Earth Apes are in meltdown. They have finally realized that currencies based on memes are poorly-suited to value storage and commerce, and are floundering for alternatives.
The largest of these so-called memecoins, the "dollar" (also the name of the planet's most popular deity) is based on a cultural meme about the greatness of a collection of people defined by various accidents of geography and arbitrary lines drawn on their maps. Several other competitors have arisen, based on similar memes, and further historical-cultural-geographic memecoins are now being planned and implemented by other ape factions. Ultimately, this will prove beneficial for the adoption of Real Money, but things are going to get messy first.
No News Is Good News, For Now
Despite shares in PacWest Bancorp crashing another 30% following reports that 10% of deposits were yanked last week alone, this week has featured a surprising lack of bank failures. Was Jim Cramer right?
Nope, says economist Peter St Onge, who warns that the current crisis has already wiped out more assets than the 2008 crisis—and is only just getting started. Given the 12-18 month lag it takes for interest rates to filter through to the economy, he sees an "extinction-level culling of banks" in the next year.
Janet Yellen has been talking about the importance of raising the debt ceiling to avoid the economic catastrophe of a default, possibly as soon next month.
As every Treasury secretary has known, the only option that leaves our economy in good shape is raising the debt ceiling.
— Secretary Janet Yellen (@SecYellen) May 9, 2023
Congress must stand behind the basic principle that America pays its bills and that we're not a deadbeat country. pic.twitter.com/1WLuOjXisD
Despite what she'll tell you, though, it wouldn't be the first time. Unlike the Lannisters, America doesn't always pay its debts...
The CPI print came in at the forecast 4.9% YoY, down 0.1% from the previous month. Core inflation was down 0.1%, and slightly lower than forecast, giving risk assets a brief and limited boost.
With all the good reasons to escape the dollar's hegemony, the idea of a BRICS Currency is gaining further interest as a competing reserve currency, among a growing group of nations. This follows other initiatives to conduct trade in existing non-US currencies.
Crypto Veers Off The Road
After bumping against the top of the resistance band at $30k last week, bitcoin has corrected hard. The CPI print was a trigger for some major volatility, with a brief push back above $28k, followed by falls as low as $26,100, tapping the all-important 200-week moving average.
Despite (or perhaps because of) a slew of major exchange listings, PEPE crashed hard from its $1.7 billion market cap high, wiping out 75% of its value. CoinDesk has commented that a surge in memecoin trading volumes has historically presaged market tops for bitcoin. That's true, but there's been the smell of desperation, not exuberance, about the current frenzy. New coins are launched, rise, fall, and die in a matter of hours.
Two Certainties In Life: Death And Transaction Fees
Bitcoin transaction volumes and fees have steadily been rising due to Ordinals, which have now seen almost 6 million inscriptions. Thanks to their popularity, the number of unconfirmed transactions held in the mempool has ballooned to an all-time high, almost hitting 500,000 earlier this week. Average transaction fees have soared 1,000% to $10-20, from their normal range of $1-2 since the highs of summer 2021 (when they briefly topped $50).
Clearly, something has got to give.
Binance briefly halted withdrawals due to high and unpredictable network fees. The exchange is also working on enabling BTC withdrawals via Lightning Network to help address the problem.
To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed.
— Binance (@binance) May 8, 2023
Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.
Hold my beer, says Ethereum. Gas fees have been hanging out in the 100-200 gwei zone for much of the past week, thanks to the memecoin trading bonanza. While that has meant pain for users, it has seen over 60,000 ETH burned in only a week, contributing to Ethereum's Ultrasound Money narrative.
Off-chain, Robert F. Kennedy Jr, a bitcoin-supporting presidential hopeful, will be speaking at Bitcoin 2023 in Miami next week, alongside Michael Saylor, Arthur Hayes, and other luminaries of the political and crypto worlds. In other good news, the US Chamber of Commerce has put its weight behind Coinbase, saying the SEC had deliberately created regulatory uncertainty and confusion for crypto firms and investors.
Meanwhile, another one bites the dust: Bittrex US has declared bankruptcy, shortly after the SEC charged the company with operating an unregistered national securities exchange, broker, and clearing agency.
What's New In The SKALEVERSE?
Ruby is launching a new media site! REX Wire is a crypto news and education service, with a particular focus on the SKALEVERSE. The aim is to raise awareness for SKALE projects, as well as providing information about all aspects of the crypto, DeFi, and Web3 space, plus key developments in the TradFi world, AI, and other cutting-edge technologies. Look out for more updates as we bring this service online.
SKALE passed the impressive milestone of 70 million transactions this week! Overall, the platform has saved users more than $1 billion in gas fees.
That's all for now!
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