By: AWNewYork/Shutterstock; Emily Ratajkowski, NYT Best-selling Author, Entrepreneur, and Model
I once wrote about how the world was not yet ready for Revenge Emily Ratajkowski. But that was three months ago. And I – and Emily – have changed. I’m no longer fearful of a woman-scorned Emily Ratajkowski but of Bitch Era Ratajkowski.
During the three months since I initially jested that we should keep our eyes on Pete Davidson during Rata, post-divorce, it appears that no one kept their eyes on Davidson. His undefeated, unmatched, and frankly unbelievable streak of pulling continues even after he literally branded himself for Kim Kardashian. DeuxMoi has spoken, and Pete and Rata are together.
To which I say, of course. Have we forgotten her late-night appearance with Seth Meyers from over a year ago when she gushed about the Davidson effect? Where she defends him against Seth?!
“I think you’re being a little mean! He’s got the height. Obviously, women find him very attractive.” She then continues on to say that it’s only men who simply don’t understand ‘what that guy’s got’:
“He seems super charming. He’s vulnerable. He’s lovely. His fingernail polish is awesome. He looks good. He’s great.”
The devil’s in the details and these details have Davidson all over them.
But the Bitch Era is about far more than just men and ass-less chaps. It’s about the ability to do it all without giving a f*ck.
Ratajkowski graces the November ‘22 covers of both Elle UK Magazine and Harper’s Bazaar where she discusses everything from babies to politics to sexism and racism. These explosive pieces mark the end of Ratajkowski as a one-dimensional poster-girl plastered all over boys’ bedrooms. Here is a multi-faceted businesswoman and writer with something to say.
Her conversations continue in her recently released podcast, High Low, with a lineup – so far – including Alex Cooper from Call Her Daddy and Josh Safdie’s muse, Julia Fox.
I hate to be that person that says I told you so, but I was right to be fearful of Revenge Rata – she just calls it her Bitch Era.
Black Panther: Wakanda Forever is finally out now for everyone to see, and it’s just as incredible as the first. The run time is two hours and 41 minutes, and the cast is massive. How do you begin on a project of this scale? How long did the entire process take for your department?
Looking at the end result of it feels like the enormity of this project. Going into it is enormity. We lost our hero, and many of us poured into our art form. We all wanted to honor Chadwick [Boseman]’s life and also present an incredibly elevated art form to the world.
When you think about the inspiration, the passion, the purpose, the intention, it doesn’t feel enormous anymore. You start to divide it and say, “Who will I include in this journey? Who gets the aesthetic? What outsourcing can I use?”
Everything starts from an enormous number of artists that come together with drawings. We sit together, and we talk about the story. All of these artists come together with illustrations.
We’re evaluating and talking about what we like, talking about what doesn’t work, talking about story. After we lost our dear Chadwick, kind of Ryan Coogler became our hero. We needed him and Joe Robert Cole to bring us a script.
One thing he was very clear about was going to honor Chadwick, and it was going to examine grief in many forms.
In this episode of “Bitcoin Bottom Line,” hosts C.J. Wilson and Josh Olszewicz discuss how the “sausage is made” internationally, why there is no pivot coming to save us and how fast food could be the next big winner for investors. Olszewics discussed how many people are coming to the realization of just how much power the Federal Reserve wields, which is much more than people in our generation ever imagined. “We are optimistic that things are going to reverse course and net assets will be saved, which is not the case.”
Everything is laser-focused on inflation right now, which means you are going to see high unemployment, housing mortgages evaporating, auto loans collapsing and consumer debt being at an all-time high. Inflation affects everything.
Wilson and Olszewicz discuss the effects of a credit-based economy. Wilson states, “We live in a country with over $90 trillion in debt and only $9 million in the money supply. This has caused the ice to start thinning, and eventually, someone will fall through the cracks.” Olszewicz continues, “That is the argument for the inability to raise our own government debt interest payments above 5%. It would exceed anything that we could even think about paying and be the single biggest line item other than the defense budget. Politicians often do not think about the impact of the money they are spending now and its potential to increase our future inflation.”
Olszewicz states, “It has only been 14 years since [the Bitcoin] white paper, the network was launched in 2009, and it has had 99.98% uptime. Over time, people age out of the CEO or CIO role and the new generation comes in and sees this as more than just an alternative asset.”
Wilson continues, “Social media platforms are only around 20 years old, which is only a little older than Bitcoin. People are being born now that do not know about how these platforms started, just that they are operational. It is similar in terms of smartphones. Some people forget that there was first Motorola, then Sidekick, and then came the iPhone. We are not even at the iPhone [stage] of Bitcoin yet.”
In this episode of “Bitcoin Bottom Line,” hosts C.J. Wilson and Josh Olszewicz are joined by special guest Mike Hobart. He is an author at Bitcoin Magazine, a seed oil disrespecter and a former member of the United States military. Wilson, Olszewicz and Hobart open the episode by talking about what is currently happening in the investing space. Olszewicz states that there is currently no good news and we are seeing how rate hikes don’t work effectively.
Wilson has observed people starting to question inflation and interest rates while seeing that there is a person responsible for them. He believes the solution is the Bitcoin mantra: rules without rulers. Hobart remarks that energy companies have the potential to have a significant impact on the acceptance of bitcoin as well. “I believe that we will get a lot closer after energy companies like Exxon[Mobil], Chevron and ConocoPhillips become vocal about how they are using bitcoin mining to help with their production numbers and revenue. I have noticed that everyone wants to treat Bitcoin like a stock and equity or as a heavy rock like gold. It is both of these things and neither at the same time. The more information that is put out about Bitcoin, the more understanding people will have, and the adoption rate will begin to grow even more exponentially.”
Hobart closes the episode by sharing the threat medical debt has to our economy. “With the rest of the macroeconomic situation, the whole market is looking at housing because of 2008; oil, energy and gas because of Ukraine; as well as supply and shipping rates due to covid. I think the markets are going to have the black swan come from the health sector. In regard to diabetes, 10% of the population has diabetes, and 97 million people are prediabetic. About 40% of the population is or will be taking insulin. This does not account for all of the other metabolic diseases prevalent in society. There are trillions of dollars worth of medical debt in the United States, and nobody is talking about how this debt is going to affect the economy.”
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Jason Maier to talk about how Bitcoin is an even playing field for humanity to build on and why politics don’t apply to it.
Q: I love that. And I feel like everyone has that, as you said, two moments. The first moment where you’re like, “No. What is this?” And then of course, the second moment, where someone that you probably have to spend the rest of your life thanking actually took the time to be like, “No. Stop. Just ignore everything you’ve ever learned about money, about everything and let’s relearn this together.”
Jason Maier: And that, and that’s what it was like, right? You sort of have to relearn everything and you start asking really hard questions, if you can think back to the beginning of your journey. What is money? And not knowing the answer to that question. You’re like, “What? What are we doing?” And just like everyone else, I dove headfirst and the more I learned, the more I wanted to learn. The more I learned, the more I wanted to own it and to be a part of this. And of course, the more I learned, the more I wanted the people that I loved and cared about around me to just own it or understand it or learn about it.
I think it’s hard to really understand Bitcoin and not want other people to be involved with it too. That’s where I come from.
P: It’s like this moral imperative, this burning. I have to talk about Bitcoin!
In this week’s episode of “Bitcoin Bottom Line,” hosts C.J. Wilson and Josh Olszewicz are joined by special guest Daniel Batten to discuss bitcoin mining using organic materials. Batten is an expert on methane and explains the benefits of bioavailable energy. “If you are taking your power source, such as natural gas that would otherwise stay in the ground, it is carbon positive when you take it out of the pipeline. This will contribute to carbon emissions and is absolutely the type of bitcoin mining we want to do.”
Batten goes on to talk about how there is another form of methane that does not come from the ground and is freely emitted into the atmosphere. “This comes from farms or anywhere you have anaerobically decaying organic matter, which are things that rot without air. Global warming is about several different emissions that all have their global warming potential. If we compare methane to carbon dioxide, methane is more warming and breaks down faster than carbon dioxide and then turns into it.”
The United Nations Environment Programme has stated that methane is the strongest lever to reduce climate change over the next twenty-five years. “This is because it increases at a parabolic rate and is 84-times more warming than carbon dioxide. If you can find a way to use it as a fuel source, you are removing it from the atmosphere.”
Wilson, Olszewicz and Batten discuss the benefits to our environment of using these emissions and potential ways to do so. They wrap up the episode by talking about how this is not a single-solution problem and many preventative measures will need to be put in place to impact climate change. Batten states, “There is enough landfill gas around the world to power the Bitcoin network many times over. Bitcoin does not produce enough energy to solve this problem single-handedly.”
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Matthew Pines to talk about China’s plan for world domination and why FTX and Binance are “like a bug hitting the windshield” in terms of the general macroeconomic scene.
Matthew Pines: We made these typical imperial hubristic mistakes with Iraq and we had a Great Financial Crisis that sort of focused on internal politics, and geopolitics kind of went to the backburner or became a domain of Sunday news shows. “Are we gonna do an Iraq surge or are we gonna do a reset with Russia?” Or whatever.
Now, it’s gonna become present because it filters into every aspect of your lives Where you get your stuff. Is that gonna come the next time? I think COVID sort of woke us up to this. I think we felt that it was just gonna be like a temporary disruption and then everything was gonna just settle back to normal. That’s not the case.
That’s why Taiwan matters. That’s why these things matter because they’re highly path dependent. We live in a very highly non-linear, coupled dynamic system where the butterfly flaps its wings and you get a hurricane. It’s why you have to pay attention.
Why focus on all the little things? Because those little things can turn into very big things very quickly. FTX is a good example of this. “Oh, there’s some weirdness going on with CZ and why did he just post that thread?” And then, all of a sudden, the token falls by 90% in a day.
Like these systems we built look stable and then they break. That’s why I like Bitcoin because Bitcoin’s one of those systems that is by definition decentralized, so it can absorb lots of shocks. The China mining ban was a great example where it took a massive hit exogenous shock boom. But then the hash rate is at all-time highs. Doesn’t mean the dollar price is gonna be stable by any means; it’s gonna likely be highly volatile. But these are very different models for how you think about building systems and that’s what attracts me a lot about Bitcoin is that they model a type of system that assumes nothing’s gonna work out and assumes that things are gonna break. You just need to build resilience and redundancy, decentralization to those systems, so you’re not vulnerable to single points of failure. You’re not vulnerable to an opaque balance sheet or a single person making a bad decision, and then that has cascading implications to everyone who is anywhere nearby.
That’s sort of my broader thesis to kind of connect these things, why it’s so important to look at FTX and be like, “We should draw lessons learned on this.” You’ll see it reflected in asset prices, but if you’re not a day trader, if you’re not trying to time the tops and bottoms, it really doesn’t matter to you.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Dr. Jeff Ross to discuss how current macro events are affecting bitcoin and what to expect from the bitcoin price.
Jeff Ross: Here’s what I like to say about bitcoin: I’m a wild fanatic about bitcoin for its long term prospects. I’m still very bearish macro-wise. I still think risk assets are gonna get hammered. I think it’s quite possible that bitcoin — let’s talk in terms of probability. This is a really long answer to your question. There’s a chance bitcoin is bottomed and $17,600 was the bottom and there’s a good chance that it could just do a slow grind higher. There’s also a chance that if the Fed pauses, that will get a really impressive rally in risk assets and that bitcoin will also catch a strong bid if that happens. But if things continue to get worse and we have a capitulation-type event in stocks, I think it sucks bitcoin down with it. I think if we get another crypto-contagion event that I’m sure you guys have already talked about today with SBF [Sam Bankman-Fried] and FTX and Alameda and Binance and all that garbage — if we have another crypto-contagion event, I think it pulls bitcoin down too. So even though bitcoin doesn’t deserve it and even though bitcoin has nothing to do with that garbage, it’s still gonna get sucked down alongside of it. That’s just what happens. Anyway, that’s my really long answer to say I’m sort of cautiously optimistic based on its price action for a trade, but I don’t think we’re out of the woods yet. I think in the next nine months things are gonna be still kind of rough and we’ll see what happens.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Obi Nwosu to talk about the difference between Fedimint and Fedi and how Chaumian Mints can be used to onboard millions of people onto bitcoin.
Q: How did the idea of Fedi — what inspired you and the team to say, “Hey, this is the problem. How are we gonna solve it? And then this is how we’re gonna solve it.”
Obi Nwosu: There’s Fedimint and then there’s Fedi. So Fedimint is this open-source protocol, a bit like the way Bitcoin is a protocol for the store or value. Lightning is a protocol for the transfer of that bitcoin around at a low cost at high speed, and also increased privacy as a side effect. Well, Fedimint is a protocol for storing that value, custodying that value with incredible privacy in a way where you are using your community to have each other’s back effectively. They work really well together. Effectively, they’re both Layer 2. When your money’s at rest, you store it in Fedimint, and when your money’s on the move, you use Lightning. But the money is bitcoin underneath both of those.
That’s the Fedimint protocol.
That actually had its roots — well actually, if you go way back 39 years we have Chaumian ecash and then 13 years or so ago with the invention of Bitcoin and then four or five years ago with Blockstream’s popularization of federation technology used for Liquid. When those things were combined, a number of incredible cypherpunks and cryptographers found we can combine these things together and take Chaumian ecash — invented by David Lee Chaum in 1983, which was considered catnip for cryptographers, some of the best form of privacy technology out there — combine it with the best form of money, bitcoin, which for the first time multiple people could hold, and federations allowed you to sort of federate this Chaumian Mint with bitcoin as the backing money as opposed to U.S. dollars which was David Chaum’s original attempt.
Work started three or four years ago and there were a number of projects running in parallel, but my now co-founder Eric Sirion was working on one called Fedimint. About two or so years ago, Blockstream saw it, got really excited about it, started sponsoring him, and about a year ago, I saw it when I was — and I didn’t mention this, I ran the U.K.’s longest-running bitcoin exchange. At one point I had 70% market share of the U.K., did the whole New York Stock Exchange gavel. And we were the first regulated exchange in Gibraltar, all that sort of stuff. But that’s the past now. But while selling that company, I was looking for a way of getting people off exchanges because I was getting increasingly concerned that there would be liquidity begets liquidity, and there’s gonna be increasing centralization around exchanges.
I could see this sort of Orwellian future where there’s half a dozen exchanges, each with a billion users with full visibility, just as bad as having CBDCs (central bank digital currencies) by countries because this is where we’re gonna end up if we just carry on the way we’re going. So we needed an alternative to custody on exchange.
Now, the obvious alternative is first-party custody, i.e., do-it-yourself custody, but if you just look at the numbers and if you look at the attitude of the people that we realize that with the best will in the world, you’re gonna get 5% of people, maybe 10% [doing] self custody, but that still leaves 90-95% trapped in these exchanges.
So I was looking for a solution to get people off exchanges. I was at Hackers Congress last year. I bumped into Eric. We had a conversation. I suggested some of my ideas. He politely told me why they wouldn’t work and then I asked him what he was working on. He told me about Fedimint and he saw it as this incredible privacy technology, which it is, but with my exchange-operator hat on, I realized that this was actually a solution to getting people off exchanges — if architected correctly. That’s where I started getting involved, I started cheerleading it and I talked about it at Bitcoin Miami. That led to Alex Gladstein asking me to go to Oslo Freedom Forum to talk about it more.
I then met some of the bravest men and women I’ve ever had the opportunity to meet, who are human rights defenders and activists from around the world. You may have met, like if you get to Ghana, hope you were there, you’ll see Farida Nabourema from Togo, for example, Fadi Elsalameen from Palestine, Roya Mahboob from Afghanistan, who created the first Afghanistan all women’s robotics team when women weren’t allowed to study and so on and so forth, and the list goes on. They were all realizing that the problems and the challenges they were having around the world, whether it was Latin America, Africa, or post-Soviet regions of the world, although they seemed very different, and the authoritarian regimes that they were battling against, seemed very diverse, they all had a common thread: Those groups used weaponized money and through high/hyper levels of inflation and many other mechanisms. They realized that if they wanted to push back against these forces, they needed to be able to control their own money. So they weren’t Bitcoiners, but they came to Bitcoin because they needed to solve problems, but they were running into scaling issues.
They wanted to roll these out to millions of people at rapid scale in multiple of these regions. And what I realized there was that only Fedimint could do that. This was in May. It went from, Fedimint is an incredible, open-source protocol that we were supporting and letting organically grow, but I came back on June 1, talked to — and now the co-founders have grown to myself, Eric and Justin Moon, another incredible soul. I explained what I’d seen and observed and who I talked to, and we all agreed that we need to accelerate this. And so Fedi was born. Fedi’s objective is to take Fedimint as the base protocol and to accelerate the adoption of bitcoin to billions of users over the coming years because we cannot wait. We have a technology that allows for the rapid rollout of bitcoin with incredible levels of privacy, high levels of safety and direct integration with Lightning. So why are we waiting? There’s no reason why. And that’s where Fedi’s journey started.
“Fed Watch” is a macro podcast, true to bitcoin’s rebel nature. In each episode, we question mainstream and Bitcoin narratives by examining current events in macro from across the globe, with an emphasis on central banks and currencies.
In this episode, CK and I cover Jerome Powell and the FOMC policy decision in depth, analyzing statements from the Federal Reserve, Powell and other financial experts. Then we move onto charts, starting with bitcoin and the dollar, then moving on to Treasury rates. Lastly, we discuss the diesel shortage brewing on the east coast of the U.S.
Federal Reserve FOMC Raises Rates Again
CK and I agree that the level of importance of the Federal Reserve and the FOMC policy decision to the market is a sign of a very unhealthy economy, where central bank decisions are the only game in town.
The Fed raised interest rates by 75 basis points (bps) to a new Fed Funds target range of 3.75% to 4%. This was not a surprise. The market had been predicting the Fed to not pivot away from their course in this meeting, despite the global liquidity concerns appearing in the financial system.
The central bank maintained their policy trajectory, but the statement did contain some softening of their hawkish tone. The sentence that jumps out is the following:
“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
“Cumulative” is the word people are focusing on. What does “cumulative” mean in this context?
The Fed is placing their meeting-to-meeting decisions within a broader scope of their tightening program as a whole since March 2022, as well as considering their globally important role. The reasoning Powell portrays in the press conference that followed is mixed. They want to place their decisions within a whole program, but also want to be data dependent on a meeting-to-meeting basis.
Overall, I think that their intention is to cause uncertainty. Uncertainty is key at the end of a hiking cycle. The Federal Reserve’s intention is to cause an economic slowdown to bring demand down to be in line with supply, but they can’t do that if the market is frontrunning the end of the hiking cycle.
That’s exactly what we’ve seen over the last several months. I’m sure Powell has mixed feelings about the stock market remaining resilient to their hiking, with the S&P 500 above where it was at the time of the June meeting’s hike. That was three meetings with 75 bps hikes, yesterday made it four, and yet the stock market was higher. He wants a “soft landing” — to achieve their policy goals without major damage to the economy — but at the same time their goal is to damage the economy. It’s a contradictory tightrope they are trying to walk.
The intentions of the last few hikes in the tightening program cannot be achieved if the market is frontrunning their slowdown, the pause, and then the eventual reversal. This is where the purposeful uncertainty comes in. If the Fed can send mixed messages and keep the market uncertain, the effects of their last few hikes can be more significant.
Charts
The charts on Fed Day were moving quickly. I delayed taking snapshots until 30 minutes after the Fed’s announcement, but the mixed messaging from Powell caused them to swing wildly. I won’t post them here because they are already out of date, but you can look at them on the slide deck for this episode.
The initial reaction was consistent across the board. Markets took the written statement, including the new language about cumulative effects, as a dovish pivot. Bitcoin spiked along with stocks and the dollar moved down.
However, as soon as Powell started to take questions at the press conference, and with his mixed messaging detailed above, markets reversed. Bitcoin and stocks headed down, the dollar up.
The one chart I will include on this companion post to the podcast is that of the 3-month and 10-year Treasury rates showing the most important inversion in the curve.
3-month and 10-year Treasury securities, in relation to the Fed Funds target range
What you can notice on this chart is the 3-month yield going higher than the 10-year yield. Also, the 10-year yield is awfully close to being inside the Fed Funds target range.
What I’ve been saying for months is that the Fed will continue to raise rates until the market forces them to stop. That force applied by the market will show up as longer term rates simply not obeying the Fed anymore and going lower, like we can see with the 10-year yield here.
The Fed is admittedly “data dependent.” They tell us they are followers, but if you want to know where the Fed is going, all you have to do is look at the yields. If government security yields start heading down into the Fed Funds target range, by the next meeting their choices will be: raise rates again and lose confidence that they are in control of anything, or pause, or even do a “mid-cycle adjustment” and lower them. Powell has done what he calls a mid-cycle adjustment before. Back in 2019, the first rate cut in July was downplayed as just such a move. Of course, it was then followed by massive cuts in the following months.
Diesel Shortage
There are other things happening in the economy than the Federal Reserve. There is concern about diesel shortages in the U.S. Reports are flying about there being only a couple weeks of diesel left in storage, and with the winter coming on, diesel and heating oil demand is set to increase.
To cover this story, I read from a great article by Tsvetana Paraskova. She covers the shortage and reasons behind it in great detail.
In short, U.S. refinery capacity is down due to some plants being switched to making biofuel and our imports from Russia are non-existent due to crazy sanctions.
On the show, we get sidetracked because I am not personally that worried about the diesel shortage. It will cause some pain, but the solution is through that pain. Higher prices will cause one of two things to occur — or both: higher prices will stimulate more production or higher prices will cause political changes to allow higher production.
There is an almost universal fear of higher prices and they are demonized as “inflation” at every turn. Of course, high prices aren’t bad if you are a producer. They aren’t bad in general, either. Prices are supposed to be neutral and give you information about the economy. The only price changes that are a net negative are those due to changes in the money supply. Since our current economic condition is not due to money printing but instead supply crises and bad government policies, the price increases are necessary to fix the problems today.
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Rafa Cordon to talk about Ibex is building Lightning Network payments infrastructure and what he thinks the future holds for bitcoin.
Q: It’s always interesting to see and have these conversations around the present day use cases for bitcoin because there is a level of privilege, especially Americans, get to have in regards to money. Then you turn around and you leave America and you start to really see how and why they need money in real time.
In these interactions or in your own personal experience, are there things you would like to see further developed or offered for people to be able to use their bitcoin?
Rafa Cordon: I think financial institutions getting onboarded onto bitcoin.That’s a big part of our like sales or commercial effort is not to onboard individuals or small merchants, but to onboard these big companies that have millions of users on their app and just adding bitcoin into an app like these.
There’s this tendency right now of this thing called super apps. A super app is an apps that does everything, like WeChat in China, KakaoTalk in Korea. There’s several super apps coming up in different countries. Our focus is helping these super app companies integrate bitcoin within their apps and that’s one single effort that you need to do to provide exposure to bitcoin for like five million, 10 million people in one shop.
That’s what we’re focusing on and I think more financial institutions are getting more comfortable with bitcoin every day, especially here in Guatemala, we’re next to El Salvador. A lot of institutions are asking about it.
That’s what needs to happen from a regulatory standpoint. There is no legal definition for bitcoin in a lot of countries. I think only El Salvador is the country that has a law that says what bitcoin is in a certain way. It needs more details, but there’s like a legal definition of what bitcoin is. I think we need to define what bitcoin is from a legal standpoint, not necessarily like laws passed by Congress, but things like jurisprudence, like having history of interpretations of what bitcoin is. Then there’s like a general idea from a legal point of view of what bitcoin is. I think that needs to happen in these countries for more financial institutions to get comfortable with it. But at the end of the day, it’s about the people, like how people are gonna see bitcoin, how they’re gonna use it.
We’re doing some user research with people who cash out remittances, and it’s been interesting on how you need to change a mindset. I think all of us Bitcoiners, we changed that mindset. It took us a long time, but we changed that mindset. So how can we change the mindset for millions of people in one shot?
For example, we created a mock bitcoin wallet and we were showing it to people who heard the cash out remittances. They received remittances and converted it to cash and one of the first things that came up is, the first pieces of feedback was like, “Hey, I don’t have to create an account here? Like I don’t have to put in my email and password?”
That was surprising. They were like, “Oh, I’m not sure I want to use it because I don’t trust it.” Because they’re used to creating an account just like a bank account, like a Facebook.
P: Oh, wow. That’s so interesting. Wait, so just repeat that.
Cordon: That was surprising.
P: I wanna make sure I understand what you’re saying. You’re saying that because people are so used to being KYC’ed (following know-your-customer regulations to give personal information), which I view as like a crime, the fact that when somebody wants to engage with financial services, they must fully dox themselves to whatever services they’re using. You’re saying that because your users didn’t have to do that, they were like, “I don’t know if I can trust this financial act.
Cordon: Exactly. Exactly.
P: Wow! Man, that is fucked up.
Cordon: It is. That’s what I’m talking about, like changing a mental model. Because a lot of people who receive remittances probably didn’t get a high school education or college or anything.
They’re used to creating an account. Most of them have a Facebook account or a Twitter account. “Any new service that I’m gonna use, I need to create an account for.” That’s the logical sort of reasoning and when you say, “Hey, you can just use it, receive bitcoin, you don’t have to create an account,” they’re like, “Uh, wait a minute, what is this?”
That was an interesting thing, so we’re thinking about how we can educate the user to break those paradigms that bitcoin enables. Those are the things. It’s more things that have to change sort of in people’s psyche or mentality or the way that they’ve been used to consume internet-based services into how Bitcoin works.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by John Carvalho to talk about building on top of Bitcoin, Bitcoin philosophy and what is happening with the Lightning Network.
Listen To The Episode Here:
Q: Is credit not “fiat” in nature or is there a way to create a healthy credit system through sound money? I feel like this is often debated and discussed and I don’t act or claim to know the right answer to this, I’m just genuinely curious if you feel as though there are components of credit that just make it inherently fiat.
John Carvalho: No, I mean, I think that’s kind of — I’m not trying to be rude or anything, but that’s just a word salad. They have definitions; these things had definitions. To you guys and everybody in the audience, if you want to try to have a tighter grasp of both the dynamics of Bitcoin and the economics that are relevant to it, read “Cryptoeconomics” by Eric Voskuil. There’s no Bitcoiner that understands these things on that level better. My interactions with him and reading with him helped me understand these things a lot more deeply as well.
He would describe Bitcoin as a market fiat. It’s almost like how some people would joke and say it’s a headless Ponzi. There’s no promise that you will get a trade value of bitcoin in the future for any specific amount.
Like bitcoin could be gone and nobody would be accountable. Bitcoin could be the most popular thing on Earth and you could buy a house with something that you only paid $5 for, but there’s no enforcement of the price by anything in the Bitcoin system. The only enforcement in bitcoin is just the quantity of them that you have in the system.
So you don’t know what you’re gonna get for your bitcoin until you try to sell it and it’s all relative to the person you’re selling it to. There’s no enforcement of the price. In a way, bitcoin itself is like a market fiat, a new type of fiat because there’s no controller, there’s no central issuer.
It’s something the market created to be able to have this concept of, and use this abstracted resource as a money. Credit and fiat are just two totally separate concepts. Credit is just simply saying [that] you have people that trust each other. So you have bitcoin for trustlessness. The market fiat, the trustless system, is simply saying, “If I want to have a unit of account where I don’t have to trust anybody to be able to use that, the ultimate store of value in the abstract, you have bitcoin. Everything else is credit.
You can say that fiat is a type of credit where they promise nothing. Fiat is just fiat by decree. You’re saying, “This is money.” You have no promise that the issuer will give you something for that money. Unless you wanna get philosophical and say, “Oh, they’re gonna give you an army for that money if you agree to have that money inflated or taken from you at will.” I don’t wanna get philosophical, so we’ll just say there’s no actual promise behind fiat, but credit is a trusted system. It’s acknowledging the fact that two people that trust each other can accomplish more than one person alone.
You can have a kind of singular nature. There’s kind of this dichotomy with humans, you have competition and cooperation. You wouldn’t have society if everybody was competing on everything all the time. When you have cooperation, you have society. Society is trust.
If you want to now cooperate with people over abstractions of economic concepts, you need credit systems. You need to be able to say, “I have one coffee shop. I have proven to my friends P over here that I can run a pretty great coffee shop and I want to have two coffee shops, but my profit margin to open two coffee shops would take me 10 years to open my second coffee shop and I want to open one next year.” And so if he says, “I think John can handle that, I’ll trust John with my money.” Now this is just a form of financing. Credit is like the minimum form of finance. It’s just saying, “I trust you for something in the future.”
I could say, “Ok. I am Starbucks. And I don’t wanna involve P,” I want to say to my customers, “Hey, I’m to sell coffees and I want you to buy them for the future at say a 20% discount.” And now you say, “Well I plan on buying coffees from John or Starbucks for the next five years. That’s a great deal and I’m gonna pre-buy them.” I can now take that and I can leverage that trust and I can use that extra money to open the second coffee shop as long as I can meet my commitments to the redemptions of the coffee.
So you can see how credit is not that much different than finance because you can kind of independently finance things if you take risks on leveraging your credit obligations.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Erik Dale to talk about how bitcoin can be used as a defensive weapon and the positive effect of Bitcoin’s incentives on the alignment of morals across humanity.
Q: I need you to defend your claim that Bitcoin is a weapon.
Erik Dale: You try to drag me into these “Jason Lowery” conversations.
P: Choose your words carefully, sir.
Dale: But this is the best way to become popularized in Bitcoin, right? If you wanna go on a lot of podcasts, just say something like this. So you know, Jason is a security expert … I’m maybe sort of a philosophical linguist and the way language shapes the way we see things and the way we understand and conceptualize things and so on.
I am definitely one of these people who use language in very broad senses. And so when I conceptualize Bitcoin as a weapon, weapons have two functions: To attack or to defend. Traditionally today, maybe the blurring of the lines is stronger than they have [been] and attack of aggressive weapons have had a huge advantage in the last 500 years with scaling. They have been able to scale much more than any other kind of weapon. Shields not so much, but guns, yeah. Bigger and bigger, stronger and stronger, all the way until we can annihilate the fucking planet.
And so you’ve had a very big imbalance between this defensive and aggressive weapon and what Bitcoin defends of course, the thing that it defends is the thing that people might want to take from you. The very motivation for war. The very motivation for conflict itself. So not only is Bitcoin defensive in the sense that it reduces the incentive to cause aggression or conflict, because potential profitability is much lower, it’s much harder to take the bitcoin, even if you take the country. But it is also a tool where if somebody does take your country, it is indeed something that you can bring with you to anywhere else or send to somebody else or whatever. And thus defend and protect that life energy, that life force, regardless of how tough your assailant might be. Of course, it’s not a perfect theory, and again this is not an angle that I’m particularly interested in. This weapon thing is just like I use it this much with much less thorough thought than some people have.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Knut Svanholm to talk about how Bitcoin can improve all facets of your life and the ways Bitcoin works as a weapon of peace.
Knut Svanholm: I realized yesterday while browsing YouTube, that Pink Floyd’s “The Wall” movie had a huge impact on how I view the world. I saw that when I was 16 and it was pretty profound. I thought it was pretty profound at the time. If you remember that movie, I like them because it was like no other movie. The storytelling is very different from a linear movie, but it starts with this guy whose father died in the war. And there’s a powerful line about, “That’s when Her Majesty’s Royal Command took my daddy from me. That’s so tough; some institution has the right to take someone else’s life and order them to die for a higher cost and what that does to the generations that follow. Of course after that, there’s the whole school system thing where you have this meat grinder factory mashing people together into voting cattle. So I think, in hindsight, that movie probably had a big impact on how I view the world and how I detest collectivism.
More than that, I grew up in the countryside with a liberty-minded father. I sailed the Seven Seas. I worked on a toll ship for eight years, and I saw a lot of different countries. Even when I was a kid, I lived abroad a couple of times: half a year in Mozambique when I was like 10 or 11 and in Tanzania and some other places. I guess I was less inclined to believe whatever national lies were around at the time.
Remember the 1980s in Sweden; we had no commercial TV channels and no commercial radio channels. It’s all state owned and it is still to this day, to a large extent. There’s a subsidy system that big media companies get the money from the state, and of course they don’t bite the hand that feeds them. So there’s that. But in the ‘80s, it was really cut off from the rest of the world. We got to watch cartoons once a year during Christmas Eve. That’s when we got to see Donald Duck once a year. So that’s how growing up in Sweden in the ‘80s was. It was pretty, pretty dark in hindsight. I guess all of those things influenced my thinking.
Q: I want to talk about time preference. For our audience members who maybe don’t understand this, could you help them understand what’s the difference between a high and low time preference?
Svanholm: A high time preference is when you prioritize quick satisfaction, when you don’t delay gratification. So if you’re robbed of everything you own, you adopt a high time preference because you need to, because you need food to survive and you need shelter to not — in most places — you need shelter not to freeze to death at night. So you become a high-time-preference individual that prioritizes short-term gains which also makes you prone to crime and bad decision making, short-term decision-making.
And a low time preference is the opposite of that. That’s when you think about the future and you think about forthcoming generations. You plan ahead and you build something for the future. I believe that a high time preference and a low time preference are on the same scale as fear and love because a high time preference to me is a fearful state of being. And what’s the opposite of fear? The opposite of fear is love. So adopting a lower time preference or being able to adopt a lower time preference because you have more capital and a more certain future that allows you to be more loving to not only your fellow human beings, but to yourself.
I think this is the killer app of Bitcoin, is that it makes us better human beings. It makes us friendlier to one another and also friendlier and more loving to ourselves. We can afford to take care of ourselves and take care of others to a larger extent. My talk was about this to a large extent.
It ties into something my grandfather said, which is, “That which you can do without, you own,” which is something that has been stuck in my mind ever since the first time I heard it. It’s the flip side of “Your possessions end up owning you.” Because if you can control your mind to the extent that you don’t crave things anymore, then you own those things that you don’t crave, in a sense. For instance, I would never buy a Lambo regardless of how much bitcoin I have or how wealthy I become. I don’t crave Lambos. In a sense, I own all the Lambos because I control my urges. I think Bitcoin is like a gateway drug to that insight.
Sooner or later Bitcoiners come to the realization that they don’t need that much shit in their life. Material things matter less and less the longer you are in Bitcoin. And it’s going to be very interesting to see how this plays out because in fiat land, as we know, in order to become rich or when you do become rich, you buy a load of shit lingling and crap that you don’t need, and I think this reverses on a post hyperbitcoinization. We’ll have an abundant future without over consumption because we won’t crave as much shit as we do now. I think that’s the real killer thing here.
Q: I wanna try to unpack that a little bit. There’s a question behind all of this, and I’ll start with a question, which is: Do you think people recognize that when they use fiat money, it inflates so regularly, so they need to be spending it constantly? Versus with bitcoin, I think all of us recognize the value proposition of spending our bitcoin today is far greater than if we were to hold it and then spend it in the future.
Svanholm: I don’t think they realize it on a conscious level, but that’s what it does to people. People who acquire assets and take on big loans win the fiat game. That’s how you win. You buy a ton of shit, including houses, for instance. Real estate is a shitcoin. I saw some metric from the U.S. that over half of the real estate bought in the U.S. last year was not for people to live in themselves, but for an Airbnb use.
So it’s becoming this, “You’ll own nothing and you’ll be happy” playing out in front of our eyes. But I prefer that “You’ll owe nothing and be happy” future of Bitcoin because just replace one letter and and you get the Bitcoin future, which is you accumulate capital first and then you consume — if you’re willing to part with your bitcoin. The longer you hold your bitcoin, the more you realize how valuable they really are.
That’s where I come to the second prediction about the future. I’ve experienced it even now because I’ve collaborated with a whole bunch of Bitcoiners and they’ve given me stuff. They’ve given me their services and physical stuff like FractalEncrypt’s art pieces, for instance. They’ve helped me with translations and proofreading and editing and animations and narration, you name it — all for free. We very rarely exchange satoshis with one another. That sort of leads me to the conclusion that us being nice to one another is just Gresham’s Law on a bitcoin standard because we find our stacks to be so valuable so we’re willing to stake our reputational capital instead. That is the less valuable coin if you compare the two. So I think there’s a connection there and that’s why I think that the necessity for money to exist at all goes down in a hyperbitcoinized world.
That’s the real scaling solution. Fewer transactions are necessary. Ironically, this “don’t trust, verify” attitude of Bitcoiners leads to a world in which we can trust one another more. If you compare it to how you interact with your friends and your family, you very rarely exchange money there, too. You help one another without even asking for it.
This is where I think Bitcoin is going or people in Bitcoin are going toward the state where we’re always incentivized to help one another. It’s not only the time-preference thing, but it’s also pumping our bags. We want Bitcoin to succeed, therefore, we want other Bitcoiners to succeed.
This is the main reason that we’re having this conversation right now. We all love Bitcoin and we want others to come on board and enjoy it too. And in the process, we enrich ourselves if we hold some bitcoin, so we’re incentivized to help one another and exchange favors for free.
The funny thing is that doesn’t go away just because we hyperbitcoinize; we still have that. The Bitcoin private key is a key to your heart, literally. We run this mathematical experiment in the back of our heads and we just become better people.
I just find that endlessly fascinating. I can’t stop thinking about it. It gives me hope.
“Fed Watch” is a macro podcast, true to bitcoin’s rebel nature. In each episode, we question mainstream and Bitcoin narratives by examining current events in macro from across the globe, with an emphasis on central banks and currencies.
In this episode, CK and I cover extremely important updates for the future of the global economy. First, we talk about the bitcoin breakout. Then we continue rolling through several more macro charts including currencies, U.S. Treasury yields, European natural gas prices and finally freight rates. Lastly, we listen to several clips from a China expert on what happened at the 20th Party Congress and what it means for the future of China.
Bitcoin Breakout
During the week of October 24, bitcoin made a nice move upwards, out of the triangle pattern we’ve been watching for weeks. During the show, I clarified that the lack of confirming volume on this breakout shows that it could be a fakeout and it could still roll over and go lower.
Watch the volume closely. If it does not come in and price hovers in this general area for a few days, the likelihood that this is a fakeout increases dramatically.
Bitcoin daily price chart shows the breakout to nearly $21,000
Currencies: Dollar, Yen, Euro, Yuan
DXY versus trade-weighted dollar
We start our currency discussion talking about the dollar index (DXY) versus the broad trade-weighted dollar index. As you can see, the DXY has moved a lot more, meaning that the weakest currencies influencing the change have been the larger ones, where the many other currencies included in the broad dollar index are slightly stronger. However, they are now both reverting.
DXY long-term range and breakout to Fib extension
DXY detail on current breakdown
If the dollar is weakening slightly, that means the other currencies must be strengthening slightly. Let’s take a look at the other major currencies.
The euro is back above parity with the dollar, exhibiting higher highs and higher lows — looking strong.
EUR/USD
Using an inverse chart to the euro chart above, the Japanese yen is 4% off its weakest and looking like it also wants to strengthen in the near term.
USD/JPY
Finally, the Chinese yuan. The rumors are that the Chinese government ordered intervention in the yuan to attempt to strengthen it against the dollar. The chart shows a big red candle in late September, followed by a week of apparent manipulation to peg the exchange rate. Immediately after that, the yuan continued its pattern of devaluation. Then, on the day of recording, there was another large red candle, likely the result of intervention. Whatever the reason, the yuan is stronger against the dollar today than last week.
USD/CNY
U.S. Treasury Yields
The next couple of charts CK and I look at were U.S. Treasury yields. Specifically, we look at the 3-month to 10-year inversion.
This is a very important inversion to the Federal Reserve, as it means a recession is imminent. As you can see below, it was 3 basis points negative at the time of recording, and at the time of writing it was negative 10 basis points. That’s a pretty strong inversion, and is likely getting Jerome Powell’s attention.
U.S. 3-month to 10-year spread
Below is my rainbow yield curve chart. I labeled each in their vertical order. You can see the 3-month/10-year inversion. I also added the fed funds rate and the future fed funds range after the upcoming FOMC meeting (if they raise 75 bps again).
Selected U.S. Treasury yields and range of the fed funds rate
On the show, I try to articulate my position which is that if the yields crash down, the Fed will not have a choice but to pause or pivot.
Insight Into The 20th Party Congress
The second half of this episode is dedicated to three clips from “Lei’s Real Talk,” a YouTube channel that reports on events in China. Lei is a financial professional turned independent journalist. She has a deep experience with China, Chinese culture, Chinese politics and censorship. I thought her insights were extremely valuable.
First, Lei goes over the additions made to the Chinese Communist Party’s (CCP) Constitution, which was voted on immediately after Hu Jintao’s public purging on the last day of the Congress.
The additions included:
Making Xi Jinping synonymous with the CCP; no one in China can question Xi without questioning the party itself.
Adding language about Taiwan, with caveats that can be interpreted any way Xi wants.
Shifting the CCP’s economic focus to the domestic economy and placing exports as a way to boost domestic supply and demand.
The second clip was a history lesson about how the CCP views Xi Jinping within their internal historical accounts (a characteristic of Marxism is rewriting history). Lei says thatthe top strategist to Xi compared Xi’s rise to power as on par with Mao in 1935 and Deng Xiaoping in 1978. These two events were framed as saving the party from collapse. Now, Xi is seen as “saving the party from collapse.”
At the end of this second clip, Lei gives her opinions of what this means for the near term in China. She concludes there will be more purges, much tighter economic controls and China will basically become “a super-sized version of North Korea.”
In the last clip, Lei answers a question from her audience about whether the CCP truly thinks these reforms will lead the country to becoming the global hegemon or if they are happy with No. 2 status. Her answer is blunt: The CCP doesn’t care about the economy. The economy is by far a secondary concern to the party and power. They believe so much in Marxism that they will push forward and try to impose it domestically and abroad.
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Marshall Long to talk about surviving the bear market as a bitcoin miner and how the current political scene will not be able to beat bitcoin miners into submission.
Q: I wanna stay on mining, but I wanna bring the World Economic Forum into the equation for a lot of different reasons that may be true and may not be true. The idea and concept of bitcoin mining seems to be one of the most triggering things for climate activists, for shitcoiners, for anyone who is just against bitcoin. Both the energy usage and proof-of-work mining in particular have been put on the stand. I’d love your thoughts from conversations around proof-of-work from the early days before Mt. Gox. What were the rationales/justifications for proof-of-work. And if someone was discussing proof-of-stake (PoS), how much did you bully them into eventually turning into the super villain, known as Vitalik Buterin.
Marshall Long: So early days, anybody that says they knew Bitcoin was gonna be a huge, major hit is a fucking liar. When I first started mining bitcoin, I was like, “Oh, I could pay off my CPUs and my GPUs by mining the nerd money. That’s awesome.” I didn’t know anything about economics or financial inclusion or any of the good stuff that we now know and love about Bitcoin.
So early, early days it was that. As far as PoS, people only used it as a way to trade shitcoins. Early days on Gox or BTC-e or any of these other exchanges — there was like NXT was like one of the first PoS coins — were just like a thing to try to arbitrage bitcoin against.
It wasn’t anything outside of that. And then papers started coming out where people were like, “It’s less secure, blah, blah, blah.” And then Vitalik didn’t get his way and get his code pushed through Bitcoin, which is a whole nother can of worms, and here we are today. Now that the golden boy has relinquished the proof-of-work dragon, we find ourselves where they try to get us on ESG. That failed miserably because most miners actually use a huge amount of green power.
BlackRock tried to put all these ESG mandates out, so all the other woke capitalists were like, “Oh, We gotta follow this ESG score shit.” That didn’t work. Then you got the war so BlackRock backpedaled on their ESG, so everybody else back pedaled on their ESG and now it’s all bitcoin mining is the devil because “Look at Ethereum, look what they did, why can’t you do it?” And the general answer is “Cuz we’re not fucking dumb.” There’s not much else to say about it.
P: Yeah. It’s pretty infuriating, for me at least. I keep expecting to become desensitized to the lies and the blatant misrepresentation of reality and the facts in order to push the bags of a very specific group of people — which is to say people pushing ESG and anti-Bitcoin narratives — but it just incenses me every fucking time.
Long: Almost every Bitcoiner I know, they don’t have a problem with ESG or green. We like to go outside. We like to breathe fresh air. There’s nothing wrong with that. There’s nothing wrong with treating people nice[ly]. And the governance part of running a company and not being a crap boss, all that stuff’s good. But when you try to leverage it to coerce people to invest in things that you want them to invest into, that’s the fucking problem. Nobody’s gonna say, “Oh yeah, I would prefer to melt the ice caps and mine bitcoin.” Everybody would probably prefer to be warm in the winter.
There’s no reason we can’t do everything and not be complete pieces of shit about it. The incentives of the fiat, woke nation are completely contorting their messaging and it’s just sloppy at this point. The White House report was a fucking joke. They didn’t even try, they didn’t even try.
They even interviewed Nic Carter and didn’t use any of his stuff. He just did a great podcast with Peter [McCormack] and was pretty interested to hear how they interviewed many other Bitcoin people and didn’t use anybody’s info.
They’re not even trying to cover it up now. It’s a clear, targeted attack. It really doesn’t have any scientific foundation, and the best part is as it starts getting cold in Europe, this is the part of the story where it’s a fuck-around-and-find-out type situation.
P: It’s maddening. As you say, it doesn’t have any basis in actual reality. The specific talking points are so divorced from what’s actually going on and they’re so insane. I feel like there is a trap that is very difficult for me to not fall into, which is when people are like, “Oh, Bitcoin uses 0.5% (or whatever the fuck it is) of the world’s energy.” It’s really hard for me to not debate on that claim. Do you run Christmas lights? Do you dry your own clothes in a dryer? Do you leave your lights on? Do you drive a car? All these things use way more fucking energy than Bitcoin does, just in the United States. But that’s actually the wrong frame. If you get down in the mud, you’ve already lost. The real frame is: If somebody is paying for electricity, if they’re paying for power or if they’re generating it themselves from a product that is considered waste from some other industry, you should be able to do whatever the fuck you want with that electricity.
We give that right to every person in America when they buy power from the meter, but for some fucking reason with Bitcoin, we try to moralize it. It’s because of moralization of stuff, people love to get so bent outta shape about issues that have a moral bent even when it’s totally wrong.
Long: If you zoom out and look at the rest of the globe, it’s a lot easier to see how none of this actually [matters]. I’ve heard Pornhub uses eight times the energy of bitcoin miners. I’d buy it; I’d definitely buy that.
The rest of the world doesn’t have issues like this. I recently went to Africa and started looking at ways that mining can help local communities and stuff like that. The reality is, the Western world’s problems are not Africa’s problems. If the whole global financial sector melts down and Russia bombs the U.S. or whatever, Africa’s just gonna keep doing its thing and will barely skip a beat.
When people start talking about this, I’ll bring up the story about people in Africa [who] don’t use that much power because it’s too expensive, not because they don’t necessarily have access to it. It’s just because it’s a Catch-22 cycle where the generators are only selling power for four to five hours a day cuz people only turn their lights on and charge their cell phones.
Because of that, they’ve gotta charge $.050, $0.60 per kWh. Because it’s so high, the community doesn’t use enough, and so it’s like this circle of terrible incentives. Mining can go in and really tweak those incentives back because there’s no central grid in Africa, so you can’t sell your power at any time as a generator, but if you attach a mining thing to it, now people are starting to get cheaper, more reliable power, and instead of cooking food with paraffin or cooking food with kerosene, which is like a really dangerous fucking thing to do — the amount of people who like get caught on fire for cooking with kerosene are kids who have lung problems from being around kerosene lamps and paraffin fires, it’s really high — now these people who are attached to mini grids that are mining are seeing their power bills reduced greatly, and now are starting to cook with hot plates, electric hot plates and stuff like this. Mining is directly impacting people’s quality of life with no filter. It’s just straight incentive. Everybody makes money. The community saves money. Not many people are gonna say, “Oh, that’s bad,” because most of the power is fucking hydro anyway, so there you go. When you tell that story, people shut up pretty quick.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Vijay Boyapati to talk about the “Bullish Case For Bitcoin” and how a bear market is where true conviction pays off.
Vijay Boyapati: I think we’re in a bear market. I think I called the bear market. I think I was a little bit early, but I think I called it somewhere in June or July. I thought the bear market was starting. I think it’s probably correct to say it started a little bit later in 2021.
I think what we’re seeing is a compounding of both Bitcoin’s natural cycle, which we’ve seen with these bear markets before with the macroeconomic picture. That explains why this bear market feels as painful as it does. I don’t really think this is — it doesn’t feel that long.
I’ve been observing Bitcoin since 2011. The longest bear market in my memory was the one from 2013 until the beginning of 2017. I thought that was the most painful and is still the most painful bitcoin bear market because it really did feel like, “Wow, this thing might not come back.” It just felt like crickets during the bear market. There was no interest in Bitcoin. Some of the big voices in the community had rage quit. Mike Hearn was a very well respected developer at the time and he fully rage quit. He wrote a piece in the New York Times like, “This thing is dead. I’m not interested in it. I’m out.”
There was very little interest anywhere. People weren’t talking about Bitcoin; it wasn’t being written about. That was a really tough time for people who believed in Bitcoin. I think this is actually very different. I think Bitcoin is now fully established as a macro asset. The price has dropped, yeah OK. It’s down to 20,000, but if someone had told you three or four years ago that bitcoin is gonna crash to $19,000/$20,000, you’d be like, “Whoa! That’s amazing! We’ve made it!”
This illustrates one of the aspects of money that people don’t really understand, which is path dependence. You can’t value money based on its cash flow because gold and bitcoin are monetary assets; they don’t produce cash flow. They get valued by a market process of people trying to determine — it’s a game-theoretic process — is this better money than all the other monies that are out there? Is it better than gold? Is it better than dollars? Is it better than silver? Is it better than Ethereum or all the competitors that are out there? That process works in these cycles that we’ve seen where people get really enthusiastic, and then run out of steam and then you have a crash. The point I’m trying to make about monetary assets is that they don’t have cash flow, so you have to measure their worth as a monetary asset against other competitors and along the attributes that make for a good money.
What are those attributes? They are things like visibility, portability, transmissibility — how easy is it to transmit — and most importantly, scarcity. Along this one critical attribute that all monies need, bitcoin is the best form of money that’s ever existed. This hasn’t changed. This fundamental aspect of what makes bitcoin good — or I think the best — money hasn’t changed. It’s just the market goes through these cycles of people trying to understand what it is and people getting over excited and then losing hope.
Each one of these cycles is defined by a group of people. In the first cycle, the group of people was very small. There were only people who could understand bitcoin: cypherpunks, computer scientists and maybe some hardcore libertarians. It was a very small circle of people, but each cycle that circle gets bigger and bigger and so we have gone through a cycle where we actually brought in a lot of retail investors, but there’s many more retail investors. There’s many more institutions. There’s many more nation states out there, and a lot of them got a taste of bitcoin. They may have given up and said, “Oh, this thing has failed,” but maybe they bought a little bit. Maybe they bought say, 1% of their portfolio, or maybe even $100 and they gave up on bitcoin, but those people are primed to come back in the next cycle.
I’ll give you one example of this: Stanley Druckenmiller is a very famous macro investor billionaire. [He’s] very successful over a very long period of time, investing in making macro bets. He owned bitcoin during this last cycle, and very recently I heard him say that he doesn’t own any bitcoin. Now that sounds bad: He’s given up on bitcoin. He has been mentally captured. He’s always going to pay attention to the price of bitcoin, and when bitcoin starts — as it always does in every cycle — slowly but surely coming back, he will be paying attention. He’ll be like, “Oh, it hasn’t died. It’s been stuck around $20,000,” or whatever it is, wherever it finds its plateau. “It’s been stuck around that level for a long time. It hasn’t gone away and it looks like it’s creeping up.” Now it’s $23,000, $24,000, $25,000, maybe $30,000. People like him will come back because they’ve been exposed to bitcoin, they’ve been mentally captured. They’ve had enough touch points where they’ve heard about it enough or they’ve invested a little bit and they’re gonna come back.
This is the same thing that happens every cycle. The same thing happened back in 2017 where a bunch of people got burned when they bought bitcoin at $19,000 or $20,000 and it dropped to $3,000 and they’re like, “Oh. Why did I do that? It was a terrible investment,” but then they were paying attention in the current cycle, which is finished, and they came back in because they noticed bitcoin. They knew about it; they knew how to invest. They were primed to put more capital in. So each cycle, the [amount of] people who are primed to come in is much bigger. The number of people who are ready to come in the next cycle, especially institutions and high networth individuals is gigantic. Some of the things that we saw, I think people got overly excited. They saw Michael Saylor coming in, they saw El Salvador and they thought this cycle is the cycle when we’re gonna have every high networth individual, every corporation, every nation state; they’re all gonna pile in.
I actually think what you got was just a taste of what we’ll see in the next cycle. I was really surprised to see El Salvador come in. I didn’t think a nation state would do what El Salvador did for a few cycles into the future and so what happened is what I expected, which is that most nation states will stand back and not do anything, but now I think many more of them are gonna be primed in the coming cycles to come in and do what El Salvador did. So I think there are many reasons to be bullish about bitcoin. None of the fundamentals have changed, none of the attributes that make bitcoin superior to all its competitors, none of that has changed.
The number of people who have been exposed to Bitcoin is much, much larger. What you have, if you’ve been around for a while, or you listen to people who have been around for a while is an incredible opportunity. The best time — if you are one of those people around in a bear market — to invest is right now. The best time to get exposure to learn more about Bitcoin, to do something for Bitcoin, to go and build a business in the Bitcoin space is right now. The people who are around now who are either building businesses, investing or learning about Bitcoin, they are the people who are gonna be most successful in the coming cycle.
What you don’t want to be and what always disappoints me is the people, friends and family I speak to, they only get interested right at the end of the cycle. It’s the same every single cycle; I’ve been through four of them now. People come to me at the end of the cycle and they’re like, “Tell me about Bitcoin. How do I invest in bitcoin?”
I’m like, “I’m really glad you’re interested in Bitcoin. Just be careful because Bitcoin is cyclical; it goes through cycles. Learn about investing in bitcoin; put a small percentage of your portfolio in there.” I usually think about it as they’re not really ready. They’re gonna come back the cycle after and they’re gonna get a little bit burned. I don’t want them to get too burned so they never come back. But if you are around now, if you are listening, there’s a huge opportunity. They don’t come around that often; it’s once every four years.
Eventually, these cycles are gonna stop when Bitcoin gets to complete, full adoption. And I think we’re only maybe three or four cycles away from that. So I am really excited. I think this is the best time to be interested in Bitcoin. None of the fundamentals have changed, so get out there and learn about it.
Get out there and invest. Get out there and build it. Now is the time.
Olympia Gayot, J.Crew’s head of women’s and kids design, knows a thing or two about color. Prior to joining J.Crew in 2010, Gayot attended the School of Visual Arts in New York City, where she studied fine art and painting. After graduating, Gayot painted commissions and simultaneously designed and styled for brands on the side.
Gayot brings her love of art and color composition into designing bold trousers, coats, and everything in between at J.Crew. “I’m always going to gallery openings or shows to keep myself interested in what’s going on and aware of what’s happening in the contemporary world,” Gayot said.
Not only does Gayot bring her artistic eye to design, but she’s also always thinking ahead when it comes to what’s going to inspire the next season’s collection. “I wish I could say it was one or two things that inspire me, but it’s really just so many different things, ” Gayot said. “It’s about connecting those dots together and creating a story.” In the latest episode of Who What Wear With Hillary Kerr, Gayot shares how she landed at J.Crew, the pieces that were her favorite to design, and more.
“Fed Watch” is a macro podcast, true to bitcoin’s rebel nature. In each episode, we question mainstream and Bitcoin narratives by examining current events in macro from across the globe, with an emphasis on central banks and currencies.
In this episode, CK and I cover a large chunk of the ongoing macro news. First, we update the situation in the U.K. gilt market. Then swing over to China to cover developments from the 20th Party Congress, the real estate market and the general investment climate. Lastly, we discuss the European energy crisis and current storage situation.
Charts And Bitcoin Sentiment
Each week, CK and I lead off with a few charts including bitcoin and other currencies to center our macro conversation from that perspective.
In the week of October 17, 2022, the bitcoin chart was showing continuing strong support in the range of $17,500-$18,500 despite all the geopolitical and global economic stresses happening. The stability of bitcoin relative to most other assets must be getting noticed by people managing large capital pools in the world.
Bitcoin daily chart
CK and I also spoke briefly about the U.S. stock market and its similarly stable performance. If you were only to listen and read the mainstream financial press and never look at the charts, you might be fooled into thinking stocks were much lower, or at least falling on a daily basis. However, as it stands now, the S&P 500 is abovethe June low.
S&P 500 chart
Below is my dueling dollar indices chart, showing the DXY which is heavily weighted toward the euro and yen, and the broad trade-weighted dollar index that includes many more currencies depending on their share of trade with the United States. Importantly, this includes the Chinese yuan and Mexican peso.
As you can see, the trade-weighted dollar performed better during the initial COVID-19 crash, but has lagged the euro-heavy DXY. What this means is dollar strength has become more broad-based in the last couple of weeks.
DXY versus trade-weighted Dollar
The last currency chart we analyze is the Japanese yen, which is crashing versus the dollar, reaching 150 yen to the dollar. In the broadcast, I mention that this is an example of the dollar’s current effects throughout East Asian currencies.
USD/JPY
United Kingdom Gilt Recap And Credit Suisse
Admittedly, CK and I have not watched the crisis in the U.K. as closely as other things, so we take an opportunity to recap the timeline of what’s gone on there so far.
The Bank of England (BoE) announced intervention on September 28, after the long-term gilt market sold off from roughly 2% yields to 4.5% yields in a matter of weeks. On earlier shows, I mentioned the importance of the end of the Q3 for financial stress, which is well known, but for some reason the BoE decided to begin quantitative tightening (QT) one week prior to the end of the quarter.
On October 3, the BoE adjusted their intervention size up to £10 billion per day, and an end date for the program of October 14. Most economic commentators did not think it would be possible to end it so quickly and in such a telegraphed manner. They were proven wrong, as the “no quantitative easing” program ended on the projected date. The latest is that the BoE will resume their QT attempts on November 1.
We also spoke about the interesting coincidence of the emergency swap lines between the Federal Reserve and the Swiss National Bank (SNB) that took place during the peak of the BoE’s troubles. I speculated that this swap line could have served as an obscured bailout of these troubled financial institutions in London, routed through the SNB.
The crisis seems to be under control for the moment, but the damage may have been done. In these financial crisis episodes, confidence is broken and despite the acute panic being over, the market is shifted to a more fragile state of mind going forward. This can lead to the crisis popping back up after a few months.
China’s Economy And The 20th Party Congress
I did not pull any quotes for the show from Xi Jinping’s two-hour opening speech. I provided a link to the full transcript and I encourage people to read it for themselves. It is eye-opening to see the rhetoric, the devotion to Marxist-Leninist communism and the hubris of authoritarian central planners.
What I did cover directly in the episode was a blog post by BlackRock and a tweet thread by Michael Pettis, confirming some of my views on the state of China today and their path in the near term.
BlackRock’s words are important as they represent what large capital pools think about China. From their post, we learn that Chinese export volumes are likely to be down 6% this year and next, although in nominal dollar terms they will be up 3%. The authors also note the horrific demographic situation in China and say it precludes the needed domestic growth to counteract the effect of shrinking exports. In a country with massive debt and demographic issues, this is not a recipe for economic growth.
“Recession is looming now for the U.S., U.K. and Europe. But this time, China won’t be coming to its own, or anyone else’s, rescue.”
Michael Pettis, Senior Fellow at the Carnegie Endowment and professor of finance at Peking University’s Guanghua School of Management, seems to agree with the direction of the Chinese economy in the medium term. His tweet thread exposes the no-win situation faced by the Ministry of Finance in China.
The Ministry of Finance said that state-backed entities are strictly prohibited from purchasing land by raising debt. Pettis agrees with this prohibition, because “local governments [reversing] the decline in land-sale revenues by setting up SPVs to buy land from themselves [as] a way for them to borrow money and pretend the proceeds were actually land-sale revenues.”
Pettis, however, emphasizes the same no-win scenario facing the Ministry of Finance that the BlackRock comments did. Namely, that Beijing has no room to stimulate. They are cracking down, but not offering any help.
“The MoF stopped them from faking revenues without addressing the reasons they had to do so.”
Pettis continues:
“Beijing must know how difficult the circumstances are that local governments face, and yet isn’t doing much to help. I think we are probably seeing the beginning of what over the next few years will be a very contentious relationship between local governments and Beijing.”
This does not bode well for Beijing and Xi, especially as the U.S. rhetoric, sanctions on chip manufacturing and arming of Taiwan is picking up pace. There is a real existential threat to the Chinese Communist Party appearing.
European Energy Non-Crisis?
We had Andreas Steno on the show a few weeks ago, because I wanted to hear his sober analysis of the European energy crisis. He was the one analyst I saw pushing back against the panic narrative.
He is back in the form of a tweet thread this week and on the show I quickly read through the highlights. They are:
Natural gas storage is nearly full in Europe way ahead of schedule.
Energy prices are rapidly coming down to normal.
There is a huge backlog in liquid natural gas ships off Europe’s coasts waiting to unload.
What struck me about this analysis is how much it reminded me of the April 2020 oil futures crash. At the time, oil storage was full and tankers were loitering around the world — also full. There was simply no place to take delivery of the futures contracts, so holders had to sell at any price, causing a flash crash to zero.
Could we see the same thing in Europe this month? Not quite yet, but it is at least a possibility. What a clown world turn of events. From massive record highs to a zero price being a possibility in a matter of months.
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Joe Hall to talk about Bitcoin Amsterdam and his experience seeing bitcoin being used in Africa.
Q: Could we discuss what were those things that you were like, “No, Bitcoin doesn’t work because of this,” and then it took you having that experience in Africa to then see and shed those biases?
Joe Hall: That’s a really interesting way of putting that question. So how did I undo my biases? I think part of it is getting burned. We’ve all been a little bit burned or rugged by shitcoins. Like many other Bitcoiners, I shitcoined first. There are still some tokens in some wallet somewhere that I can’t sell because there’s no liquidity because it’s just been completely rugged to zero. That’s the personal experience.
I’m a journalist, so I’m all about primary sources. Seeing my driver, for example, which was the example I gave [at Bitcoin Amsterdam], he’s the first guy to really show me that Bitcoin works and it’s used in this way. We all talk about censorship-resistant money and money that can’t be debased, money that can’t be stolen. As long as you’ve got your seed phrase, you’re set.
This guy called Giam, he used to be our driver at Bloomberg. He would drive us to work every day. We used to have quite long chats about Bitcoin and crypto, and he effectively orange-pilled me. The big thing for him was that the government can’t steal the money from him, whereas they can easily steal the money that’s under your mattress or they can debase your currency as they’ve done with the West African Franc or the CFA in the past. Alex Gladstein did this amazing piece about the West African Franc, which is like this horrible colonial hangover currency.
The French sort of concocted when they gave back power to their colonies in West Africa. Basically, the notes are printed and designed in Élysée in France, which literally means that some white guy sat in some university in France and he’s drawing palm trees and coconuts thinking, “Oh yeah, this is what we should put on the note in West Africa.” It’s like the most fucked up, racist thing you can imagine and this is still what is on the paper. It’s just hilarious when you think about the fact that they are printed in Paris and shipped over to West Africa.
This is just one example of how messed up this whole currency situation is. It’s one of the things that really riles me up about money in general, fiat-backed currencies. In the West, we have it bad, but in a lot of emerging markets around the world, the situation is deplorable and we must do more to help people realize what is money and why bitcoin is a money in which we can opt out of the current horrible, controlling system.
The thing about Bitcoin and crypto is it’s evidence based. Do you know Paco in India, the bitcoin runner? He’s the guy that’s traveling around the world using only bitcoin. He’s currently on his 22nd country and he’s trying to hit 40 countries in 500 days. He’s awesome. I catch up with him regularly just to see what his stories are like and we have quite similar interests. He was saying today that the Bitcoin community in Africa is massive. It’s one where people realize that bitcoin is a natural currency. You can buy a beer with it, you can pay a taxi with it, you can do all these sorts of real things. You’re not gonna buy your beer with dogecoin, are you? Yes, people do it for the stunt, but it’s not like you’re gonna see a “doge accepted here” sticker around the world. People are just gonna laugh at you.
The fact that it does have this first mover advantage and the fact that it does have this critical mass adoption, that there’s no real going back from that. Despite cardano’s best marketing efforts, particularly in Africa where there’s a huge cardano community. It’s awful. They’re like buying up universities and being like, “Oh, we’re gonna put your ID on the blockchain.” The guy’s an excellent marketer. Charles Hoskinson knows how to build a business. But you got to ask, “Why can’t we do this all with Bitcoin?”
