Did you know that China’s GDP could overtake that of the USA’s by 2030?
That’s thanks to the current growth trends we have been seeing over the past few years. However, can these numbers really be trusted? Is China’s GDP really 73% of that of the USA?
Well, that’s what I will be exploring in my video today. I will be peeling back the curtain on those Chinese GDP numbers and analysing exactly how their data is collected. I will also be diving into numerous research reports that have studied China’s questionable statistics over the years.
These numbers have really important implications for transparency in the global economy and I hope that my video today can shed some light on them.
You can watch that video here.
📊 Main Portfolio 📊
Given how deep we are in this bear market, I have decided to close out my position in some altcoins and decrease my exposure in others. I think that we are in for a longer period of uncertainty and in these times, I prefer to be top heavy in BTC & ETH. I will also move some of the proceeds of that sale into stablecoins.
I might make even more portfolio moves due to market conditions. If you want to be kept up to date with that then jump into my Telegram group!
BTC 36.89% | ETH 33.64% | USDC 7.79% | SOL 5.26% | DOT 4.95% | ATOM 2.71% | HNT 1.73% | ADA 1.70% | RUNE 1.50% | NEAR 1.26% | FTM 0.72% | MATIC 0.71% | LINK 0.64% | INJ 0.51%
📈 Thoughts on Market 📈
This is what they call a ‘deleveraging’. In simple terms, everyone who borrowed to invest in crypto – be it by taking out fiat loans with their bank or crypto-backed loans with DeFi protocols – are getting absolutely rekt. Those who borrowed from exchanges to speculate on the short term price action of crypto got even more rekt, with at least $1.3 billion lost.
Under normal conditions, these liquidations wouldn’t do that much damage to the crypto market, because there would be enough buyers around to absorb the sell pressure – “buy the dip”, as they say. If you watched our video about the Federal Reserve’s financial stability report however, you’ll know that all markets are missing buyers as everyone HODLs fiat.
Fiat HODLing is finally starting to happen in crypto too, and I say finally because BTC is generally considered to be the safe haven (relative to altcoins at least). This is why it took me by surprise when Bitcoin dominance suddenly dropped, without altcoin dominance increasing. CoinMarketCap reveals a flight to fiat – to stablecoins like USDT and USDC.
This is the first time I’ve seen this in a while, and it tells me that investors are expecting a lot more pain in the crypto market. Many were expecting the previous bull market highs of 18-20k to hold for BTC, but we sliced through 20k like butter. Some are arguing that this is because we were already below the previous high when you factor in inflation.
If you’re wondering why the crypto market is collapsing, you probably missed our video about macro factors to be on the lookout for. In this case it’s the Federal Reserve raising interest rates by 0.75%, the highest rate hike since 1994. The markets also seem to believe that the Fed will be more hawkish than it’s letting on, leading to losses across the board.
If you’re wondering when we could finally see the volatility start to decline, I’m afraid this is unlikely to happen anytime soon. It looks like regulators are trying to capitalise on the crypto crash by using it as justification for a crackdown. The irony of course is that everything else is crashing too, yet you don’t see calls for stricter regulation there, do you?
Crypto investors also seem to be on edge about the possibility (if not the likelihood) that the SEC will reject Grayscale’s spot Bitcoin ETF application. The decision date is set for July 6th, and a rejection could dash the hopes of a spot Bitcoin ETF being approved for the foreseeable future. Conversely, an approval could keep the crypto markets afloat.
What I’m sure we’re all wondering now is where exactly the bottom is, and this is a question I will be answering to the best of my ability later this week. All I’ll say for now is that I think the bottom will be marked by some sort of catalyst – be it a spot Bitcoin ETF rejection or some kind of regulatory crackdown. Regardless, the bear market is likely to last for a while.
🔨 The Third Option 🔨
Given how much macro factors have been moving the markets these days, I’ve found myself listening to the Blockworks Macro YouTube channel quite a bit. They have some of the most interesting guests and discussions of any podcast, and though what they discuss can and often does fly over my head, there’s an interesting pattern that I’ve noticed.
Basically, the macro guys are falling into one of two camps: the Fed will continue raising interest rates until something breaks, at which point it’ll be forced to reverse course. Or, the Fed will continue to raise interest rates regardless of what happens in the market or the economy, because tackling inflation is the number one issue and will remain so indefinitely.
The chances are that you fall into one of these two camps too, and for a long time I was torn between which camp I fall into, because I’m not convinced that either of these views are correct. As it so happens, a discussion at the World Economic Forum’s Davos conference a couple weeks ago (which we covered in a video, by the way) seems to suggest there is a third option here.
As I just mentioned, the Fed is fundamentally raising interest rates to fight inflation. If inflation comes down, then the Fed will stop raising interest rates, or possibly even start lowering them again. This will cause all markets to rally, including crypto. Right now the consensus is that inflation is going to stick around for years, but again, I’m not convinced.
This is for two reasons. The first reason is that as time goes on, more and more of the inflation we’re experiencing is not as a result of the Fed’s money printing, but a result of factors that are causing issues on the supply side. The two elephants in the room here are the war in Ukraine, and the pandemic we’re still technically in (with autumn approaching).
As I mentioned in last week’s crypto review, there is intense pressure on politicians around the world because of inflation, and this is starting to translate into pressure for them to resolve the war in Ukraine and convince the WHO to declare an end to the pandemic. An inability to do so almost certainly means serious instability elsewhere in the world.
Lo and behold, many Western media outlets are starting to report that Western leaders are pressuring Ukraine’s president into negotiating with Russia to end the conflict.
This brings me to the second reason, and that’s perception. Again, right now the consensus is that inflation is going to stick around for years. This is arguably contributing to inflation today as it leads to behavioural changes in preparation for such a future. But what happens when two primary sources of inflation are suddenly removed from this assumed roadmap?
Obviously, individuals and institutions alike will adjust their behaviour knowing that the inflationary forces that were initially forecast to remain have suddenly been removed. In other words, we could see inflation decline rapidly almost overnight despite the fact that the fundamentals haven’t changed yet, simply because of the drastic change in perception.
This in turn would cause the Fed to stop its interest rate increases or even bring interest rates back down, which will bring life back to the markets without the fear of hyperinflation. I must stress that this is speculation based on circumstantial evidence, at least for the time being. I reckon it’s best to prepare for the worst, as many have already failed to do…
🤯 We Have Come Full Circle 🤯
A few days ago, I tweeted about how crypto has come full circle. What was once meant to be the solution to the reckless status quo of TradeFi casinos has become just another gamblig den. Like Obi-Wan discovering that Anakin has joined the dark side, crypto was supposed to fight Wall Street greed – not join it!
What has become increasingly clear over the past few days is that the institutional adoption that we thought would tame the crypto market, has in fact made it a lot more risky. Large VCs, hedge funds and lenders have taken outsized risks and levered themselves up to the neck. They have amplified this further by their interconnected nature, which has led to collateral damage throughout.
This was perhaps best illustrated this week with the collapse of Three Arrows Capital. It was one of the most well-known names in crypto. It had over $10 billion in AuM and had invested in hundreds of companies and projects in the crypto space. Not only that, but it also engaged in risky DeFi yield-generating strategies, levered crypto bets and other market-making activities.
So trusted was the firm that other participants used its trading accounts and crypto protocols used it to manage their treasuries. What they didn’t know was how much leverage 3AC was taking on and how quickly the house of cards would collapse. It is the crypto equivalent of Lehman Brothers with too much “AAA Rated” mortgage debt on its books.
But, what is scaring most people (including myself) is the risk of broader contagion that could come from 3AC’s collapse. It’s hard to know exactly who was exposed to it and how these companies will have to adjust their positions based on this. How much further could the rot spread?
I hope to be doing a deep dive into the 3AC collapse in the coming days. There are so many layers to this story and it keeps evolving every day.
Now, having said all of this, there is one silver lining to this saga and that is that it was caused by the greed of men, not by the underlying technology. Bitcoin’s fundamentals remain unchanged. Open and transparent DeFi protocols have continued to function in a completely permissionless manner. Onchain liquidations are tough to watch, but at least they function as intended.
Builders are bruised, but they will get back to doing what they were born to do. 3AC will be a sacrifice, and so will those who it drags down with it. But, it’s a sacrifice that will help remind us exactly why we started this crypto journey in the first place.
🔥 Deal of The Week 🔥
So, if you want to take control of your crypto and not run the risk that centralised entities can freeze your funds, you want to take control over your private keys. There are many free wallets you can use – I’ve done a video on my top picks here!
But if you are looking for the safest way to store your coins and tokens then you’ll want a hardware wallet. I’ve already talked about my top 5 favourite hardware wallets on the market!
If you just want to know which one I personally use, that would be Trezor!
👉 Take back control of your crypto by getting a Trezor!
🔮 Video Pipeline 🔮
- Leaked US Crypto Regulations – What Do They Say?
- Polkadot Update – What’s Up With DOT?
- The Celsius Situation – What Is Going On?
- Where Is The Bear Market Bottom?
- Three Arrows Capital: Crypto’s LTCM
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Serum Review: Solana’s One-Stop DeFi Toolbelt
✅ Bridge Mutual: Insurance for your Crypto
That’s all for this week folks. I know the markets have been really bloody this week and so many members of the crypto community are feeling the pain.
However, we need to remember that it’s always darkest before the dawn and when that new crypto dawn does finally come, those that have brushed up on their crypto knowledge are best placed to reap the rewards.
Guy your crypto guy