While I was away on holiday, I read a book called “Moneymakers – The Secret World Of Banknote Printing” and it was one of the most fascinating reads I’ve enjoyed this year.
It’s a story about a company that was contracted by many of the world’s central banks to print their money. A company so secretive that many haven’t even heard of it and one that chose to be paid in gold instead of cash.
I learned so much about the world of banknote printing from this book that I decided it was well worth a dedicated video – and that is exactly what I have for you today!
Sit back, relax, stack sats and enjoy the video!
📊 My Personal Portfolio 📊
I sold a bit of my ETH and BTC on the back of the rally this week and am keeping it in USDC. We have the FOMC to look forward to this week, so it would be good to have some dry powder should there be any strategic buying opportunities that open up.
Updated portfolio is:
ETH 38.14% | BTC 34.66% | SOL 7.28% | ATOM 6.15% | USDC 5.87% | DOT 2.26% | MATIC 1.49% | ADA 1.21% | RUNE 1.18% | NEAR 1.01% | INJ 0.74%
📈Guy’s Forward Guidance 📈
Get ready for volatility. The Federal Reserve will be announcing how much it plans on hiking interest rates this Wednesday. Investors currently believe there is an 80% chance that the Fed will raise rates by another 0.75%. Consensus is the perfect recipe for volatility, because if the Fed does anything else other than 0.75%, then the markets will pump… or dump.
What’s concerning to me is that nobody seems to be pricing in the possibility of a 1% increase. This would be unprecedented, but it wouldn’t be without reason. The jobs market continues to be extremely strong, which doesn’t make sense. What makes even less sense is that Q3 GDP in the United States was somehow up 2.6% after two negative quarters.
If you watched our video about the upcoming recession, you’ll know that two negative quarters of GDP is the technical definition of a recession. It’s believed that the Fed will start to pump the brakes if a deep recession sets in. The surprisingly positive GDP print could embolden the Fed to do the unthinkable. This seems to be what has the markets on edge.
That said, the foreign exchange market seems to be sending a different signal. The US dollar has been dropping against major currencies over the 10 days or so, and this is part of what has fuelled the rally in the stock market and crypto market. Money moving out of the USD and into other assets and currencies suggests the Fed is past peak hawkishness.
Another important macro factor to be on the lookout for is the midterm elections in the United States on the 8th November. It’s safe to say there’s going to be lots of volatility leading up to the actual date. That’s because there’s a lot of uncertainty about the outcome of and reaction to the upcoming election, and we have yet to see a truly head-turning October surprise.
One thing I’m going to be watching closely this week is Twitter – not the feed, but the company. As I’m sure you’ve heard, (how could you have missed it?) Tesla CEO Elon Musk has officially taken control of the social media company. He’s fired some of its top brass and sent in software engineers from Tesla to assess just how much Twitter was suppressing speech on its platform.
Besides the effects that an open social media platform could have on the upcoming elections in the United States and elsewhere, Elon’s acquisition of Twitter is likely to have a huge impact on cryptocurrency. Twitter developers coincidentally announced that it will soon be possible to buy and sell NFTs through tweets, and this is definitely the tip of the iceberg.
Honestly, I just want him to get rid of those damn Twitter bots!
🤔 Energy Crisis: Part 2 🤔
Not sure if you saw the news, but natural gas prices in Europe recently fell off a cliff. In the United States, petrol (ok, gasoline) prices are likewise falling (at least according to the White House). These are just two of many recent statistics which suggest that the cost of energy is starting to come down. However, this is just the prelude to part two of the energy crisis.
Let’s start with Europe. The reason why gas prices have suddenly fallen is basically because the autumn has so far been much milder than expected. This means that Europeans haven’t had to heat their homes nearly as much as they might have done. Yet the gas imports continue to flow, to the point that there’s no available space to store them. It’s almost the same story as pandemic oil prices.
The thing is that this reprieve is temporary. Winter will eventually arrive, and the demand for gas will spike. If the winter ends up being colder than expected, then demand will spike to the point that Europe could run out of gas, even with full reserves. Something tells me Europe’s weather modification machines are working overtime to prevent this from happening.
Conspiracies aside, it’s a similar story in the United States. Gasoline prices have only been falling because the current administration continues to pour gasoline from the Strategic Petroleum Reserve (SPR) into the US economy. This is keeping inflation artificially low leading up the midterms. However, the US government will eventually have to start refilling the SPR.
When it does, then it will be faced with the same supply and demand dynamics as before, but worse. OPEC recently announced it would be cutting oil production by 2 million barrels a day. At the same time, there’s a chance that China could finally end its zero-covid policy. If that happens, then it will bring an additional 2-4 million barrels of oil demand online.
There’s also a chance that the 10 million barrels of oil being produced by Russia each day could be disrupted by the price caps that have been discussed by Western countries. Things seem to be improving on that front, with the current US administration realising that a price cap won’t be possible to enforce, as China and India are refusing to play ball.
To put things into perspective, around 90 million barrels of oil are being produced each day. Meanwhile, global oil consumption sits at around 95 million barrels of oil per day, and that’s before you factor in all the stuff I just mentioned. Being short 10 million barrels of oil per day would of course cause oil prices to skyrocket. It looks like that’s the direction we’re headed.
So, don’t bet on the central banks dropping interest rates any time soon…
⚡️ Lightning Network Updates ⚡️
The Lightning network is something that I’ve been keeping an eye on over the years. If this is the first time you’ve heard of it (probably not), it’s a state channel scaling solution for the Bitcoin blockchain. Transactions on the Lightning network are typically faster and cheaper than those directly made on the Bitcoin network.
Over time, I’ve seen Lightning being hailed as the one-stop solution to Bitcoin’s scaling problem and I’ve also seen it called “vapourware” with no real users and less than optimal usability. While I reserve my judgement on the same for another day, let me point out that October has certainly been eventful for the Lightning Network ecosystem. Absolutely ‘electrifying’, so to speak… Sorry.
Just earlier this month, we read reports of a major bug wreaking havoc in the LND implementation of Lightning. The bug resulted in users being unable to open or close Lightning channels for a few hours, effectively freezing funds on the network. It was discovered when researchers, who were testing the limits of the Bitcoin scripting language, created a large multi-sig Taproot transaction that required co-authentication by numerous parties (998 out of 999 signatures to be exact!)
This was a huge leap when you consider that Lightning users typically open channels using just 2-of-2 multi-sig transactions. While the 998-of-999 multi-sig Taproot transaction was accepted and later mined in a mainnet Bitcoin block, it resulted in the LND implementation becoming confused when calculating what the most recent Bitcoin block was. This put LND temporarily out of sync with the Bitcoin mainnet.
Nothing to fear though, as there was no loss of funds and the issue was fixed in a few hours when Lightning Labs released a patch update titled ‘version 0.15.2.’ However, it does bring to attention the fact that the Lightning network is still far from complete and may not quite be ready for mass adoption. Or could it?
Well Cash App, Block Inc.’s mobile phone payment-processor, certainly seems to think so. Last week, Cash App announced that it was adding support for transactions via Lightning. This integration has brought over 40 million potential new users to Lightning – more than 5 times the population of El Salvador!
That said, I must point out that Cash App was already providing Lightning network compatibility for Bitcoin transactions in a limited capacity – customers were able to pay invoices by scanning Lightning QR codes. The new integration expands this by enabling all Cash App transactions using QR codes to default through Lightning. However, for the time being, the feature seems to only be available to US customers, with the exception of residents of New York state.
However, Cash App isn’t the only one helping spearhead the growth of the Lightning network. Stone Ridge, a multi-billion-dollar asset manager and the parent company of NYDIG, just launched a startup accelerator program called “Wolf” focused on Lightning. The program will see participating teams receive $250,000 in funding, as well as advisory services from employees at Stone Ridge and NYDIG. Some of the possible applications coming out of this incubator could include integrations and user services that will increase the reach of Lightning, and payment rails using it as the supporting technology.
Speaking of which, last Wednesday crypto firm Kollider publicly launched its derivatives exchange, which uses Lightning. The derivatives exchange features two versions; the simple-to-use Kollider Lite and the full-feature interface Kollider Pro. The exchange will allow users to open and close their positions on the exchange directly from their Lightning wallets. This move, yet again, seems to be bullish for the Lightning network.
I suspect we will see much more development on Lightning as the bear market wears on. Perhaps by the time I next speak of Lightning we’ll have a definitive picture of whether it’s here to stay, or whether a superior competitor might steal its… thunder. Sorry.
🔥 Deal of The Week 🔥
Winter is coming in the northern hemisphere and there is nothing better than snuggling up with some awesome crypto merch!
👉 Visit our store and stay warm this winter with some tip top crypto merch!
🔮 Video Pipeline 🔮
- Fidelity Report: Institutions are loading up on crypto!
- Instagram Fact Checking CBDC Memes
- Housing Market: Is The Bubble Going to Pop?
- Demographic Decline: Elon’s Warning to us all!
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ KuCoin vs SwissBorg 2022: Top Crypto Exchanges Compared
✅ Optimism Review 2022: Ethereum’s Ultimate Scaling Solution?
That’s all for this week. Thanks for all your support during these bear market times. Regardless of what happens, we’ll be here providing you with the crypto content you deserve.
Guy your crypto guy