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- đź’ˇ If you missed Q1, here's your 90-second summary
đź’ˇ If you missed Q1, here's your 90-second summary
PLUS: Banks run continue & ASEAN countries dump USD/EUR
Alex M.
April 03, 2023
🧙‍♂️
GM everyone. This is 2036, the crypto newsletter that pays you đź’¸
A new quarter has started. But Q1 was one for the history books.
A lot happened. And it’s all setting us up for Q2.
Here’s a quick run-down of everything you need to know.
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1/ US banks collapse
On Wednesday, March 8, Silicon Valley Bank makes an announcement to their shareholders about their cash position.
On Thursday, March 9th, depositors pull $40 billion out of the bank.
By Friday, March 10th, the bank is dead.
Panic follows. In the span of just two weeks, Silicon Valley Bank, Silvergate, Signature, and Credit Suisse all go under.
2/ The Federal Reserve goes haywire
Two days after the collapse of SVB, the Federal Reserve announces emergency money printing for domestic banks.
Daddy Powell making it rain
The scope of potential money printing is set at $2 trillion. But as 186 banks are found to be as screwed as SVB, that number skyrockets to $18 TRILLION.
When $500 billion gets wired out of banks in a week, banks borrow over $150 billion to fill the gap - the most since the financial crisis of 2008.
The Federal Reserve prints an additional $400 billion, reversing most of the Quantitive Tightening they’ve done over the last 18 months.
3/ The panic goes international
On a Sunday when no one is paying attention, the Federal Reserve announces it will print money for foreign banks.
At the same time, they reassure everyone that “US banks are resilient.”
In total, 5 banks have collapsed, including Credit Suisse.
Deutsche Bank seems to be next. Then, American brokerage firm Charles Schwab.
The Federal Reserve reaffirms that US banks are resilient.
The next day, the US Treasury announces “further actions may be necessary.”
The US treasury in March
4/ US lawmakers crack down on crypto
Signature, Silvergate and Silicon Valley Bank were all crypto-friendly banks. That means crypto companies have to find new banks to work with.
But the US government is on a roll.
The SEC sues Kraken and Paxos, two enormous players in the crypto ecosystem.
Coinbase gets a Wells notice and Binance gets slapped with a lawsuit by the CFTC.
Elizabeth Warren announces she’s building an“anti-crypto army.”
this is actually real.
5/ Hyperinflation or deflation - no one knows
Balaji Srinivasan - one of the smartest minds in crypto - calls for hyperinflation in the US and bitcoin to $1M within 90 days.
Raoul Pal says inflation will collapse to less than 2% in May and go negative in the summer.
Most people, however, seem to agree that the Federal Reserve will have to lower interest rates sometime this year again.
This is good for all risk assets - including bitcoin.
5/ Bitcoin’s living its best life
Bitcoin’s in 1989, thoughts short and hair long. Caught somewhere between a bear and bull market a.k.a living its best f*cking life.
Bitcoin ends Q1 as one of its biggest winners - up 65%.
There are multiple reasons for this:
The Central Bank printing money is good for all risk assets. Bitcoin is the ultimate risk-asset.
Bitcoin is a safe haven against bank troubles. When SVB collapsed, bitcoin kept going higher.
Bitcoin is a safe haven within crypto itself. With lawsuits left and right, bitcoin is the one crypto asset that’s relatively safe from regulators.
Bitcoin NFTs are having a moment.
On top of that, bitcoin’s hashrate - a measure of how safe the network is - hit an all-time high last weekend.
A.k.a, last quarter, bitcoin really got to shine.
And if Q2 offers us:
more money printing
more bank troubles
more bitcoin NFTs
… then it could keep shining all summer long.
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