Bitcoin Observations
This is NOT investment advice.
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Biggest News of the Week
Lightning Labs literally built the Lightning Network implementation LND and has played an immense roll overall for a long time now. I've never observed CEO Elizabeth Stark to be anything but professional, prudent, and way ahead of the curve but waiting politely and patiently for others to catch up. They seem to think USDT on Lightning is a very big deal. I agree. Not something I personally expect to become some type of overnight miracle. Methodical and persistent traction and adoption.
What are some key things Stablecoin users want/need? Speed and ease of use. Tether selected the Lightning Network among all the other options.
I look at this type of "news" similar to the way I looked at FASB and SAB 121. Nothing will be visible tomorrow morning or next month. More like a looming tsunami gaining momentum in the background.
Bonus Time: So now we know for sure why Tether has been hammered to hell and back with FUD by the "experts"?
Think about it. DC, Wall Street, and Silicon Valley love Eth because they can and have co-opted it. Circle and this crowd do not want Tether all in on BTC.
Mining Experts: Help us out. Net effect of this over time on transactions settled on chain via Lightning channel management, etc.?
US Trade Deficit
No free lunch. Stronger USD means you sell less stuff to other countries. It means you import more and more. That's not the end of the world just important to remember these flows impact other things such as labor and inflation. A huge chunk of "growth" and "job growth" in America last few years has been a direct result of government spending (more below). Maybe it's time to create more real jobs inside of America. Would other nations not want the same for themselves?
Longer term:
Treasury
The Treasury came out and said Yellen's schedule of debt issuance will hold for the next few quarters. In other words - the Treasury did not say it was in a hurry to shift back to the long end of the curve. Yellen handcuffed Bessent's ability to optimally manage the Treasury's term issuance risk. Bessent knows this of course and still accepted the job. So what is going on?
Trump/Bessent Need:
- Revenue
- more buyers for UST most especially 10yr and 30yr
What can Trump/Bessent NOT control? The amount of UPB and LT rates.
We already know (highlighted here) that the wheels are in motion to jam these bonds down the throat of the banks, namely the Primary Dealers. Stablecoins to the rescue for the entire shorter half of the curve? Maybe. Not clear that would be enough, but you can muscle the crowd into these (401K and IRA mandates).
Use tariffs to encourage/force foreign buyers to buy 10yr and 30yr UST? Personally - I see the tariffs really landing on China and the EU and UK perhaps. Something tells me we will see some type of formal response to this massive wall of refi needs approaching for UST.
DXY:
10yr UST:
Market falling asleep due to lack of "official news" on rates, fiscal woes, and sovereign risk? Or, sniffing out some potentially more palatable options? Or, front-running the inevitable collapse in labor market data via revisions? Time will tell.
*Jobs Data on Friday Morning (after publication of this)*:
Gold
Did anyone else notice how gold broke out to a new all time high before Bitcoin broke out of that arduous six month long correction and ultimately to a new high a few months back?
Bank of Japan Sees . . . . . . . . . . Inflation?
That whistling sound you hear is the yen carry trade blowing by you on a high speed train as the BOJ moves toward consistent hikes? Tourism industry sizzling hot, but an aging population doesn't particularly like inflation in food and energy for a country that imports most food/energy. Keep an eye on Japan. More on this in future posts.
Micro Mining
I do not have any type of investment in Heatbit or anything related to this topic. I'm intrigued by the concept of micro-mining and putting it in people's pockets via the phone and inside normal devices at home.
Will Bitcoin mining become ubiquitous? Time will tell. It can take a long time for things to hit the so called mass adoption.
How Does America Grow Its Economy?
The above is courtesy of ZeroHedge and I saved it because the way they described the situation was perfect. Five years from now cutting spending may be heralded as long overdue and a great move. In the here and now, mathematically, cutting government spending significantly will lead to a technical "recession". There are parts of the country where more than 10% of the adult labor force is employed by an NGO. What happens when they take the hatchet to all of these "non-profits" paying people to sit around and complain about politics all day?
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