BITCOIN BOX SCORE
Market Capitalization: $706.7B
Hash Rate (90 days): 425.2 EH/s
Transactions (30 days): 13,829,672
Network Fees (day): 12 sat/vB
Bitcoin Dominance: 52.25%
The U.S. government continues its precarious balancing act as debt escalates ever higher.
Last week's treasury auction highlights this reality. Even a significant interest rate hike struggled to attract buyers, with primary dealers stepping in to absorb the slack.
That didn’t stop Janet Yellen from claiming that “the American economy is fundamentally strong, and Treasury securities remain the world’s preeminent safe and liquid asset.”
Yet few outside the White House agree with her. Traditional treasury buyers are growing skeptical, and global financial confidence has noticeably shifted downward.
With national debt nearing $34 trillion and interest payments becoming increasingly burdensome, the U.S. is at a crossroads. How will politicians proceed?
Severely reduced entitlements and military spending could save the U.S. bond market.
However, the more probable maneuver is a deliberate devaluation of the currency to cope with the mounting debt and increased government control over a population already struggling with inflation.
Thankfully, you can opt out of this mess by owning bitcoin.
With that, let's dive into the news.
New IRS and SEC rules for bitcoin and crypto 📏
Bitcoin and the broader crypto industry have protested the new IRS "broker" rule for the last few months. This rule would classify exchanges, wallet providers, and others as brokers and require them to report transaction and user information to the IRS.
Today, bipartisan U.S. lawmakers, led by Patrick McHenry and Ritchie Torres, are challenging the Treasury's proposed digital-assets tax regime as overreaching, urging revisions to its definitions and an extended comment period.
On the SEC front, in February 2023, the agency proposed expanding the custody rule to include all client assets, including digital assets, mandating that registered investment advisors (RIAs) use qualified custodians.
Following the closure of its public comment period in October, the SEC is now deliberating on the new rules, emphasizing bankruptcy-remote solutions and compliant record keeping to meet requirements.
As a result, RIAs will likely direct their clients' digital assets toward separately managed accounts (SMA) with qualified custodians. It's important to note that this rule applies only to RIAs, not individuals.
CPI print foretells more easy money 💸
The Bureau of Labor Statistics reported a continued climb in year-over-year inflation at 3.2%, marking the thirty-second consecutive month above the Fed's two-percent target, with negligible month-over-month change.
Despite a minor moderation in the CPI, real average earnings have barely increased, with a 23-cent rise over three years. Economic indicators suggest a looming recession, contrasting with optimistic views of a "soft landing."
Why is Wall Street happy?
As Wall Street focuses on the possibility of lowered interest rates and easy money from the Fed, any decline in CPI inflation will fuel speculation. Why is this important?
It's simple: Today, financial market movements are driven by monetary bubbles created by the Fed rather than underlying company fundamentals.
Congress kicks the can down the road 🥫
Congress has passed a bill to fund the U.S. government until early 2024, with the Senate's approval following the House, averting a potential shutdown. The "continuing resolution" maintains fiscal year 2023 funding levels. House Republicans have criticized it for not including spending cuts.
America's fiscal house is still in disarray
The U.S. government will avoid a shutdown. However, Moody's downgraded its credit outlook from stable to negative last week, citing rising debt, costly interest payments, and diminishing foreign investment in U.S. Treasuries.
What will happen if the U.S. can't fund itself because no one wants to buy its "risk-free" IOUs?
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
Bitcoin is truth.
Before the advent of Bitcoin, there was no solution to the well-known "Byzantine General's Problem." Individuals and groups could not establish trust in decentralized systems without a central authority.
Trust in centralized systems like banks and governments always leads to corruption and debasement. However, bitcoin offers a groundbreaking way out of this trap by changing how we think about money.
Bitcoin's combination of blockchain technology and Proof-of-Work solve the Byzantine Generals Problem. The blockchain serves as a public, distributed ledger, recording every transaction with mathematically verifiable transparency and immutability.
This system allows every participant or node in the bitcoin network to independently validate all transactions, eliminating the need for a trusted central authority.
The Proof-of-Work protocol further guarantees trustlessness by requiring people to expend resources to add new blocks to the blockchain, thereby incentivizing honest participation.
The result is a revolutionary monetary system that is verifiable, counterfeit-resistant, and, most importantly, operates without reliance on trust.
Bitcoin stands as the first successful implementation of decentralized, trustless money, creating a new form of money and a new era of financial freedom and integrity.
It serves as proof that truth can be established in a decentralized world, even in the digital age.
That’s all for this week, folks! When you signed up for this newsletter, we promised to act as your personal guide and help you understand what’s happening in the world of bitcoin. What did you think of today’s newsletter? Reply to this email and let us know what you’d like to see more of.