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28th May 2023 > > The US and China.

tl;dr

The US debt deal and developments in China are positive for cryptos.


Market Snap (at time of writing)








Market Wrap

Relief at a US debt deal (for the next two years that is) provides a benign backdrop for risk assets.


Curious Cryptos’ Commentary – The US debt deal

Joe Biden tweeted:


“Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle. It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments. The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing. And, this agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost. Over the next day, our negotiating teams will finalize legislative text and the agreement will go to the United States House and Senate. I strongly urge both chambers to pass the agreement right away.”


Though I don’t like being lectured as to what the meaning of compromise is – perhaps Biden can have a word with my soon-to-be ex-wife instead – this is undoubtedly good news removing the very remote possibility of a black swan event.


It also increases the probability of yet more monetary stimulus in the short-term, an outcome that simply raises the price of all hard assets to the detriment of the poor and the dispossessed. Which could be the cue for some very easy but very truthful political point scoring, but the CCC remains - as ever - fiercely politically impartial.


Curious Cryptos’ Commentary – China

Just a few days ago (https://www.curiouscryptos.com/post/24th-may-2023-hong-kong) we had the surprising news that Hong Kong was to launch a new licensing regime for centralised cryptocurrency exchanges, a move seemingly at odds with China’s “ban” on cryptos.


Given that nothing can happen in Hong Kong without President Xi’s approval – “two systems one country” was always only ever going to be a lie – this initiative hinted at a dramatic about-turn by the ruling elite towards cryptos.


Now we have two more pieces of evidence.


State broadcaster/chief propagandist China Central Television ran a news item which included a shot of a BTC ATM with “Buy Bitcoins” clearly visible:


Then yesterday, a government sponsored white paper entitled "Web3 Innovation and Development White Paper (2023)" was published. According to a report in The Paper (https://www.thepaper.cn/newsDetail_forward_23250778) my browser translation states:


“The white paper believes that the Internet 3.0 is an integrator of modern science and technology, an inevitable trend for the future development of the Internet industry …”.


I like the use of the word “inevitable”.


This white paper is laying the foundations for investment in Web3 technology to ensure Beijing’s role as an innovation hub.


Cryptos are coming back to China with official blessing.

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