What do Kenya, ETF's, China and Fitch haven in common? Qrafty!!!

Wahaha! 🦡 What do you call a fake noodle? An impasta! 🖖 

Good day, good evening and good fortune to you, dear reader! Thank you for reading this newsletter, I appreciate you considering Qrafty’s opinion valuable.

🦡 Qrafty knows some things today about the US being downgraded by Fitch, Peter Schiff being… Peter Schiff again and a lot more! Let’s get sniffin’!

Main story of the day 👇️

The US was downgraded by Fitch

Why that might be worth considering? 

Fitch is one of the big three rating agencies (together with Moody’s and S&P). Their opinions moves markets 🙈 . Up until now, US debt has been regarded by all of them as AAA quality (the best indicator, it’s like A+ in class when you did that damn homework and knew your lesson perfectly, remember?).

Now Fitch is stepping forward with their projection and downgrades the US to AA+ with a stable prospect. 👀

So what’s the problem, bub? 🤯 

An AA+ isn’t a terrible tragedy for a short to medium period of time, but obviously for the US it’s AAA or bust. This is because the geo-political context right now is quite complicated (when is it not), with the war in Ukraine and the US funding both Ukraine and Taiwan against Russia and China, respectively. This is just a very small tip of a humongous iceberg, obviously there are multiple problems on multiple dimensions both internal and external for the US state.

Yeah… so?

At this level, problems need money, power, the military or a combination of them in order to be solved. The US already invested a lot of money in Ukraine and it seems that a new financing line will open up towards Taiwan in a more rather permanent fashion. So the US will need access to capital in order to maintain the support. New capital means debt. And debt has interest rates. Get it? 🤑 

So in order to generate new capital to sustain its (new) efforts, the US needs to take on more debt. Which further exacerbates the problem with the debt ceiling in the future, meaning that it draws the deadline closer.

Ok, but what does Fitch have to do with this?

Fitch considers that the Washington administration is in disarray; back in spring there was the usual problem with the debt ceiling we talked about above 👆️ . They also foresee structural problems, in terms of “erosion of governance” of the state “compared to other AAA countries”. That hits pretty hard if you ask Qrafty. 🙄 

So Fitch downgrading the US means that the interest rates at which the US can borrow capital aka take on debt are suddenly…. tadaaaaam….. BIGGER 😱 ! It means that for the same amount of capital required, the US will take on more debt. Which will drive the ceiling closer and further create political strife. But this has effects on multiple orders of magnitude, not just some old white guys fighting in Washington DC. 😒 

At high level, this leads to loss of investor confidence, destruction of capital, financial turmoil, rising borrowing costs which leads to new jobs not being created and existing jobs being reduced in number.

At ground level, unemployment rises, government benefits stop, etc. and this creates social tension. Qrafty doesn’t want to go further than this, Qrafty sad already…

Bottom line: the US needs a lot of money and will need it for the foreseeable future (it’s not like this is news… 😇 ). Fitch’s move is very badly timed for the US and the USD. It’s crucial now that the USD remains the main international trade currency. This creates demand for the USD and the US, through the Federal Reserve, is basically the world’s printing press in this aspect.

But Qrafty paid attention and noticed that there are some movements in this area as well and noticed that China, Russia, Brazil, India, ASEAN nations, Kenya, Saudi Arabia, and the UAE are now using local currencies in trade. This is important.

Inflation has already eaten up a lot of people’s buying power. Prices are already high. General living costs are through the roof. The FED raised interest rates faster than a New York minute.

Alas… Qrafty isn’t a financial analyst and hasn’t the brain of the big folks running the show. Qrafty is just a small crypto loving honey badger. 🦡

The weirdest and funniest thing in all of this? The USD made a green dildo and broke a technical resistance on the charts 😂 🤣 

Why is that funny?

Because that’s exactly the opposite of what was supposed to happen!

Aaaaaaaaanywaaaaaay…

🙃 We need a breather, so here’s to everyone who said they’ll be buying the dips but never bought any dip and will definitely buy the top 🤑 You gotta love people!

The most wasted of all days is one without laughter! Now that we freshened up a bit, here are Qrafty’s stories for the day

1. Today is Litecoin’s halving

• Long story short: let’s say that up until today you used your PC graphic board to mine Litecoin all day, and after 24 hours of mining you got 1 whole LTC (LTC is short for Litecoin, mkay?). Starting tomorrow you will receive 0.5 LTC for the same amount of mining (electric current + the usage of your board).

• Why so? Because when Charlie Lee, the founder of Litecoin, literally copy pasted the bitcoin code and changed a couple of variables (including the name… get it? get it? 😶 ) the halving was already coded in. So just like Bitcoin, LTC has a halving every 4 years.

• You either upgrade or buy more mining equipment to maintain your mining (called hashing) power. This is like an invisible force coded in the algorithm that drives efficiency in the system and forces miners to adapt. It also has other market effects, but Qrafty will write an article about that. So oui, LTC had its halving. And it crashed after. 🙃 

2. Kenya suspends Worldcoin eye scanning

• Those who have had their freedom endangered, know how to value it most. The Ministry of Interior in Kenya has suspended (not banned, just suspended for now) the Worldcoin app under the concern of “authenticity and legality” in how they handle the data for all those people.

• Worldcoin installed orbs in different locations that would scan your eyeball in exchange for some free crypto tokens. The turnout was really big (because free money, duh!), so the ministry stepped in to see how Worldcoin deals with the data. Good to see some people are still using their brains.

• Worldcoin is investigated in UK as well for how they handle people’s data. An MIT review says that their practices are not great… to say the least. Qrafty is reserved and not quite happy with this.

3. The new game in town is to file for more ETH ETF’s

• 6 ETF filings filed today, and Qrafty thinks there’s more to come. It’s a love-hate tragedy unfolding as we speak, but on a more conceptual and rather philosophical level: the big boys dressed in suits are coming out to play in crypto, meaning the financial bigshots of the world have entered the BTC and general crypto game in a more visible manner.

• SO? Well, your average crypto bro doesn’t really care. But the hardcore “I’m in it for the tech” 😆 crypto fundamentalist (yes, it’s a religion, you didn’t know that?) is a very sad panda, because BTC was invented to bring down the banks! ( 🤡 insert triggered meme here 🤡)

• So the big boys bring a lot of liquidity (good), but a lot of politics and a whole new trading game and allocation of capital (terrible). The voices of crypto messiahs will be pushed to dark crypto spaces of the internet void if they don’t fit the narrative. The narrative will be taken over by institutions and talking heads, instead of crypto bros and degens throwing their life in for that 100x. In time, of course, but the effects were visible the last bull run and will steadily grow.

• Conclusion: institutions coming in and ETF’s being approved means that the normal, hard working person will have access to crypto financial products in their traditional finance establishments.

  This means more people in crypto, rocket firing, price go up, big green dildo, yes yes?

4. Crypto is illegal in China. China accounts for 20% of Binance’ Global Volume. Trolololoooool. 

Title says it all, but Qrafty wants to note two things:

• That 20% is about 90 billion $. Si señor, it’s not a mistake, it billions with a “b” from bazinga! Binance is a Chinese exchange and the markets are completely fair, open and accessible for everyone! Yaaaay!

• And that South Korea, Turkey, Vietnam, and then the British Virgin Islands (kapow!) are the largest markets, in that order. You gotta love it when the British Virgin Island, a nation with exactly 31,122 population, is a MASSIVE cryptocurrency trading powerhouse amounting to a considerable revenue source for Binance. Massive, I tell you!

5. Neopets metaverse closes and Star Atlas downsizes

• Crypto winter is hitting hard in what is known as GameFi (Gaming Finance aka games with coins). Neopets is quite an aged business with a nice concept and a great following. They just upgraded their image and initially wanted to create a metaverse. Probably not being used to crypto winter, they quickly steered and went into a different direction. Makes sense… if you don’t know crypto, it’s a lot of pain. Ever noticed that crypto starts with cry? No, I’m not crying, you’re crying! 😂 

Mr. Peter Schiff is scolding Michael Saylor for buying BTC again.. Yeah… that’s how comedy is made folks!

Have you ever seen a lonely dog barking at the rain because it’s wet? Well… once you see it you can’t unsee it… It’s pretty much the same with old people yelling at digital things they don’t understand. Might as well throw a stick at it… why not?

… and here’s Michael Saylor with a simple to understand visual explanation of the results of his decisions. It’s really easy when you look at it, innit?

That’s it for today! Qrafty wishes you to live each moment as if you are listening to the music you love most! Wahaha!