Qrafty has lined up stories about Tether, Ray Dalio, NFT's and more!

Wahaha! 👈️ That means a loving and cute hello in honey badger language!😇 

Whoooweee there's a lot to talk about today! 🦡 Qrafty is extremely excited to share the stories for today! We have Ray Dalio’s market resilience theory, Tether’s report about its financial health, NFT’s going down for July, a cool blockchain game called Axie Infinity and a lot more!

Time is of the essence, so here’s the main piece for today 👇️

Does Ray Dalio’s theory “Great Wealth Transfer” explains recent US economy resilience?

Ray Dalio is a US renowned entrepreneur and investor known, among a lot of things, for being the founder of the world’s largest hedge fund, Bridgewater Associates, his legendary book on investment mentality named “Principles“ or his management concepts like “radical transparency” or “idea meritocracy“ that he applies in his business.

Qrafty knows that this isn’t strictly crypto related, but Qrafty likes to take into consideration a wider picture of finance and economy to make better connections and judgements. It’s important to take a look at all possible angles and keep a keen eye on the economy and traditional finance, as Bitcoin and the crypto market overall are inevitably connected to everything. We are all in different bubbles, connected by the invisible thread of capital and markets.

So in a really, REALLY long (but data and knowledge juicy) LinkedIn post, Mr. Ray Dalio presents his theory on why markets have been resilient in the past period. He is arguing that the US government and the Federal Reserve along with US bonds holders basically engineered a transfer of wealth towards the private sector.

This way, the government could take on a lot more debt without severely impacting the private sector (businesses and households).

Now, how did they do that?

Well, during 2020 and 2021 there was a time when the US gov’t increased the budget deficits, the central bank bought a lot of bonds and kept the rates to 0, close to 0 or even in the negative territory. That was the time of (almost) free capital and easy access to it.

Ok Qrafty, wth do negative rates mean? What’s the idea?

Negative rates means that the central bank is encouraging people and investors to NOT deposit capital in banks and use it in other purposes, to deploy it into the economy and markets instead of depositing into the bank for interest.

That’s a good time to borrow (to access capital because it’s cheap) and a bad time to own. That’s what the central bank encouraged banks to do.

Then, in 2022 when the inflation was sky high and unemployment was low, the monetary policy tightening started and this hit a few sectors of the economy that usually rely on cheap capital to function well (like venture capital, commercial real estate or private equity) alongside stocks and bonds going down too.

But the unexpected (or intended) results were that the private sector’s net worth increased, compensation increased and unemployment fell. So government took on more debt and central bank printed more money, which

• For the near future, Mr. Dalio proposes a mild stagflation in the absence of turbulent factors or unexpected events in the economy. On the medium to long term, he postulates a quite evident scenario where governments run large deficits because they need to take on more debt to service the current debt and other budget costs.

In simpler terms: you have a loan (current debt) + current household expenses (budget expenses). It would seem that historically the state/government is the most incompetent capital administrator since the debt is always rising (there was, though, a single state in history that managed to completely pay out all its debt 100% and be completely free of debt for a while).

• So you take on more debt to service the current debt and increasing household expenses. Ideally you should generate more revenue to keep up with that, but that’s doesn’t really happen at state level. You might say that taxes can be increased, but there’s a big difference in increasing taxes and collecting them 😅 . This creates a spiral of increasing debt which only leads to more money printing by central banks and… you guessed it… inflation!

There is a scenario where the exacerbation of inflation and the inevitability of transferring it to the wallets of the population, and it’s becoming more real as the debt keeps mounting. The upwards spiraling debt also leads to the scenario where there are more govt bonds available than the demand in the market for them.

This is a really nasty case because either the interest rates need to rise or the central bank needs to buy the bonds, leading to mounting losses which directly negatively influence monetary policy. This leads to political unrest and the central bank becoming more politically controlled.

What do you think about a less independent, politically controlled Federal Reserve?

P.S: Qrafty didn’t see two important things mentioned in Mr. Dalio’s report:

• The buying power was severely impacted for households, even if the net worth increased. That is the hidden and destructive face of inflation. It’s cool to have 1 million $ in the bank, but when you realize it buys you two Mickey D’s burgers without fries and soda, it’s not fun anymore, is it? I mean c’mon… no fries and soda?! Qrafty sad badger…

• The US is the only country that has demand for its currency outside its borders and economy. The US is the international trade currency and this means that other countries need the USD in order to trade. Obviously, this makes the US like a central bank of the world in this regard.

🙃 Before we get to the main news, here’s the trading atmosphere within the past couple of days 👇️

Here are Qrafty’s main stories of the day for you! Enjoy!

1. Tether’s report about its health looks damn good

• The sparky people from Tether released their company’s overall financial health evaluations and the report is looking fine as the feeling of a rainy day without work where you cozy up in the blanket with a cup of Joe and a good book (or jumping off a rock and assembling your airplane on the way down, depends on what tickles your fancy). Obviously, we don’t know what we don’t know (and they’re not telling us) so everything is taken with a pinch of salt.

• Numbers wise, Tether claims excess reserves totaling $3.3 billions (yes, with a B from bazinga!), an increase with $850 million. Excess reserves means the company’s own profits, not distributed to shareholders, which they decided to keep as collateral to back the coins in reserves.

• “Tether’s operational profits are over $1B for the time period of April 2023 to June 2023, which corresponds to a significant 30% increase quarter over quarter.”  👈️ Mic drop moment right there

• If the above wasn’t enough, about 85% of Tether’s investment is kept in cash or cash equivalents. And they also did some shares buyback amounting to $115 million.

• Finally, they are smart enough to get exposure to US Treasury bills and Treasuries collateralizing the Overnight Repo amounting to $72.5 billion. NOT… TOO… BAD… AT… ALL!

Why is that important?

It’s important because Tether is like the central bank of crypto, it is the issuer of USDT, the digital equivalent of the USD. So whenever there’s bad news (true or not) about Tether, the whole of crypto starts to shiver. So as long as Tether is stable and healthy, crypto can resume its funny memes and thought bubble.

But… but… much dEceNtRaLizAtiOn!!! Yeah… Qrafty gets ya… it’s a central entity issuing the currency that is used by the whole industry. If Tether fails, there is a very high possibility that crypto fails or it is severely damaged for a long time.

P.S.: the report was made by BDO, a top 5 ranked global independent public accounting firm. This evolution was done in a bear market, so it’s pretty good money management if you ask Qrafty.

2. Did Bankman Fried use botnets to pump the token prices on FTX to their advantage? Bet your ass they did…

Obviously, Qrafty is speculating here about the botnets… then again, considering the complete story of the FTX/SBF/Alameda telenovela, it’s pretty clear that we haven’t yet seen the full dimension of it. Maybe we never will, since some smart folks dealing with the FTX bankruptcy noticed that FTX is an extremely profitable business if you’re well connected politically so they decided to open it up again soon (as we also mentioned on the 1st of August edition of the newsletter).

• Yes, you read that well. FTX, the biggest and clearest case of misusing customer funds, fraud left and right, incompetence, illegalities and overall complete and utter debauchery in the full sense of the word on all possible dimensions - will be up and running soon and just waiting for your money!

• So yes, in Qrafty’s opinion, they definitely used any means of lying, cheating and manipulation possible in the market to drive the price of their tokens up. No question about it. And yes, they will use it in the future, regardless of what bs talking head they will bring next.

Why are you telling me this, Qrafty?

Because my purpose is two fold: to keep you well informed (both technically and up to date with the news) and to prepare you for the next bull run, which shouldn’t be really far away now (theoretically we are about one year and a bit away, give or take a few months).

During the bull run, there will be lots of hype and noise. It will seem that we have all reached Nirvana. It’s important to be clear headed and know what to do. That is why I am here. Those who don’t know their history are doomed to repeat it. And there’s a whole lot of history in crypto. So sit tight, relax and let things flow, as Qrafty’s mission is to slowly and surely prepare you for the next crypto bull run. For this, you need to know the truth about things that happened in the markets, aside from the glittery bs and cyclejerk that is publicly available. That’s all smoke and mirrors to make you lose your money. Crypto is not an easy game. It’s made to look easy to take your money. Beware, it ain’t.

3. The NFT Market Slump: An Emerging Trend or a Temporary Dip?

As usual in bear markets, uncertainty is running high and the stress levels are either extremely high or zero. Dappradar made a report for the month of July for the decentralized app industry and we have some numbers:

• 13% reduction in UAW (unique active wallets) activity in July 2023

• Gaming resumed domination of the industry, reaching 41%

• While gaming went up, DeFi went 26% down in usage, reaching a level of 30% of the total user activity.

• NFT’s on the other hand are going down.

Why is this important, Qrafty?

You want to know these things or at least have a very top level knowledge of the concepts and overall market. In time, we will delve deeper into some of them for a better understanding on your part. Qrafty is always here to help you improve!

4. Another big name in gaming is starting to test blockchain waters, after Ubisoft.

A few weeks ago, Ubisoft announced their first web3 game that will be on Oasys blockchain (just like this game that's also on Oasys). Now Bandai Namco (who is actually an even bigger studio than Ubisoft with market cap of 14.7 billion USD as opposed to Ubisoft's 4.1 billion) announced their first web 3 game.

Why is this important?

Web3, gaming and NFT’s are rather new additions to the blockchain family. These areas gathered a LOT of attention and hype during the 2020-2021 bull run, but the foundations were not strong enough to sustain during the bear crash. Also it is filled with scams and thieves for the moment, as these are about the only ones that are left in the space for the moment.

Qrafty is very sure that things will come around and there will be massive gains to be made with NFT’s and gaming tokens during the next bull run. But for now it’s a good time to analyze and get your hands one what you like. Also, Qrafty thinks the bottom is not in for crypto and especially for web3 and NFT’s. So it’s important to keep a watchful badger eye on this space and buy when there’s blood in the streets. I mean… if there’s more blood in the streets it’s going to be a flood.

5. Binance denies reports of $90B in crypto trades in China

Mainly because the Binance website is blocked in China and theoretically unavailable to Chinese users. 

cough cough cough VPN’s, proxies, IP changer, web anonymizers, tunnels… cough Sorry about that, Qrafty just had a coughing fit remembering all the simple and fascinating ways of evading a ban such as the one in China.

Oh, let’s also not remember the fact that the Party and CZ are… let’s say... connected, get me? So what I propose is to try reading beyond or at least between the lines, especially when it comes to China and Binance.

Let’s remember that some Binance employees helped customers bypass the KYC (Know Your Customer) protocols. So Qrafty is taking this with a bit of healthy skepticism.

6. Greyscale hopes that the US will have a soft landing so that their crypto hopes become true

Pretty much the title says it all. Greyscale prays for the US economy to have a soft landing so that the economic cycle restarts upwards and crypto gets a boost from this.

Why is this so, Qrafty?

This is because there is a clear correlation between the crypto market’s boom periods with the economy. When the economy is growing, financial markets are healthy and growing, after the BTC halving it’s time for the bull run to start.

Up until now, BTC hasn’t had a bull run in an economic downturn. We’ll see how things pan out next year, as it’s going to be a really crazy one, with elections and the economy in uncertain territory.

BTC’s next halving is on the 16th of April, 2024. Historically, about 5-6 months after that we witness the start of a new bull run. Qrafty doesn’t know what will be, but it knows that it’s going to be fun!

Gen Z’s investment of choice is crypto.

Well… what did you expect? Duh! Crypto is cool money! Crypto is gold for nerds! We live in a technological age, an information age. TradFi is for old geezers who read news on PAPER! That's… like… weird bro!

A new generation brings its own culture and habits. It’s time for the more traditionally inclined minds to expand their horizons and understand that crypto is here to stay, whether they like it or not.

The best time to invest in Bitcoin was 10 years ago. The second best time is now. Or… you know… bitch about it later. Entirelly up to you!

New coins or investment ideas?! It’s bear time, dummy!

This is not the time to ape into coins or to invest mindlessly. To be honest, I don’t think there ever is such a time. Well, maybe there’s a short window of opportunity during the exuberance phase of the market. But Qrafty doesn’t suggest that kind of mental approach because it is extremely detrimental for one’s financial wellbeing.

On the other hand, Qrafty will come to you in the near future with a lot of data and information in order to have an idea of what to look out for and how to form an investment strategy that will allow you to navigate to tumultuous medium of a bull run in crypto. Sit tight and relax, Qrafty has you covered. Todaloo!

GameFi

GameFi and play-to-earn represent a category of blockchain where gaming is the main concept and the possibility of earning money for gaming. Qrafty loves this and from time to time will present valuable projects and people.

Axie Infinity: A Guide on How to Play and Earn

Axie Infinity is a great blockchain, play to earn game. It is one of the extreme few that actually has a good use case, a solid and dedicated team, a good CEO and overall a nice feeling to it, aside from the investment perspective.

They are generally quite silent and down to work. Aside from the social media events and activity, they are not vocal or very noticeable. But these beautiful people are hard at work every day to bring a great experience to their players.

And it shows, the community is awesome and overall it is a great vibe. Check it out, Qrafty will expand on this game in the near future.

P.S.: this is not a sponsored piece; Qrafty loves authentic projects and promotes them because Qrafty believes in good crypto!

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