Good morning investors; I just wanted to thank you for reading this publication, and if you haven’t already, make sure to join 848 other readers to stay up to date on everything in the financial markets.

Here’s what we’ve got for you today:

• The coming ‘crisis’ of the USA defaulting on its loans

• CPI Inflation data coming out & what that means for the FED

• Why BTC has ~500k unconfirmed transactions

• The banking crisis is just getting started

• & Much More!

📺 What To Watch For

1.  The United States is very close to defaulting on its loans. If you’re not aware yet, the United States likes to spend more money than they make to do things they want.

   The US has never defaulted on its loans before, but there’s currently a stalemate in Congress on what each side wants to do next. The Democrats would like to raise the debt ceiling while still being able to spend money on all the things they want. The Republicans would also like to raise the debt limit, BUT they want to cut spending for climate change, education, and possibly veterans.

   President Biden is set to meet Mitch McConnel and Kevin McCarthy on May 9th to discuss possible solutions upon agreeing to raise the debt ceiling.

   The worst-case scenario is if Congress cannot agree and default on its debt, this could potentially kill millions of jobs for Americans, crash the stock market by ~40%, and cut GDP by ~6%. Currently, Janet Yellen, the Secretary of the Treasury, said we will run out of money around June 1st.

2. Is the FED done raising rates even if inflation rises? CPI data for April is coming out on May 10th. If you’re not aware, the ONLY thing the FED has been focused on is bringing inflation back down to 2%.

   Recently on May 3rd, the FED said they would pause raising rates as they believe inflation is starting to cool off and fall back down toward their target. The markets seemed to have priced in the rate pauses, and some investors even think the FED will start cutting rates as early as July.

   But what happens if inflation remains high or even shows signs of rising? Will the FED stay true to their word and keep rates at what they are currently (Current Rates: 5-5.25%)? The upcoming CPI data for April alone may not be enough to scare the FED, but what happens if we see sustained high inflation for months to come?

3. The Bitcoin blockchain is EXTREMELY congested. On May 7th, The Bitcoin mempool was clogged with over +400,000 transactions waiting to be processed. This is a new all-time high for the BTC network, and this is due to the new BRC-20 tokens introduced to the blockchain.

   People are clogging up the BTC network with useless transactions and meme coins, making the network slower and creating high fees for transactions. The congestion was so high that Binance had to pause withdrawals on BTC twice in 12 hours in order for the network to catch up to transactions.

   This new feature has pros and cons, but with any new addition to a product/service, there will be an adjustment period. There are a lot of solutions online as to what should happen, such as increasing the block size, getting rid of BRC-20, or creating a better lightning network infrastructure.

4. The banking crisis is just getting started. Over the last month or so, we have had some of the most significant banking failures in US history happen within a short while of each other. From SVB → First Republic, ~$500 billion of assets were lost in bank failures.

   Our most recent bank failure, ‘First Republic,’ was bought out by JP Morgan, where they seized all their assets; after the fact, the CEO said the banking crisis should be over by now, and there’s nothing to worry about. But here are some things they are not telling you that prove we are just getting started…

   • The 3 bank failures in 2023 have totaled losses similar to the 2008 Great Recession

   • Massive credit squeeze coming from the banks due to tighter restrictions, this means it’s going to be very difficult for anyone to get money from the banks, which really slows down the economy

   • There are ~722 more large regional banks that are potentially insolvent if another bank run happens

   • The regional banking ETF has fallen ~38% since the start of March

So it looks like this party is just getting started!

🚨 What You Missed

1. The FED raised interest rates by .25% and said they could be done

2. Jobs report totals ~253,000, beating expectations

📊 Important Indicators

Bitcoin Dominance

Bitcoin is getting extremely close to owning 50% of the entire crypto market; this tends to happen during downturns when BTC outperforms altcoins.

Altcoins will continue to bleed into BTC until this whole recessions scare is over, and even then, BTC will lead the next bull run.

Mempool Transactions Relative To Fees

This shows us the recent congestion on the BTC network from the BRC-20 tokens

• ~300k unconfirmed transactions

• Higher fees per transaction

  

🐦 Twitter Takeaways

Banking Crisis Explained

The Banking Sector Is “Solid & Stable”

🤔 Did You Know

During the COVID-19 scare, the US printed 25% of its money supply in less than 12 months.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.