Gone too far, changing tack, halftime oranges, buying garbage, and a German powerhouse.

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Towards the end of 2022 there was a particular shift in the sentiment towards this sector. Choke Point 2, as it became known, targeted the banking relationships of crypto businesses and ultimately took out Silvergate Bank, Silicon Valley Bank as well as a few others along the way.

While that was intentional, the knock on effects of it certainly were not. Would Credit Suisse have died without the attack on the US crypto industry? Perhaps not.

The strategy didn’t really have the desired effect since it did more damage to the traditional finance sector than it did to the intended target. The process quickly moved on, with the SEC bringing action against Binance, Coinbase and various others.

Then something changed.

The Hong Kong news referred to here was the HK government calling on its banks to support the crypto industry at exactly the moment the US government was trying to kill it.

HSBC launched three digital asset ETFs for its clients this week. This wasn’t restricted to Hong Kong. Overtures have been made from the Middle East and London too. America was about to kill an industry everyone else wanted.

Then what happened? Within a month we got multiple spot ETF applications from BlackRock and others. On Friday we got a completely new US ETF approved, amusingly called the Volatility Shares Trust which is a leveraged bitcoin futures ETF. It commenced trading on Tuesday.

In what world is a leveraged synthetic product acceptable for retail investors when a simple spot product is denied? It utterly destroys the notion that the SEC is out to protect retail investors when this product is much riskier than a spot ETF and yet somehow gets approved.

The existing US Futures ETF (ticker “BITO”) just had its biggest week of inflows for a year and now has over a billion dollars in AUM.

Suffice to say, it all bodes rather well for the spot products in the pipeline. The whole process has been utterly insane and the SECs reputation has been totally trashed by it. Not least because they are now facing multiple lawsuits that they are likely to lose.

The pendulum has swung. They went too far and however irritating the process has been, I suppose we should welcome the backflip and embrace it.


On the theme of changing sentiment. It wasn’t just the US. The IMF this week has changed tack too.

Bans are off the table. Now the focus is on competitor products, namely CBDCs.

Some of this sentiment shift is driven by the clear success in El Salvador. They endured two years of heat from the IMF for adopting bitcoin but the economic statistics there are so overwhelming it is becoming hard to deny. Attacking El Salvador as a strategy has failed, it's time for something new.

I think very little of El Salavador’s success has anything to do with bitcoin. Simply, it is sensible economic policies like making it easy for talented people to get visas and then not taxing them too much. Their economy grew 10% last year and looks set to exceed that in 2023.

Halftime Orange

A striking chart. For such a volatile currency, bitcoin is a very consistent performer. Those red candle years are tremendously painful though and perhaps sear themselves into the memory more than anything else. They generate far more news too. You won’t read too much about bitcoin this year because it’s doing well (but not so spectacularly well that it's newsworthy).

As we turn the corner, priced in bitcoin, the year looks like this:

  • NASDAQ -29%

  • S&P 500 -37%

  • Gold -43%

  • Crude Oil -53%

13 years, 3 negative ones and those 3 years probably account for 90% of the articles on bitcoin.

Don’t complain though; take the opportunity it creates.

$700 billion

Since the US debt ceiling was suspended earlier this month, the US government has borrowed $700 billion dollars. It’s a monumental level of debt issuance in just 13 working days since. $2,000 for every American.

If that’s surprising, it’s even more surprising to me that the bond market barely blinked. Where is the money coming from and who is buying this total garbage?


Lagarde’s “journey” continues. As she expressed at the last interest rate rise, “we are not there yet and there are more rate rises to come”. Perhaps.

“Slowed sharply”. It was hardly flying either. German house prices fell by 6% last month, the steepest fall in history. Industrial production is off a cliff.

Over at powerhouse Siemens Energy, things are worse. Shares crashed 37% on Friday, the worst single-day drop ever. The company issued a profit warning and withdrew earnings guidance, citing issues at its Gamesa wind-turbine division. That should not be happening given the demand for renewable energy in Germany; something is off.

The ECB though has other objectives. They gave an update on their “crypto-strategy” this week. ‘No public backing for crypto’, whatever that means. ‘Regulations’, so presumably the complete stifling of innovation and essentially exclude Europe from any of the benefits of the industry (exactly as they are doing with AI). Then, brilliantly, we will release our own version of the same thing which we will call a CBDC.

It’s utter nonsense. Clearly, there is market demand for effective, immediate and permissionless payments. CBDCs will not deliver that. They will be a surveillance mechanism (for your safety of course).

I have zero faith in the ECB. They are institutionally unable to innovate because innovation destroys existing institutions and they exist solely to protect them. Their statistics are false and the theatre of lies will collapse in a heap if it hasn’t already. It’s fun to pretend though and they are very good at it.

Further information

Read our bitcoin news wrap-up for last month on Livewire.

Our May 2023 report to investors can be found here.

If you are considering an investment in the Managed Fund, you can now apply using our online application form: