Fitch Downgrades US Debt

Plus a spat of ETH ETF applications

Author

Nathaniel Whittemore
August 02, 2023

The Breakdown First Five - Wednesday, August 2 2023

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

Prompt: 1970s-style political cartoon of United States government debt

5. Bitcoin for Equity Swap

Bitcoin bull Michael Saylor’s Microstrategy has announced $750M worth of stock sales. The company will use the additional capital to fund general expenses and, of course, buy more Bitcoin. The company reported solid earnings this week, returning to profit with a net income of $22.2M for the quarter. Microstrategy increased their Bitcoin holdings last quarter and now own 152,800 BTC, worth around $4.5B.

4. ETH ETF

Six firms have now filed for futures based ETH ETF. The frenzy began last Friday with a filing from Volatility Shares. Prior to that, the SEC had always refused to consider ETH filings leading some to suspect that opinions have softened at the regulator. The first deadline for an SEC decision is October 12.

3. Davies Renounced US Citizenship

Disgraced 3AC founder Kyle Davies has rejected the jurisdiction of US Courts, claiming to have renounced citizenship in late 2020. 3AC is in the middle of bankruptcy proceedings with liquidators frustrated at a lack of assistance from Davies and fellow founder Su Zhu. The pair have failed to accept subpoenas and liquidators have asked that Davies be held in contempt of court, subjecting him to a $10,000 per day fine until he responds.

2. Kenya Suspends Worldcoin

Kenya’s Ministry of the Interior have said Worldcoin will be suspended until risks to the population can be assessed. The Ministry said it was concerned about “registration of citizens through the collection of eyeball/iris data”. Worldcoin’s presence in Africa and across the Global South has been a point of criticism since the project began, with Kenya being a key location for the eyeball-scanning orbs. Worldcoin boasted of 250,000 signups in Nairobi back in December.

1. US Debt Downgrade

Fitch has downgraded US government debt citing long term structural concerns about compounding budget deficits. Treasury Secretary Yellen called the move “arbitrary” and based on “outdated data”, claiming that Democrats have fixed the governance problems of the Trump years. Fitch pointed out that the US debt-to-GDP ratio will hit 120% within the next 3 years as interest payments command more of the budget.

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Thanks for reading -NLW