Is #Artificiallnteligence an economic hoax?

How much is artificial intelligence contributing to GDP growth? You know that we are all talking about artificial intelligence, that artificial intelligence is the future.

But, how much is it really contributing to GDP? Initially, we are finding that the first estimates suggest that artificial intelligence may currently represent around 0.4-0.5% of the #GDP of the United States. Logically, in other countries, the contribution will be lower.

Now, whether we are in favor or against artificial intelligence, whether we believe in it or not, I believe that artificial intelligence is necessary for governments to guarantee national defense. Additionally, artificial intelligence is logical for automating a series of labor tasks. How much could it be? 10 to 25% of all labor tasks?

Therefore, artificial intelligence will drive economic growth. When will we notice it in the GDP? When will it have a greater percentage of the global GDP? Well, not before the year 2026, because first, all the necessary infrastructures must be developed for companies to incorporate artificial intelligence into their production processes.

Speaking of infrastructure, governments and also the private sector will have to invest in infrastructure. In this specific case, public investment is more necessary than ever. But this public investment is a productive investment that will generate tax revenues for governments.

Will these tax revenues be enough to reduce the enormous public deficits? Well, obviously not. Because on one hand, there is productive investment and, with these higher tax revenues that governments will have, politicians will try to spend them to secure their power.

However, the widespread adoption and integration of AI technologies could significantly influence the crypto market. As AI drives automation and economic growth, it may also enhance the efficiency and security of blockchain technologies, making crypto like $BTC and $ETH more reliable and widely accepted.

That's all for today, have a great day. 🤖

Bitcoin keeps leaving exchanges.

In the last two days, we have seen an outflow of 50,000 $BTC from exchanges. Keep in mind that this is an enormous amount, considering that only 450 new Bitcoins are generated per day.

When you remove an asset from a platform, it is because you do not intend to sell it in the short term. This, combined with the halving and the increase in institutional demand, can create a supply shock. Starting from March 2020, at the beginning of the pandemic, we saw Bitcoins suddenly start leaving exchanges. This had never happened before; the trend was to send more Bitcoin to exchanges. But since March 2020, institutions have begun to get more involved in cryptocurrencies, and the situation changed completely.

Now, we are seeing a significant outflow of 50,000 Bitcoins in the last two days. I have reviewed all the exchanges and, surprisingly, the massive outflows have been from Kraken. I want to confirm this because if an on-chain tracker can verify this, I would be surprised. I think it is an error from Glassnode itself, although other platforms are reporting the same data.

Why do I say it is an error? Because if we review the history of Kraken, we have practically never seen these types of outflows. In just two days, we have moved from average levels of the last few years to levels not seen on the platform since 2017. If this data is accurate, it is an enormous anomaly.

I always say the same thing in crypto: everything happens slowly until it happens suddenly. Imagine that tomorrow we see another massive outflow on Coinbase; this could create FOMO out of nowhere and kickstart the bull run. What is happening now is something brutally bullish, both from institutional demand and ETFs in Wall Street, as well as messages from Larry Fink and actions from other countries and institutions.

In conclusion, the current market dynamics are extraordinarily bullish. The coming days will be crucial in determining whether these trends continue, potentially setting the stage for a major market rally. Stay tuned. 😀

Central bankers expressly acknowledge that they are confused.

Take a look at this news published by Bloomberg yesterday. Dallas Fed's Lorie Logan says that despite the rise in interest rates and their high levels, she considers them to be less restrictive than initially thought.

Why? You know that when a central banker says they are data-dependent, what it really means is that they do not trust their macroeconomic model. This means that they do not know the equilibrium interest rate, the natural interest rate. Without knowing the natural interest rate of an economy, monetary policy cannot be conducted.

Why are central bankers so confused? What are the economic consequences of this? Very simple. You know that central bankers implement monetary policy, raise interest rates, and adjust their balance sheets. What we are finding is that the service sector, when you raise the interest rate, is very insensitive to interest rate hikes, while the goods sector is very sensitive.

Of course, in the 1950s, you would raise interest rates, and since the goods sector represented practically 75% of the economy and was sensitive to interest rate hikes, you could slow economic growth. Nowadays, this is not the case.

Yesterday the first revision of the initial estimate of U.S. GDP growth for the first quarter of 2024 was published. What did we see? The economy grew at a low rate, relatively low, the lowest since 2022. Why? Let's make the same distinction: we find that the service sector rises, but the goods sector contracts. This is a consequence of the interest rate hikes. In the end, we had positive growth for a very simple reason: the growth of the service sector offset the decline of the goods sector.

Do you see that this is the key behind the problems central bankers face when defining their monetary policy? How does this affect $BTC ? Well, greater uncertainty in monetary policy could lead more investors to seek refuge in decentralized assets like cryptocurrencies. 😉

That's all for today, have a great day.

'The Future Of Crypto And Bitcoin Will Be Made In The USA'

These are the words of #DonaldTrump , the candidate for the White House presidency in November. We are talking about the world's leading power, which many institutions and countries use as a reference.

You have already seen what has happened with Wall Street. Once Wall Street accepted $BTC as a novel tool to generate a wealth vehicle, it simply opened the doors. The rest of the world is starting to do the same.

In his recent speech in Washington, Trump assured that he would support the right to self-custody for the more than 50 million cryptocurrency holders in the country and, under his mandate, he would never allow the creation of a central bank digital currency (CBDC). He also commented that he would keep Senator Elizabeth Warren's anti-crypto army and her henchmen away from your Bitcoin.

But let's see, who is this guy, Donald Trump or Michael Saylor? It’s pretty crazy what we are experiencing. Keep in mind that they are now floating trial balloons to capture votes. If they continue to expand the range of proposals in the crypto sector, it’s clear that they have seen significant activity and can gain several votes. Therefore, it wouldn’t surprise me if, as we get closer to November, the discourse becomes more radical if the crypto community positions itself in favor of Donald Trump, as it is currently happening.

Attention, because it seems the portfolio has been discovered. Do you remember that Donald Trump accepts cryptocurrencies as donations for his campaign? Well, in one week, he already has 10 million dollars, according to tracking by Arkham. And as you can see here, the asset that weighs the most in his portfolio, as expected, is the #Trump token with over 7 million dollars.

All this being said a couple of years ago, I would have said it’s quite unlikely. But well, it’s happening. Now, how far will Donald Trump go with Bitcoin? Do you think he could propose adopting Bitcoin as the country's reserve if cryptos become a very powerful niche to attract new voters? Let me know.

These altcoins will never return to their all-time highs.

Alright, let’s launch a new section called "Trash Coins." The chart doesn’t lie. Is it going up or down? It’s going down, and it has been since 2013.

Of course, I'm talking about $LTC and $XRP . But why?

Litecoin’s market performance has been declining since its peak in December 2017. Despite positive news and adoption, it hasn't managed to surpass its previous highs. The lack of a unique value proposition is also an issue.

While Litecoin was one of the first altcoins to improve upon Bitcoin’s technology, newer cryptocurrencies with better features and scalability have emerged, overshadowing its advantages. Even the introduction of MimbleWimble for enhanced privacy hasn't significantly impacted its adoption or market price.

What’s happening with $XRP now is very similar to what happened with Litecoin in the previous cycle. I was in the previous cycle with Litecoin, which just kept going up. I only saw good fundamentals and thought, "This is silver, Bitcoin is gold."

Institutions were accumulating it, like Grayscale starting a Litecoin fund and incorporating it into their portfolio. There were positive news stories, but over time, it became clear. We entered a bear market and I thought, "Oh man, this is tough." These are the lessons I’ve learned, and that’s why I’m making these posts—to lay out the reality.

With a heavy heart, I have to say XRP is in a similar situation. One of the most significant factors is the ongoing legal battle with the SEC. This lawsuit has created significant uncertainty around XRP’s future and has led many exchanges to delist or restrict its trading. Regulatory uncertainty has made investors cautious, reducing the demand for XRP.

It's near historical lows, and the price levels are reminiscent of 2014. Long story short, it’s not a coin I’d hold.

That’s all for today! I hope this information has been helpful. See you.

It is thanks to immigrants.

The question I want to ask you today is very delicate because it has many implications: How is illegal immigration affecting the U.S. economy? I will stick to my area of expertise, which is the economy.

First, note that 80% of the increase in the adult population in the U.S. over the last two years is due to people not born in the U.S. but abroad.

So, the next question is, without these 3.2 million people, how much would the U.S. economy have grown? These people contribute to production and create demand. Without them, U.S. GDP would have grown much less. How much less? At least a third less, so it would have been two-thirds of the estimated figure.

Illegal immigration has helped the U.S. maintain a strong labor market, allowing companies to rely on these workers to continue services. On average, people coming to the U.S. have low technical qualifications. This can affect productivity. In the short term, it doesn't help, but this influx of adults, who will later have children that will enter the education system and fill higher-skilled jobs.

Additionally, this influx isn't happening in countries like China and Russia, which have low birth rates. In the medium and long term, this will boost the U.S. population and productivity while competitor countries lag.

Yesterday, in the Wall Street Journal, I was surprised when they said the inversion of the yield curve failed to predict recessions, questioning its utility.

Remember, when the yield curve inverts, it usually means a recession is coming. But the reason for the recession is that if banks lend less after the inversion, the economy shrinks. If banks lend more, the economy doesn’t enter a recession.

The yield curve inversion signals you to watch credit supply and demand. If it's healthy and growing, the economy won’t recess. This is what’s happening now. It's surprising that the Wall Street Journal would say this, and even more so that Cambridge or Oxford professors would echo it.

That's all for now. I am going for a walk. Have a great day!