More Banks Won't Bring More Prosperity
More Banks Won't Bring More Prosperity
August is complete, and we are still trading within a range. We have been inside this pattern for 6 months, and we are still looking for a catalyst to take us higher. For those of you that are more visual, Austin Powers himself can show you what it feels like to be stuck in a range at times. For 6 months, Bitcoin has not been able to reach March's All Time High.
A Look Outside Australia - Stormrake's Asian Tour
A Look Outside Australia - Stormrake's Asian Tour
It's easy to get stuck in echo chambers these days, from your friendship circles to social media that feeds you the same content over and over. In this way, it's also easy to assume what happens in Australia and New Zealand applies to the rest of the world, but we represent a relatively small part of the world. In August, Stormrake visited the Philippines on a tour designed to review the Philippine crypto scene.
The findings were very interesting:
1) The Philippines is a country with enormous economic potential. With over 100 Million incredible, friendly and talented people (12th largest in the world) the Philippines has a building block of opportunity. Can the country up skill its people and provide the infrastructure required to make the place an economic powerhouse? I think it's very possible.
2) We are incredibly early. Whilst at a large event in Manila, we saw first hand the reaction of regular people to the concepts our readers will probably find relatively obvious. The locals had little knowledge about the very basics of money, monetary history, inflation, money printing and government intervention in money markets. How, then, can they understand Bitcoin?
We saw firsthand that Manila's elite are not yet aware of the real need for a transparent, borderless, decentralised monetary system like Bitcoin. Bitcoin is not just a "money go up investment"; it also provides freedom and protection from money printing.
For investors from down under who think they have missed the boat, the message is loud and clear: buying today makes you an early adopter. You are still early and the opportunity is fresh.
3) Manila has more bank branches then I've ever seen. There seems to be more bank branches then fast food outlets. There is one on every corner. On one short drive (in kms not time), we drove past the following banks:
BNP, China Savings Bank, Metro Bank, Commercial Bank, Eastwest Bank, ChinaBank, PSBank, RCBC, DBP Bank, BDO, Landbank, Security Bank, SEC Bank.
Here's how many Banks the Phillipines has:
45 universal and commercial Banks
44 Savings Banks
400 Rural and Cooperative Banks
and a further 6,267 Non-Banks with quasi banking functions all licensed under the General Banking Act 2000 as of 2022
You might ask why a relatively poor nation requires 6-7,000 banks (Some with many branches). But also how do they all keep themselves afloat? How do they make their money?
Here are some factors that may contribute:
A) ATM fees, ATM fees as a % of ATM withdrawals are incredibly high compared to what we are used to. A taxi fare will often cost you less than an ATM fee. However, I don't think that explains why there are so many banks.
B) Government subsidies and monetary policy.
- PDIC - A deposit insurance scheme is an indirect subsidy born by taxpayers which budgets around 10 Billion PHP (Circa $265Million AUD).
- Direct Subsidies - PHP 24 billion ($633 Million AUD) was given out in 1 year just to Landbank for "Development projects"
- Other Rural Programs - The Phillippine government also grants various regional banks significant subsidies for various rural projects (it is hard to say how much oversight exists to check those funds are not disappearing but all I can say is that the countries infrastructure leaves a lot to be desired.
- Bailouts - 2008 and 2018 saw significant bailouts where the taxpayer paid banks to stay afloat. It's another reason bankers can take big risks with other people's money. If it goes pear shaped they will be saved.
However as disgusting as all that is, it also exists elsewhere so that brings me to point C.
C) Remittance Revenue
The Philippines has an enormous workforce working outside of the country and sending funds back home. The remittance business is incredibly large and the Philippines is the 4th largest inward remitter in the entire world. 39 Billion USD$ worth per year comes into the Philippines via remittances. The cost of sending money overseas can be 7-10% in Australia for popular pairs. For the PHP, the charge is often more than that. A huge portion of those comes through banks gouging poor Filipino workers. That's circa $4Billion in remittance fees the banks above are likely earning just from inbound funds. That's enough to have a huge competing network trying to take a slice of the pie.
This leads me to the front cover:
As we drove past Bank after Bank we noticed that a lot of them had homeless people sleeping out the front. In fairness and respect to those people we didn't take any photos and instead offer the above AI dramatisation.
The message is clear, though:
Having more Banks does not create wealth and won't lift your country out of poverty. The solution must be something else. Central Banking isn't solving the problem.
The Solution:
Keep more of what you earn!
As more business move to a Bitcoin standard it will soon be possible to get paid directly in Bitcoin. If you are a handyman or an artist - ask to get paid in Bitcoin.
If you do, you can actually own that money and you don't need a bank to store it. You can store it yourself or failing that a trusted broker ;)
If you need to send it to your family in a different country you can do it directly and not be charged egregious fees by Banks or money transmission services.
You can trade in and out of whatever you want through Stormrake with ease and reap the rewards yourself.
Be sovereign - Rely on Yourself - Own your own future.
August's timeline of key events and impact on BTC with prices:
August's timeline of key events and impact on BTC with prices:
August has seen plenty of news. Here is a simplified timeline of the events that had a great impact on BTC price.
- August 4:
Japanese Yen Carry Trade Unwinds. Global Markets rocked by sharp losses on the Yen Carry Trade which has been the easiest trade going around. The shock is felt by Crypto first as investors are unable to exit equities on the weekend seek liquidity elsewhere. Monday is a bloodbath in world equity markets.
- August 21:
The US Bureau of Labor Statistics revised downward the estimates for non-farm payrolls by 818,000 for the 12 months to March 2024. That announcement sent a shudder through world markets because it meant that the US economy was probably in recession and previous reported estimates were wildly optimistic
- August 23
Kennedy (RFK) drops out of US presidential race and endorses Trump putting the likelihood of a Trump-Pump higher. Both Trump and Kennedy had promised positive regulations and support for Bitcoin earlier.
On the same day, Jackson Hole meeting produces first dovish statement from Chairman Powell suggesting US interest rates may soon start to fall. (Closely linked to the news 2 days earlier)
- August 24:
Pavel Durov, founder of Telegram, arrested in Paris, France on terrorism charges. TON coin experiences volatility as fear of a negative impact on the coin as a result of Pavel's arrest. (He has since been released but can not leave the country).
- August 26:
Allegations of misconduct in the Australian Gold industry are exposed with Economist John Adams taking on ASIC for corruption which implicates Australia's PM Anthony Albanese.
Market Update
Market Update
Here is the fast five of what you need to know about the market in August 2024:
- Bitcoin struggled to breach the 6 month sideways trend ending the month lower.
- The Ethereum ETF's underperformed and ETH failed to regain $300B Market Cap.
- TON coin dropped out of the Top10 being replaced by Tron (TRX) on the back of Telegram founder Pavel Durov's arrest.
- Outside the Top10, Helium (HNT) bucked the downward trend. HNT is the only coin in the top 100 up over 10% in the last week.
- MATIC (Polygon) begins its migration to POL (Its own dedicated chain). The MATIC price actually fell though so this could be an opportunity
Video of the month
Your favourite Stormrake Broker will be touring the country to speak about the importance of Bitcoin as a tool for self sovereignty. Some tickets are still available at Eventbrite. Link below:
In the news
TON Community Unites over Founder's Arrest in Paris
The nation of France steeped in the tradition of Liberty has taken the incredible step of arresting the founder of global messaging app Telegram. Pavel Durov was arrested after arriving at the Bourget Airport for actions related to criminal activity on the platform, including complicity in illegal gang transactions, “laundering of crimes in an organized gang,” and refusal to communicate information to authorities, according to the French prosecutor’s statement. Our view is that these charges are egregious to say the least and fly in the face of France's history of freedom and liberty. Investors in TON have to be wary though and a strategy needs to be formulated. Talk to your broker if you've not developed one.
Ethereum ETFs Underperform:
So far the Ethereum ETF's have underperformed expectations compared to the results of the Bitcoin ETF's. We saw a streak of ETH ETF outflows which have added to downward pressure on Spot ETH market price.
US Economy Slowing
There has been a consistent pattern of overestimating the economy in the US. The latest Job numbers saw the largest ever jobs revision of almost 1 Million jobs. The market took a stumble and many commentators are expecting the US to slow to an official recession.
Stormrake x Sharewise Partnership Announced
Diversification is the name of the game. Now its even easier to diversify across asset classes with our new partnership with Equities Broker Sharewise based in Sydney, Australia. Speak to your broker to find out more.
Education
Education
Education
Risk Warning: Scammers are Getting Smarter
Risk Warning: Scammers are Getting Smarter
The entire crypto industry has experienced a wave of scam attempts by sophisticated scammers trying to lure unsuspecting Aussies and Kiwi's into their trap. AI tech may be helping scammers convince more victims to send them their hard earned funds.
What are scammers trying to do?
What are scammers trying to do?
Scammers are not interested in working hard for a small fee. They want 100% of your funds. They often achieve this by convincing you that they have the ability to offer incredible results that no one else can achieve for you. All you have to do is send them money and you can become rich.
Once scammers have your funds the likelihood of recovery is close to zero. Worse still they will likely try again and again.
How to protect yourself
How to protect yourself
First and foremost, look out for unrealistic promises. A genuine opportunity would never guarantee income and returns. In real life reward comes with risk. You can't have your cake and eat it too! You can't have great returns without the risk associated.
Secondly, know who you are getting in bed with. Real financial professionals are happy to meet you and have a public profile. Ask questions, know who you are dealing with. Do not talk to people through unsolicited calls or online contact.
If you think you have been scammed.
If you think you have been scammed.
If you think any of the above is ringing alarm bells. Contact us to let us know because we may be able to help.
Some scam victims may feel a sense of embarrassment which prevents them from reporting the scammers. If this is you please don't hesitate to call. You may be helping prevent others from getting scammed just like you.
Lastly "If its too good to be true it probably is". Don't be afraid to build wealth slowly.
Our Article
Our Article
We released an article earlier to help identify scams and it can be found here
If you have been contacted by a scammer they may already be reported in this list.
Please trade responsibly.
Written by Michael Milmeister
Memes of the month
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No Advice Warning
The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.
Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.
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