Sometime in late April, the Houthi rebel group in Yemen showcased its ability to strike targets far from its borders by attacking the Israeli-linked commercial ship MSC Orion in the Arabian Sea, around 400 miles off Yemen's mainland.

The strike appears to have involved drone debris hitting the vessel, causing minor damage but no casualties. 

Courtesy: Marine Traffic, FT

This follows the Houthis' escalation last year, targeting shipping linked to Israel, the U.S. and the U.K through airstrikes and blockades. The rebels cited Israeli military actions in Gaza and Western involvement as the impetus. 

According to Antiwar.com: “The Houthis, officially known as Ansar Allah, restarted attacks on commercial shipping last week after about a two-week lull. During the lull, the Houthis were examining 'incentives' to stop the attacks put forward by the U.S., which included an offer to fully lift the blockade on Yemen that's been imposed since 2015.”

Despite this potential opening, the Houthis have resumed their campaign, threatening an expansion into the Indian Ocean unless a ceasefire is reached in Gaza.

The situation in and around Yemen exemplifies failed U.S. policy, wherein diplomacy is treated as a last resort rather than a primary path forward. And as tensions escalate — with the Indian Ocean as a new front — a diplomatic solution is even more urgent. 

Moving on… 

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Your Rundown for Monday, May 6, 2024...

STILL a Case for Crypto

Admittedly, crypto’s been a basket case recently. If you’re a long-time HODLer, you know that’s nothing new… 

“There’s STILL a case to be made for crypto,” assures Paradigm’s crypto analyst Chris Campbell. 

“The current economic environment is characterized by high debt levels, slow growth, and a reliance on central bank and government interventions to keep the system functioning.

“Global central banks have agreed to use quantitative easing (i.e. expanding their balance sheets) to monetize government debt and keep interest rates low.

“Right now, economic growth (GDP growth) is too slow to cover the interest payments on the high levels of debt in the system,” Chris notes. 

“The solution? Stimulus, which can come in various forms, such as reducing interest rates, quantitative easing, draining the reverse repo, etc.

“While the consequences are currency debasement and rising asset prices (like crypto), the central banks avoid a deflationary collapse under the debt burden.

“BUT let’s say things don't go that way,” he counters. “What if central banks can’t control the deflationary monster?

“In short, debt burdens would increase, with rising defaults and bankruptcies, falling asset prices, rising unemployment, and more.

“In a stagflationary or deflationary environment, for example, there would be increased interest in tokenizing real-world assets, such as real estate, commodities, or even debt instruments, on blockchain networks.

“This would create new investment opportunities and provide alternative financing and liquidity channels for otherwise illiquid assets.

“Moreover, access to credit through DeFi protocols could become more attractive as traditional lending channels tighten.” 

All that to say: “There’s STILL a case to be made for crypto,” Chris repeats. “Crypto has many paths to success. What’s happening right now is normal. Don’t panic; stay focused on long-term goals. 

“Once the altcoin season kicks off, things will start to get really exciting.”

Market Rundown for Monday, May 6, 2024

The S&P 500 is up 0.50% to 5,150. 

Oil is up 0.65% to $78.60 for a barrel of WTI. 

Gold is up 1% to $2,334.10 per ounce. 

But Bitcoin is down 0.50% to $63,500 at the time of writing. 

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