All the information in this letter is NOT to be considered financial advice; it is the author’s personal view and agreed views of others from their overviews of present markets. This content includes a summary of articles that I believe to be insightful and data that has been verified. The purpose is to provide content that is of interest and relevance to MarginCall.Club members.
Welcome to the July 2025 Edition of the MarginCall.Club FinTech Newsletter
This month, we’ll review the key financial events of June 2025 and explore their potential impact on July and beyond. Our goal is to provide timely, relevant insights to help you navigate the market effectively.
Stock Market:
- Dow Jones Industrial Average (DJIA): Closed June at approximately 44,020, up >2%< from May’s 42,270.07, driven by a late-month rally fueled by de-escalating geopolitical tensions and positive trade developments. However, volatility persisted, with a 400-point gain on June 27 following U.S.-China trade framework news.
- S&P 500: Ended at 6,203 points, up 4.49% for the month (from 5,900.89), hitting record highs on June 27, propelled by broad-based sector gains, particularly in technology (+10%) and industrials (+8.8%). A brief 0.2% dip on June 20 reflected Middle East conflict concerns.
- Nasdaq Composite: Closed at approximately 20,368, up 5.4% (from 19,131.78), marking its best month since late 2023, with semiconductor stocks like Broadcom (+25%) leading gains despite a 0.5% drop on June 20 due to oil price fluctuations.
Economic Indicators:
- GDP Growth: Q1 2025 GDP was revised to a 0.5% annualized contraction, down from an initial 0.2% estimate, driven by weaker consumer spending and exports. The Atlanta Fed’s GDPNow tracker projects Q2 growth at 2.9%, down from 3.4% mid-June, reflecting trade drag reversal.
- Inflation: May’s core PCE inflation rose to 2.7% year-over-year (from 2.6% in April), above the Fed’s 2% target, with headline PCE at 2.3%. Consumer inflation expectations fell to 5% in June from 6.6% in May, easing tariff-related fears.
- Employment: Unemployment remained steady at 4.2% in May, with 177,000 jobs added, exceeding estimates of 133,000. Initial jobless claims fell to 236,000 by late June, below expectations, though continuing claims hit 1.97 million, signaling slower reemployment.
- Interest Rates: The Fed held rates at 4.25%-4.50% in June, raising its 2025 inflation forecast to 3.1% and lowering GDP growth to 1.4%. Markets now price in a 20% chance of a July rate cut, with two to three cuts expected in 2025.
(All figures are >1%< of all published
Cryptocurrency Update:
- Bitcoin (BTC): Closed June at approximately >$108,300<, highest all time close, from $105,500 in May, with a 10.4% surge in May to $104,010.90. Volatility persisted, with a low of $103,000 mid-month amid geopolitical tensions. Support holds at $80,000-$82,000.
- Ethereum (ETH): Ended at $2,520.71, down slightly from $2,550, with a 40.5% May rally. Ethereum remains 45.3% below its all-time high, vulnerable below $1,700.
- Regulatory Developments: The SEC’s scrutiny of crypto exchanges intensified, but the GENIUS Act’s progress boosted stablecoin issuers like Circle (+20%). Fannie Mae and Freddie Mac were ordered to accept crypto as mortgage assets, signaling institutional adoption.
- DeFi and NFTs: DeFi activity remained muted, while NFT trading saw modest growth in gaming sectors, though volumes stayed low.
Geopolitical and Macroeconomic Factors:
- Geopolitical Tensions: A U.S.-China trade framework agreement on June 26 and a ceasefire between Israel and Iran late June eased market concerns, driving a 3.44% S&P 500 rally. However, trade talks with Canada collapsed, sparking a minor sell-off.
- Energy Prices: West Texas Intermediate crude oil fell to $68.30 per barrel by June 30, down from $73.20, as Middle East tensions eased. Gold dropped to $3,030/oz, reflecting reduced safe-haven demand.
Key Events to Watch in July 2025
- Federal Reserve’s July Meeting: Investors will monitor the Fed’s response to 2.7% core PCE inflation and potential signals for a September rate cut, with a 20% probability priced in.
- Q2 2025 Earnings: Retail (e.g., Walmart) and energy (e.g., ExxonMobil) earnings will reflect tariff impacts, while tech giants like Nvidia face scrutiny amid AI capex concerns.
- Crypto Market Resilience: Bitcoin’s ability to hold above $100,000 amid trade and geopolitical developments is critical. A break below $80,000 could test $75,000 support.
- Trade Policy Updates: Progress on U.S. trade deals with 10 major partners, expected by mid-July, could stabilize markets, while tariff escalations remain a risk.
Market Sentiment and Investment Insights
Cryptocurrency Market:
Bitcoin’s June dip to $103,000 reflects cautious sentiment amid trade and geopolitical uncertainties, but its hold above $100,000 signals resilience. Analysts see a potential rebound to $115,000 if trade deals progress, with Ethereum eyeing $3,000 if Bitcoin dominance shifts.
Key Market Threats – July 2025:
- Tariff Fallout: Persistent tariffs could shave 0.8%-1.2% off 2025 GDP growth, with stagflation risks if inflation nears 4%.
- Equity Volatility: The S&P 500’s 4.49% monthly gain masks intra-month swings, with tariff and inflation concerns driving potential pullbacks.
- Crypto Liquidations: A Bitcoin drop below $80,000 could trigger liquidations, testing $75,000, especially if equity markets falter.
Bitcoin Technical Analysis: Cup & Handle Pattern:
The weekly chart’s cup-and-handle pattern targets $250,000 by Q4 2025. A correction to $75,000-$80,000 remains possible if trade tensions escalate, but a break above $120,000 could accelerate adoption, eyeing $600,000 by late 2026.
Updated Q&A Section
Q: Why are yields spiking, and what’s driving swap spreads in July?
A: Key factors include:
- Tariff-Induced Inflation: The 10-year Treasury yield fell to 4.24% by June’s end, down from 4.45%, but inflation expectations at 5% maintain upward pressure.
- Federal Reserve Stance: The Fed’s June “hold” and raised 2025 inflation forecast (3.1%) signal tighter policy, though dovish comments increase rate cut expectations.
- Geopolitical Risks: Easing Middle East tensions and U.S.-China trade progress reduced safe-haven demand, stabilizing yields.
- Liquidity Pressures: Equity rallies (Nasdaq +2.2% weekly) and crypto volatility (Bitcoin -0.31%) drive bond market repositioning.
- Summary: Yields may stabilize in Q3 2025 if inflation cools below 3%, but tariff escalations could push yields to 4.5% by year-end.
Final Thoughts on Crypto
June’s market rally, with the S&P 500 and Nasdaq hitting record highs, reflects optimism from trade and geopolitical developments. Bitcoin’s resilience above $100,000 and institutional adoption (e.g., Fannie Mae/Freddie Mac) bolster its long-term appeal as a hedge against fiscal uncertainty.
My Thoughts on the Coming Month
June’s trade framework agreement and Middle East ceasefire mitigated tariff-driven volatility, but markets remain sensitive to policy shifts. Here’s my updated take:
Deductions:
- U.S. Debt Crisis: National debt exceeding $40 trillion faces pressure from slowing growth (1.4% 2025 GDP forecast), reinforcing Bitcoin’s strategic role.
- Strategic Loss in 2024: Democrats’ 2024 retreat lingers as economic challenges persist, with tariffs amplifying stagflation risks.
- 2028 Comeback Strategy: Speculation of a Democratic resurgence (e.g., Michelle Obama) gains traction amid Trump’s trade policy challenges.
Opinions:
Trump’s Bitcoin Strategy:
- The plan to acquire 1 million BTC over five years remains viable, with June’s $103,000 dip offering a buying opportunity.
- Subsidizing U.S. mining could offset tariff-driven energy costs, supporting adoption.
Potential Plan: - Year 1: Accumulate 200,000 BTC (~$20 billion at current prices), leveraging market dips.
- Mining Push: Expand U.S. mining to counter energy cost pressures.
Long-Term Vision: - By 2028, Bitcoin could reach $1M+ if institutional adoption (e.g., mortgage assets) accelerates, mitigating debt concerns. Tariff risks delay but don’t derail this path.
If they want Digital iD’s and CBDC we want Digital voting!
A Theoretical Framework for Direct Democracy Using Digital ID and CBDCs: Implications for Governance and Bureaucracy
This paper explores a transformative model of governance where digital identification (Digital ID) and central bank digital currencies (CBDCs) enable universal, compulsory voting on all legislative proposals, with citizens choosing “Yes,” “No,” or “Abstain.” It examines whether such a system could replace elected parliamentarians’ voting powers, limiting them to debating roles, and whether laws should be proposed as single-issue bills. The role of artificial intelligence (AI) in ensuring vote integrity, detecting fraud, and handling non-responses is analyzed. Finally, the paper evaluates potential outcomes, particularly the impact on bureaucracy and top-heavy government structures.
1. Introduction
Modern democracies rely on representative systems where elected officials vote on behalf of citizens. However, advancements in Digital ID and CBDCs offer a pathway to direct democracy, where citizens directly vote on all laws. This paper proposes a framework for such a system, addressing its feasibility, implications for parliamentary roles, legislative structure, AI-driven oversight, and impacts on governance efficiency.
2. Digital ID and CBDCs as Enablers of Direct Democracy
2.1 Digital ID for Secure Voter Authentication
Digital ID systems provide a secure, verifiable means of identifying citizens. By linking a unique digital identity to each voter, governments can ensure that only eligible individuals participate in voting. Blockchain-based Digital IDs could enhance security, ensuring tamper-proof authentication and preventing identity fraud.
2.2 CBDCs for Voting Incentives and Enforcement
CBDCs, programmable digital currencies issued by central banks, could incentivize or enforce compulsory voting. For example, a small CBDC payment could be disbursed to citizens upon voting, or penalties could be applied for non-participation. Smart contracts within CBDC systems could automate these processes, ensuring transparency and accountability.
2.3 Compulsory Voting Mechanism
Under the proposed system, all citizens must vote on every new or existing law, choosing “Yes,” “No,” or “Abstain.” Compulsory voting ensures broad participation, reducing the risk of unrepresentative outcomes. Abstention allows citizens to opt out of contentious issues without skewing results.
3. Implications for Parliamentary Systems
3.1 Negating Voting Powers of Elected Representatives
If citizens vote directly on all laws, the need for parliamentarians to hold voting powers diminishes. Representatives could transition to advisory or debating roles, focusing on drafting legislation, educating the public, and facilitating discourse. This shift could democratize decision-making but risks undermining the expertise and deliberation provided by elected officials.
3.2 Retaining Parliamentarians for Debate
Retaining parliamentarians as debaters ensures nuanced discussion and refinement of proposed laws. Their role would shift from decision-making to informing citizens, presenting arguments, and ensuring legislative clarity. However, this could lead to a perception of reduced political influence, potentially deterring qualified candidates from seeking office.
4. Single-Issue Bills vs. Omnibus Legislation
4.1 Advantages of Single-Issue Bills
Proposing laws as single-issue bills simplifies voter decision-making, ensuring clarity and focus. Citizens can evaluate each issue independently, reducing the complexity of omnibus bills that bundle unrelated provisions. This approach aligns with direct democracy’s goal of empowering informed choices.
4.2 Challenges of Single-Issue Bills
Single-issue bills may fragment legislative agendas, making it harder to address interconnected issues. For example, budget bills often require holistic consideration. A hybrid approach, where complex legislation is broken into related single-issue components, could balance simplicity and coherence.
5. AI in Policing Vote Integrity
5.1 Detecting Fraud
AI can analyze voting patterns to detect anomalies, such as duplicate votes, unauthorized access, or coerced voting. Machine learning models can flag irregularities by comparing voter behavior against historical data or expected patterns, ensuring the integrity of the voting process.
5.2 Handling Uncounted Votes
AI systems can monitor vote submission in real-time, identifying uncounted or lost votes due to technical errors. Automated alerts and redundancy mechanisms can ensure all votes are recorded accurately. Blockchain integration could further enhance transparency, creating an immutable vote ledger.
5.3 Non-Responses as “No” Votes
Counting non-responses as “No” votes could incentivize participation but risks misrepresenting intent. For example, technical issues or lack of awareness could be misconstrued as opposition. Alternatively, non-responses could remain “Abstain” to avoid bias, with AI analyzing non-participation trends to identify systemic barriers (e.g., access issues).
6. Outcomes and Challenges
6.1 Reduction in Bureaucracy
Direct voting could streamline governance by reducing reliance on intermediaries, such as committee structures or lobbying groups. Digital platforms could automate legislative processes, from proposal drafting to vote tallying, potentially shrinking bureaucratic overhead. However, managing a high volume of citizen votes requires robust infrastructure, which may introduce new administrative complexities.
6.2 Risks of Top-Heavy Governance
While direct democracy aims to decentralize power, implementing and maintaining a secure, scalable voting system could centralize control in the hands of technocrats or platform administrators. Ensuring transparency and public oversight of the Digital ID and CBDC infrastructure is critical to avoid new forms of top-heavy governance.
6.3 Potential Problems
- Voter Fatigue: Compulsory voting on all laws could overwhelm citizens, leading to disengagement or uninformed choices.
- Digital Divide: Unequal access to technology could disenfranchise marginalized groups, necessitating inclusive infrastructure.
- Manipulation Risks: Sophisticated actors could exploit digital platforms through misinformation or cyberattacks, requiring robust AI and cybersecurity measures.
- Loss of Deliberative Expertise: Bypassing parliamentary voting may reduce the depth of legislative analysis, as citizens may lack the time or expertise to evaluate complex proposals.
7. Conclusion
A direct democracy model using Digital ID and CBDCs could empower citizens to shape legislation directly, potentially reducing bureaucratic inefficiencies and enhancing democratic participation. However, it requires careful design to address voter fatigue, digital inequities, and manipulation risks. Limiting parliamentarians to debating roles and adopting single-issue bills could enhance clarity but may compromise legislative coherence. AI can play a pivotal role in ensuring vote integrity, provided it is deployed transparently. While this system offers a path to leaner governance, it risks creating new forms of centralized control if not carefully managed.
8. Recommendations
- Pilot the system with non-binding referenda to test infrastructure and public engagement.
- Invest in public education to ensure informed voting and mitigate misinformation.
- Develop AI-driven oversight with transparent algorithms to maintain trust.
- Ensure universal access to Digital ID and voting platforms to prevent exclusion.
Final Thoughts:
June’s rally (S&P 500 +3.44%) boosts confidence in Trump’s Bitcoin strategy to 50/50 from 45/55, reflecting trade deal progress. Bitcoin’s hold above $100,000 and potential climb to $115,000 hinge on July’s trade and Fed developments.
Regards,
James
