Cryptos & CBDCs
If you look at the chart, BTC quickly went down under 20k initially with the bank news, as SIVB was affiliated with bitcoin. Yet in a matter of seven days it recovered to almost 28k with that stable coin bailout news, and as of today still on an uptrend with decent volume. It was on a small rally since January. It went from 16k in December to 24k in Feb, so that took about 30 days to gain around 10k on no hype or news.
Gold saw some strength here, but if it weren’t for the cryptos gold would be way over $2,000. In fact if cryptocurrencies never existed gold would be $3,000+.
The stable coins received a huge vote of confidence as the Fed and US Treasury bailed out USDC, rather than have the stable coin lose the $1.00 NAV due to an unprotected deposit.
If I were running stable coins, I would probably take my money and deposit it at Banks like JP Morgan or Goldman Sachs. I would play nice with regulators and they would allow me to make a lot of money as I would help support the price of Bitcoin and divert money from the precious metals.
We talk about a central bank digital currency, the Fed is not going to use a cryptocurrency type of regime like bitcoin. Rather it will be a digital currency in which it controls and operates. Concepts like FEDNow, Fed deposit guarantees, and a digitized currency would allow them to centrally manage it and forcibly govern its users.
Theoretically, Bitcoin is not centrally managed and these powers would not engineer a digitized currency that was not centrally managed.
Will CBDC be connected to BTC or can they coexist?
Yes, they can and will coexist. I am predicting that any nation-state digital currency won’t be like BTC, but rather will be a centrally managed behemoth, similar to a stablecoin that will vary in supply as needed, and that will be dispensed based on good behavior and social standing. Regardless, we are a few years away from anything substantial. It won’t happen before the force majeure of WWIII.
As reminded in the podcast no collapse, just consolidations. With the billions of deposits and merge talks, do CS and FRC uptick next week? I would think banking stocks start to make a recovery, but anything can happen.
I wouldn’t buy any of the bank stocks in question, like FRC or CS, as the terms of any buyout or rescue usually means stockholders get the shaft. Their debt would be the most likely to see support, like CSs this weekend.
Centrally planned objectives
Chris you said it was already known by the FED what was going to happen, before it happened, and isn’t that always the case with these big events. Like clockwork they had all the bailout liquidity immediately ready to save the day. The headlines are mostly free from Covid and Ukraine stories, that is old news, they are intentionally moving the populace along to follow what appears to be a pre written script.
Indeed, these rescue and bailout packages were already in the can waiting for the opportunity. The Fed and UST know all about the ramifications of its fiscal and monetary policies, and are aware in real time of the unrealized losses generated on bank balance sheets. Moreover, SVB was a who’s who list of Democrat donors and supporters. What better way to benefit from and control a crisis than by causing it in the first place?
The coming asset inflation
This past week’s monetary injection is not going directly to the end user, but is staying primarily in the financial shell for now; which is similar to the pre-covid QE stimulus.
Contagion being their fear keyword and now we enter their financial vaccine cure phase. The bailout and merging news is starting to appear in the headlines, making the banking hype seem like everything is fine and okay as Yellen has just stated, so this means BTC and related stocks should slowly go back down. Or maybe this event will be a kickoff to an extended BTC rally, the exact opposite of the expected crypto winter that was being reported in December. Once again proving we should take the contra on the reported mainstream expectations.
For now, inflation is going to continue raging. However, the difference between the bailout money injections of the past week and the monetary and fiscal stimulus from covid is vast. This time around, the entities getting the cash are the large institutions.
These banks and institutions are now flush with this cash and will begin deploying it eventually. Rather than directly driving up the costs of living, this money will most likely effectively be sterilized to some extent, and these bailout recipients are going to go out and buy the assets. I suspect they’ll probably even continue buying rental properties as well as other income generating assets.