The U.S. is facing a pivotal moment as the White House pressures the Federal Reserve to cut interest rates to boost a lagging economy – a move that will inevitably increase inflation. Since 2008, $12 trillion has been injected into the U.S. economy through quantitative easing. It’s a staggering amount of money in such a short period of time. Inflation is a slow and quiet killer; much like a frog that’s slowly boiled to death, people adapt to inflation – until they can’t.
But the table is set much differently now than it was in 2008. The increase in cryptocurrency of all kinds, including the recent launch of Facebook’s Libra and a 200% rise in Bitcoin this year alone, supports the weight of cryptocurrency’s role in the global economy, especially as it affects inflation. As the founder of an international alternative assets firm, I believe that more corporate giants will follow Facebook with their own exclusive coin offerings; in 10 to 20 years, a company without its own token may be analogous to a company without a website today.
Whenever the market is artificially propped up with a large influx of currency, there inevitably comes a breaking point when enough of that currency begins to circulate in the environment. We saw the beginning of this process during the “Crypto Boom” of 2017, when the initiation of an entirely new kind of currency made many people millionaires overnight. This is a form of inflation.
When banks insert $10 trillion into the economy, that inflation has to surface eventually. As more of the Crypto Boom billions circulate in the environment, and as less of the $10 trillion influx is hidden in banks and on Wall Street, cryptocurrency has the potential to rapidly accelerate the consequences of inflation by forcing new currency into existence.
However, past this initial inflation, cryptocurrency offers an opportunity to stabilize the global economy because, much like gold, there is a finite amount of it to be mined. Furthermore, it’s the first investment that anyone in the world can purchase at any time, as long as they have access to the internet. For example, if you’re living in Argentina, you can’t just buy U.S. dollars whenever you want. You need a broker. And while the New York Stock Exchange closes, cryptocurrency never does. It’s a 24/7 investment.
Ultimately, the consequences of inflation won’t be nearly as devastating as the alternative – deflation. Inflation, at least, gives us a leg to stand on to stay in the game long enough to devise a better strategy. Much like one person can acquire a credit card and continue to live despite mounting debt, the global economy can utilize inflation as a way to extend the time frame we have to figure out a better solution.
I believe that solution is cryptocurrency. Within the next 10 to 20 years, our monetary system will likely reach a point of inflation that’s so massive it will mandate some type of monetary reform. The potential collapse of the Euro or the U.S. dollar may even necessitate the development of national cryptocurrencies, the prelude to which we may be currently witnessing, with the introduction of corporate cryptocurrencies like Libra.
Coupled with blockchain technology, national cryptocurrencies could increase transparency around government spending and make it difficult for dark money to infiltrate political campaign financing, illegal drug trade, and criminal activity. A cryptocurrency-based monetary shift would also be aligned with the exponential growth of technology and the cultural impetus to digitize as many facets of day-to-day life as possible. It’s not hard to imagine a day in the near future when people move through the world without carrying wallets or even mobile phones – at least not in their current iteration. I’m optimistic that cryptocurrency would naturally fall into that space.
VanEck exec claims Visa, Mastercard were forced to stay away from Libra
While several dissed Facebook’s cryptocurrency venture, Libra, a few others envisioned the social media giant’s move to be a boost to the crypto-industry, due to its global reach. However, the regulatory climate that surrounds the project has been hindering its launch. Recently, the five companies that backed Libra, namely, Visa, Mastercard, eBay, Stripe and Mercado Pago, followed the footsteps of PayPal and announced that they would no longer be part of this project.
Director, Digital Assets Startegy at VanEck , Gabor Gurbacs, is the latest to comment on the issue, claiming that these companies are being urged to leave the crypto-project. He took to Twitter and said,
“Every company that is leaving #Libra is likely, in some ways, forced to do that. It’s unfortunate and I am sorry that capital markets aren’t free.
Now you have a first-hand understanding why censorship-resistance is important!
> Welcome to #Bitcoin!”
Recently, these companies received letters from a few US senators, urging them to withdraw from the project. The letter stated that if the companies didn’t steer away from the project, they would have to encounter regulatory obligations. Gurbacs addressed the same in his tweet and said that regulatory burdens have hindered these companies from experimenting and innovating. He concluded his tweet by saying,
“America can do better!”
Recently, the New York-based investment giant, VanEck, withdrew its Bitcoin Exchange Traded Fund [ETF] application, a month before the U.S Securities and Exchange Commission [SEC] was scheduled to give its final verdict about the approval or rejection of the application.
Additionally, the SEC also rejected Bitwise’s application that seeked the approval of a Bitcoin ETF. The asset management platform had submitted the application back in January. However, the SEC after delaying a verdict several times over the year, has finally dismissed it.
Cryptocurrency market update: Subdued trading action continues on Sunday, XRP/USD gains traction
- Bitcoin struggles to determine its next short-term direction.
- Ethereum rebounds after posting modest losses on Saturday.
- Ripple remains on track to register weekly gains for the second straight week.
Major cryptocurrencies stay relatively calm for the second straight day on Sunday and continue to fluctuate between technical ranges in the absence of significant fundamental drivers that could impact the cryptocurrency market sentiment.
Top-3 coins price overview
Bitcoin (BTC/USD) posted small gains on Saturday and closed the $8,300 and is now moving up and down in a tight channel near that level. As of writing, the pair was up 0.5% on a daily basis at $8,345. Unless the pair advances beyond the critical 200-day moving average (MA), which is currently located at $8,700, and registers a daily close there, it is likely to have a difficult time finding its next direction.
Above the 200-day MA, $8,970/$9,000 (Fibonacci %78.6 retracement of June rally/psychological level) could be seen as the next resistance ahead of $10,000 (psychological level/Fibonacci %61.8 retracement of June rally). On the downside, the first technical support is located at $8,270 (20-day MA) before $7,700/$7,800 area (September 26th, September 30th, October 6th, October 7th low).
Ethereum (ETH/USD) lost 0.5% on a daily basis on Saturday and closed at $180. However, this move didn’t have enough momentum to suggest that sellers were looking to take control of the ETH/USD pair’s movements. In fact, the pair easily recovered Saturday’s losses on Sunday and was last seen trading near $182, adding 1.1% on the day. Looking at the near-term technical levels, $185 (50-day MA) aligns as the first hurdle on the upside before $200 (psychological level/October 11th high). Supports, on the other hand, could be seen at $177 (20-day MA), $170 (October 6th, October 7th low) and $152 (September 26th low).
After gaining nearly 2% on Saturday, Ripple (XRP/USD) is outperforming other major cryptocurrencies on Sunday as well. As of writing, the XRP/USD pair was up 1.95% on the day at $0.2783. With this weekend’s rally, the pair remains on track to gain more than 8% on a weekly basis after rising 6.3% in the previous week.
Looking at the daily chart, the Relative Strength Index indicator continues to stretch higher above the 50 mark, suggesting that bullish momentum is gathering strength. The pair could face the first resistance at $0.29 (October 9th high) ahead of $0.3 (psychological level) and $0.3270 (September 18th low). On the downside, supports are located at $0.2635 (50-day MA), $0.2125 (September 24th low) ve $0.20 (psychological level).
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SEC Looks to Suspend “Unlawfully Sold” Telegram (GRAM) Cryptocurrency
The upcoming launch of GRAM tokens has become somewhat of a spectacle for the cryptocurrency community in recent months. With final token disbursement on the horizon, the SEC has filed for emergency action against Telegram and Telegram Open Network (TON), both of whom are offshore entities to the United States. Out of the entire ordeal, the SEC’s classification of GRAM as a security is the biggest risk to the smooth launch and execution of the network, October 11, 2019.
Telegram Crackdown as Expected
Choosing to launch their network and native token without regulatory consultation was seen as a bold move from Telegram; however this appears to have backfired as the SEC has finally decided to “halt” their token offering. Nearly $1.7 billion has been raised by TON to launch a blockchain-enabled payment network that can be used over their messaging app and the scope of potential mainstream adoption is arguably on par with that of Facebook’s Libra, should that ever see the light of day.
The biggest concern for the SEC, at this point, is that GRAM tokens will be sent to respective investors before October 31, 2019. In light of this, the regulator believes this opens up the possibility of the United States market becoming a dumping ground for the tokens.
What irks the regulator the most is when companies issue tokens and don’t register them with the SEC. As the SEC describes, they allegedly evaded registration of their “security” by simply designating it as a ‘cryptocurrency’.
Veering Treatment From the Regulator
In one instance, the regulator could decide to impose a fine on a $4 billion initial coin offering (ICO) that is less than a basic business purchase and allows the project to continue working; or, they decide to completely stop the project from running in the country because they didn’t bow down to U.S. authority, which may open doors for Libra.
By the SEC’s definition, both EOS and Telegram conducted “unlawful digital token sales”. Whether EOS and GRAM are securities or not is up for debate, but that one small difference can’t possibly account for such a large deviation in their treatment.
In the age of decentralized money networks that are self-regulating, the SEC is fighting a very obvious power struggle, and they will do anything to ensure they do not lose their authority over this segment.