This week the U.S. Federal Reserve’s balance sheet charted another all-time high. At an astounding $8.357 trillion, are the rapidly growing assets of the Fed speeding crypto adoption?
The Federal Reserve publishes updates to its balance sheet numbers every seven days. This week’s report was a doozy, revealing another $8 billion in assets purchased over the period.
The U.S. central bank has been busily hoovering up mortgage-backed securities and Treasury bonds, buying them with new dollars it creates at its own discretion.
Fed Balance Sheet Hits New Record High
The Fed’s balance sheet now stands at an incredible $8.357 trillion. Are we looking at a dollar bubble in the making? “There is no end in sight,” remarked crypto proponent Anthony Pompliano.
The glut of newly created money pouring into America’s institutional financial infrastructure keeps interest rates glued to near-zero in the U.S. dollar economy.
The purpose of this in the Federal Reserve’s parlance is to help it achieve its twin mandates from Congress to stabilize prices and maximize employment.
The Credit as Money Economy
But really, the purpose is to steadily and easily notch up prices, so dollar users are incentivized to spend their dollars sooner rather than hold them and wait to spend.
The monetarists want to see goods and money exchange hands more often and use quantitative easing to grease the wheels of the market.
They also fear a deflationary episode, with Jerome Powell warning against a deflation-driven economic depression during and before the coronavirus pandemic.
Borrowing at zero percent interest is a really great deal, actually kind of impossibly great. No one who couldn’t create more of their own money supply at their own discretion to lend would lend their own money for no interest. It’s an artificial construct of the monetary system that would not make sense in someone’s personal or business finances.
So who’s paying for it? Everyone buys things that cost more because of it. Higher food and commodity prices subsidize those zero percent interest rates. Higher equities and housing prices too, and higher tuition prices with all that low interest student debt to pay back.
Are Central Banks Hastening Crypto Adoption?
Is it hastening crypto adoption? You bet it is. Investors who see monetary expansion radical even by 2008’s standards are protecting and growing their savings in cryptocurrencies and other digital asset instruments. As Nasdaq recently reported:
“Inflation fears are apparent with economic contraction and government stimulus increasing the global money supply. Bitcoin has positioned itself as a perfect hedge against inflation. Unlike fiat currency, bitcoin is not regulated by the central bank.”
The Nasdaq report emphasized how strong this narrative is, how much investors believe in it, and how validating Bitcoin’s performance against the dollar has been. Advising readers how to include cryptocurrencies as part of an inflation-proof portfolio on Saturday, Benzinga warned:
“With the U.S. CPI having increased beyond 5.4%, inflation is already here in a very real way… Investors who are not taking a look at the allocation of their asset portfolios may find themselves with a reduced future long-term spending power.”
While the Federal Reserve is essentially skimming other people’s money and lending it out at zero interest, investors on DeFi (decentralized finance) cryptocurrency lending platforms are lending their own money for massive, sometimes double-digit annual percentage yields. Meanwhile, others are parking their savings in disinflationary digital assets like Bitcoin.
The central banks are pumping liquidity into decentralized banks with every round of money printing.
Former Wall Street Banker Partners With Ethereum Competitor for New $1,500,000,000 Crypto Fund
A former Citigroup executive is shaking up the crypto investment space with a $1.5 billion venture, partnering with a leading layer 1 altcoin project.
Hivemind Capital Partners is an investment firm founded by Matt Zhang, a 14-year Citigroup Inc veteran. In a press release, Zhang announces Hivemind’s mission to provide solutions to early blockchain entrepreneurs through the creation of a new “tailor-made crypto investment platform.”
“We believe blockchain technology is a paradigm shift, and we are still in the early innings. Our mission is to provide start-to-finish capital and infrastructure solutions to visionary entrepreneurs and category-defining crypto projects.
The traditional asset management model is not designed to do this, which is why we are building a tailor-made crypto investment platform from the ground up that also offers the infrastructure institutional investors need for risk management, compliance and security.”
Hivemind is partnering with payments and decentralized finance (DeFi)-focused blockchain Algorand (ALGO) as a “strategic partner to provide technology capability and network ecosystem infrastructure.”
“We believe that Algorand is the preeminent blockchain protocol that allows institutional and corporate users to connect with the decentralized economy. With the explosive growth of the digital asset space, people tend to forget how early the crypto economy still is. We want to team up with partners who have the patience to build an enduring business.”
However, Zhang notes that Hivemind is exploring partnerships with other layer 1 blockchains as the project progresses.
“We are also in active discussions to form partnerships with a number of other leading layer-1 networks. The goal is to build a multi-chain world to let our investors see the best opportunities across the entire crypto ecosystem.”
ALGO, trading at $1.82 at time of writing, is up nearly 12% on the day. The payments blockchain has interest from other large investors lately, including an endorsement from American financier Anthony Scaramucci last month.
Jack Dorsey Steps Down as Twitter CEO
Jack Dorsey has reportedly decided to step down as the chief executive officer of Twitter.
The price of Twitter shares shot up by double digits as news broke that the CEO of the social media giant – Jack Dorsey – has decided to quit.
- CNBC reported, and later was confirmed by Jack Dorsey himself on twitter, the breaking news about Jack Dorsey’s decision to step down as the chief executive officer of Twitter.
- The news comes as somewhat of a surprise at the moment, given the support Dorsey had. Last year, reports emerged that Paul Singer – billionaire investor and founder of Elliot Management Corp, wanted to replace Dorsey.
- Shortly after, though, it became clear that he will remain at his position, which was regarded as positive news for Bitcoin supporters since Dorsey is among the most well-known proponents of the primary cryptocurrency.
- In the past, he has repeatedly outlined BTC’s merits and even suggested during the 2021 Bitcoin Conference that he would quit being the CEO of Twitter and Square if BTC needed him, which raises the question of whether he has done precisely that.
- Nevertheless, there will be many questions inside the community about what will happen to the relationship between Twitter and Bitcoin. The social media giant has been highly supportive of the cryptocurrency, including allowing BTC tips.
- Separately, the news about Dorsey’s stepping down as Twitter CEO propelled a price surge for the company’s shares, which opened 10% higher than the last close.
MicroStrategy Buys $414 Million Worth of Bitcoin
MicroStrategy has announced another massive Bitcoin purchase
Business intelligence firm MicroStrategy has wowed the cryptocurrency community with yet another massive Bitcoin purchase.
The company announced Monday that it had bought an additional 7,008 Bitcoins at an average price of approximately $59,187 per coin since the beginning of October.
MicroStrategy’s Bitcoin riches have now swelled to 121,044 coins, whose average purchase price is $29,534.
The company currently holds roughly 0.64% of Bitcoin’s total circulating supply.
Bitcoin did not budge on the announcement as it continues to flatline just above the $57,000 level.
As reported by U.Today, the flagship cryptocurrency has managed to partially recover from the violent sell-off that took place on Monday.