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At this point it is practically guaranteed that higher inflation is coming.
The Federal Reserve, which has already printed about $ 3 trillion of new money this year, is now explicitly dedicated to reducing the dollar’s purchasing power in an effort to revive the economy. Higher inflation also typically occurs when a country takes on debt and interest rates are reduced to zero, as is now the case in the United States.
“We are at a time where you may see some inflation,” Federal Reserve Bank of St. Louis President James Bullard said last week.
The trend could be positive for bitcoin, which many crypto investors believe can serve as a hedge against inflation, a digital and perhaps more portable alternative to gold. As SeekingAlpha contributor Lyn Alden explained last week, the trend has been clear since around 1980, when the share of wealth held by the world’s richest 0.1% began a 10-year increase from around 5% to over 20%. %.
But increasingly, it appears that the bitcoin-as-inflation-hedge may be cryptocurrency’s most compelling investment narrative, and not necessarily the dominant digital asset for perpetuity, as many so-called bitcoin maximalists have argued.
Last week, bitcoin’s “dominance” – the market value of all existing bitcoins, divided by the market value of all digital assets – dropped to 57%, from 68% at the start of the year, according to CoinMarketCap.
The main challenger, of course, is ether (ETH), the native token of the Ethereum blockchain, which this year has exploded in activity as the head office for the rapidly growing realm of decentralized finance, or DeFi. The market value of Ether has risen to around 12% of the sector total, from around 6.8% at the beginning of the year.
“The rivalry between Bitcoin ‘maximalists’ and Ethereum enthusiasts has become more polarized in recent months, with each side sticking to narratives that best support the asset they have pledged their loyalty to,” Kevin Kelly, co-founder of the market- analytics firm Delphi Digital, wrote this month in the report. And recently, Ethereum “caught up with its” digital gold “counterpart.”
Bitcoin Watch
Bitcoin is still taking its cue from traditional markets.
The leading cryptocurrency is falling alongside stocks, with coronavirus cases on the rise across Europe and other parts of the world threatening to put an end to the nascent global economic recovery.
Bitcoin is currently down more than 2% to $ 10,650 and could experience a more significant drop if risk aversion worsens, increasing demand for the safe haven US dollar. The cryptocurrency plummeted 40% on March 12, when the coronavirus-induced slump in global equities sparked a global rush for cash.
The recent increase in the outflow of coins from miners’ wallets to exchanges could increase bearish pressures around bitcoin.
On Sunday, 784 BTC was transferred to exchange wallets from the miners’ wallets, significantly higher than the 30-day average daily outflow of 265 BTC, according to data source Glassnode.
Read More: Bitcoin Tumbles As Stocks Fall On European Coronavirus Fears
Token Watch
Curve (CRV): Decentralized stablecoin exchange launches a new dividend program for governance token holders.
Ether (ETH): Ethereum’s transaction fees hit a record as developer Danny Ryan says the 2.0 update will dramatically improve network performance and security.
Enigma (ENG): A privacy-focused blockchain startup says its tokens “lack features” of the securities, but still registers them with regulators in the filing tied to the February deal with the US Securities and Exchange Commission.
What’s new
Bank of New York Mellon has transferred over $ 100 million in funds linked to the Ponzi OneCoin encryption scheme, according to a collection of leaked documents from the US crime watchdog FinCEN (CoinDesk)
Kava Labs Sniffs DeFi Fever With A New Yield Generation Platform With Bitcoin Deposits, Binance Coin (BNB, Binance USD (BUSD), And XRP From Ripple (CoinDesk)
Vitalik Buterin was obsessed with rabbits as a 7-year-old, writes Bloomberg News reporter Matt Leising in a new book on Ethereum and The DAO’s $ 55 million hack (CoinDesk)
The Governor of the Bank of Thailand says the central bank is conducting tests to integrate digital currency, with the aim of expanding adoption to “enable greater payment efficiency for companies, such as increasing flexibility for transfers of funds or provide faster and more agile payments between suppliers “(TheStar)
Cryptocurrency custodians “will catalyze the rotation of flows of funds from currency-based blockchain projects to utility-based projects / smart contracts in the short term” (Global Digital Assets)
The magazine published by the Chinese central bank says the country must be the first to launch the digital currency, in part to weaken the role of the dollar in international finance, part of a “new battlefield” between nations (CoinDesk)
Cryptocurrency Mining Takes Off In Iran Using Cheap Energy, With Government Blessing (Tehran Times)
Analogues
The latest news on traditional economics and finance
As the Federal Reserve backs corporate debt, the spread between government and corporate bond yields shrinks to an all-time low (WSJ)
Minneapolis Fed Chairman Neel Kashkari says pandemic aid was also effectively a “bank bailout” (Reuters)
People sell “good” shares to buy in “smoking” IPOs, says Jim Cramer (CNBC)
US banks are helping to fund the federal government with a $ 250 billion increase since February in government-guaranteed treasury bills and mortgage bonds (WSJ)
Hopes vanish for US stimulus bill to save states and cities (Bloomberg)
US middle-class households have 32% more family debt than in 2004, even after adjusting inflation (WSJ)
HSBC, JPMorgan, Deutsche Bank, Standard Chartered have moved large sums of allegedly illicit funds despite registration flags, BuzzFeed reports, based on suspicious activity reports leaked (CNBC)
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