Analysts at odds over Fed, US debt ceiling impact on Bitcoin price

A political deadlock looms over the U.S. debt ceiling and its potential impact on the price of Bitcoin, which is already up 75% in 2023.

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Commodity Strategist Warns US Economy Heading Toward ‘Severe Deflationary Recession’

Bloomberg Intelligence’s senior commodity strategist, Mike McGlone, has warned that the U.S. economy is “heading towards a severe deflationary recession,” emphasizing that the Federal Reserve is still tightening. “Typically, when you have commodities collapsing at this velocity in the past, the Fed has already been easing, and they’re still vigilant against that,” he cautioned. Strategist [...]

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How Scalable Are Oracles to Handle Real-World Commercial Applications on the Blockchain?

QED network introduces new ways to solve the rising DeFi problems. QED oracle protocol designed to function effectively with any ...

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Is Hyperinflation Inevitable? Jack Dorsey Says It’ll “Change Everything”

When Square’s boss Jack Dorsey talks about hyperinflation, the world listens. And Twitter reacts. Since so-called developed economies are now feeling the pain that inflation brings, the concept is in everyone’s mind. Every human has a front-row seat to witness the consequences of the United State’s relentless money printing. And, since the Dollar is still the reserve currency of the world,  they’re all feeling it too. Related Reading | Bullish For Bitcoin: US Inflation Expectation Breaks Out From Decade Long Downtrend This is Jack Dorsey’s tweet: Hyperinflation is going to change everything. It’s happening. — jack?? (@jack) October 23, 2021 As you can see, he doesn’t merely talk about inflation. He goes for “hyperinflation,” which caused adverse reactions in the replies and the quoted tweets. They accused him of fear-mongering and quoted official numbers at him. And the nay-sayers probably have a point here, because the US is far removed from the reality that word implies. However, one thing’s for sure: money printer goes brrrrrrrr… and it hasn’t stopped working since Covid hit. Negative And Moderate Reactions To Jack Dorsey‘s Tweet This is an example of an unnecessarily insulting response from a traditional finance person.  2/ step back and it’s disturbing that a lot of most powerful financial figures/oligarchs are invested, literally and figuratively, in various huckster schemes and libertarianish fantasies of state and civilizations collapse. — Josh Marshall (@joshtpm) October 23, 2021 This man has obviously not done his homework regarding Bitcoin, so his argument is invalid. And doesn’t require a response. Plus, he’s being insulting to get attention, which he got. So, good for him and his dopamine levels. Let’s hope he has fun staying poor. This is a Venezuelan economist with a moderate answer to Jack Dorsey. I don't think it will. But it doesn't need to happen for things to get ugly. https://t.co/Cj85mJ8o7x — Eduardo Gavotti (@EduardoGavotti) October 23, 2021 Since Venezuelans have first-hand experience with hyperinflation, let’s take what he says into account. The US is just feeling what inflation does. So-called developing economies live with that concept on their backs every second of every day. BTC price chart for 10/23/2021 on Bitstamp | Source: BTC/USD on TradingView.com Informative Reactions To Jack Dorsey’s Tweet The Human Rights Foundation’s Alex Gladstein, a notorious Bitcoin maximalist, had this to say to Jack Dorsey. Those shocked by this tweet live in a bubble of financial privilege. *1.3 billion* live under double, triple, or quadruple-digit inflation: Turkey, Nigeria, Ethiopia, Iran, Lebanon, Venezuela, Cuba, Sudan, and beyond. It’s already one of the world’s biggest humanitarian crises. https://t.co/P83opDagdu — Alex Gladstein ?? ? (@gladstein) October 23, 2021 He’s not lying. Hyperinflation is “already one of the world’s biggest humanitarian crises.” However, the US is far away from “Turkey, Nigeria, Ethiopia, Iran, Lebanon, Venezuela, Cuba”, and Sudan’s situation. And, since the Dollar is still the reserve currency of the world, they have a comfortable cushion to resist the constant money printing’s effects. Serial entrepreneur and former Coinbase CTO, Balaji Srinivasan, answered Jack Dorsey with a fully-fledged idea. A “censorship-resistant inflation index.” I wrote a spec for a censorship-resistant inflation index. It’s framed for a startup, but Square could easily do this. In a crisis, accurate inflation info would be something people checked Twitter for every day. @milessuter @moneyball @jack https://t.co/SYb2mfxjex — Balaji Srinivasan (@balajis) October 23, 2021 In the project, he brings forth some hard truths: “If inflation is a government-caused problem, we can’t necessarily rely on government statistics like the CPI to diagnose it or remediate it. Indeed, in places with high inflation, censorship and denial is the rule rather than the exception.” If you are technically capable, there’s still time to send your proposal and earn “A $100k Prize for a Decentralized Inflation Dashboard.” Be aware that “if you use Chainlink’s oracle tech in your project, the best dashboard will be eligible to receive a $100k grant in LINK tokens.” Those tokens are in addition to the main prize. Poor Understanding Of The Terminology In a Twitter Spaces room specifically dedicated to Jack Dorsey’s tweet, notorious podcaster Preston Pysh concluded. “I think people’s understanding of the terminology, deflation, inflation, is just grossly misunderstood. And so, when you say we’re going to have these deflationary events that are then going to lead to more QE, which is then going to result in more inflationary events. I completely agree with you, but we’re talking that there’s so much information loss in such a simple word as deflation and inflation. So the deflationary event is that this whole system is constructed as credit.” When he says QE, Preston refers to Quantitative Easing, which Investopedia defines as:  “A form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment. Buying these securities adds new money to the economy, and also serves to lower interest rates by bidding up fixed-income securities.” Related Reading | Jack Dorsey Plans to Build A Decentralized Exchange For Bitcoin That being said, Preston asks: “How many people in the US, or in the world, have that context when that’s not their expertise, right? They didn’t get a major in macroeconomics, or finance, or whatever. So, it’s just all buzzwords that people throw around. And, in the meantime, no one really even understands what those definitions even represent.” For more information about inflation, check out the Bitcoinist Book Club analysis of Saifedean Ammous’ “The Bitcoin Standard.” Featured Image by Gerd Altmann from Pixabay - Charts by TradingView

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How an Improved Oracle Infrastructure Makes Blockchain Viable

QED connects multiple blockchains, smart contracts platforms, and off-chain data sources. QED protocol builds an oracle aggregator that can improve

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Economist Dr. Nomi Prins Sees Potential for Massive Banking Crisis, Foresees QE as Remedy

This week, during a recent interview, the renowned geo-macro economist and acclaimed author Dr. Nomi Prins shared insights on the Federal Reserve’s future actions, particularly regarding whether the central bank will reduce the federal funds rate come March. Prins mentioned that we might see a form of quantitative easing (QE), though it might not manifest [...]

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Bitcoins Big Breakout? Feds Not QE, QE Just Flipped The Switch

A fresh infusion of liquidity from the US Treasury General Account (TGA) is making waves among market observers, with some analysts speculating this could be a key trigger for Bitcoins next major move. While the Federal Reserve continues its Quantitative Tightening (QT) program, the TGAs latest cash injectionpegged at up to $842 billionhas sparked debate over whether we are witnessing a stealth version of quantitative easing, sometimes referred to as Not QE, QE. Fed’s Not QE, QE In a post shared on X, macro analyst Tomas (@TomasOnMarkets) offered a breakdown of how this dynamic is playing out: Not QE, QE has officially started. A liquidity injection that could total up to $842bn from the US Treasury General Account began this week. Functionally, this is similar to Quantitative Easing, but on a temporary basis. The backdrop for this liquidity surge is the binding $36 trillion US debt limit. With no new debt issuance allowed until a fresh debt ceiling agreement is reached, the Treasury is forced to rely on funds from the TGA to cover government spending obligations. This draws down the TGA balance$842 billion as of Tuesday, February 11effectively injecting liquidity into financial markets. Related Reading: Bitcoin Network Activity Is Declining Impact On Price? According to Tomas, the Treasurys train of TGA spending started in earnest on Wednesday, February 12: From my understanding, the official debt ceiling-induced Treasury General Account (TGA) drawdown began on Wednesday February 12 This train is now in motion and will not stop until lawmakers come to a new debt ceiling agreement. He projects that the first segment of this process will likely involve around $600 billion in injections between February 12 and April 11. After the April tax season, a temporary replenishment of the TGA could occur, but until a new debt ceiling deal is reached, the Treasury will presumably continue to spend down existing cash reserves. While some observers are hailing this development as a de facto round of QE, Tomas underscores that the final net impact depends on two critical drains on liquidity: The Federal Reserve is rolling off assets at about $55 billion per month, which Tomas expects to continue at least through the next FOMC meeting in March. Over two months, that translates to an estimated $110 billion liquidity reduction. With the Treasury issuing fewer T-bills due to debt-ceiling constraintstermed net negative T-bill issuancemoney market funds may have fewer short-term government securities to buy. This scarcity could prompt them to park more cash in the Feds Reverse Repo facility, which effectively drains liquidity from the broader market. Tomas notes: This may incentivize money market funds to park cash in the Fed’s Reverse Repo, potentially pushing this chart up Reverse Repo usage increasing would be a liquidity drain, as money would be moving away from markets and into the Reverse Repo facility at the Fed. Overall, the true scale of the TGA-based stimulus remains uncertain. Last week, net injections into the system were estimated at $50 billion, a figure that could fluctuate in the weeks ahead as QT and Reverse Repo demand evolve. Another key piece of the puzzle is the ongoing political deadlock over the debt ceiling. Despite calls for bipartisan cooperation, divisions within the narrow Republican majoritycombined with broad Democratic oppositioncomplicate prospects for a swift resolution. Related Reading: Analyst Says Bitcoin Is Primed For A Breakout: Is BTC Heading For $150,000 Rally? House Republicans recently put forward a plan tying trillions of dollars in tax cuts to raising the debt ceiling. However, the measures passage is far from assured, as deeply conservative members object to any debt limit increase on principle. Past increases have typically required cross-party support, indicating a potentially prolonged standoff. This comes down on the shoulders of House Speaker Mike Johnson, as he attempts to rally lawmakers behind the plan, Tomas notes, reflecting widespread skepticism about whether sufficient votes can be secured. Will Bitcoin Benefit? For Bitcoin traders, these liquidity ebbs and flows often correlate with broader risk appetiteBitcoin has historically seen upward price movements during periods of loose monetary policy and liquidity injections. Although the Federal Reserve has signaled no immediate halt to QT, the TGA drawdowns near-term flood of cash could still buoy risk assets, including Bitcoin. Precisely how much of this Not QE, QE trickles into Bitcoin remains to be seen. Yet, for market participants watching daily net liquidity metrics, the interplay between TGA drawdowns, QT, and Reverse Repo usage has become a central storyline. As the standoff in Washington continues, the Bitcoin space will be monitoring every uptick and downtick in the Feds liquidity chartshoping it might just flip the switch on Bitcoins next big breakout. At press time, Bitcoin traded at $96,424. Featured image created with DALL.E, chart from TradingView.com

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Is The Bitcoin Bull Run Over? Fed Chair Powell Just Killed QE Hopes

In his testimony on Tuesday, Federal Reserve Chair Jerome Powell dampened hopes for another round of quantitative easing (QE), reiterating that QE is a tool we only use when rates are already at zero and that the Fed remains a long ways away from ending QT. This stance challenges the notion that a quick pivot to aggressive easing might buoy Bitcoin and the entire crypto market as it did in past cycles. End Of The Bull Run For Bitcoin And Altcoins? Macro analyst Alex Krüger posted on X that we are ages away from QE, stressing that some market participants needed to hear Powells stance clearly. Another commentator, Tagoo, noted there is no need for QE, only for discontinuation of QT, prompting Krüger to respond that it may take a few more months for QT to wind down. Felix Jauvin, the host of the On the Margin podcast, commented via X: For the QE is coming soon dreamers, I hope you just heard what powell said “QE is a tool we only use when rates are already at zero”. You don’t want zero rates and QE. That means a LOT of pain has to happen in the interim. QE isn’t coming to save your overleveraged alt bags anytime soon. Jauvin believes the US economy has shifted from a period of stagnation to a more fundamental growth phase. According to him, we can still see bull markets and a bid in risk assets without these monetary plumbing tricks, since he views this as a healthier, productivity-led environmentone he calls an economic golden age. Dan McArdle reminded followers that markets can remain risk-on with a decent economy and some credit expansion. He cautioned the crypto community against anchoring expectations solely to zero-interest-rate policies and QE, suggesting that a steady economy could still support Bitcoins upside. Julien Bittel, Head of Macro Research at Global Macro Investor (GMI), framed Powells comments within The Everything Code, contending that QE is only one part of the global liquidity picture. While the Fed might not pivot to QE soon, Bittel pointed out that other factors, such as actions by the Peoples Bank of China, private credit creation, or shifts in the Treasury General Account, can also inject liquidity into markets. The Fed’s got other tools, and they’ve been working with the Treasury since Covid to smooth out the QT impact through the TGA and RRP, Bittel remarked. He reminded traders that its not just the Fed in this equation and noted that Chinese rates heading toward zero heightens the possibility of China rolling out some form of QE. Back in 2017, the Fed was a small player in the liquidity game. In fact, the Fed was doing QT and hiking rates all year, yet risk assets still flourished and Bitcoin did a 23x following the sharp but short 28% correction in January, he added. Crypto analyst Kevin also argues that Bitcoin may not strictly require QE to thrive. However, he pointed out that we have also never seen a macro cycle top in BTC Dominance during active QT, casting doubt on the likelihood of a robust altcoin season anytime soon. I still believe my analysis tells me sometime in Q2 it will end but if we take Powell at face value then altcoins season callers everyday for the last 2 years will continue to look more lost and wrong then they already are and have been, Kevin stated. At press time, BTC traded at $96,334. Featured image from Shutterstock, chart from TradingView.com

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As a pleb with a fiat job, you have an important role to play.

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