"This Is Transitory"

yeah, ok.

Numbers Don’t Lie

The latest inflation numbers are in. The Consumer Price Index (CPI), which is used to measure how the average prices of goods and services have changed, shows 5.4% average inflation over the past 12 months. Economists were expecting the number to be as high as 5.3% (which would have tied 2013’s high) but instead it wound up tying with 2008’s high (right before the financial crisis). The U.S. Bureau of Labour Statistics said that “the price of food and shelter made up half of the increase in the overall rate”.

The largest increase by far was energy costs, which rose by an astounding 25%.

Officials from the Federal Reserve are still calling this spike “transitory” and are trying to quell concerns by saying that they expect it to subside in a few months.

Sure.

Stripe Keeps Their Word

Payments giant Stripe is getting back into the crypto game. This week a job posting on Linkedin said that they are in search of at least 4 engineers to “design and build the core components that we need to support crypto use cases”. According to a tweet by former head of engineering for banking and financial products, Guillaume Poncin:

“I’m hiring engineers and designers to build the future of Web3 payments.”

We’re delighted to welcome Stripe back into the crypto space. In 2014, they became the first major payments company to support Bitcoin payments. Then in 2018, they announced that they would be ending this support but that they would, “continue to pay close attention to the ecosystem and to look for opportunities to help our customers by adding support for cryptocurrencies and new distributed protocols in the future”. They said at the time:

“Our hope was that Bitcoin could become a universal, decentralized substrate for online transactions and help our customers enable buyers in places that had less credit card penetration or use cases where credit card fees were prohibitive.

Over the past year or two, as block size limits have been reached, Bitcoin has evolved to become better-suited to being an asset than being a means of exchange.

Transaction confirmation times have risen substantially; this, in turn, has led to an increase in the failure rate of transactions denominated in fiat currencies.

We’re interested in what’s happening with Lightning and other proposals to enable faster payments. … Ethereum continues to spawn many high-potential projects. We may add support for Stellar (to which we provided seed funding) if substantive use continues to grow. It’s possible that Bitcoin Cash, Litecoin, or another Bitcoin variant, will find a way to achieve significant popularity while keeping settlement times and transaction fees very low. Bitcoin itself may become viable for payments again in the future. And, of course, there’ll be more ideas and technologies in the years ahead.”

We’re not sure which of the above led them to get back into the space, but we’re excited they’re here.

China Continues Cracking Down

In their latest push to tighten state control over the private sector, China has released a plan to prohibit “non-public capital” (which is defined as money that is not related to the government or companies run by it) being invested into the media. This would ban private investment in news agencies, radio and tv broadcasters, editing services, online platforms, publishers, and many other organizations.

Their updated “Negative List” was released late last week by the National Development and Reform Commission and specifies that any private capital “...cannot be used for live broadcasting of key events, including content related to politics, economics, the military, diplomacy and culture, along with any other events that can affect public opinions”. Private investors are also banned from investing in a wide array of other organizations, including political, economic, military, or diplomatic organizations, and "major social, cultural, technological, health, education, sports and other services."

Xi Jinping, President of the People's Republic of China, has been tightening CCP control over speech since he came into political prominence in 2012, but many suspect that this latest crackdown could have something to do with his term coming to an end and wanting to try for a 3rd term in power.

On the same day that these bans were announced, all hell broke loose in the Chinese bond markets. A representative from Avenue Asset Management in Hong Kong calling it a “disastrous day,” telling Reuters that even “safer” “investment grade” firms saw 20% wiped off their bonds. Many publications say this collapse was due to Evergrande being about miss its third round of offshore bond payments.

And then there’s the news of a US destroyer being chased out of waters in the Sea of Japan, where Chinese and Russian warships are currently conducting drills. Things seem to be really heating up over the sovereignty of Taiwan.

Lots going on in China right now.

Bank of England Spins That Record

Why play a new song when the last hit single has not yet gone out of style? The Bank of England has issued a warning (much like every other major central bank these days) that unless tough regulations are imposed, cryptocurrencies could spark a worldwide financial crisis. Deputy Governor for Financial Stability Jon Cunliffe stated on Wednesday:

“When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice”.

He did note that the government needs to be cautious not to label crypto technologies as “dangerous” just because they are new, and even went as far to say that crypto technology offers “radical improvements” on financial services. That is as far as he went, though, before falling back on the tried and true classic, that crypto poses a threat to financial stability if it goes un-regulated because it has “no intrinsic value” (a line that was also dropped by Bank of England’s Governor Andrew Bailey last May).

While he warns that crypto could CAUSE a 2008-level meltdown, those of us in crypto know that bitcoin was invented IN RESPONSE to the 2008 meltdown.

Crypto is and antidote to government-created financial disasters and inflationary monetary policies.

Crypto is the solution not the problem. Perhaps the Bank of England already knows this, and that’s why they’re screeching so loudly.

The Future of Bitcoin May Be Upon Us

After years of “will they / won’t they” speculation akin to that of Ross and Rachel from “Friends”, it looks like the SEC might finally allow this romance to happen after all. A recent Bloomberg report indicated that the SEC is on track to allow a Bitcoin futures exchange-traded fund (ETF) to clear, which could pave the way for a whole slew of trading commerce. As of this writing, more than 40 applications by firms wanting to enter the ETF product market are in review.

Last week we reported that SEC chairman Gary Gensler is more in favor of an ETF linked to bitcoin futures markets than the spot price of bitcoin, and this is likely due to the fact that many futures are cash-settled: having an ETF that is bitcoin-settled would require the SEC to put out guidelines about what SEC-approved bitcoin custody looks like, and as we know, the SEC doesn’t like to put out guidance about anything.

Bitcoin ETF applicants have fruitlessly vied for approval for years, and many in the crypto community have become somewhat numb watching endless delays and rejections ensue. It seems that not everyone is numb to ETF news though, as Bitcoin skyrocketed past $60,000 after the Bloomberg speculation. An ETF application automatically goes through if the SEC doesn’t ask for any changes to be made by their decision deadline, and, according to the Bloomberg report, at least 1 of these ETF applications is on the right track.

Let’s see what happens.

By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.


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