COVID-19

Macroeconomic Trends Boost Bitcoin and Gold, US Dollar Index Shows Bearish Double-Top

15/09/2020 by Idelto Editor

According to a number of reports and commentary from financial analysts, the world is “drowning in U.S. dollars” after the Federal Reserve decided to pump billions of dollars into the hands of 14 central banks via liquidity swaps. Moreover, recent technical analysis shows the dollar’s trade-weighted index chart indicates the USD might be in for a gigantic slide in value in the near future.

As members of the U.S. Federal Reserve plan to convene this week, both gold and bitcoin (BTC) markets have started to climb in value ahead of the meeting. Bitcoin prices rose over 4% during the afternoon’s trading sessions and gold jumped 0.76% as well. The price of one ounce of fine gold is $1,956.24 at the time of publication.

Meanwhile, after a brief upswing in value, the U.S. dollar has started to show signs of weakness again after losing massive amounts of value this year. One financial commentator believes the “world is frozen in response to the deluge of U.S. dollars.”

According to an article written by the business analyst, Stephen Bartholomeusz, “the world has been drowning in U.S. dollars” via “liquidity swaps with 14 central banks.”

“The combination of the access to dollars, the extent of the monetary policy stimulus in the U.S. and the Fed’s recent decision to hold U.S. rates at their current negligible levels – negative in real terms – has seen the U.S. dollar depreciate about 9.3 percent against the basket of its major trading partners’ currencies since March 19,” Bartholomeusz wrote. “That’s its weakest level for more than two years.”

Bartholomeusz added:

A weak dollar exports deflation elsewhere. It helps US exporters be more competitive (albeit while harming importers in an economy with a structural trade deficit) and therefore one that imports more than it exports) while damaging the exports and growth prospects of economies elsewhere.

In addition to Bartholomeusz’s ominous outlook, the U.S. dollar index (DXY) could see a sharper fall in the near future according to a technical analysis report published on Monday. The DXY technical analysis explains that charts show a “bearish, M-shaped chart pattern containing two peaks and a trough.”

If the dollar’s trade-weighted index dips another 5% the pattern will be confirmed the author notes. The pattern is traditionally dubbed the “bearish double-top” and they are typically followed by a strong decline in value.

“The most notorious double-top for the dollar came in 2001-2002, in the aftermath of the September 11, 2001 attacks on the United States, and was followed by a 33% fall in the currency through 2004,” the analysis details. “[The USD] then rallied for about 11 months before continuing its slide to record lows in 2008.”

When the members of the Fed meet on Tuesday and Wednesday, a number of analysts and economists think the meeting will fuel bitcoin and precious metals like gold. The cofounder of Gold Bullion Int. (GBI) and DTAP Capital, Dan Tapiero, championed the two assets after U.S. commercial real estate markets have started to show signs of pending disaster.

“An entire asset class redefined almost overnight by [Covid-19],” Tapiero tweeted. “Total value of all U.S. commercial real estate is $16 trillion. Now entering the largest bear market since the late 80s? 50% price drop wipes out $8 trillion. Major econ drag/knock-on effects [are] huge. Rates stay 0%, + Gold and BTC.”

A recent report published by Pacific Investment Management Co. (Pimco) also explained that the U.S. dollar value drop is just starting and there is “room for the world’s reserve currency to weaken against emerging markets.” Many emerging markets worldwide have advanced the use of crypto assets and decentralized finance (defi) markets.

What do you think about the world drowning in U.S. dollars and the predictions about a major USD decline? Let us know what you think about this subject in the comments section below.

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Unlimited QE and an Index Portfolio: How Fed Chair Jay Powell Can Pump His Bags

04/09/2020 by Idelto Editor

In mid-August the U.S. stock market defied odds and mainstream media claimed after the Standard & Poor’s 500-stock index touched new heights on August 18, it ‘officially’ ended the “shortest bear market in history.” Interestingly while roughly 30 to 40 million Americans face the risk of eviction, the 16th Chair of the Federal Reserve, Jerome Powell, is profiting from all the stock market craziness.

The U.S. economy is facing financial disaster after the country’s government decided to enforce harsh lockdowns and shutdown over 60% of the nation’s business production. U.S. bureaucrats leveraged Covid-19 as an excuse and politicians continue to keep the American economy constricted.

Meanwhile, the U.S. Federal Reserve has been providing “unlimited money” to the central bank’s friends from Wall Street. All this money the Fed has hosed at the hedge funds, special interests, and bureaucrat-backed slush funds, all the while 30 to 40 million U.S. citizens face eviction. In mid-August, the stock market, specifically the top three U.S. indexes, has seen impressive gains rebounding enough to make mainstream journalists call it the “shortest bear market in history.”

A number of reporters and financial commentators have reported that the 16th Chair of the Federal Reserve, Jerome “Jay” Powell, has a conflict of interest with these rallies. Financial analyst Sven Henrich and Wall Street on Parade reporters recently explained how Powell is profiting from the stock market spikes.

“One person who is financially benefiting from every stock market rally is Jay Powell who has tens of millions in ETF fund long holdings,” Henrich notes. “Including SPY, RUT & holdings with Blackrock the same firm he selected for doing the Fed’s ETF buying.”

News.Bitcoin.com reported on how America’s banks can simply bail themselves out, thanks to the Fed’s deal with Blackrock created this spring. Henrich also shared a screenshot of the Fed Chair’s holdings and said:

Imagine being in charge of deciding unlimited QE while holding this long index portfolio and then saying the Fed does not increase wealth inequality.

Wall Street on Parade columnists, Pam Martens and Russ Martens, have grilled the U.S. central bank’s fraudulent financial moves on a regular basis and have also detailed Jerome Powell’s conflict of interest extensively.

“Powell is a member of the one percent class,” the Martens write. “According to his 2019 financial disclosure, his net worth could run as high as $55 million. Much of his investments are with Goldman Sachs (a Wall Street bank that is supervised by the Fed) or with Blackrock and its iShares Exchange Traded Funds (ETFs). The government-mandated financial disclosures report investment values in a range.”

The Martens further added:

The upper value of Powell’s holdings with Blackrock is $11.6 million. The upper range of Powell’s holdings with Goldman Sachs is $16.55 million. The name Goldman Sachs has been shortened to ‘GS’ in the disclosure document.

It is well known that the Fed started funneling massive amounts of money to private dealers in mid-September 2019. By May, trillions of dollars in bailout money ($6.98T) was given to Wall Street special interests at the whims of five unelected officials. These five governors of the Federal Reserve Board and the New York Fed report to megabank shareholders such as JPMorgan Chase, Citigroup, Goldman Sachs, and Morgan Stanley.

Instead of helping the American people, Fed Chair Jerome Powell and the board governors have protected the banking cartel elite and dishonest bureaucrats. Central planners have leveraged the coronavirus in every possible way as an excuse to create massive stimulus packages.

“Once the pandemic entered the picture, the Fed opened its money spigot to Wall Street even wider, setting up 11 additional bailout programs,” the Wall Street on Parade authors recently wrote on September 3.

Despite the conflict of interest, Jerome Powell can pump his own bags whenever he wants. Moreover, Powell has no background as an economist and spent most of his career with the Wall Street firm, Dillon Read. That specific firm had a strong partnership with Carlyle Group, which spent $1 billion lobbying the government according to Martens’s report.

What do you think about Jerome Powell being able to pump his own bags? Let us know what you think about this subject in the comments below.

The post Unlimited QE and an Index Portfolio: How Fed Chair Jay Powell Can Pump His Bags appeared first on Bitcoin News.

Canaan Cuts Losses for Second Successive Quarter, Down To $2.4M in Q2; Demand Remains Weak

03/09/2020 by Idelto Editor

Canaan Creative, the Chinese maker of bitcoin mining hardware, reported a net loss of $2.4 million during the second quarter of 2020, down from $5.6 million in the previous quarter. It is the second consecutive quarter of narrowing losses for the firm, hit hard by falling demand amid the Covid-19-induced global recession.

For the three months to June 30, revenue soared 160% to $25.2 million from $9.6 million the quarter before, driven by a near 200% increase in total computing power sold.

According to Canaan’s earnings release of August 31, the Beijing-based company sold 2.6 million terahash per second (TH/s) of Bitcoin hashpower, up from 0.9 million TH/s during the first quarter. Year-over-year, total computing power sold declined 18% from 3.2 million TH/s.

Canaan Cuts Losses for Second Successive Quarter, Down To $2.4M in Q2; Demand Remains Weak — The Nasdaq listed stock (NASDAQ: CAN) for Canaan Inc., on September 2, 2020.

Shares of Canaan fell 0.72% to $2.08 on the Nasdaq Stock Exchange, at the time of writing. The stock has tumbled more than 80% since listing on the exchange last November. Then, it traded at a high of $13.

Canaan chief executive officer Nangeng Zhang commented: “During the second quarter of 2020, the Covid-19 pandemic continued to impact the lives of people around the world and the Bitcoin halving event also caused significant volatility in bitcoin prices.” Zhang added:

We are confident that our…pipeline of next-generation products will continue to sustain our growth momentum in the future.

In the review quarter, research and development expenses declined to $3.7 million from $5.9 million previously, said the firm, which manufactures the Avalon range of ASIC bitcoin mining chips.

Canaan reported cash and cash equivalents of $22.2 million for the June quarter, down from $37.3 million in Q1. The company said the decline is a result of higher short-term investments, which amounted to a total of $49.2 million by the end of June.

For the second quarter running, Canaan did not issue guidance for the next three trading months, citing “continued uncertainty from the rapidly changing global environment related to the Covid-19 pandemic and corresponding economic downturn.”

What do you think about Canaan’s continuing losses? Let us know in the comments section below.

The post Canaan Cuts Losses for Second Successive Quarter, Down To $2.4M in Q2; Demand Remains Weak appeared first on Bitcoin News.

$1 Trillion in Housing Bonds: US Real Estate Crisis Held Back by Fed’s Mortgage Purchases

02/09/2020 by Idelto Editor

The U.S. real estate market is facing a conundrum, as there’s now a tidal wave of renters who can’t pay rent and a massive number of mortgage defaults stacking up like never before. Amid the looming real estate chaos, the Centers for Disease Control and Prevention (CDC) enacted public health emergency powers to stop landlords nationwide from evicting tenants. Moreover, the Federal Reserve has purchased $1 trillion in mortgage bonds since March, capturing 30% of the country’s outstanding mortgage bonds.

US Housing Market Strained, Rents Slide 30%, Foreign Real Estate Investors Left ‘Holding the Bag’

The coming winter may be pretty tough for a great number of Americans, thanks to the government shutting down more than 60% of the nation’s businesses and the lockdown mandates.

The government’s move has strained the U.S. economy indefinitely and the Federal Reserve has attempted to salvage the financial system via stimulus. All across the country homeowners and rental tenants are facing a crisis and the signs are showing in a number of hard-hit states.

For instance, many popular cities like New York and San Francisco are in distress, as rents plunge to lows not seen in years. San Francisco has seen rents drop significantly to levels not seen in roughly six years.

International investors who invested in U.S. real estate, prior to Covid-19, are now left “holding the bag” according to a number of reports. A number of real estate proponents believe the U.S. housing market is rebounding, but most people don’t understand the Federal Reserve is trying to keep the real estate market afloat.

The Fed Spent $1 Trillion on Outstanding Mortgage Bonds Since March, Captures 30% Housing Bonds

On September 1, a Bloomberg report had shown that the U.S. central bank is on a “mortgage-buying spree,” as it has captured around 30% of outstanding agency mortgage bonds to-date.

Since March, the Fed has funneled $1 trillion into the mortgage bond system and analysts say the stimulus has helped some homeowners refinance. However, the Fed’s balance sheet of U.S. properties also gives the central bank an unfair advantage when it comes to setting lending rates.

Analysts from Morgan Stanley say that the Fed is purchasing these outstanding mortgage bonds at 8x the rate it has leveraged in the past. Moreover, Fed board members have disclosed that the pace will remain “at least, at the current pace.”

A mortgage trader at Wells Fargo, Kevin Jackson, thinks the Fed did the right thing capturing one-third of U.S. mortgages. “We had a pandemic arise and you needed a force to come into the market and stabilize things,” Jackson stressed.

‘Distressed US Properties Coming in 2021,’ CDC Enacts Eviction Moratorium Nationwide Until December 31

Additionally, the U.S. is facing troubles with the number of tenants that cannot pay rent nationwide. Alongside this, apartment rent payments in the United States are down 30% across the board. The rental market is failing so badly that there have been a few eviction moratoriums invoked in some states and on the federal level. Now the CDC is stepping in by leveraging emergency powers in order to stave off the rental crisis.

The CDC’s order is called the “Temporary Halt in Residential Evictions to Prevent the Further Spread of Covid-19.” The CDC’s moratorium will extend the eviction ban leverage in the CARES Act and will expire at the end of 2020.

The CDC has leveraged emergency powers to invoke an eviction moratorium which will hold until December 31, 2020.

Reports say the moratorium will cover roughly 12.3 million tenants who live in single-family homes backed by a federal mortgage, or an apartment complex that is financed by the government as well. Even though critics have questioned the CDC’s move, the agency utilized emergency powers granted by the Public Health Service Act.

“The Centers for Disease Control and Prevention (CDC), located within the Department of Health and Human Services (HHS) announces the issuance of an Order under Section 361 of the Public Health Service Act to temporarily halt residential evictions to prevent the further spread of Covid-19,” the CDC’s order notes. Following the CDC’s notice, a writer covering federal economic policy for Propublica, Lydia DePillis, says “we could see a lot of distressed properties come 2021.”

However, Kentucky’s 4th congressional district leader, Thomas Massie, has been very outspoken against the CDC’s latest eviction mandate. “If this rules sticks, the federal government is effectively seizing property without compensation — Theft at gunpoint,” Representative Massie said on Twitter.

Illusionary Markets and Free Markets

Traditional stock markets on Wednesday have spiked 250 points, as economists see a few equities having a strong September start. But many analysts think that the stock market is extremely far removed from the real world’s products and services because of the Fed’s constant stimulus tactics. The amount of money created out of thin air and the mountains of debt continue to grow. For instance, U.S. debt is set to supersede the economy for a whole year for the first time since World War II.

Meanwhile, precious metals like gold and silver, alongside digital assets like bitcoin and ethereum have shined during the economic downturn. Rather than investing in real estate, which was once a fairly predictable safe haven, many are turning to safe-haven assets that are far more liquid.

With the central bank leveraging massive buys of outstanding mortgage bonds and the CDC’s latest emergency powers use, it is hard these days not to envision the U.S. real estate market as a house of cards.

What do you think about the U.S. real estate markets being propped up by the central bank? Let us know what you think about this subject in the comments section below.

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Microstrategy’s $250 Million Bitcoin Buy Consequential

02/09/2020 by Idelto Editor

When a publicly owned company decides to invest about $250 million in an asset that was widely attacked more than a decade ago, it says a lot about how the world has changed. The reasons and the timing of Microstrategy’s bitcoin incursion could not have come at a better time for the company’s investors.

The constant reminders about the waning fortunes of the U.S. dollar on one hand and the growing recognition of bitcoin, on the other hand, all tell the story of a changing world.

Changing Environment

To illustrate, it has been reported that the U.S. Federal Reserve has printed more money in two months than it had done in more than four decades. Such an unprecedented feat means it cannot be business as usual. There has to be a response to this new normal.

Similarly, the story of the Office of the Comptroller of the Currency (OCC), giving the green light for Banks to offer cryptocurrency custody services, is another important signal. It is a signal that reinforces the notion that the world has changed and that businesses need to embrace this. The OCC’s pro-fintech chief currency comptroller, Brian Brooks, elucidates this point in a recent interview.

Elsewhere, a U.S. Court had ruled that bitcoin is a form of money. The implications of such a ruling are potentially far-reaching.

While such signals might make it seem obvious that companies need to invest in bitcoin, it appears a much larger catalyst was needed to kick things off. Unfortunately, it had to take something on the scale of Covid-19 to jolt companies into action. The rapid spread of the virus set off a chain of extraordinary events which ultimately led to global financial markets crashing.

The inevitable (if not alarming) response by governments around the world added a new sense of urgency to the issue of embracing cryptocurrencies. Whether it is the stimulus check or any other appropriately named welfare scheme, the response by governments has been unprecedented. Such interventions extinguished any hopes that the era of unbridled money creation ended with the 2008/9 financial crisis.

Meanwhile, before governments intervened by pumping money, the collapse of markets in March had alarmed investors. The carnage that saw stock markets like the NYSE suspending trades several times in a short space of time, showed just how vulnerable financial markets are.

Bitcoin a Better Inflation Hedge

While bitcoin initially crashed alongside global financial markets, it did recover and quite quickly too. Those buying the digital asset realised it had a better chance of protecting funds against the inevitable inflation than fiat assets.

The unprecedented largesse by the US government is certain to cause inflation and value dilution. Hence something else is needed to act as a hedge and for Microstrategy that something is bitcoin.

There is no doubt that government aid in times like these is well-intentioned as George Ball, the former CEO at Prudential Financial remarked in an interview. However, the negative effects of such generosity–which seem to have no limits–will outweigh the positives in the medium to long term.

Irrespective of the circumstances that justified the decision, any addition of new money to that which is already in circulation, is inflationary. Ball, a former bitcoin basher, knows this and that why he is now encouraging investors to invest in bitcoin.

Already, usual inflation indicators like the price of gold shows it is growing. Many now expect the safe-haven commodity which has already touched new all-time highs to continue with this streak.

Why Now?

Similarly, many people like executives at Microstrategy also believe that bitcoin, just like gold, can protect wealth from bad economic policies. Their faith is premised on the fact that just like gold, bitcoin has a finite supply. Furthermore, the process of extracting or adding more bitcoin into circulation cannot be manipulated.

Although gold cannot be counterfeited, in the past, some have tried and even had some success before their luck ran out. With bitcoin, so far that possibility is almost zero. The technologies behind bitcoin require massive resources for anyone to have that chance.

So after more than ten years of proving itself, bitcoin is now likened to a digital version of gold. It is this designation that prompts interest from unusual suitors like Microstrategy, the Nasdaq listed billion-dollar business intelligence firm.

It, therefore, stands to reason, that when Microstrategy announced the acquisition of bitcoins worth $250 million, it had a clear plan. The plan is to maximize the long term value of its shareholders.

There will be risks involved yes but to Microstrategy, these pale into insignificance when compared with risks that are now associated with investing or storing wealth in fiat asset form only.

Or as aptly put by the Microstrategy CEO, Michael J. Saylor, “bitcoin is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”Bitcoin is such a unique asset that allows corporations to limit exposure to fiat-based financial assets.

The Future of Bitcoin Price

Another interesting fact about Microstrategy’s purchase of bitcoin is the effect this has on the digital asset’s supply on the market. As Mike Novogratz, a bitcoin bull noted during a conference call with analysts in August, Microstrategy’s purchase of bitcoin reduces supply.

Reduced supply means speculators’ will have less influence on bitcoin prices going forward. This helps to reduce bitcoin’s price volatility, a key concern for many potential investors.

With growing evidence that more institutional investors in the mold of Microstrategy, are acquiring the digital asset, it means less and less bitcoin will be available on the market. The law of supply and demand dictates that the price will have to go up.

It is interesting that at this point, some might see Microstrategy’s decision to invest in bitcoin as a gamble but in a few years, those looking back will say this was a no brainer! Bitcoin is going mainstream and those from Mainstreet that go in early will enjoy the first-mover advantage.

Microstrategy maybe the first but many more corporations will follow and invest in bitcoin and their shareholders will fare better in the post-Covid-19 era.

What are your thoughts about Microstrategy’s bitcoin investment? Tell us what you think in the comments section below.

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