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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.

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

The post Microstrategy’s $250 Million Bitcoin Buy Consequential appeared first on Bitcoin News.

Free Market Family: Goldbug Peter Schiff Asks the Bitcoin Community to Gift Crypto to His Son

29/08/2020 by Idelto Editor

The American libertarian, economist and financial commentator Peter Schiff has been criticizing bitcoin for years, as he believes “bitcoin has no real value.” However, on Thursday Schiff asked the crypto community to give some bitcoin to his 18-year old son Spencer for his birthday and explained that his son “won’t lose his” wallet.

The Bitcoin community is well acquainted with Peter Schiff the economist and gold bug who has been knocking bitcoin for years. Every few days, Schiff has something to say about the cryptocurrency and it’s never anything positive.

Schiff’s Wiki says that “at times, [Peter Schiff] has remarked that he sees Bitcoin not as an alternative to gold, but more as resembling the tulip mania bubble.”

Despite Peter’s feelings against bitcoin, just recently his son Spencer Schiff purchased some bitcoin and does not have the same contempt for it as his father does. Spencer is also like his father, as he believes in free markets and sound economics.

“The free market is the nexus of mutually-beneficial, voluntary exchanges,” Spencer tweeted on August 17. “It represents cooperation, harmony, and social cohesion. Conversely, the political system is inherently divisive. Its coercive nature creates antagonistic relationships that inevitably foster conflict,” he added.

Spencer just turned 18 the other day, so his father tweeted to the Bitcoin community and asked them to send his son some satoshis for his birthday.

“Since so many of you Bitcoin guys are ribbing me because my son Spencer bought bitcoin, why not really rub it in by gifting him some as a belated birthday present,” Schiff wrote on Thursday. “He turned 18 yesterday. He won’t lose his. Here’s his wallet address.”

Of course, Schiff was referring to the time he lost access to his bitcoin wallet after Shapeshift founder Erik Voorhees gifted him a bitcoin in 2018.

A number of bitcoin luminaries and experts have debated Schiff in the past or have tried to persuade him about the benefits of bitcoin. Despite the attempts from many, Schiff continues to rag on the crypto day in and day out, and he gathers a lot of attention for his statements.

After Schiff’s tweet about giving Spencer some bitcoin for his birthday, the gold bug said that so far his son got around $300 worth of bitcoin.

“Of course, Bitcoin has no real value, but it’s the thought that counts,” Schiff tweeted. “On behalf of my son Spencer, thanks for the generous birthday gifts.” His son Spencer has achieved a sizable following on Twitter in recent months, and he speaks fondly of bitcoin and precious metals regularly.

“The simultaneous surge in the prices of gold, silver, and bitcoin represents a repudiation of global currency debasement and the regime of fiat money,” the young Schiff wrote on Twitter recently.

Similarly, Spencer’s dad Peter amassed quite a following from his father Irwin as well. Irwin Schiff was a well known libertarian and tax resistance advocate.

Irwin also testified in 1968 before the Senate Committee on Banking and Currency when the United States decided to remove gold backing from Federal Reserve Notes (FRNs). Additionally, throughout much of his life, Irwin spent writing and promoting literature that argued income tax was immoral and unconstitutional.

Unfortunately, Schiff passed away in prison serving a sentence for his tax evasion and died on October 16, 2015.

“In 1976, his beliefs in free market economics, limited government, and strict interpretation of the Constitution led him to write his first book, The Biggest Con: How the Government is Fleecing You,” Peter Schiff wrote about his father in 2015.

“A blistering indictment of the post-New Deal expansion of government in the United States. The book achieved accolades in the mainstream conservative world, receiving a stellar review in the Wall Street Journal, among other mainstream publications,” the gold bug added in an open letter to the public.

Schiff further stated:

My father was most known for his staunch opposition to the federal income tax, for which the U.S. government labeled him a ‘tax protester.’ But he had no objection to lawful, reasonable taxation.

Peter Schiff may not like bitcoin, but he is a free market advocate and when his father was locked away, he told the media his dad was a “political prisoner.” All three Schiffs have criticized U.S. politicians and Federal Reserve board members for fleecing the American public on a regular basis.

Despite the fact that Schiff doesn’t agree with bitcoiners, most crypto proponents do agree with his disdain toward the state’s central planners and today’s money changers.

What do you think about Peter Schiff asking people to gift bitcoin to his son Spencer? Let us know what you think about this subject in the comments section below.

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Visa Exec Says ‘Opt Out With Bitcoin’ Slamming Fed’s Policy Change Toward Inflation

29/08/2020 by Idelto Editor

On Thursday, 17 top Federal Reserve officials explained that the committee plans to let inflation run hotter than usual, or above the benchmark 2% rate for a duration of time. Fed Chair Jerome Powell’s speech was considered a “major policy shift” and a number of economists commented on the central bank’s move. Senior director of policy at Visa, Andy Yee, said Powell’s inflation statements were historical and people should “opt out with bitcoin.”

According to the U.S. Federal Reserve, the central bank will be allowing inflation to run up higher than 2% for a period of time.

The Fed also said that it wouldn’t hold a bias toward the labor markets and the central bank will hold to its new policy framework. News.Bitcoin.com recently reported on the Fed’s inflation proposal and how it aims to leverage the economy’s inflation rate.

“The Committee seeks to achieve inflation that averages 2% over time and therefore judges that, following periods when inflation has been running persistently below 2%,” the Fed explained on Thursday. “Appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time,” the central bank added.

Following the Fed’s major policy shift to let inflation run more rampant, a few analysts and economists commented on the central bank’s new direction.

Andy Yee, a senior director of policy at Visa tweeted about the Fed’s latest move to let inflation run hotter than usual. “Jerome Powell’s speech today will be for the history books,” Yee said. The Visa executive continued:

Never in the history of mankind was so much stolen from so many by so few. Opt out with Bitcoin.

On Twitter, the Visa executive Yee has commented on bitcoin on numerous occasions in the past. When CNBC reported that the Fed Chair was set to deliver a “’profoundly consequential speech,” Yee said: “In 2008, Satoshi Nakamoto delivered ‘profoundly consequential’ whitepaper, changing how people view money.”

Raoul Pal the chief executive officer at Real Vision also explained on Twitter that he knows that gold and bitcoin have slumped in recent days, but stressed that Jerome Powell’s comments bolster an “inherent upside skew in both assets.” Pal further added:

I think [gold and bitcoin will] rise over time in inflation or deflation. Most people don’t understand the latter but is simply put, Powell has shown that there is ZERO tolerance for deflation so they will do ANYTHING to stop it, and that is good for the two hardest assets – Gold and Bitcoin. Powell WANTS inflation.

Pal also added that he thinks bitcoin will outperform gold during this macroeconomic storm. “Gold can go up 2x or 3x or even 5x, while bitcoin can go up 50x or even 100x,” Pal insisted on Twitter.

A great number of other free market advocates spoke out against the Fed’s manipulation after Powell’s statements. Moreover, the Fed Chair never disclosed what “moderately above 2%” actually means on Thursday.

News.Bitcoin.com also reported on how Robert Kaplan, the Dallas branch Federal Reserve President said it would likely be between 2.25% to 2.5%. However, St. Louis Fed President James Bullard elaborated further on the matter.

“This is a very large committee as you know, with many opinions,” Bullard said during an interview with Bloomberg. “So I don’t think you want to get into precise mathematical formulas here. But the spirit of this is that, in the committee’s judgment, it would be wise to allow inflation to be above targets for some time to make up for past misses.”

What do you think about the Visa executive’s recent statement towards the Fed’s policy change? Let us know what you think in the comments below.

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