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| Investor takeaway: Uniswap remains one of our top crypto picks, as it currently has more than 75% of the overall DEX market. It's a terrific product, which the team continues to innovate and improve. |
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Hi Everyone,
It would probably be very easy for Federal Reserve Chair Jerome Powell, or J-Pow as we like to call him, use the new omicron variant of COVID-19 as an excuse to deliver another large load of stimulus into the economy.
For some reason, he seems to be running hastily in the opposite direction.
This should probably be a concern for anyone involved in financial markets. ... |
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For those of you who may be coming into the markets from a crypto-first standpoint, let me be very clear.
Fed policy makers are the ones who control the money flows. Their actions tend to have a greater impact on the price of bitcoin than the quadrennial halving event.
Our research indicates that when the Fed is printing lots of money, bitcoin tends to benefit, and when they reduce stimulus, as they're doing now, all markets tend to get volatile, especially crypto. |
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It's the Inflation
No, it's not the inflation that's been fueling the price movements of bitcoin.
Anybody trying to hedge a 6% annual inflation rate with an asset that often moves 50% or more in a week is sorely misled.
Then again, the general public has recently become acutely aware that saving money in a bank account that pays little or no interest doesn't make any sense when inflation is as high as it is, so they're certainly looking for alternatives.
But what's a much larger factor is that when money is created by the Fed and then amplified through the fractional reserve system, it needs to find a home. Increasingly, that home is crypto.
For their part, after being embarrassingly wrong in their prediction that inflation would be transitory, Fed policy makers are now doing their best to fight inflation.
The way they do that is to stop printing money as quickly as they can and to start raising interest rates.
So, rather than a slow, gradual easing of quantitative easing that we were previously expecting, they're now talking about cutting all stimulus and hiking rates by March. They're basically slamming the brakes.
Former Federal Reserve Bank of New York President William Dudley was on Bloomberg today, warning that the market is not ready for this level of monetary tightening. |
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Party time
As always, past performance is not an indication of future results. Just because the Fed is on a tightening tear, that doesn't necessary mean that everything is about to crash, but it does seem likely that a lot of the market froth will soon get wiped out.
Have a great morning/afternoon/evening! |
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| Mati Greenspan Analysis, Advisory, Money Management |
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| Square has changed their name to Block. The Block is taking the news rather well. |
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Bitcoin Market Journal is a daily newsletter focusing on blockchain and crypto investments. It is written and edited by Evamarie Augustine, Charles Bovaird, Mati Greenspan, and John Hargrave.
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