CHIASMUS MAGAZINE BLOG. 2023 A YEAR IN REVIEW: Bitcoin bailout march 2023
The libertarian free market, small government deregulation advocates ,who are also pushers and supporters of Crypto, as a beacon of so called peer-to-peer monetary exchange. Live in hope that will one day Crypto will remove the monopoly that the banks, more so the Central Banks have on cash, interest rates and exclusive markets. Of course Crypto ala Bitcoin is an elaborate conjob, that has Trillions globally tied up in it via speculation, when the biggest holding company in the world Blackrock, that although is not a Central Bank or non-market Monetary Fund, but acts like it is. In 2023, Blackrock had invested Billions to set up Bitcoin ETFs, which, and so rightly the Security and Exchange Commission was very wary of how an unregulated, assetless financial product could end up being been used legitimately in regulated exchanges. And if something was to go wrong.
And it did, two Banks in early 2023 who were exclusively lenders into the startup markets of tech, that being speculation with Crypto and AI, went belly up. With Crypto and Bitcoin already in the throes of what was known as a 'Crypto winter', after the pandemic stimulus of 2020 and the CEO of Tesla insider trading via Twitter. Billion dollar exchanges FTX and Binance collapsed when FTX CEO Sam Bankman-Fried was charged with stealing Millions from his customers. The fear was and still remains, that Crypto and Bitcoin have a intertwined network of databases, pegged to currencies that no one has ever heard of, things called 'ecosystems', 'miners' and 'wallets' for a string of binary numbers that is your 'asset', could all come undone. In steps the very institutions that is apparently meant to be adverse to the philosophy of Crypto, The Federal Reserve and Federal Deposit Insurance Corporation. The Fed bailout and shored up any banks that had been tainted by the 'Crypto' lenders, adding to its balance sheet Trillions of worthless bonds, while the FDIC increased their insurance to depositors and/or investors to over $250K, so in the end everyone got a bail out.
And Bitcoin, was the biggest winner of all.
(A.Glass 2023)
Chiasmus Magazine Blog. 2023 a year in review.
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THE FED AND THE FDIC BAILOUT CRYPTO (FOR THE TIME BEING). BITCOIN GOES PARABOLIC, SHORT END YIELDS COLLAPSE IN HOPE AT EXTENDED BAILOUTS AND RATE PAUSE.
There was probably not going to be a major bank run on the Silicon Valley Bank collapse, what did occur and it should really not be that surprising, the depositors over 250K made a case that they are all to be insured for the collapse, otherwise there would be an 'investor' bank run. Which means, write-downs to the people who invest, and that is the risk when gambling with large amounts of money, you will, in most cases than not, lose money. All Americans that had money with SVB (as savers) under $250K were going to get their money back. Anyone over that amount: investors, venture capitalists', Crypto/tech start ups, Crypto funds, bond holders were not going to be 100% guaranteed. Well, the Fed and the FDIC just wrote a blank cheque to everyone connected with SVB and the Crypto bank 'Signature'. This, as mentioned in my post, is essentially a bailout of crypto, the unregulated, energy gobbling, asset worthless speculation trade. Hence, and you can't make this up, Bitcoin shot up over 20% on news that crypto holders now have 100% protection of their assets.
However, the entangled mess remains, and it has to be asked; how long does the Fed and FDIC extend to complete guarantees of collateralized debt connected to the crypto markets? And the many banks that fund them? This could be a bailout with no end, hence Quantitative Easing in a time of inflation may have been inadvertently activated.
Note with above Chart with price notes and analysis, showing the extraordinary spike in Bitcoin after the Fed's and FDIC underwrite. Also note the the collapse in the 2 YR and 10 YR yield, with markets pricing in a Fed pause in rate increases and continued bank bailouts.
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