March 29, 2024
Another Big Boost for Bitcoin's Price Could Be Ahead
Dear Subscriber,
 |
| By Juan Villaverde |
It’s pretty simple: Rising liquidity lifts all financial boats.
And Bitcoin (BTC, “A”) is no exception.
But while everyone is busy decoding Federal Reserve Chair Jerome Powell’s cryptic messages following last week’s Federal Open Market Committee meeting, trying to figure out if the Fed will pivot from its current belt-tightening policies to turn the money press back on …
I’m looking elsewhere for the next liquidity flood.
And I think it’ll come from an unexpected actor: commercial banks.
See, the U.S. economy is wading deeper into what financial wizards call “fiscal dominance,” where all Fed action is determined by fiscal policy.
It’s a fancy term that means the Fed is slowly becoming the U.S. Treasury’s lapdog.
The Treasury borrows to the hilt; the Fed provides the financing by buying up Treasury securities.
Sound familiar? It should.
Because that’s what the Fed has been doing in the trillions of dollars since Lehman Brothers failed in 2018 …
And since the Federal deficit has been exploding out of control.
Indeed, we’re on track for an 8%+ deficit indefinitely.
Problem is that the private sector has little interest in funding these spending sprees. That’s why the U.S. Treasury has to offer higher yields than it wants just to raise all the money it needs.
For investors, it’s such a familiar story, that they already know exactly what to do about it … even while sleepwalking in the dark of night:
They avoid bonds like the plague.
And they look for investments that go up when bonds go down.
That’s why we’re now seeing a scramble for short-term debt: No one wants to be in that very situation.
Picking up on this, the U.S. Treasury came up with its latest stunt — tapping into the Fed’s Reverse Repo Facility to offer short-term Treasury notes to money market funds and banks.
It's a relatively safer bet, offering a manageable wait, and still offers a decent return at 5% nominal interest rates.
Decent for TradFi, that is. As you know, there are much better returns available in DeFi.
In fact, I’ll be sitting down with Weiss Ratings founder Dr. Martin Weiss this coming Tuesday to discuss a strategy that can turn 2x, 9x and 10x crypto opportunities into 20x, 344x and even 816x winners.
And it’s completely free to attend. Just save your seat, then look to your inbox for more details.
This information is time-sensitive since the crypto markets move at the speed of light, so you definitely do not want to miss out.
Especially since this little stunt by the U.S. Treasury could mean even more liquidity may flow into crypto soon.
Why?
Because between Uncle Sam's insatiable appetite for borrowing and an 8% annual fiscal deficit, Washington’s prodigious demands for funding are unrelenting.
And while a tentative balance has been maintained so far, that was only because of the reverse repo facility … which is now nearly exhausted after being plundered by both the Fed and Treasury.
As they run out, some speculate that the Fed will simply turn the money printers back on.
I disagree. The Fed’s too busy trying to salvage its reputation post-COVID, and turning away from its fight with inflation is not a good look.
Instead, I predict the next wave of money printing will come from commercial banks.
Yep, the very same banks that handle our everyday transactions can also “print” money, provided there are profits to be made.
In a fractional reserve banking system — like the one we have in the U.S. — the money supply increases with every new loan and shrinks as they’re paid down.
To date, commercial banks' ability to purchase U.S. Treasury bills has been limited by a Federal Reserve rule known as the “Supplementary Leverage Ratio” or SLR.
But if the SLR is abolished — or even just adjusted — then banks could print endless funds to buy U.S. Treasurys, akin to the Fed's own money-printing escapades.
I predict this is going to be the next course of action.
This situation might seem concerning: The Fed surrenders a measure of autonomy to the whims of a government with a voracious spending appetite.
It threatens to make the U.S. banking system a reluctant accomplice to Washington’s ever-expanding fiscal demands.
But the markets are wise to these maneuvers.
And hard evidence is blatantly obvious: Both Bitcoin and gold have surged to new, all-time highs.
Both have firmly established themselves as ideal escape routes from government madness.
Both are now proven beneficiaries of capital flows into inflation hedges that can only accelerate.
And both are amazing profit machines, especially Bitcoin.
That’s why we’re seeing record-breaking inflows into Bitcoin ETFs week after week.
That’s why money is flowing into newer cryptos that go up far faster than Bitcoin.
And that’s why Bitcoin’s gains pale in comparison to those of newer cryptos.
Just in the last 365 days, Bitcoin has more than doubled in value.
Great!
Meanwhile, however …
- THORChain (RUNE, “B”) is up 588.56%,
- Fetch.AI (FET, “B”) is up 696.41%,
- Render Network (RNDR, “B”) is up 820.7%,
- Solana (SOL, “B+”) is up 839.22%,
- Injective (INJ, “B”) is up 892.45%, and
- Celestia (TIA, “B+”) is up a crazy 2 million percent.
All just in the last 365 days. And all boast a Weiss rating of “Buy.”
This is how the market speaks.
And what it’s saying is unmistakable: Get out of the traditional financial system.
Move into assets that not only help protect you from an impending fiscal and monetary nightmare … but also generate some of the world’s best returns.
That’s why my briefing this coming Tuesday is so urgent, and why I sincerely hope to see you there.
But at a minimum, you should consider getting a good chunk of your money to safety … while you still can.
For that, an investment in Bitcoin or even one of the Bitcoin spot ETFs is often a solid first step for new crypto investors seeking shelter from TradFi.
Best,
Juan Villaverde
Tidak ada komentar:
Posting Komentar