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In this episode of Bitcoin MagazineOn the “Fed Watch” podcast, hosts Christian Keroles and I, Ansel Lindner, reviewed my latest article “What Caused the Bitcoin Mid-Cycle Price Correction” then toured the latest news from central banks around the world. We also talked about the future of China, North America and the Fourth Turn.
My recent post was about the most important stories from the second quarter of the year, which when plotted on a chart all overlap when the price of bitcoin fell in the second week of May 2021.
Grayscale’s Bitcoin Trust (GBTC) unlocks were so correlated with price that it is undeniable that they played a major role in the price during this time period. In the article you can get an introduction to the GBTC product, but for these issue notes it will suffice to point out that the great series of discounted unlocks started on the exact day of the current peak and continued until to July 17, just before the bottom.
The next story was the ban on Bitcoin mining in China. We have reviewed this one, but have identified an interesting link between the Bitcoin ban and other authoritarian Communist crackdowns currently taking place in China.
The last major story during the sharp drop in prices was the Taproot upgrade. It went under the radar for the casual space observer, but it was of great interest to hardcore bitcoiners who experienced SegWit’s last and highly controversial upgrade in 2017.
Our conversation then turned to central bank news. The main news regarding the Federal Reserve is the explosion of reverse repurchase agreements (RRPs) and the new permanent repo facility about to be launched. We’ve covered this in depth and I’ve tried to connect some dots. Conclusion: while the RRP exceeds 1000 billion dollars, the Fed refuses to talk about reduction and sets up a compensatory pension facility. We can say that the fragility of the system is increasing. Maybe the Fed is expecting fireworks later in the year?
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The evolving situation in China is very worrying. First, he banned bitcoin mining, and then he banned IPOs in the United States. It has cracked down on tech companies, effectively nationalizing them, and the latest news is the crackdown on video games as “spiritual opium.” If you place this in the context of the recession, aggressive relations with Hong Kong and Uyghurs, and de-globalization, it could be the beginning of the end for the CCP. It is important to remember how quickly the Soviet Union collapsed. One year, academic experts still claimed that the Soviets were about to take over the world, the next, they collapsed. The same could happen to the CCP.
We often fall into a geopolitical discussion, and this episode is no different in that regard. We concluded the show by talking about what the future holds for the United States, China and the global economy.
Again, it was a very entertaining show. You get a dose of central bank news in a broad global context, which today must include a strong concern for bitcoin.
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