Bubbling US Dollar Is Bitcoin Biggest Investor

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Last Updated on 14 February 2021 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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You may think that Tesla’s 1.5 billion investment into Bitcoin was the biggest asset allocation into crypto this week whilst in fact, it was the Federal Reserve all along which is egging on the price of Bitcoin.

Not directly though, but through their money printing during the Trump years, their money printing during the pandemic and President Biden’s promise of a new stimulus, they have rushed Wall Street to stocks, bonds, gold and Bitcoin.

Advertentie.

Biggest bubble of all

According to a report of market analyst firm Seeking Alpha this week (entitled Let Them Eat Stonks: Greenback Bubble Deflating), neither the stock market (which to onlookers seems overheated at this point), nor Bitcoin (which rose from $20k in December 2020 to $49,000 in February 2021) are representing the biggest bubble.

That honour goes without question to the US dollar, which they denominate as the biggest bubble of all. Take that Nouriel Roubini.

The numbers of course are staggering. Trump’s tax returns to the wealthy (which he did in his second year in office) have taken an incredible bite out of the US government’s general ledger. At the moment, the US stands

At $27 trillion in debt on $3.3 trillion in revenues with another $100 trillion to $200 trillion in unfunded pension and entitlement liabilities.

White House

It doesn’t take a genius to see that there are only so many ways the next White House administration can solve this problem. Either they deflate the value of the US dollar further, in which case Americans will be surprised the next time they finally are able to travel to Europe, or they tighten the belt and start building their way out of this massive debt.

Looks like Biden will pick the former.

Now what does this all mean for Bitcoin?

It means that there will be two forms of Bitcoin investment coming from Wall Street in the next few months. The first will be the believers who invest in Bitcoin as they are convinced about the philosophy behind cryptocurrencies.

A second group those who follow the mantra first laid out by hedge fund manager Paul Tudor Jones last May, namely that you should hedge against inflation in these uncertain economic times.

The treasury directors of Fortune 500 companies that will follow Tesla’s lead and convert some of their sleeping cash in Bitcoin (some of which are waiting to buy in at a lower price point) will fall in the second category.

Elon Musk and Twitter CEO Jack Dorsey fall in the first.

No inflation

Although Federal Reserve president Jay Powell claimed earlier this week that all this extra money he was printing could help the poor, it has in fact done the opposite as rich Americans are the ones who have invested part of their sleeping cask in stocks, bonds and Bitcoin.

As to inflation, Cardano founder Charles Hoskinson released an interesting calculation this week when he, an American always critical of his own government, said:

Lumber: +115% Soybeans: +59% Silver: +55% Copper: +46% Corn: +45% Cotton: +30% Coffee: +25% Gold: +17% Crude Oil: +16% Wheat: +16% US Home Prices: +10% — US Consumer Price Index (reported today): +1.4% Yeah no inflation at all.