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In this episode of Bitcoin Magazine’s “Fed Watch” podcast, moderators Christian Keroles and Ansel Lindner gave an update on the price development of Bitcoin over the past two weeks, spoke to NYAG about the Tether agreement and gave an expert commentary on the latest statements and Chairman Powell’s dove deep into how Bitcoin fits into the macro landscape.
Bitcoin’s price movement has been quite volatile, but bitcoiners are used to it. After the consolidation erupted in January, it rose 50 percent to threaten the roughly $ 60,000 level before pulling back and consolidating. There are some concerns about this withdrawal as many people have been willing to raise the price and never lower it again. Of course there will be periods of profit followed by periods of consolidation. There is nothing to worry about at this point.
Tether was also involved in some very bullish news this week when it was revealed that the parent company had resigned itself to the New York Attorney General (NYAG) for a fine of $ 18 million. Despite NYAG allegations of wrongdoing, no convincing evidence has been presented to warrant further prosecution of the case. This new product seems quite bullish for the Bitcoin industry as Tether provides a significant portion of the liquidity on the fiat side of trading.
Next, the co-hosts canceled some statements by Federal Reserve Chairman Jerome Powell that were presented to the US Senate on Tuesday. At the time of recording, the process had just ended and the tweets about Powell’s Bitcoin and “Digital Dollar” comments were already starting to fly. Ultimately, there was nothing new on this front from the Fed chief – he repeated previous comments with very similar rhetoric, with the only exception that a digital dollar was a “high priority.”
The Fed’s position on the digital dollar remains cautious. It works with partners like the University of Texas and MIT on research initiatives, but takes its role as a reserve currency provider very seriously. It won’t be quick with a digital dollar. By comparison, the European Central Bank is at the forefront of this movement for various reasons, but admittedly, even it is four years away. If there is to be a digital dollar separate from the market that is already selling digital dollars very successfully, like Tether will be, it will be at least five to eight years away.
Powell also talked about inflation. Much information can be gathered by carefully listening to your choice of words. He said we could see prices rise when the economy reopens. However, this is not a strong proposition, it is a proposition from an academic framework, not real data. He also said the Fed had the tools to keep inflation under control. However, there was no mention of the tools to keep deflation under control. This is the primary atmosphere we are currently dealing with. Finally, referring to recent hikes in longer-term US Treasury bond rates, Powell said interest rates are rising on expectations of an economic recovery. This is a subtle but important point that Lindner emphasized: Powell is not saying that rates will go up because of the actual rebound, only because of the expectation of a rebound. And what happens when these expectations turn negative?
This far-reaching podcast episode ended with a foray into how Bitcoin fits into the world of macroeconomics and even geopolitics. We are aware that Bitcoin is entering the broad international currency scene, but what will that look like later this year and in the future? Where does Bitcoin fit in? You have to listen to find out what Lindner and Keroles said it might surprise you.