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In this episode of Bitcoin magazine’s Fed Watch podcast, moderators Christian Keroles and I, Ansel Lindner, reviewed my latest article, “What Caused the Mid-Cycle Bitcoin Price Correction,” then took a tour of the latest central bank news made all over the world. We also discussed the future of China, North America, and the Fourth Turn.
My last article was about the key narratives from the second quarter of the year, that when presented on a chart, they all overlap when Bitcoin price fell in the second week of May 2021.
Grayscale’s Bitcoin Trust (GBTC) activations were so closely correlated with price that it cannot be denied that they played an important role in price during this period. In the article you can get an introduction to the GBTC product, but for these show notes it is enough to point out that the large series of unlocks with a discount started exactly on the day of the current top and lasted until July 17th before the lowest.
The next narrative was the Bitcoin mining ban in China. We flipped through this topic but found an interesting link between the Bitcoin ban and other communist authoritarian raids currently taking place in China.
The last big narrative during the big drop in prices was the taproot upgrade. This flew under the radar for the casual space observer, but it was of great interest to the hardcore bitcoiners who went through the last highly controversial SegWit upgrade in 2017.
Our conversation then turned to the central bank news. The top news concerning the Federal Reserve is the explosion in reverse repo (RRP) and the new standing repo facility that is about to be launched. We’ve covered this in detail and I’ve tried to connect a few dots. Bottom line: With the MSRP rising above $ 1 trillion, the Fed refuses to talk about a taper and sets up an offsetting repo facility. We can say that the system is becoming more fragile. Maybe the Fed is expecting fireworks later in the year?
The situation in China is very worrying. First it banned Bitcoin mining, then it banned US IPOs. It has cracked down on technology companies and effectively nationalized them, and the latest news is the fight against video games as “spiritual opium”. If you put this in the context of the recession, aggressiveness towards Hong Kong and the Uyghurs, and deglobalization, this could be the beginning of the end of the CCP. It is important to remember the speed at which the Soviet Union collapsed. One year academic experts said the Soviets would conquer the world; the next they fell apart. The same could happen to the CCP.
We often get into geopolitical discussions, and this episode is no different in that regard. We ended the show by talking about what the future holds for the US, China and the global economy.
That was another very entertaining show. You are getting a dose of central bank news in a broad global context that must include a major concern about Bitcoin today.