Trump Wants Bitcoin “Made in the USA,” U.S. Senators Urge Fed to Cut Rates, Another Company Adopts Bitcoin Strategy
News Block #41 (06/13/2024)
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President Trump Wants Bitcoin to be "Made in the USA"
People started calling the Bitcoin rally this week the Trump Pump.
After dipping below $67,000 on Tuesday, Bitcoin’s price momentum briefly came back to life and broke through $69,000 on the back of statements coming from none other than former President Donald Trump.
Trump sent out this post:
President Trump’s comments came after holding meetings with Bitcoin Magazine’s David Bailey and several mining industry leaders. I’m actually talking to David Bailey about this on my next Coin Stories interview!
It seems that Trump heard the Bitcoin message loud and clear – expressing support for Bitcoin mining and how it’s good for America.
The last part of Trump’s post, in particular, caught my attention. It appears that he’s beginning to understand how Bitcoin mining can benefit our energy industry and why embracing this technology is becoming a matter of strategic importance. This is the game theory playing out. If we don’t embrace Bitcoin, but our adversaries do, then what?
Amanda Fabiano attended the meeting and she sounded optimistic about how it went. She tweeted:
David Bailey seemed even more enthusiastic about the meeting, tweeting:
When Trump first made pro-Bitcoin comments earlier this month, many questioned whether he was genuine or if he was just trying to garner votes. Both may be true, but by taking the time to meet with industry leaders, he’s showing that he’s serious about it.
It’s crazy to think about, but by taking just ONE meeting with the industry, Trump has already shown more friendliness towards Bitcoin than Biden has during his entire presidency.
Trump really doesn’t have to do much to stand out here. All he has to do is provide support, get out of the industry’s way, and let us build. To paraphrase Riot’s Pierre Rochard…Trump’s campaign promises on Bitcoin policy are actually very easy for him to keep: he’s just promising not to do anything. He’s just promising to not attack it.
Over the years, that’s really all this industry has asked for from our government officials. Stop discriminating against Bitcoin. Stop attacking it. And take some time to learn how Bitcoin and Bitcoin mining can help America prosper and make America great again.
U.S. Senators Urge the Fed to Cut Interest Rates
As Trump remained focused on Bitcoin, other politicians turned their attention to the Federal Reserve.
On Monday, Senators Elizabeth Warren and Jacky Rosen co-signed a letter to Fed Chairman Jerome Powell asking him to cut interest rates.
In the letter, they shared their concerns that the level of interest rates is driving inflation up, and by not cutting rates, they argue that Powell is threatening the economy and increasing the risk of a recession.
The authors ended the letter in a demanding tone saying, “You have kept interest rates too high for too long: it is time to cut rates.”
I have a lot of thoughts on this. First, I thought the Fed was supposed to be independent. A couple of months ago, President Biden publicly said that the Fed would cut rates, and now we have sitting senators writing letters directing the Fed Chairman essentially how to do his job. Politicians seem to be getting more and more involved with the Fed’s affairs.
In addition, these senators have no one to blame but themselves when it comes to the inflation Americans are suffering from. It’s not the Federal Reserve that continues to run trillion-dollar deficits, and it’s not the Federal Reserve that increased the money supply by more than 20% over the last four years.
The same politicians have now blamed supply chains, price gouging from grocery stores and gas stations, and now high interest rates for the inflation — but never their reckless spending.
Powell, Yellen, the Congressional Budget Office, and many others have all said the quiet part out loud — the fiscal path we are on is unsustainable. So perhaps instead of blaming high interest rates for the sticky inflation, maybe these politicians should stop spending instead.
Despite the letter and inflation coming in cooler than expected on Wednesday, the Fed decided to keep rates unchanged. I expect the political pressure on the Fed to only increase as we head closer to the election and because our politicians want cheaper debt to continue on their spending spree.
Another Company Adopts Bitcoin Treasury Strategy
Warren and Rosen did highlight one thing in their letter that was interesting to me – they brought up how central banks around the world are starting to cut rates. Last week, both the Bank of Canada and the European Central Bank cut rates for the first time in years. A Financial Times headline said it all — “The cutting cycle begins.”
When it comes to the ECB, the rate cut came despite inflation still being above its 2% target. They even announced a rate cut while increasing their inflation expectations for the year. This was kind of strange considering the purpose of rate cuts is typically to stimulate economic activity, which increases inflationary pressures. My take is that either the ECB is expecting some kind of economic downturn and is trying to get out in front of it, or they are cutting for other reasons.
Lyn Alden tweeted on the news saying:
As always, Lyn makes a good point. When debt levels get this high, monetary policy becomes more political. It should come as no surprise that senators are starting to write letters to the Fed to cut rates. They have large deficits they need to finance with new debt. The lower the rates, the easier and cheaper it will be for leaders to continue spending.
The fact that rate cuts are now back on the table really is evidence that central banks are between a rock and a hard place. With government debt levels at nosebleed levels, raising interest rates becomes problematic for governments. But by cutting rates, the central banks risk stoking inflation.
It seems like central banks are getting comfortable with the idea of inflation hovering around 3% instead of 2%. All this means is that the purchasing power of your money will continue to erode faster than in the past, and that’s why saving in a form of money that can’t be eroded away is more important than ever before.
Another Public Company Adopts a Bitcoin Strategy
The last bit of news is around corporate bitcoin adoption, which seems to be ramping up.
After Semler Scientific made news that it had adopted a bitcoin treasury strategy, another company has come forward doing the same.
DeFi Technologies, a Canadian public company, announced that it has adopted Bitcoin as its primary treasury reserve asset and has purchased 110 bitcoin.
In a statement, the company said, “DeFi Technologies believes it [Bitcoin] has unique characteristics as a scarce and finite asset, making it a reasonable hedge against inflation and a safe haven from monetary debasement…Bitcoin has the potential to generate outsized returns as it gains increasing acceptance.”
This story caught the eye of Fidelity Digital Asset’s Head of Research, Chris Kuiper, who wondered if this is a signal that the game theory of Bitcoin corporate treasury adoption is really getting started.
Chris made some good points in his thread. Although these are smaller corporations today, this is how he expected it to play out, similar to how nation-state adoption first occurred with smaller nations like El Salvador.
Another thing that stood out to him was the similar language of the companies’ announcements. Both mentioned Bitcoin as a hedge against debasement and the opportunity for outsized returns as reasons for adopting the strategy.
What’s interesting is that the three small companies that recently announced a Bitcoin strategy—Metaplanet, Semler Scientific, and now DeFi Technologies—have all seen their stocks explode in value.
What the market is saying is that it likes when companies hold bitcoin on their balance sheets, and perhaps other companies will soon listen to what the market is telling them and follow suit.
I happen to agree with Chris – the game theory here is starting to play out, and the corporations that adopt Bitcoin first will have an advantage over those who wait.
Can’t wait to see which company is next.
Until next week, keep stacking.
- N₿
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