Bitcoin Drops Below $20,000USD: Centralized Crypto lender Babel is freezing withdrawals for users due to “unusual liquidity pressures.” – June 18, 2022,
The centralized and overleveraged parts of Bitcoin are showing severe signs of stress as their bet that the FIAT price of Bitcoin was going up forever at least in the present is coming into question. When I look at the charts, the price of bitcoin appears correlated with STIMULUS spending mostly from the U.S government. It’s a lot easier to buy Bitcoin when the government sends you free money in the mail.
Buying or even hoarding Bitcoin is harder when the PETRO-DOLLAR is under attack. I’ve been consistent with my argument that I DO NOT WANT A GOVERNMENT gold standard, why? Because it’s DEMOCRACY or the market that demanded an elastic money supply. I don’t want the government knocking down my door looking for gold when they’re broke, nor do I want to feel secure imagining that I can cash my government notes and exchange them for Gold and Silver.
The last thing I want to do is go to the government to get my money when the government is broke because the exact thing Crypto lender Babel is doing is EXACTLY what you’d expect from any authority figure you’ve given the power of your money to. In the even the fiat monetary system, another can be created AND although it would be INCONVENIENT I can still trade with my PRIVATELY-owned Gold and Silver, which is obviously more decentralized than keeping my crypto in Babel.
At the time I’m writing this Bitcoin crossed a HUGE milestone, it dropped below $20,000. Maybe the time you’re reading this, Bitcoin bounced back, but it should be noted that the $20,000 mark has been breached and that means people will be looking for Bitcoin to drop to $15,000 potentially, even if it has a rally.
Why is this important? Because the longer it takes for central governments to send out stimulus checks, the more people will need those stimulus checks to buy ESSENTIAL THINGS!. I assume that there’s another round of stimulus coming, but it’s not a guarantee, and if stimulus comes, I’d assume interest rates are back down again, after the Federal Reserve or other central banks, claim they tried to fight inflation and lost.
What I’m seeing in the marketplace right now is a COST OF LIVING problem, the cost to live is too expensive and these excessive costs are DIRECTLY related to Progressive Politicans in charge of running the economy. I’m not certain what direct democracy is headed for right now, but I hear LITTLE chatter about austerity measures. The easy fix for this madness is to cut regulations on the economy, but if voters like the people in charge, this is unlikely for the foreseeable future.
In Canada, as an example, their Progressive government has already talked about a new round of stimulus spending. I’ve written about why I think the Canadian economy might be the first Western economy to crash and my reasoning for it revolved around how the Canadian economy is structured, there are a lot of price controls in Canada, and Canada has become increasingly reliant on IMPORTS, thereby making the value of the Canadian dollar on the Forex markets extremely important.
Which from my perspective has a surge of Bankruptcies written all of it. How this relates to crypto, is that a lot of the money that flowed into crypto was the result of people imagining they had a lot of DISPOSABLE income.
Economic deflation tends to lead to a strengthening U.S dollar, which makes imports more expensive, some argue this will make countries dump U.S dollars, I imagine the opposite, a strong U.S dollar from the point of view of the Canadian government as an example, could equate to a government cash windfall(higher prices for fewer goods and services), the downside to all of this is that Canada’s PRIVATE SECTOR. The average Canadian is in a LOT OF PRIVATE DEBT, and price controls guarantee, that certain prices WILL NOT COME DOWN. Now, when it’s all said and done, the nail in the coffin in my opinion will come when the Bank of Canada goes to NEGATIVE INTEREST POLICY.
Why I say this is that the economy is DEFLATING and the government’s solution to a deflating economy is for the government to Borrow and Spend. Keyword BORROW, meaning malinvestment, I personally think the Bitcoins current price is the result of MALINVESTMENT, I don’t even like Bitcoin at $100, a lot of people BORROWED to invest in Bitcoin and I don’t know if you’ve listened to these institutional investors, but their plan for Bitcoin is to make sure it’s under the control of GLOBAL governance?
It wouldn’t surprise me in the least if this Babel story and others like it, lead to more people asking for the government to step in and do something. Market sentiment when there’s a downturn in something will get worse if what was supposed to be a DECENTRALIZED cryptocurrency requires government intervention to prop it up. Sure, it might get a price bounce, but all of a sudden it’s no longer the darling it once was.
Fractional reserve banking is LIFE, fractional reserve banking even works with a gold standard, in fact, it works best with a gold standard, a private sector Gold currency would differ greatly in that it wouldn’t simply be an asset backing digital or paper money, it would also allow the investor the ability to withdraw their gold from a debt owed, leaving the debtor in violation of the contract to give back the investor(s) money as agreed to in the terms of the agreement.
When the wrong people have access to debt, they’re quickly thrown out of it, which allows the market to run more smoothly as Credit checks for an example will have more value to borrowers. As an example both former President Donald Trump and Prime Minister Justin Trudeau sent citizens free money when they were about to DEFAULT on their loans, a lot of the people who got this free money didn’t pay down debt, some saved it, others had fun with it BUYING BITCOIN as an example. Now in an honest economy, we cold have seen who was swimming naked and the market could adjust to granting liquidity to the people most competent.
CONSUMER debt is the problem here, this is what a lot of people fail to realize, debt is supposed to be reserved for BUSINESS people, but because the government is in charge of the money supply, the government is trying to ENRICH itself by creating as many debt slaves as possible. The average person imagines that the government can simply print money to solve problems, EXCLUDING themselves from the equation.
I know people who have been on government WELFARE their entire lives, why? Because the option to NEVER work was presented to them, and they took advantage of the opportunity. Now, this could never be SUSTAINABLE under a Gold standard, but this doesn’t mean it couldn’t happen. Political Democracy allows people to imagine all sorts of stupid ideas and in economics stupid ideas lead to malinvestment.
We’re on a petro-dollar standard and the U.S President has declared war on DOMESTIC petroleum? The U.S President didn’t even bother to find a Viable ALTERNATIVE TO FOSSIL FUELS, as if wind turbines and solar panels don’t use plastic and as if most humans aren’t clothed with polyester clothing. If you wonder why I don’t want a GOVERNMENT gold standard it’s because of stories like Babel.
Why would anyone use Babel, when they have the ability to hold onto their Bitcoin themselves? Because they’re LAZILY looking to get gains, well when you allow centralization of decentralized assets, you’re bound by the terms and conditions of the lender. If I have a 1-ounce gold coin that I’m going to lend out in the paper or digital markets, I’d only lend out a fraction of that ounce and because Gold is money, the fraction I lend out is supposed to not only make me whole put potentially give me 2+ ounces of Gold back.
The rate of interest, the fees I charge to the borrower, etc, are designed to protect me from losses. Bitcoin is a DERIVATIVE of the U.S dollar, the U.S dollar is a DERIVATIVE of Gold. There is a FLOOR for how low the price of gold can go, there’s no floor for Bitcoin. Gold being money is supposed to protect me from paper losses. I’m not going to lend out my gold without some form of COLLATERAL Maybe I’d put on lean on their house, a lean on their car, a lean on something of value the own.
Run-on banks often equated to people withdrawing their gold from banks, the moment they hear the bank might be insolvent, so for many, they’d only put money in banks they could afford to lose, this should have been the same approach people took regarding Babel, only leaving money in there they could afford to lose.
The world of business and investing is cutthroat and it’s this way for a reason because mal-investment occurs when the WRONG people, the wrong GOVERNMENTS have access to capital they don’t deserve. The financially illiterate will always become pirates by default. Providing people with UNEARNED benefits, will not help them, it will actually worsen their condition and make them even more dependent.
I don’t know what the future holds for fiat money, but a reminder to the reader that Bitcoin is a DERIVATIVE of fiat money, Bitcoin has no history and therefore NO-VALUE without fiat money. The charts show that Bitcoin’s value appears to be correlated with Zero Interest Rate Policy(ZIRP) and government stimulus checks. take for that what you will and invest wisely!
Interesting times ahead!