Tag: stimulus

US Democrats Propose Distributing Covid-19 Stimulus Payments Through Digital Dollars to Unbanked Citizens

As markets across the globe continue to feel the crunch of economic disruption caused by the coronavirus pandemic, debate has raged over a massive stimulus package being proposed in the US which could see the IRS send up to $2000 a month to all US citizens until the recession takes a turn for the better.According to a draft of the Covid-19 economic stimulus legislation, House Democrats are proposing the use of digital dollars and digital wallets to expedite the distribution of the emergency funds to unbanked citizens.

Digital Stimulus Payments for Families 

In section 101 of the draft entitled ‘Direct Stimulus Payments For Families’, the draft which has been circulating since March 23, specifically calls for the creation of digital wallets for all American citizens which are to be maintained by the Federal Reserve.

The paper defines the term Digital Dollar as, “(A) a balance expressed as a dollar value consisting of digital ledger entries that are recorded as liabilities in the accounts of any Federal Reserve Banks or (B) an electronic unit of value, redeemable by an eligible financial institution.”

The section outlines that every adult in the US earning less than $75,000 a year would receive the $2000 per month stimulus payment, with the payments becoming less and less as the market rebalances.

This latest draft of the bill comes from the office of House Speaker, Nancy Pelosi (D-CA) orginating on March 22, according to Bloomberg.

The Democrat version of the bill has enormous financial implications for the US, is over a thousand pages long and aims at distributing upwards of $1.8 trillion. The Republican version of the bill was immediately blocked when it made its appearance in Congress on both occasions (March 22 and 23) and was criticized for being too focused on helping big business.

Economic Countermeasures

Almost as concerning as the global economies downturn, is the projected inflation aftermath of the stimulus packages and counter measures being imposed by the Central banks and governments that have been fast to respond to the disruption caused by the Coronavirus.

Recent analysis by Bitmex highlighted, “In the US the Federal reserve has lowered interest rates to near zero (0% to 0.25%), announced the purchase of at least $500bn of treasuries and $200bn of mortgage backed securities, and also reduced the commercial bank reserve requirement to absolute zero.”Bitmex believes that there are further measure to come, but it is clear that these attempts to restabalize the broken system are, “the last major throw of the dice from central bankers. Monetary policy will not be enough.”

The Fed and the Infinite Money Pool

As reported by Blockchain.News, in an interview given to CBS’s 60 Minutes on March 22, Neel Kashkari, the President of Federal Reserve Bank of Minneapolis made a controversial remark after being asked to comment on how the state would deal with it if a situation like the 2008 financial crisis came again due the Coronavirus outbreak. 

On being asked whether the Federal Reserve Bank is equipped to provide money to the US banks if they needed to satisfy all incoming panic withdrawals, Mr. Neel Kashkari was quick to respond that this is the reason why Federal Reserve Bank exists. 

“Yes. This is the fundamental reason the Federal Reserve exists.”, said Mr. Neel Kashkari. He further added, “If everybody gets scared at the same time and they demand their money back, that’s why the Federal Reserve is here, is to make sure that there’s liquidity and that there’s money to meet those demands.” 

Mr. Neel Kashkari further clarified his controversial statement by saying ‘that’s what Congress has told us to do’. He stated that they have been given the authority to print money and provide liquidity in the financial system by first creating it electronically and then printing it with the Treasury Department. 

After the interview went live on the internet it received a wave of public criticism, one of the voice was the CEO of Cardano, Charles Hoskinson. He went on to tweet that the comments made by Neel Kashkari gave the US Dollar a real OneCoin Ponzi scam vibe. These sentiments were reiterated by CZ of Binance and Anthony Pompliano, co-founder of Morgan Creek Digital who tweeted, “History tells us that this is not sustainable long-term for a currency.”

Can US Lawmakers Really Just Mint Two $1 Trillion Coins to Back a Digital Dollar COVID Stimulus with "No Additional Debt"?

As the economy continues to deteriorate in the ongoing COVID-19 pandemic climate, US Lawmakers are once again pitching the creation of a sovereign digital dollar to quickly distribute the proposed stimulus packages.

Congresswomen Rashida Tlaib (MI-13) and Pramila Jayapal (WA-7) unveiled the Automatic BOOST to Communities Act (ABC), legislation to immediately provide a $2,000 payment using BOOST debit cards to every person in America as economic stimulus relief during the COVID-19 crisis.

After the initial payment, the ABC Act will provide a further $1,000 in recurring monthly payments for a full year from the time the coronavirus pandemic has been defeated.

According to a release on 16 April, “the ABC Act would be funded directly from the Treasury with no additional debt issued by minting two $1 trillion coins, and additional coins as necessary.”

FedAccounts and the Two Trillion Dollar Question

While there has been discussion about the Federal Reserve getting involved in the ongoing race for Central Bank Digital Currency (CBDC) dominance with a proposed FedCOIN, the motivations previously revolved around concerns with China’s determination to launch their DCEP and Facebook’s Libra project, which incidentally may be showing up once again on the Fed’s radar with the release of their new white paper earlier today.

The ABC Act would jolt the Federal Reserve into action if passed, and the Fed would be authorised by Congress to create digital wallets for all people and businesses in the US. These digital wallets are called “FedAccounts” in the proposal. The digital dollars that will be distributed are not going to be stablecoins and there is no mention of the payments being based on blockchain infrastructure. 

An alarming notion is the insinuation that the FED must recognise the two newly minted Treasury coins valued at a trillion dollars each to back the payments with “no additional debt” and the explanation given seems like an exercise in creative accounting. According to Fortune, “Under the plan, the Treasury would mint the two $1 trillion coins, then deposit them at the Federal Reserve. Forced by law to recognize the coins as legal tender, the Fed would add $2 trillion to the Treasury’s account. The Treasury would then use this money, under Congress’s direction, for stimulus.” 

FinTechs Enlisted in the Fight Against COVID

The bill was introduced as concerns continue to be raised regarding the timeliness of the $1,200 stimulus payments authorized under the CARES Act. While the IRS has been distributing the stimulus, it has not been an easy or quick process so far.

An appeal to Congress by Financial Innovation Now (FIN), on March 19, for FinTech companies to help distribute the loans digitally was given the green light by Lawmakers over the last week.

PayPal, Square and Intuit have received the US Government’s approval to take part in the Small Business Administration’s (SBA) Paycheck Protection Program(PPP) which was established in response to the COVID-19 pandemic triggered global financial crisis. 

FIN is a FinTech alliance which includes Square, PayPal, Intuit and Stripe. In the letter addressed to lawmakers they argued that they had “the reach, relationships, and digital capabilities to reach those businesses most vulnerable” in a more timely fashion while the traditional US insititutions were left wanting in this regard.

Image via Shutterstock

FinTech Giants PayPal, Intuit and Square Capital Approved to Digitally Distribute US Govt COVID-19 Small Business Stimulus

PayPal, Square and Intuit have received the US Government’s approval to take part in the  Small Business Administration’s (SBA) Paycheck Protection Program(PPP) which was established in response to the COVID-19 pandemic triggered global financial crisis. 

The approval was granted following an appeal to Congress by Financial Innovation Now (FIN), on March 19, for FinTech companies to help distribute the loans digitally, citing concerns that many small businesses would run out of working capital before they received any of the $350 billion stimulus package. 

FIN is a FinTech alliance which includes Square, PayPal, Intuit and Stripe. In the letter addressed to lawmakers they argued that they had “the reach, relationships, and digital capabilities to reach those businesses most vulnerable” in a more timely fashion while the traditional US insititutions were left wanting in this regard.

PayPal First Non-Bank Participant

Paypal was the first of the non-bank institutions to announce they had received official approval to help distribute the funds under the SBA program, which is part of a larger US Congress approved economic stimulus relief package totalling $2 Trillion USD.

The global payments giant has been offering small businesses loans and cash advances since 2013.

In a Linkedin post on April 11, Dan Schulman, President and CEO of PayPal said, “We are eager to deploy our capital and expertise to do our part in helping small businesses survive this challenging period.”

Shulman also revealed that the first loans have been applied for and issued. He said,“ We expect more loans to be issued in the coming days. Thanks to Congressional leaders and the Administration for ensuring the CARES Act allowed companies like PayPal to help distribute funds quickly to those businesses that are most impacted.”

Square Capital Joins In

Jack Dorsey’s newly founded Square Capital also announced it had received SBA approval as a PPP lender in partnership with Celtic Bank.

Jackie Reses, Capital Lead and People Lead at Square took to Twitter yesterday to announce, “Square Capital has received U.S. Treasury and SBA approval to be a PPP lender, and we will start rolling out our PPP loan applications this week. We continue to work with our partner Celtic Bank as they have existing expertise as a leading SBA lender.”

The announcement also stated that sellers would be notified through the Square Dashboard when their applications are available.

Intuit Demystifys Stimulus Programs and PPP

Joining PayPal and Square Capital, Intuit has also received approval as a non-bank lender for the SBA’s PPP via its QuickBooks Capital.

Intuit appears to be taking things a step further in demystifying the whole process for American citizens. Their software simplifies the application process and offers guidance on which relief funds the small business owner’s are eligible to claim. Intuit automates the application in coordination with the SBA to distribute the PPP funds quickly.

On Monday, Intuit also announced the details of several of its new programs launched in response to the COVID-19 global financial crisis and the resulting US federal government aid programs. The FinTech company set up Intuit Aid Assist as a free website designed to help small business owners and those who are self-employed assess how much federal relief they’re eligible for under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Image via Shutterstock

Elon Musk and Joe Rogan Slam US Stimulus Money Printing and Incoming Inflation

Elon Musk appeared on the Joe Rogan Experience for the second time and had a few choice words regarding the coming inflation and creative monetary issuance coming into play due to the COVID market meltdown.

While a clear Bitcoin advocate, Musk did not mention the pioneer crypto despite its ability to fix inflationary money issuance.

Musk believes that given the current US stimulus money being sent to US citizens and small businesses on lockdown, that the population is starting to view the economy as a limitless source of support regardless of the loss in production and rising unemployment.

Appearing on the Joe Rogan podcast on May 7, Musk said, “This notion though, that you can just sort of send cheques to everybody and things will be fine, is not true.”

Endlessly Printing Money

The coronavirus pandemic lockdown has created a huge financial chasm and the US government has put a $2 trillion stimulus package in play with the belief that they can endlessly print more.   

“If you don’t make stuff, there’s not stuff. You can’t just legislate money and solve these things.” Elon Musk explained the basis for a working economy seemingly unknown to US Lawmakers who only recently suggested having the US Treasury mint a couple of $1 trillion coins and force the Federal Reserve to recognize them so they could back the stimulus “debt-free.”

Elon Musk and Bitcoin and Inflation

As stated in the original Bitcoin white paper, there can only ever be a maximum of 21 Million Bitcoin and does not allow for inflation.   

Although Musk and Rogan did not mention Bitcoin during the lengthy two- hour podcast, Musk has appeared bullish on the cryptocurrency recently on Twitter and reportedly owns around 0.25 BTC himself.  

In terms of what havoc the coming inflation could have, a positive note for Bitcoin believers are recent reports like that from Bitmex, which highlights that in the aftermath of the current Coronavirus market crash and the subsequent inflation that will be caused by the response of the Federal Reserve and Central banks, Bitcoin will face its truest test and be presented its biggest opportunity to prove itself in its short lifetime.

BitMEX Research outlined that the global response to the pandemic and disruption will, “mark a significant economic regime change from monetary policy to central bank funded fiscal expansion” from which intolerable market inflation will rise.

Recently the Bloomberg April 2020 Crypto Outlook also revealed that the creative financial measures of the US Lawmakers and Central banks around the world appear to be accelerating the status of Bitcoin to a new type of digital gold.

How do you pronounce  X Æ A-12?

On May 4th, 2020, Elon Musk and his partner Claire Boucher welcomed their first child together and soon after revealed the baby’s name: X Æ A-1

Musk was immediately questioned by Rogan on how to correctly pronounce the boy’s name.

Musk said his son’s name is pronounced “X Ash A 12.” The X is just “X” and the A-12 is just “A 12.”

Trump Pushes Federal Reserve For Negative Interest Rates, Bitcoin's Anti-Inflation Mechanism Shines

Trump tweeted out his support of negative interest rates as European Central Banks and the Bank of Japan take their interest below zero.Bitcoin basher and gold advocate, Peter Schiff was quick to respond to the President with a tweet of his own, explaining what a bad idea negative rates would be as they trigger mass lending from banks who could be penalized for hoarding cash. 

The billionaire bond king Jeff Gundlach also responded with the tweet below, stating that negative interest rates would be fatal for the US economy. 

Bitcoin was Made to Curb Central Bank Inflation

While some have suggested the dive below zero may be necessary to kickstart the economy, the potential for negative interest rates on the US dollar highlights the strength of cryptocurrencies like Bitcoin which has an anti-inflationary mechanism built-in to its code.

Bitcoin experienced its Third Halving this week, which effectively reduced the block rewards for miners from 12.5 BTC to 6.25 BTC.

Figure 1: Snapshot of Bitcoin Network Source: Bitcoinblockhalf.com, Data as of May 13 2020

The rationale of the Bitcoin halving stems from the currency design of Bitcoin. In the email thread between the mysterious Satoshi Nakomoto and Mike Hearn, Nakamoto stated that the total supply of Bitcoin is capped at 21 million. This is opposite to the inflationary nature of fiat currencies in which their supply is controlled by central banks.

Guy Hirsch, the US Manager for the eToro exchange told Forbes, “The bitcoin protocol has a monetary policy built into the code and it is therefore not bound by political or other external manipulation.” He continued, “Every 210,000 blocks bitcoin will hold a stronger stock-to-flow ratio, which makes bitcoin a real source of value. Central banks have now made printing trillions of dollars a normal occurrence, which is not sustainable.”

Many bitcoin and cryptocurrency exchanges have seen users and trading volumes soar since the coronavirus crisis began—Brian Armstrong, CEO of Coinbase even revealed an interesting data set which looked like Americans were investing their stimulus checks.

As the US counts the cost of the coronavirus pandemic, alternative assets like bitcoin could begin to look more attractive and the stimulus and creative monetary theory even seems to be accelerating the asset into a type of Digital Gold.

Fintech not Big Tech: Square is a Greater Threat to Banks than Google and Amazon

A recent survey of 300 senior executives at US-based mid-sized financial institutions found that more than half of bank and credit union executives view Big Tech companies like Amazon and Google as significant threats to the banking industry.

Meanwhile only a third believe financial technology (fintech) firms will be a threat in the future but are they sleeping on Square?—Jack Dorsey’s financial technology venture whose stock price recently recorded a 20 month high, and the soaring price is being largely attributed to the firm’s integration of Bitcoin in its services. 

What banks need to recognize is that while Amazon and Google are the perceived threats to the banking sector, they are actually on a path to become vendors or official distribution channels to banks—while Square will be their direct competitors. Unlike the institutions, Square’s acceptance and use of Bitcoin is also making it more marketable than ever to a highly desirable customer base.

Why Banks Should Worry about Square and not Google

As reported by the Wall Street Journal in November 2019, Google will begin offering checking accounts to consumers in 2020 as part of its push into financial services, The product, currently code-named “Cache,” will be run by Citigroup and small lender Stanford Federal Credit Union.

However, Google’s announced checking account is not designed to compete with banks’ checking accounts but instead actually enhances the banks’ services. In addition, Google has also launched an AI tool to help banks analyze their PPP loans, and has vastly improved its cloud services for financial institutions.

In contrast, Square Capital’s 75,000 PPP borrowers may give Square Capital new opportunities to rev up lending post-crisis. As Square’s base of large merchant continues to grow dramatically, the fintech is poised to take away a significant chunk of small lending volume for the banks.

Bitcoin Utility and the Cash App

As reported by Forbes on June 9, a recent survey of the banking industry indicates that Square may be a far greater threat to the traditional banking sector than Big Tech giants Amazon and Google.

The article suggests that Square’s surging growth and popularity come down to the number of Cash App services that can drive revenue, and its utility with Bitcoin making it attractive to older millennials and the Gen Xers.

Square has added a number of Cash App services that can drive revenue, and a recent push to highlight those features has helped it capitalize on them. According to Seeking Alpha, “Cash App is now used for tax refunds, stimulus deposit, and work paycheck deposit. Also, as retail investing surged during the stay-home period, Cash App has allowed people to buy equities and bitcoin with widely accessible features such as fractional investing and recurring purchases.”

Cash App’s P2P transfer network is its “best acquisition channel,” said CEO Jack Dorsey in a recent interview, because existing users bring in more consumers by sending and requesting funds.

According to Forbes, Cash App’s revenue for Q1 2020 was $528 million, three times its revenue for Q1 2019. In terms of Square’s Bitcoin news, a huge portion of the fintech firm’s revenue was in Bitcoin at $306 million, which also marked a $65 million increase year-over-year.

As the fiscal results show, the importance of Bitcoin to Square’s price growth cannot be overstated as the fintech firm is managing to capture a market that other virtual or challenger banks are not yet servicing.

CBDC for Stimulus Payments Advocates Honorary Christopher Giancarlo

During an open hearing by the House Committee On Financial services yesterday, the Honorable Christopher Giancarlo once again advocated for the use of a Central Bank Digital Currency (CBDC), effectively digital dollars, as a solution to directly distribute the COVID stimulus packages to citizens.

Members of the House Committee On Financial Services met for the open hearing Task Force On Financial Technology held yesterday, June 11. The hearing focused on the topic of the US government’s ability and options for delivering stimulus payments efficiently to citizens – and specifically discussed the more than 8 million unbanked families across the US.

While several views were discussed, Giancarlo made the case for strengthening the existing payment rails and the two-tier banking system through the development and functions of a CBDC or a digital dollar. He also warned that China’s focus on their own CBDC development, could undo the US dollar’s utility as the defacto global currency.

CBDC Could be Effective in Delivering Stimulus

While the central banks around the world have been experimenting with their own CBDC development, Giancarlo views the development of sovereign digital currencies as inevitable.

Addressing members of the House Committee, Giancarlo advocated for the use of digital dollars as a solution to directly distribute the proposed stimulus money. A CBDC would be distributed through a two-tier system in the same way that cash is distributed now.

A former chair of the CFTC, Giancarlo is now the director of the Digital Dollar Project and believes that a CBDC would be akin to critical infrastructure for the future—a future which in his mind appears to be all but inevitable.

Despite China’s race to secure their own CBDC, or DCEP (Digital Cash Electronic Payment) as they are calling it, Giancarlo is positive that a digital dollar built in line with US standards and built-in privacy will be far superior.

He also warned that stifling the US’ development of CBDC could see China usurp the US dollar as the defacto world currency.

Giancarlo believes that the development of the digital dollar should not be rushed, despite the pressure from China, and will most likely not be able to address the needs of stimulus distribution in the short-term.

In the long run, however, Giancarlo argues that young people everywhere and even citizens in rural communities are very comfortable with digital devices and if broadband and mobile access were more available—a CBDC would be the most effective way to onramp millions of the unbanked into mainstream banking services.

Texas Man Charged for Using COVID-19 Small Business Relief Funds to Buy Crypto

A Texas resident named Joshua Thomas Argires has been charged by US authorities for using funds from a COVID-19 relief program to trade cryptocurrencies.

The criminal charge was announced by Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. Argires was taken into custody for fraudulently securing more than $1.1 million in a Payment Protection Program (PPP) which he invested in a cryptocurrency account.

Violation of the CARES Act is a Crime

The Coronavirus Aid, Relief and Economic Security (CARES) Act is a Federal law enacted on March 29. It was enacted to help Small Business Administrators (SBA) to access emergency financial assistance to combat the negative economic effects of the COVID-19 pandemic. One major source of relief the CARES Act provides is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding. These funds were approved to be digitally distributed to qualifying small businesses back in April.

Joshua Argires is one of many US citizens that has been charged in recent times based on violations of the CARES Act. He claimed the funds through the companies Texas Barbecue and Houston Landscaping. According to the statement issued:

“Neither Texas Barbecue nor Houston Landscaping has employees or pays wages consistent with the amounts claimed in the PPP loan applications.  The complaint further asserts that both of these loans were funded, but that none of the funds were used for payroll or other expenses authorized under the PPP.  Rather, the funds received on behalf of Texas Barbecue were invested in a cryptocurrency account, while the funds obtained for Houston Landscaping were held in a bank account and slowly depleted via ATM withdrawals, according to the charges.”

Following these questionable allegations, Argires made his first appearance before the US Magistrate Judge Peter Bray on Monday.

Blockchain Firms Also Benefited From COVID-19 Relief Funds

Besides the role that blockchain technology is playing to help fight the COVID-19 pandemic, blockchain inventions were also considered as a potential channel for the disbursement of the funds. In addition to these, blockchain firms (particularly Tron) also benefited from the US government COVID-19 relief funds as it was awarded $2 million.

Bitcoin Price Bull Run Will Hit All Time High in 2020, Predicts Billionaire Bitcoin Investor

Bitcoin’s price is heading to $20,000 by the end of 2020 according to billionaire cryptocurrency investor Michael Novagratz, CEO, of Galaxy Digital.

The Bitcoin price appears to finally be making its bull run after months of inaction, and briefly reached a new price high for 2020 when it peaked over $11,400 on Monday before a slight correction.

Michael Novogratz, the former hedge fund billionaire and now cryptocurrency investor and advocate thinks that the Bitcoin price bull run is just warming up. The Galaxy Digital CEO believes the Bitcoin price will hit $20,000 by the end of 2020 due to rising investment from the retail sector and fueled by the liquidity pump of the Federal Reserve into the global economy.

The Liquidity Story

On Tuesday, July 28, billionaire investor Michael Novogratz told CNBC that his investments into gold and Bitcoin have started to pay off in recent weeks, and he asserted that the price of both assets is set to continue rising—predicting the Bitcoin price will return to its all-time high of $20,000.

Novogratz told CNBC, “The liquidity story isn’t going away. We’re going to get a big stimulus…it doesn’t look like the Federal Reserve is going to raise rates.”

The Bitcoin price had been stagnant, hovering around the low $9000s in value prior to the bullish surge on July 26, and had received a lot of criticism from big players in the crypto industry.

As the value of the USD has been depreciating with the mass printing of stimulus checks deployed by the US government for pandemic repercussions relief and with gold finally responding with a price rally, Bitcoin (BTC) appears to have finally gained some bullish traction on the crypto market.

With the announcement on Monday of the second round of stimulus payments on the way in the United States—Novogratz believes that a catalyst for a further Bitcoin price bull run as well as a gold price bull run is upon us.

Depreciating Dollar and Safe Haven Assets

The coronavirus pandemic lockdown has created a huge financial chasm in the markets, one that the US Federal Reserve has tried to fill by pumping liquidity back through the economy via stimulus packages for small businesses and citizens. The US government’s first stimulus package put $2 trillion dollars into play, sending out $1,200 dollars to each citizen.

The second round of stimulus will be another $1 trillion dollars as well as individual payments to each US adult citizen of $1,200.

With the USD being printed in bulk by the US government in the goal of delivering a second round of stimulus packages to the population, many investors have been moving wealth to cryptocurrencies like Bitcoin as a safe haven hedge.

In fact, it was even reported by crypto exchange Coinbase that many Americans had used their first stimulus check of $1,200 towards investments in Bitcoin. Crypto advocates tout Bitcoins and altcoins as a means to protect their wealth from the expected inflation that will follow.

Gold has also enjoyed a resurgence in popularity and has always been regarded as the traditional store of value. The gold price also rose above $1900 and has held up close to $2000 per ounce—a trend that Novogratz also sees continuing.

With the announcement of the second stimulus, Novogratz observed, “Yesterday, you saw a lot of money shift back over to gold and Bitcoin,” he added that there is also, “a lot of retail interest in Bitcoin.”

Novogratz stated that the mass of retail traders switching from stocks to Bitcoin due to the announcement of a fresh government stimulus indicated to him that the Bitcoin price could reach $14,000 in the next three months. By the year’s end, the Galaxy Digital CEO predicted the Bitcoin price will return to its all-time high of $20,000 per coin.

Novogratz also asserted that he has observed institutional investors moving value to Bitcoin but believed there is a bit of a learning curve for Wall Street investors when buying cryptocurrency instead of gold. He said, “Gold has been around for 3,000 years, it’s pretty easy to buy…there’s an adoption game in Bitcoin that you don’t have in gold.”

Winklevoss Twins Also Think BTC is a Good Hedge Investment

Novogratz’s Bitcoin price prediction has been shown support by other investors in the space.

The always influential Gemini CEO Tyler Winklevoss advocated in a recent public tweet that Bitcoin is the way to go, and should definitely be invested in. He explained that with the US Federal Reserve’s plan of mass printing money, the “stage for Bitcoin’s next bull run is set.” 

The coin exchange CEO thinks that with the current economic turmoil, investors are going to be looking at BTC as a more interesting alternative investment solution, as opposed to mainstream markets.

Bitcoin Billionaire Winklevoss Slams European Central Bank Money Printing Despite Strong Euro

The European Central Bank announced it would not alter its interest rates and COVID-19 stimulus programs despite a strong euro—which Bitcoin billionaire Tyler Winklevoss called a “powerful advertisement for Bitcoin.”

The European Central Bank (ECB) announced on Thursday Sept 10, that it was keeping its interest rates and coronavirus-stimulus program unchanged despite the euro rising over 5% against the US dollar since July. The rise in strength of the euro will mean cheaper imports and will put strain on euro-zone exporters, creating tighter financial conditions for the wider economy.

The ECB stimulus money printing and interest-free lending to businesses appears set to continue as it announced it would not be making any immediate changes to raise inflation or to alter its Pandemic relief program which remains at a total of 1.35 trillion euro.

Bitcoin billionaire Tyler Winklevoss chimed in to make the case for Bitcoin on Twitter immediately following the ECB’s announcement—to continue to keep refinancing operations, marginal lending facility and deposit facility unchanged at 0.00%, 0.25% and -0.50%, respectively.

Winklevoss said:

“The European Central Bank’s refinancing rate is 0% and its deposit rate is -.5%. This means it is free to borrow money, but actually costs you money to save. Thinking face This is both a potent recipe for inflation and powerful advertisement for #Bitcoin.”

The ECB increased its COVID-stimulus program from 750 billion euros to 1.35 trillion euros in June and it is expected to last and increase until June 2021, which will mean more new money creation and a need to raise interest rates. However,the ECB last forecasted the annual inflation to reach 0.3% by the end of 2020 which is below its target of 2%—which also drew the criticism of the Gemini exchange founder and early Bitcoin investor Tyler Winklevoss.

Winklevoss tweeted:

“Now that “money printer go brrrrrr” has become the default operating procedure for central banks around the world, we need an updated version of this meme to indicate its now the status quo. And perhaps one for banks that one day (gasp) turn the money printer off.”

What Does it Mean for Bitcoin and Gold?

As previously reported by Blockchain.News, Bitcoin is now more closely correlated to safe haven asset gold than ever, which enables the world’s largest cryptocurrency to be able to combat risk aversion in the traditional markets.

According to Bloomberg’s records, the correlation between Bitcoin and gold is now at its highest level since 2010. During the current unprecedented economic turmoil, investors have fled to safe haven assets, such as gold. With the injection of fiat currencies due to recent economic stimulus, investors may look to hedge in alternative assets. This could be a possible explanation for the record-high correlation between Bitcoin (BTC) and gold.

It also means that the continued money printing by the ECB and well as the Federal Reserve to stimulate the economy should ultimately drive up the value of both Gold and Bitcoin.

Edward Meir, analyst at ED&F Man Capital Markets commented:

“All the central banks are in the same boat. They will have to keep printing money, keep easing policy, in order to fight the slump we are in and that will keep gold supported.”

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