The Crypto Comms #24

  1. A rock and a hard place
  2. Yield Curve Control
  3. Historically speaking
  4. BoE intervention
  5. Latest happenings
  6. Listening material

Bitcoin analysis

The crypto airwaves are rife with chatter about the ‘Bitcoin bottom’. Analysts are talking about fresh lows with $10,000 price predictions, local highs followed by new lows, and everything in between. But one thing is absolutely clear: the majority is trying to pinpoint the Bitcoin renaissance as the heat in legacy markets reaches extremely uncomfortable levels.

BTC/USD rounding bottom, D1 time-frame.

A rock and a hard place

If history is any indicator, the cost of living crisis is unlikely to get any better in the months ahead. On one hand, if the Federal Reserve pushes interest rates too high, the global economic recession will push normal people deeper into poverty. On the other hand, pivoting or not raising rates will lead to hyperinflation.

Yield Curve Control

YCC is a mechanism for central banks to influence interest rates and the general cost of capital. In practice, a central bank sets the desired interest rate for a particular debt instrument. This is followed by repetitive two-way buying and selling the debt instrument (10-year bond) no matter what in order to maintain the interest rate peg desired. This activity is normally facilitated using newly printed cash, which in turn adds to inflationary pressures.

Historically speaking

After WW2 in 1942, the United States had major debt expenses which financed the war, and the Fed capped yields to keep borrowing costs low. In that time, the Fed capped both short and long-term interest rates across shorter-term bonds at 0.375% and longer-term bills up to 2.5%. By doing so, the Fed threw its hands up with respect to the money supply and its balance sheet, both of which increased to maintain the pegs.

US public debt to GDP

BoE intervention; harbinger of things to come

Is it the return of quantitative easing or is it yield curve control? Whatever you want to call it, the BoE’s Sept. 28 announcement of ‘temporary and targeted purchases’ in the gilt (bond) market shows investor faith in the UK’s fiscal strategy has turned sour.

Latest happenings

Listening material

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Chris on Crypto

Chris on Crypto

71 Followers

Journalist-turned crypto-writer & analyst; forging the narrative, stacking sats.