Bitcoin extended its losses after China vowed to crack down on the cryptocurrency's mining and trading activities in an effort to prevent financial risks at a meeting chaired by Vice Premier Liu He on Friday, May 21. t was a doubled move against virtual currencies coming just after three Chinese financial regulators banned financial institutions from crypto-related businesses on Wednesday. China will also clamp down on illegal activities in the securities market, and maintain the stability of stock, bond and forex markets, the State Council's Financial Stability and Development Committee said after the meeting. China powers most of the world's bitcoin mining. According to data from the Cambridge Center for Alternative Finance, China accounted for over 70 percent of the world's computing power for bitcoin between September 2019 and April 2020.
Cryptocurrency mining has drawn regulatory attention in China in recent years. In April 2019, China's National Development and Reform Commission put cryptocurrency mining on a preliminary list of industries it wanted to eliminate, citing concerns including energy-wasting and regulation. However, the final version released in November removed cryptocurrency mining from the list. In June 2019, China's central bank – the People's Bank of China – issued a statement saying it would ban all domestic and foreign cryptocurrency exchanges and Initial Coin Offering websites. By the end of April 2021, north China's Inner Mongolia Autonomous Region said it would "clean up and shut down" all cryptocurrency mining operations to reduce carbon emissions in the coal-based region. Beset by the escalating regulations in major economies, bitcoin failed to recover from its tumble week after Tesla's CEO Elon Musk's tweets doubting its environmental impacts. The U.S. Treasury Department on Thursday also called for new rules that would require large cryptocurrency transfers to be reported to the Internal Revenue Service and the Federal Reserve flagged the risks cryptocurrencies posed to financial stability. China's Hong Kong also proposed on Friday that cryptocurrency exchanges operating in the city will have to be licensed by the markets regulator and will only be allowed to provide services to professional investors. At time of writing, bitcoin is traded at $39,000 each, about half from its all-time high a month ago of over $63,500 and similar to the level of the beginning of the year. Cryptocurrencies could stay a feature of global markets as something akin to “digital gold,” even if their importance in economies remains limited, former US secretary of the treasury Lawrence Summers said. Speaking at the end of a week in which bitcoin whipsawed, Summers told Bloomberg Television’s Wall Street Week that cryptocurrencies offered an alternative to gold for those seeking an asset “separate and apart from the day-to-day workings of governments.” “Gold has been a primary asset of that kind for a long time,” said Summers, a paid contributor to Bloomberg. “Crypto has a chance of becoming an agreed form that people who are looking for safety hold wealth in. My guess is that crypto is here to stay, and probably here to stay as a kind of digital gold.”
If cryptocurrencies became even a third of the total value of gold, Summers said that would be a “substantial appreciation from current levels” and that means there’s a “good prospect that crypto will be part of the system for quite a while to come.” Comparing bitcoin to the yellow metal is common in the crypto community, with various estimates as to whether and how quickly their total market values might equalize. Yassine Elmandjra, a crypto analyst at Cathie Wood’s Ark Investment Management LLC, said earlier this month that if gold is assumed to have a market cap of about US$10 trillion, “it’s not out of the question that bitcoin will reach gold parity in the next five years.” With bitcoin’s market cap about US$700 billion, that could mean price appreciation of around 14-fold or more. However, cryptocurrencies do not matter to the overall economy and were unlikely to ever serve as a majority of payments, Summers said. Summers is on the board of directors of Square Inc, which this month said that sales in the first quarter more than tripled, driven by skyrocketing bitcoin purchases through the company’s Cash App. Summers’ comments were echoed by Nobel laureate Paul Krugman, who doubted crypto’s value as a medium of exchange or stable purchasing power, but said that some forms of it might continue to exist as an alternative to gold. “Are cryptocurrencies headed for a crash sometime soon? Not necessarily,” Krugman wrote in the New York Times. “One fact that gives even crypto skeptics like me pause is the durability of gold as a highly valued asset.” Separately, Tesla Inc CEO Elon Musk is again writing on Twitter about technology and cryptocurrencies, and this time he is clear on where his support is at. In a thread started by Musk comparing magic to technology where someone asked what he thought about people “who are angry at you because of crypto,” Musk wrote that the “true battle is between fiat & crypto. On balance, I support the latter.” Bitcoin rose after Musk’s post, and was trading at about US$38,700 as of 9:32am New York time on Saturday. Musk has made similar comments before, including in December last year when he tweeted that “bitcoin is almost as bs as fiat money.” In February, he said that “when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.” Earlier last week, Musk wrote on Twitter that he would not be selling any dogecoin, and he also posted a cryptic image of a dollar bill with a shiba inu replacing the face of a former US president. Bitcoin ended the week in the volatile territory after a new warning from Chinese officials over cracking down on cryptocurrencies. The earlier sell-off on Friday hit bitcoin believers still fuming after Musk did an about-face and criticized the token for its energy usage. The last few days has seen huge volatility and sharp plunges in the prices of crypto currencies, with coins and tokens across the board falling by between 20% - 40%, and then followed by the inevitable bounce back. The story is the same across mega and large cap names such as Bitcoin and Ethereum, through to the myriad of mid and small cap coins and tokens.
Over the last few days, Bitcoin hit a low of $30,000 while Ethereum hit as low as $2000, before Bitcoin bounced back to $37,400 (at the time of writing) and Ethereum retraced up to the $2680 range (at the time of writing). This huge and sharp plunge across cryptos in the last 24 hours has occurred on the back of a week long period in which many crypto prices were already in a sustained downtrend. Is what we are seeing now a shakeout or a healthy correction? Is the bounce back a dead cat bounce or the turning point in a new uptrend? Who knows. There are many views on crypto asset prices (just look at Twitter), and at the end of the day, it’s the combined trading and liquidity of the millions of traders and speculators across the world which create the prices, and the volatility. But in this volatile period, it may be worth diversifying some of your crypto holdings into gold and silver bullion, real and tangible assets that have been wealth preservation and financial insurance for thousands of years. Let's start with the meaning of inflation and interest. Inflation is the diminishing value of assets: prices are rising on average. The opposite of inflation is deflation, where assets increase in value and prices fall on average. Interest is the payment for making assets available. The interest we are considering here is the refinancing rate set by the central bank. It is important to consider the difference in the nature of inflation and interest. Inflation is a given, while interest is an instrument (of the central bank). In other words, inflation is an external variable, and interest an internal variable. Because inflation benefits no one, the central bank tries to control inflation with the interest-rate instrument. Inflation decreases with higher interest rates. This has two causes. First, there is the effect on the exchange rate of corresponding currencies. After all, wealth investors will prefer to do so in currencies that yield the highest interest, which increases the demand for that currency, which increases the exchange rate (price) of the currency, which makes imports cheaper, which decreases inflation. there is the effect on the money supply (M). When interest rates rise, more is saved, reducing the amount of money in circulation. Here we can use the Fisher equation to reason about the price arrow.
The Fisher equation is as follows: M v = Y p The meaning of the variables is: M = money supply in circulation, v = turnover rate, Y = national product, p = price level. When M is decreased, another variable must change to keep the Fisher equation valid. The turnover speed and the national product will not change (just). The price level is the variable that will change. The Fisher comparison shows that the only possibility remains a decrease in the price level, with other advantages: money becomes more valuable, so there is a decrease in inflation. The foregoing has shown that inflation will go hand in hand with higher interest rates. Now we can still look at the effect of rising interest rates on the prices of shares and bonds. If interest rates rise, corporate debt will become more expensive. Moreover, consumption is declining because relatively more is saved. The two factors are unfavorable for companies. This will cause stock prices to fall. The price of bonds is determined by the nominal interest rate of the bonds and the market interest rate. When market interest rates rise, the nominal interest rate of the bonds will be relatively lower. As a result, the real interest rate of the bonds becomes lower and the price of bonds falls, in such a way that the real interest becomes equal to the market interest rate. source: tradingeconomics.com
Inflation in the US is taking off rapidly and is evident in everything from commodity price rises to the official inflation measures from the US Government (Bureau of labor Statistics). The latest US Producer price Index (PPI), a gauge of wholesale prices in the US, has just been released (13 May) and shows a rise of 0.6% in April, which was twice as fast as economists had predicted. https://www.bls.gov/ppi/
This surge in the PPI now brings the annual wholesale price inflation rate for the year to April to 6.2%, from 4.2% a month earlier, and is the highest PPI rate since 2009 (when the current version of the PPI was introduced). Within the PPI surge, prices of services, wholesale prices for food, partly finished goods all rose in April, and raw material costs are noticeably higher than last year. A day previously (Wednesday 12 May) the US Government announced that the Consumer Price Index (CPI) rose 0.8% month-on-month for April (versus 0.2% expected), and that the CPI rose to 4.2 per cent for the 12 months to end of April, up from 2.6% at the end of the March. This 4.2% rise is the biggest consumer price inflation rise since September 2008 and reflects higher consumer prices across most items measured. https://www.bls.gov/cpi/ With commodity prices rising steeply across the board, and producers needing to pass costs on to consumers, it looks like official US inflation data can’t hide the inflation truths any longer, despite BLS calculations being famous for minimizing reported inflation. The Federal Reserve says that this inflation is transitory, as the US economy rebounds from 2020, but the Fed would say that, as they may need to, but cannot practically, raise interest rates, and are now boxed in. Higher inflation also worries stocks markets, makes real interest rates more negative, and is positive for the gold price. Inflation statistics will be important to watch over the rest of this year, and don't be surprised to see inflation headlines crop up with increasing frequency in the media throughout the rest of 2021. In a shocking retraction, the bullion bank dominated London Bullion Market Association (LBMA) has just announced that it has been overstating LBMA silver vault holdings by a massive 3,300 tonnes of silver.
This overstatement relates to the total quantity of physical silver bars that the LBMA claimed were being held in LBMA vaults in London as of end of March 2021. These LBMA vaults in London are operated by three banks, namely the infamous JP Morgan, the equally infamous HSBC, and the maybe not so infamous ICBC Standard Bank, and three security vaulters, Brinks, Malca Amit and Loomis. On 9 April, to much fanfare, the LBMA published updated monthly vault data for London vaulted silver bars, claiming that as of end of March 2021, total silver held in LBMA London vaults had risen by a whopping 11.04% during March from 1.125 billion ozs (34,996 tonnes) to 1.249 billion ozs (38,859 tonnes), i.e. an increase of 124 million ozs or 3863 tonnes. Continue Reading at BullionStar.com… What are people using it for? Dogecoin is interesting because although it was meant to be satirical and just for fun, it has become an important mainstay in the cryptocurrency world. Due to its incredibly low transaction fees and fast transaction times, as well as relatively stable value, some traders are using it as a means of exchange. For example, if someone wants to withdraw money from a cryptocurrency exchange, it may be very expensive to do so if the currency is in bitcoin. Therefore, some traders may choose to first trade their bitcoin for Dogecoin and then withdraw their currency as Dogecoin before later converting again into something else. Some use it purely for speculation since the price of each unit is so low. It’s possible to purchase many millions of units without spending a fortune, and any small price increase can lead to reasonable market gains. Dogecoin is also very widely accepted at almost every major exchange as well as several instant exchange services such as Shapeshift and Flyp.me. Because Dogecoin is integrated into Shapeshift, it can be used to pay for a wide variety of services and goods that have the Shapeshift API built-in. The future of Dogecoin Dogecoin has fallen on hard times more than once in its history. A highly divisive incident involving a cryptocurrency exchange followed by a massive theft resulted in many Dogecoin fans becoming disaffected, and abandoning the currency. As well, Dogecoin was removed from the Exodus wallet because Exodus claimed Dogecoin is not being developed and lacks several important updates. “Although we love the Dogecoin community…the development seems to have gone stale with not many updates to key components we need. The last release of Dogecoin core was in Nov of 2015. Unfortunately Exodus is built on support from public Insight servers and Dogecoin does not have the latest updates to Insight. We have asked around and it does not seem this is going to happen anytime soon.” But what Dogecoin has going forward, however, outweighs its downsides. It is still accomplishing the original goals that it was set out to accomplish back in 2013. It is still a low-cost, easy to acquire, friendly and welcoming cryptocurrency. The Dogecoin community is especially quite famous for its friendliness and willingness to help new users. Dogecoin supporters are often seen giving out small amounts of the currency in order to encourage others to adopt it and understand it.
While the Doge meme may be all but forgotten for many, for the true believers, it is still a wide-reaching and effective symbol that unites the masses under a unified banner of solidarity. As waves of new users join cryptocurrency every day, many of them will inevitably use Dogecoin to get started, and of those, some will certainly stay and support the community and the currency for the foreseeable future. In what is an unbelievable and bombshell admission from a US Commodity Futures Markets regulator, the CFTC’s Acting Chairman, Rostin Behnam, was recently caught on record as acknowledging and condoning attempts by Wall Street bullion banks to put a halt to the strong rise in the silver price in early February.
The admission came in an interview of Behman in March, a clip of which can be seen here in the video. This interview was first brought to the world’s attention by Chris Marcus of Arcadia Economics. In the interview, Behman blatantly shows his true allegiance to Wall Street, saying that “the resiliency and the market structure of the futures market was able to tamp down what could have been a much worse situation in the silver market.” Much worse for who? The bullion banks and the US Government of course, none of who want the price of silver to rise. For those who don’t know, ‘tamp down’, means to drive down by succession of blows, to put a check on, to reduce. While its not surprising that Behnam will not be investigated for supporting an attack against the silver price (since the CFTC works hand in glove with protecting the interests of Wall Street banks), it is somewhat surprising that not one reporter in the mainstream financial media sees fit to cover such an important bombshell.
Even today it’s still a widely used, traded, and community supported cryptocurrency. It’s available on almost every exchange, and is supported by a number of popular multi-asset wallets.
So read on as we go over more about the history, present, and future of this silly yet highly effective cryptocurrency. Cryptocurrency as satire? Created back in December 2013 by creators Billy Markus and Jackson Palmer, the currency was originally intended for two main purposes. Arguably, the primary purpose of Dogecoin was to act as a satirical commentary on the sudden explosion and ridiculous valuations of the new currencies coming out at that time. Back in 2013, all sorts of random and debatably pointless cryptocurrencies were created and had million-dollar market caps after just a few days online. One of those was “BBQ Coin“, which at one point had a market cap of nearly $8 million, and is now effectively worth nothing. The second goal was to create a currency that was fun and more readily accessible than the dominant bitcoin. Dogecoin was also designed to have a very large supply in the hundreds of billions so that each individual unit would always have a low price. Other intentions for the currency were to be used as an online tipping currency, such as for Reddit comments or YouTube videos, among other things. The creators of Dogecoin used the popular Doge meme as the name and symbol for the new cryptocurrency. Word of the currency spread quickly through the Internet thanks to an innovative guerrilla marketing campaign using the characteristics of the Doge meme. This usually involved a picture of the Doge character alongside various broken English sentences that often took the structure of “much something”, “very something”, “such something”, “wow”. For example, “such crypto, many coin, very currency, wow” or something like it. Dogecoin technology and economics Dogecoin was created as a fork of Luckycoin, which itself was a fork of Litecoin. Therefore, Dogecoin contains a number of characteristics that are similar to Litecoin but not identical. For example, it uses the Scrypt algorithm which was originally designed so that bitcoin ASICs could not mine it. Of course, Scrypt ASIC miners exist today, but that was not the case back in 2013. Dogecoin also has a shorter block time than Litecoin. Dogecoin was designed to have a very large supply, for the express purpose of keeping the currency accessible. As a result of the low cost of the individual tokens, transaction fees are also significantly lower than other competitors. Typically less than one cent or so is all that it takes to send a transaction. Further, Dogecoin transactions are very fast and confirm quickly. Dogecoin has recently seen a fast rise in price, as of Feb 2021 it trades for around 3cents, it did hit as high as 7cents after a huge pump in price after going viral on TikTok, Twitter and other social media sites. Investing in silver has a few advantages: you can own the physical commodity, it is more liquid than gold, is scarce, and has many practical uses. Not only that but its supply and demand ratio has been expanding all over the United States. For example, there is demand for silver in solar panel production, electronics, and medical devices. There is even an IRA backed by silver! Because the silver price tends to decrease and become stable during times of economic prosperity and growth, it’s not a recommended buy. However, when the market is declining, it’s a good investment option because it is expected to hold its value during that rough time and you can expect a higher ROI afterwards. Also, if you are considering investing in both of these metals i.e gold and silver, then it can yield a great deal of benefits.
Different ways to invest in silver:
In the last few weeks we’ve seen most gold and silver dealers with ‘out of stock’ signs on their storefront. That’s what the vast majority of silver bullion consumers have been getting since the end of January. Stories have been surfacing online about Silver bullion dealers seeing a rise in demand, one of the biggest they’ve seen in their lifetime. Everyone is buying, and no one is selling the physical metal in the United States. Bullion Dealers are requesting 35% premiums…and that’s if you can get your hands on some.
And yet less than a year ago when pandemic took the world by it’s grip, Gold or silver bullion dealers were nearly completely sold out within a matter of days. In some cases silver premiums reached historic highs, near 100% of spot prices. With the inception of the new #silversqueeze hype inspired by an army of retail investors on Reddit, silver has traded at an 8-year high, as demand was exploding. Silver’s given back $2 since its $29 peak on Feb. 1. But it’s still up 20% since late November, and has gained 125% since its March lows according to Kitco news. To add to that, silver stocks in the United states have been surging. It’s all related to the now infamous WallStreetBets calls to action, the latest of which targeted silver. It was enough to cause Comex to raise silver margins by 18% after just two up days. But silver’s story is still in its early days. Dramatically higher silver prices are still squarely ahead. The silver market has been largely under-owned and underinvested until 2020, when silver began its bull rally and outperformed gold. According to John Feeney from Guardian Vaults: Silver is looking more and more like the metal of the future and a substantial investment for 2021. The big driver that is here to stay is a global move into renewable energy, he said. "Under the Biden administration, we will see a lot of money getting moved into solar panel production. That is happening globally too. If you look at the solar market, the outlook for the next 5-10 years is very bullish for silver." Also, there is an argument to be made for the start of the commodity supercycle. "A lot of analysts think that we are at the beginning of it. There has been a lot of underinvestment in commodities over the last few years. A lot of capital moved into the tech sector and hardly any capital in comparison moved into the commodities sector," Feeney said. Gold and silver as a whole are considered safe haven assets - an investment that’s expected to hold their value during market turbulence. However people are often skeptical about whether to invest in gold or silver! They often think of investing in these metals as a long term yet reliable opportunity. So today we're going to break down in depth: how much gold and silver will be worth if the U.S Dollar collapses? Is it wise to invest in gold and silver or are there other options? Considering gold and Silver is considered are considered safe haven assets as we’ve mentioned above, that makes it a likely choice for investors during political and economic upheavals because they have intrinsic value, carry no credit risk, and cannot be inflated. That’s why either gold or silver, investing in precious metals is one of the best types of investments you can make in 2021. Owning just a small percentage of precious metals diversifies your portfolio, and therefore reduces volatility and risks. It can also protect your future buying power. Even in today’s cryptocurrency dominated world of investing, gold and silver hold a prominent place in the stock market. To briefly summarize this article, I firmly believe silver and gold both are good resources for future investments and something you should own even when the U.S dollar collapses. |
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