On the Eve of the Great Dollar Devaluation, Bitcoin Awaits the Final Catalyst
The Federal Reserve recently cut interest rates as expected and announced monthly purchases of $40 billion in short-term Treasury bills, which some have labeled "QE-lite." However, this policy is not equivalent to quantitative easing, as it does not suppress long-term yields, reduce duration risk, or broadly ease financial conditions. It is aimed at stabilizing repo markets and banking liquidity rather than stimulating risk assets like Bitcoin or equities.
The authors argue that true monetary easing—which would involve suppressing long-term yields, lowering real rates, and compressing term premiums—has not yet occurred. When it does, it could drive capital into riskier, longer-duration assets. They anticipate increased volatility in Q1 2025, with a shift toward financial repression likely later.
On a macro level, structural tensions are rising due to U.S. efforts to reduce its trade deficit and reshore manufacturing, which conflict with the dollar’s reserve currency role. This could lead to reduced capital inflows, higher volatility, and an eventual forced devaluation of the dollar. In this environment, non-sovereign stores of value like Bitcoin and gold may gain importance due to their scarcity and lack of reliance on policy credibility.
marsbit12/18 06:06
