BITCOIN IN THE NEWS AGAIN
ANOTHER CRYPTO VENTURE FAILS
On April 14th, the price of Bitcoin hit its all time High of US$ 64,662. It then started to fall. At the end of June, it had fallen below $ 30,000. It is now struggling to hold around US$ 33,000 – 34,000. If it falls decisively below $ 30,000 again, it will certainly be in trouble as a wealth storage asset. Confidence could then fall if sellers persistently accept lower prices offered by buyers. Such price falls do not require large numbers of sellers. One seller is enough to cause a collapse as long as they hold a large volume and persistently take lower bids as they slowly reduce their position or make their exit. The majority of holders do not have to sell to see this scenario take place. Prices are set “at the margin” in all asset markets. Relatively small numbers of investors can have signficant impacts especially if most holders of an asset are inactive in the market. In fact, daily trading volumes recently peaked on May 20th and have been in decline since then.
Bitcoin is a digital asset which is priced in fiat currencies, but especially in US Dollars. If such a seller is desperate to get back into US Dollars, then they will push the clearing price lower and lower while the “true believers” remain inactive. A crash happens if the true believers lose confidence and start to sell as well.
In regard to the Crypto market capitalization as a whole, Bitcoin has dropped to a “dominance” figure of just 45.3%. In January this year, it was almost 70% of the market. In 2013, it was 96.6 % of the market. So there has been a steady erosion of its value in regard to other Crypto alternatives. In January 2018, it reached 32.8% which was its all time Low. It is still a significant player in the Crypto world but has clearly fallen out of favour again in the last 6 months.
Some recent events will not help.
BITCOINS MISSING IN AFRICA
Last week, it was reported that two brothers in South Africa had fled with $ 3.6 Billion of clients’ money after closing down their online Crypto investment business called Africrypt. Reportedly, they had full control of their clients’ Bitcoin and Crypto holdings through Africrypt. However, since then, one of the brothers has said that the total was much more like US$ 200 Million and that “only” $ 5 Million was missing. But, nevertheless, they are now apparently in hiding from some of their disgrunted investors.
Africrypt had offered “decentralization” of finance via the use of so-called “Crypto-currencies”.
Magical thinking seems rampant in the Crypto world.
Advertisements are common suggesting that Millions (or even Billions) can be made. This appeals mostly to people who crave wealth but are not interested in building it slowly over time. Speed is always emphasized.
BINANCE IN TROUBLE
NATIONS TAKE ACTION TO PROTECT INVESTORS
Last week, one of the world’s largest crypto-exchange networks, Binance, was ordered to shut down all regulated activities inside the UK. The Financial Conduct Authority (FCA) in the UK issued a warning to consumers about Binance Markets Limited, the network’s only regulated UK entity.
“A significantly high number of crypto-asset businesses are not meeting the required standards” under money-laundering regulations, the FCA said.
This will not affect Binance operations outside of the UK. However, it is not a good look.
Recently, Japan’s financial regulator issued a statement saying that Binance is not registered to do business in that country. Again, this will not affect Binance operations outside of Japan significantly but it is not a good look. These developments have occurred after China recently took action to stop Crypto currency mining operations inside their borders.
One month ago, on 23rd May, BOOM wrote — “BOOM expects further declines in Bitcoin price. Most Crypto exchanges are not regulated in any significant way. It is the wild, wild west.“
The Ontario Securities Commission (OSC) in Canada also recently started legal action against unauthorized virtual currency exchanges operating there. The OSC said that some crypto businesses are not adhering to Ontario’s securities laws.
With the recent crack down from the Chinese, UK, Canadian and Japanese money authorities, BOOM expects the price of Bitcoin to weaken further from here. But the US is the big player in this space because the US Dollar is the currency of choice for most Crypto holders to acquire if they sell out. The US financial regulators have already expressed their discontent about the Crypto world inside their borders but they have not yet taken decisive steps to stop conversion into US currency outside their borders. That may be the next step. Or it may not be — as perhaps the US authorities favor a global market in Crypto -US Dollar exchange?
https://www.rt.com/business/527767-uk-bans-cryptocurrency-exchange-binance/
WAGES GROWTH IN THE USA
The annual percentage change in Average Hourly Earnings in the US is currently around 3.5 %. This was the figure way back in 1964. Since then, it has averaged about 7 % over more than 5 decades. In 1981, at the height of CPI inflation in modern times in the US, it reached 9 %.
Last Friday, the US Bureau of Labor Statistics reported a strong figure for Non Farm Payrolls for June with 850,000 jobs added. However, the unemployment rate rose from 5.7 % to 5.9 %. Average hourly earnings increased by only 0.3%, below forecasts of 0.4%. This indicates that CPI inflation may remain in check in the future, at least for the rest of this year.
Strength in all bond market prices continued with no reaction apparent to the good number. It seems that bond investors continue to be adamant that CPI inflation risk is in check in the United States.
DR ROBERT MALONE BLOCKED
BOOM has reported on Dr Robert Malone’s recent statements about Covid 19 and the Covid injections. You will recall that Dr Malone is the inventor of mRNA Vaccine technology and that he refers to the Covid injections as “experimental genetic vaccines”.
Sadly BOOM must report that Dr Malone has since been banned by LinkedIn.
Dr Malone, the discoverer of in-vitro and in-vivo RNA transfection and the inventor of mRNA vaccines, had this to say elsewhere.
“Yes, I have been locked out of Linked In and my account has been shut down. #censorship in the time of COVID. I have had to submit copies of my driver’s license and Linked In will now make a determination about reactivating my account.“
He also said — “ regarding the censorship – I predict it will get worse.”
And — “Linked In has provided a list of my thoughtcrimes. An amazing document.” –
And — “We need a new word for what is going on regarding the censorship and integration between government, big tech, and pharma. One example might be “technofacism”. Please teach me better words for this? What do you call it?”
More from Dr Robert Malone here on the Highwire
SINGAPORE TO LIVE WITH COVID
Singapore has abandoned any plans to eliminate Covid 19.
Travellers will not have to undergo the horrors of quarantine and if you are in Singapore and come into close contact with a “case”, you will not have to isolate yourself. They have decided to manage it like they manage Influenza every year. Daily “case” numbers will not be released. This means that Singaporean life will return to Pre Panic Normal. A breath of fresh air and common sense.
THE TRUTH ABOUT THE DELTA VARIANT IN THREE MINUTES
It’s not as dangerous as they imply ……. watch the 3 minute video from Ivor Cummins.
Send it to your local politician. They might learn something. But they won’t like it.
REINER FUELLMICH BEGINS LEGAL ATTACK ON COVID 19 PROTAGONISTS
LINK: https://beforeitsnews.com/eu/2021/06/an-announcement-by-reiner-fuellmich-2673985.html
In economics, things work until they don’t. Until next week ………… Make your own conclusions, do your own research. BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS: OUR BRAVE NEW ECONOMIC WORLD
EMAIL: gerry {at} boomfinanceandeconomics.com
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HOW MOST MONEY IS CREATED
BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://
How is Most New Money Created ?
LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).
From the Bank of England Quarterly Bulletin Q1 2014 —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“
“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.
Youtube Video — https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction
and
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Paper: Money in the Modern Economy PDF — CLICK HERE
Quarterly Bulletins Index
http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx
Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.
On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —
“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”
Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html
The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans“
“In the first instance, the process of money creation requires a willing borrower.”
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
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