Is it Right Time to Buy Bitcoin & Gold – Massive Crash in Oil Markets

Today a massive crash has taken place in the oil markets and even if you don’t care at all about the oil markets this news is an important one because it really serves as a stark warning about how dangerously fragile the global economy is right now. This could spread panic to other markets and of course what does all of this mean for Bitcoin.

The big news today is that the oil markets have been absolutely savaged. It’s been crazy the West Texas Intermediate which in case you don’t know is the benchmark price for US oil. It fell to -40 today minus 40 yes you heard that right- $40 totally negative.

This is the first time in history that prices have gone negative for oil. This means that producers were paying buyers to take the oil off their hands because storage facilities are completely full and they can’t cope anymore because obviously oil going under zero.

Factors responsible for the Oil Crash

It doesn’t go in minus in a functional economy. This is because wild demand for oil has been crushed with the global economic downturn that is no surprise to anyone who’s been paying attention, but oil producers continued pumping oil out of the ground leading to an oversupply of historic proportions.

Do understand that this is just one oil market, the US oil market is the one that got savaged today. Internationally prices have been battered big-time over the last few weeks but nothing like that happened, that’s crazy although the fierce contest currently taking place between Saudi Arabia and Russia has actually done very little to support prices with both of these countries really committing to pumping more oil into the markets, of course, this negative US oil price it’s really only a specific reference to the price for crude delivered in May so this is the month in which oil demand is expected to be the lowest and supplies are expected to be the highest so it’s a very specific thing but still incredibly significant when you consider the overall implications of what this means.

Some people were predicting Bitcoin Price towards zero and not oil but all those mainstream talking heads were wrong again I’m not surprised actually but anyway, in fact, one of the largest market just completely imploded in Bitcoin it really just finished the day, only down around 5% which is not bad, considering what happened to the oil markets today although oil prices did see a bit of a recovery after Trump announced that the US will be buying up 75 million barrels of oil which is a pretty good decision to buy that oil fill-up the US strategic reserves on the cheap but collapse of the oil derivatives markets could be bad news for the wider markets as it really creates a strong risk that panic could spread to other assets in fact other markets might already look like the oil market did today.

It wasn’t for the fact that you had the Federal Reserve dumping trillions upon trillions into the economy, buying up junk bonds, putting in money for the repo markets for Wall Street but now that oil has led the way there is, of course, a massive risk for carry on effects to start playing out commodities across the board could get crushed potentially with the exception of gold of course a real domino effect of destruction could be underway what has happened

We’ve seen consumer demand just go right through the floor, basically the jobless rate in the USA at top twenty. Two million last week and the nail in the coffin for the economy is likely coming very soon negative rates in the world’s biggest economy. The USA is likely to be the next to join Japan and the EU and a few others in the negative rates game whereby you lose money if you leave it sitting in the bank. Thanks to bad rates cool stuff

Interest rates and deflation

that is what, is likely in store for the world’s biggest economy the simple definition of deflation in case you are not aware is that this is what happens to an economy that experiences declining prices for goods and services. Intense deflation was also a prominent feature of the Great Depression that fault of course the 1929stock market crash very famous in case don’t know about it and of course it means that businesses will face lower profitability and hire fewer workers while investing in less expansion of productive capital basically a massive economic slowdown.

How does a central bank fight against the forces of deflation?

By expanding the money supply which the Federal Reserve has already been doing quite aggressively for the last few months really but I mean we’re talking decades here of massive quantitative easing and of course by cutting interest rates to incentivize spending versus saving. To cut long story short, the economy is not doing super well in case you hadn’t noticed now in terms of investing. The place for a deflationary scenario are of course the classics by dollars yes I know the dollar is in big trouble long term you have trillions upon trillions being put upon the sacrificial altar of Wall Street. The stimulus package is one of the biggest handouts to corporate America ever.

Stimulus Package

The stimulus package involves companies that have spent the last decade soaring up corporate profits with stock buybacks, they now all have their hands out to get some of that free money. The dollar is supporting a broken system, the Wall Street banks are getting a trillion dollars a day and liquidity, it’s not trillion new dollars every day. It is just a trillion dollars put up for the overnight lending markets and total available daily. The small business bailout fund yeah I remember that was rated by hedge funds on hundreds of billions of dollars of a ride and internationally as well, to keep the dollar forex markets afloat but the pockets of the US. they are very deep and the ability of the US to manipulate the dollar and for the dollar to remain powerful, largely thanks to its status as the global reserve currency should not be underestimated in the short term.

Long term I remain bearish on the dollar, right now it is a flight to safety and a good portfolio will have a decent amount of readily available dollars sitting in it. The second play is, of course, to buy gold as a hedge against all of this insanity that you’re seeing going on right now at the global economy. Gold is one of the few things that I personally wish I had a bit of, in my portfolio because it is that relatively stable store of value that classic thing that’s been here for thousands of years and of course physical gold is far better than paper gold if you are going to be doing some gold investing because as oil just proved a run on the markets it is very possible and due to all the trickery that goes on in the gold markets things like there may not be enough physical gold for futures investors to take delivery,

Should a run on gold happen?

avoid the counter party risk and hold the real stuff in your hand if you can

What does all of this mean for Bitcoin?

Bitcoin represents in terms of digital scarcity but do understand that there does remain a strong risk that Bitcoin could be drugged lower with wider market moves but perhaps enough of the short term speculators have moved aside for the moment and Bitcoin can get on to doing what bitcoin was designed to do and have that really shining breakaway moment from the traditional markets one thing remains sure for me though having Bitcoin in my portfolio makes me sleep well at night even if the dollar value goes up and down long-term I know that I’ve got a portion of a very scarce asset in the world’s strongest computer network, so that to me holds an incredible amount of value and I think it’s something that a lot of investors are waking up to and the more the Bitcoin gains interest the long-term picture for Bitcoin remains very positive. Robots too are helpful in trading Bitcoin if you are new. This is why personally I keep up my usual play of just dollar cost averaging into Bitcoin into a theory. I do a little trading all stuff on the side but really it’s mostly just stacking stats stacking way and then chill in with an eye on that long-term game.

Are you ready for Digital Dollar?| Digital currency is coming!

Digital dollar

What I’m talking about is the Digital Currency, are you ready for the digital dollar. Read on to know more about the latest development on digital currency and how block-chain projects are most likely connected right back to the USD’s next transformation. In mid-March, the treasury department announced the hiring of Brian Brooks, Coinbase’s Chief Legal Officer, who was highly involved in the legal red tape of getting USDC the Ok from the mix of US regulators. And this was before the stimulus bill was announced, by March 23rd….there were draft Stimulus Bills, with digital dollar language in them. So there are many layers of this onion to peel back on digital currency….of course, there’s the Federal Reserve including the treasury department, but there is also the layer of the clearinghouse, and finally, something called ISO20022.

What is ISO20022?

It’s the new global standard for payment messaging, that isn’t new, it was created and first published back in 2004 by the international organization for standardization, the group, that makes sure things are ISO certified, in industries across the globe. So, in 2012, the FED created a stakeholder group whose goal was to assess the value of adopting the new ISO standard. This lead to the publishing of a paper in 2015, titled Strategies for improving the US payment system. And in it, with stakeholders including the clearinghouse, they assessed ISO20022 in a business case, and from the recommendations.

Also Read: How Ruja Ignatova Scripted Onecoin Scam?

The study concluded that a phased approach to ISO 20022 adoption should be employed in the United States to reduce risk and cost. This includes 3 phases.

Phase 1: Education

Phase2: Adoption for cross border payments

Phase 3: for domestic payments.

Almost 3 years went by since that paper, and in July of 2018 when the New York FED board of governors released the statement that they were looking to adopt the ISO20022 message format for the Fed wire Funds service as it would be an international standard that would replace Fed wires current payment messaging format. And as we can see, the transition to ISO would take place in 3 phases with the FED, beginning in 2020 and ending in 2023. Now here is where things start to accelerate.

November of 2019, Jerome Powell, head of Federal Reserve sent this letter to Congress, and it said that they were exploring whether it makes sense to issue its own digital currency that could be used by households and businesses a central bank digital currency, or CBDC. In the letter, Jerome Says

 

“The Federal Reserve is not currently developing a US dollar CBDC. but continues to carefully evaluate the costs and benefits of issuing a general purpose CBDC, defined as a new type of Fed liability that could be held directly by households and business”

 

So no actual work in November, but like I said, things accelerate fast. February 5th of 2020, Fed Governor, Lael Brainard gave a speech at the Stanford Graduate School of Business in California. No recording, but the FED has a transcript of the speech. In it, she talks about Digital players in the payment space, from technology firms, and increased competition…thus the FED needs Real-time infrastructure Lael says

 

“We are committed to closing the gap between the transaction capabilities in the digital economy and the underlying payment and settlement capabilities. Recognizing that consumers and businesses across the country want and expect real-time payments, and the banks they trust should be able to provide this service securely, this summer, the Federal Reserve announced that it is building its first new payments retail in more than forty years—the Fed Now Service. Fed Now will facilitate end-to-end faster payment services, increase competition, and ensure equitable and ubiquitous access to banks of all sizes nationwide. Together, the Clearing House’s RTP and Fed Now are moving the U.S. banking system to real-time retail payments. These systems will enable consumers and businesses to settle retail transactions in real-time, at any time, and allow them to manage their money with greater flexibility. RTP and Fed Now should significantly increase the speed and efficiency of the U.S. payment system.”

She then goes on to talk about Central Bank Digital Currencies, how private banks, and other countries like China, are rapidly moving with plans for digital currency. She explains “Given the dollar’s important role, it is essential that we remain on the frontier of research and policy development regarding CBDC. Like other central banks, we are conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies, including the potential for a CBDC. We are collaborating with other central banks as we advance our understanding of central bank digital currencies. So the way money is going to move, is going to rapidly change. FED now and Clearinghouse RTP, are in the works…..and there is potential for a US central bank digital currency to move through these systems.

Well, as we know, just a month later, in March we had Brian Brooks brought onto the Treasury department Team specifically to the office of comptroller, reuniting with his old friends from One west bank. And we know, what Brian thinks, private companies should build the tech, while the government sets monetary policy on digital currency.

What private payment organization does the Federal government and regulators love? SWIFT, or the society for worldwide interbank financial telecommunication. And you know Swift, they are the transfer powerhouse…according to the treasury, they handle 5 trillion dollars….per day. And what has SWIFT recently said? Well just last month, they announced their new approach to ISO 20022 adoption, which, gives banks a little leeway to full adopt, pushing out requirements for banks from 2021to 2022 but still sticking to their original roadmap, of a complete overhaul by 2025.

So now we know, the FED is getting an overhaul, FED wire, the Clearinghouse is getting an overhaul through RTP, and their favourite private system is getting redone.

What blockchain projects are involved with this?

we zeroed in on Coinbase and their USDC. It’s built, and Brian Brooks was a big part of it. It’s something that the Federal Reserve likes, a coin backed by their greenbacks. So this is definitely suspect number one! And as we know, USDC is an erc20 asset built on Ethereum, so that is big news for the Ether crowd if so. But in my personal opinion, the stable coin isn’t what we should be worried about, as I foresee many private organizations, attempting to create their own version.

As just 3 days ago, another company Netcents declared their readiness for the expected Federal Reserve Digital Dollar. The competition will be fierce, and there will be many stable options. But how those stable coins are transferred, is a much different story. So this goes back to Swift, the FEDs favourite private transfer system.

Swift is conforming to the ISO20022 standard through SWIFT GPI, which they say will digitally transform cross border payments. Well in January of 2019, SWIFT announced swift GPI link, a gateway that would enable GPI to E-commerce and DLT platforms. And the proof of concept would launch with the firm R3. Well almost a year ago, in March of 2019 we got a very informative webinar between SWIFT and R3, Swift GPI link is an oracle service. It’s an ORACLE that is system agnostic because they plan on working with a multitude of services blockchain/DLT and the new traditional ones like Fed Wire. And it’s easy to see, just going to smart contract.com, of which is chain link, you see their first partner.

“We’re proud to be working with SWIFT on their own SWIFT Smart Oracle. Allowing smart contracts on various networks to make payments, send governance instructions, and release collateral with over 11,000 banks”

Sergey, the flagman himself, has clearly explained…..but that was back in the day during the proof of concept phase, well just 6 months ago back in September, at a chainlink meet up in Paris, something went quietly under the radar. So from my research, we should be keeping a keen eye on a couple of projects, USDC. I mean, just look at the explosion in supply, once news of the digital dollar started circulating, a growth of 62% in just a month, and USDC supply is at about 700 million. Something is bubbling regarding this stable coin.