Between the major Central Banking powers of the world, the sentiment towards Bitcoin is harsh and very public.
The Final Boss
One by one, the old guard of financial institutions is succumbing to the power of Bitcoin and decentralized sound money. The Bitcoin bug that has been planted in the trading floors and board rooms of Wall Street, as well as the dinner tables and golf courses of the rich and poor have proliferated so much that it cannot be ignored by skeptics any further. As Citibank put it in their research piece released at the start of the month:
‘… Bitcoin’s global reach and neutrality could spur it to become the currency of choice for international trade.’’
‘’…leads to the conclusion that Bitcoin is at a tipping point and we could be at the start of massive transformation of cryptocurrency into the mainstream’.’
With reports that Goldman Sachs had reinstated its crypto trading desk early this month to trade futures positions on behalf of their clients, last week, it was the turn of Morgan Stanley. The difference here is that not only is the story confirmed, but they will be the first US bank to market products to their client base via their monster wealth management arm of their business. Galaxy, as well as NYDIG’s fund products, will be sold by the investment bank’s advisors to wealthy clients that hold more than $2m of assets with the bank. Morgan Stanley will certainly not be the first and only US bank to properly embrace crypto. We fully expect the continuation of this shifting mindset towards crypto as other US and European banks follow Morgan Stanley’s lead. Failure to do so will be potentially very costly as clients move their capital to the institutions that do provide access to digital asset products.
In a recent Fortune podcast, the CEO of global payments processor Visa shed light on how the company intends to position itself in the center of the crypto industry. Following Mastercard’s public notice in February of this year, which also plans to support select crypto assets on their network, Visa really had no choice but to engage the crypto market for fear of losing market share to their competitor. This institutional pattern of FOMO will now more than likely happen with commercial banks around the world. Now that Morgan Stanley is promoting crypto, one by one, the banks (and other institutions) will succumb to the wave of retail and institutional demand for crypto and specifically Bitcoin.
However, those leaders of commerce and politics that have publicly stated their anti-crypto opinion will find it the hardest to change their view, and it is often those that stand to lose the most via crypto’s disruption who have been such vocal detractors, namely the banks, central banks, and governments. These institutions are the final boss of crypto, and a change of opinion will be crypto’s hardest challenge, however, we see it as inevitable over the long term. JP Morgan has done it, Morgan Stanley is now onboard, and so too are Visa, Mastercard, Paypal, and Tesla. Howard Marks has done a u-turn, Stanley Druckenmiller has doubled down and Ray Dalio had the humility to change his mind over time having once declared it a bubble, not an effective store of value, as well as predicting it would soon be outlawed.
We are now at the stage of adoption where the traditional institutions are accepting the technology because they have to for fear of being left behind. Those that stick by their skeptical guns and refuse to change their mind will do so to the detriment of their share price, reputation, or fund’s performance.
We speculate that should there be another typical 4-year cycle (as opposed to the growing Super Cycle theory, where investors price in halving events compounded with a macro backdrop), then this cycle will likely to defined by this so-called institutional FOMO with a retail-driven blowoff top. The 2017 meme that the institutional ‘herd is coming’ was a little early for the 2017 cycle but will surely be very apt for this cycle as banks and financial institutions such as Morgan Stanley and Visa move (or FOMO) into the industry.
Tying all this together, it’s not unrealistic to look ahead at the next 4-year cycle and predict that perhaps it may well be defined by the acceptance of Bitcoin by its Final Boss, the Central Banks, and governments around the world. Central Banks and their political masters have taken a very public stance against Bitcoin because they stand to lose the most, that is their monopoly on currency. Like with Morgan Stanley, it will likely only take one brave prominent sovereign nation to go public with their holding of BTC as a reserve asset before others FOMO into the market. If this happens, then BTC will surely be worth much, much more than $55,000.
However, between the major Central Banking powers of the world that include Jay Powell (US), Christine Lagarde (ECB), Andrew Bailey (BOE), and the central bank’s own banker Agustin Carstens at the Bank of International Settlements, the sentiment towards Bitcoin is harsh and very public. These financial institutions that the general public has little direct democratic influence over are the precise target that Satoshi had in mind when he designed the Bitcoin Protocol.
‘’The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.’’ — Satoshi Nakamoto
Perhaps the most ridiculous example of warped incentives and monopolistic corruption is that of the Bank of International Settlements, the central banks’ banker whose role is defined as one that pursues financial and monetary stability. Naturally, the bank’s Head has the following take on Bitcoin
“Sound money is central to our market economy, and it is central banks that are uniquely placed to provide this,”
“If digital currencies are needed, central banks should be the ones to issue them.”
Agustin Carstens, BIS General Manager
This is the final resistance for Bitcoin and crypto in general. It may take years or indeed several cycles for Satoshi’s prime targets to be accepting of Bitcoin, but as we have seen with the banks, change can and will eventually happen, and in our opinion, it is inevitable.
What is at stake is our privacy and freedoms. A dystopian future of Central Bank Digital Currencies (CBDCs) that track and monitor your every move awaits us if the likes of Agustin get his way. It is shameless that Central Banks aren’t even hiding their agenda anymore, and more people need to realize what is happening. The good thing is that this process is happening and is increasingly reflected in the price of Bitcoin as more people and institutions move value into Bitcoin, not just to speculate on price, but because it sits outside of the Central Banks agenda, which poses a very real risk to our human rights.
The above recent video from Mr Carstins serves as a final shocking reminder of what Bitcoin is up against with central banks. On CBDC’s vs cash….
‘’with cash there is a huge difference there, for example in cash we don’t know for example who is using a one hundred dollar bill today, we don’t know who is using a one thousand peso bill today….a key difference with the CBDC is that the Central Bank will have absolute control on the rules and regulations that will determine the use of that……we will have the technology to enforce that those two issues are extremely important’’
Bitcoin is not anymore a speculative asset, it is essential to our freedoms that are being preyed on by these autocratic central bankers who are openly admitting their desire to surveil our lives. It is encouraging to see Wall Street slowly embrace crypto, but we anticipate that the path to central bank acceptance may be a more difficult journey in the coming years.