Ryze Recap 6/11: What Global Monetary Stimulus Means For Bitcoin Investors, Bakkt Partners with Galaxy Digital
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Itâs Thursday, June 11th. Today, weâve got two important stories for you today.
Global Monetary Stimulus, Negative Interest Rates, & Bitcoin
Earlier this year, we wrote a report on what unlimited money printing around the world means for Bitcoin. In a nutshellâ central banks lowering interest rates and increasing the money supply can lead to inflation. Bitcoin is digitally scarce, deflationary money, and is a hedge against inflation. As the global economy heals from the first wave of coronavirus lockdowns, central banks are cutting rates and injecting trillions into the financial system.
Whatâs happening now:
Central bankers in the UK, Europe, and New Zealand are considering negative interest rates as a means of economic stimulus. The head of the Bank of England (BoE) stated last week that negative interest rates were off the table. This week, Parliament and the BoE are actively considering lowering interest rates below zero.
Last week, the European Central Bank and Bank of Japan announced an additional combined total of $1.5 Trillion in economic stimulus.
Though US Federal Reserve Chairman Jerome Powell has stated that he will not lower interest rates below zero, heâs also stated that interest rates in the US may remain near 0% until the end of 2022.
Why it matters:
Negative interest rates, in theory, encourage borrowing and ultimately spending. However, money thatâs sitting in a bank account with negative interest rates accrues charges rather than interest. Consumers could opt to pull money out of banks, and a portion may choose to protect their wealth by holding Bitcoin.
Though consumer prices may fall temporarily, printing trillions of dollars will likely have long-term inflationary consequences. While Bitcoin Twitter commentators have long sounded the alarms about this, investors such as Paul Tudor Jones and firms such as Bloomberg have recently come on board with the narrative, bringing credence to Bitcoinâs value as a hedge against inflation and store of value.
The Federal Reserve canât print more Bitcoin ÂŻ\_(ă)_/ÂŻ
Bakkt Partners With Galaxy Digital to Service Institutions
Atlanta-based Bitcoin company Bakkt has partnered with Mike Novogratzâs Galaxy Digital to offer âwhite-gloveâ services to institutional investors. The offering includes both secure custody and trade execution services for funds, asset managers, and other financial institutions.
Why it matters:
As the race for a Bitcoin prime brokerage heats up, Bakkt and Galaxy Digital seem to be throwing their names in the hat. Companies including BitGo, Coinbase, and PrimeTrust are making strides to become the first prime brokerage for Bitcoin.
Both companies have significant backing and considerable client bases. Bakkt is a spin-off of ICE (Intercontinental Exchange, the parent company of the NYSE), has raised nearly $500M, and has over 70 institutions using its custody product. Galaxy Digital, headed by former hedge fund manager Mike Novogratz, saw over $1B in volume in Q1 2020 for its trading division.
Thatâs all for today! Weâll be back tomorrow with another Ryze Recap.
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