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Welcome to the new week. This is Tokengraph, bringing you cutting edge Web3 news and discourse. Today, we’re bringing you a new format: podcast breakdowns, here you can expect summaries and analysis of key podcast episodes from the crypto space as well as our own thoughts on them.
We’re kicking off this series with the new Bankless episode, featuring BitMEX co-founder Arthur Hayes.
Is hyperinflation on the horizon, and could it lead to a massive spike in Bitcoin’s price? Arthur Hayes thinks so, and he laid out his entire thought process on a recent episode of Bankless, hosted by David Hoffman.
#Bitcoin goes to $1M, $USD goes to ZERO
@CryptoHayes thinks the time has come
The "Bank Term Funding Program" (BTFP) forces the Dollar to lose its grip
Inflation sets in
$BTC goes to $1M
Interview live @ 9am EST
— Bankless (@BanklessHQ)
Mar 22, 2023
Hayes covers a lot of ground over the course of the podcast, but what you need to know is that he agrees with Balaji’s prediction of a $1M Bitcoin — or at least that current macro conditions will cause a massive spike in Bitcoin’s price.
Banking $BTC going old school again. Every spot exchange will trade at a diff price depending on how reliable their fiat banking partner is assuming they have one. Welcome back arbitrage.
— Arthur Hayes (@CryptoHayes)
Mar 21, 2023
It has to do with the creation of something called the Bank Term Funding Program (BTFP), a new credit facility created by the Federal Reserve to provide banks with cheap funding, with the specific goal of stabilizing the very unstable banking industry.
Fed's New BTFP Facility Is Stealth QE Injecting Up To $2 Trillion In Liquidity, JPMorgan Concludes https://t.co/fIoK24C5Pj
— zerohedge (@zerohedge)
Mar 16, 2023
Currently, the BTFP is constrained from giving infinite amounts of cash in two ways:
Only certain eligible assets are available to access this credit facility
The BTFP has a limited lifespan before it’s finished; it’s not a long-term program.
However, Arthur Hayes argues that both of these constraints are about to be massively expanded in scope, which could lead to a significant increase in the money supply (read: hyperinflation).
DON’T FORGET that foreign banks—including @CreditSuisse—are eligible for the Fed’s new bank liquidity program BTFP👇 (via their US branches). ANOTHER Fed bailout of foreign banks is incoming, just like in 2008 when foreign banks heavily used the Fed’s swap lines… https://t.co/M7T66Yx0pf
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_)
Mar 15, 2023
And what does he think people will turn to in the event that the US dollar loses its value? That’s right — Bitcoin.
— Dylan LeClair 🟠 (@DylanLeClair_)
Mar 17, 2023
It’s worth noting that Hayes does not think this will happen over the next 90 days as Balaji does. He has a wider time frame in mind without specific dates. Hayes is more interested in grabbing hold of the general trend rather than directly getting the timing right.
Here are the other key discussion topics that Hayes touched on during the podcast:
Consequences of monetary policy: The rapid shift from easy to tight monetary policy has led to the bankruptcy of the entire US banking system.
Monetary and fiscal policy: Hayes runs through a historical overview of monetary and fiscal policy from the 1930s depression to the present, highlighting the central banks' inclination to print money in response to financial crises.
Quantitative easing: a term first used in relation to the Bank of Japan, “quantitative easing” refers to central banks printing money, such as bank reserves, in order to improve liquidity in financial markets.
Covid-19 and monetary policy: In response to the pandemic, the US Federal Reserve provided emergency support and nationalized the corporate bond market, while the US government issued stimulus checks, resulting in inflationary concerns.
$BTC = $1mm FUCK YEAH! https://t.co/zdfbe9euWD
— Arthur Hayes (@CryptoHayes)
Mar 22, 2023
In summation: monetary changes over the past few years have led to a banking crisis, namely increased inflation and bankruptcies. The Bank Term Funding Program (BTFP) is a new way for the Federal Reserve to inject liquidity into the banking sector in response to that crisis.
Hayes believes that while it might help stabilize the financial system in the short term, the BTFP could also cause hyperinflation, potentially driving up the value of assets like Bitcoin.
Our take? We aren’t making any predictions here, but as far as our general sentiment goes, Hayes makes some great points with well-thought-out arguments. We think it’s certainly possible to see Bitcoin shine in the coming year, but only time will tell.
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How much money has the Fed loaned to banks in the past two weeks under the BTFP?
A. $50MB. $119MC. $5BB. $11.9B
Scroll down to the bottom to see if you're right!
Web3 Resource of the Day
Blockchain Expert Explains One Concept in 5 Levels of Difficulty | Video from WIRED
This is a fun one. As part of their “5 Levels of Difficulty” series, WIRED asked Bettina Warburg, blockchain expert and co-founder of Animal Ventures, to explain the technology behind cryptocurrency to five different people at five different levels. Starting with a five-year-old child and ending with an NYU historian, Warburg runs the gambit of creative definitions and explanations of some of the world’s most fascinating — and complicated — technology.
❓ Trivia Answer
As of a week ago, the Federal Reserve had loaned out $11.9B to banks in order “to avoid a systemic crisis.” The amount of money the Fed has now lent is far past what it gave banks during the 2008 crisis.
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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice to buy or sell any assets or to make any financial decisions. Do your own research.