A group of 85 economists has supported the Honduran government’s decision to leave the World Bank’s arbitration body, the International Centre for Settlement of Investment Disputes (ICSID), amidst a legal conflict with the crypto island project Próspera Inc., which seeks .8 billion in compensation after losing its special economic status due to legislative changes in […]
Bitcoin News
ECB Economists: Bitcoin Fails to Become Global Decentralized Digital Currency, BTC’s Fair Value Is Still Zero
The European Central Bank (ECB) has published a blog post claiming that “bitcoin has failed to fulfill its original promise to become a global decentralized digital currency.” The ECB economists who authored the post added that bitcoin’s fair value is still zero and bitcoin transactions are “still inconvenient, slow, and costly.” Moreover, they asserted that […]
Bitcoin News
Bitcoin At A Crossroads? Economist’s Doom Prediction Clashes With Spot ETF Approval Hopes
As the world of crypto braces for a potential regulatory nod from the US Securities and Exchange Commission (SEC) in favor of a Bitcoin spot exchange-traded fund (ETF), Peter Schiff, a notable crypto critic, has voiced a dissenting opinion.
Schiff projected a grim future for Bitcoin, especially in the event of a spot ETF approval. His comments come at a time when the crypto community is abuzz with expectations of a boost in institutional investor interest in Bitcoin.
Economist Spells Gloom For Bitcoin
In a recent post on X, Schiff expressed his skepticism, suggesting that the speculative buzz around the US.-listed ETF directly investing in Bitcoin has been “inflating” the crypto’s value.
This view aligns with Bitcoin’s price trend, which saw an uptick in late last year, following a false report about the approval of BlackRock’s pending spot ETF application. While crypto enthusiasts view the potential spot ETF approval as a gateway for traditional investors into the crypto market, Schiff’s outlook starkly contrasts this sentiment.
Be careful what you wish for. The promise of a U.S. listed spot #BitcoinETF has been supporting the #Bitcoin price and speculative demand for years. Once the ETFs are launched and the highly anticipated institutional and other new investor demand does not show up, look out below!
— Peter Schiff (@PeterSchiff) January 2, 2024
Community Clashes With Schiff’s Pessimism
Peter Schiff’s statements have not gone unchallenged in the crypto community. On X, his posts have attracted critical responses, with users questioning the basis of his bearish predictions. One X user, known as Bloxpert, directly asked Schiff for examples of ETF launches that led to bearish outcomes.
Schiff, in response, questioned the necessity of a Bitcoin ETF, arguing that since Bitcoin can be bought and stored independently, an ETF seems redundant. He implicitly downplayed the need for such financial products in the crypto space, concluding: “You might as well just own a gold ETF.”
Well there is really no need for a Bitcoin ETF, as you can buy and store Bitcoin yourself for free. What’s the point of owning it in an ETF anyway? You might as well just own a gold ETF.
— Peter Schiff (@PeterSchiff) January 2, 2024
Despite Schiff’s bearish outlook, a significant portion of the crypto community and many experts remain optimistic. For instance, James Butterfill, head of research at CoinShares, sees the approval of a spot Bitcoin ETF in the US as a transformative event for the digital asset market.
Butterfill suggests that an investment increase of 20% from current assets under management could push Bitcoin prices to around ,000. Such predictions stand in stark contrast to Schiff’s views, reflecting the diverse opinions and expectations surrounding Bitcoin’s future in the wake of potential regulatory changes.
Featured image from Unsplash, Chart from TradingView
Economists Warn Direct Iran-Israel War Could Trigger Global Recession
Bloomberg’s economists have warned that a direct war between Iran and Israel could trigger a global recession. “Soaring oil prices and plunging risk assets would deal a substantial blow to growth, and take inflation a notch higher,” they said. “The wider the conflict spreads, the more its impact becomes global rather than regional.”
Economists Warn of Global Recession Triggered by Middle East War
Bloomberg’s economists outlined how the war in the Middle East could tip the world economy into a global recession in an article published last week. The article has three authors, including Ziad Daoud, the chief emerging markets economist for Bloomberg Economics, and Ziad Daoud, Bloomberg’s global economist.
They explained that the conflict between Israel and Hamas “has the potential to disrupt the world economy — and even tip it into recession if more countries are drawn in.” Emphasizing, “That risk is real,” the economists detailed:
A sharper escalation could bring Israel into direct conflict with Iran, a supplier of arms and money to Hamas, which the U.S. and the European Union have designated a terrorist group.
“In that scenario, Bloomberg Economics estimates oil prices could soar to 0 a barrel and global growth drop to 1.7% — a recession that takes about trillion off world output,” they added.
“Today’s world economy looks vulnerable. It’s still recovering from a bout of inflation exacerbated by Russia’s invasion of Ukraine last year. Another war in an energy-producing region could rekindle inflation. Broader consequences could extend from renewed unrest in the Arab world to next year’s presidential election in the U.S., where gasoline prices are key to voter sentiment,” the economists opined.
Bloomberg Economics conducted an analysis to assess the potential effects on global growth and inflation under three different scenarios. The first scenario envisions hostilities mainly within Gaza and Israel. In the second scenario, the conflict expands into neighboring nations like Lebanon and Syria, “essentially turning it into a proxy war between Israel and Iran,” the economists said. The third scenario involves an escalation into a direct war between the two regional enemies, Israel and Iran.
The economists stressed:
Direct conflict between Iran and Israel is a low probability scenario, but a dangerous one. It could be the trigger for a global recession. Soaring oil prices and plunging risk assets would deal a substantial blow to growth, and take inflation a notch higher.
“In all these cases, the direction is the same — more expensive oil, higher inflation, and slower growth — but the magnitude is different. The wider the conflict spreads, the more its impact becomes global rather than regional,” they concluded.
What do you think about the warnings by Bloomberg’s economists regarding a global recession? Let us know in the comments section below.
Consensus Pause: Majority of Economists Predict No Rate Hikes for 2023, With Cuts Delayed Until March 2024
A newly published Reuters poll reveals that most economists concur: the U.S. Federal Reserve has likely capped its rate hikes. Yet, rate cuts aren’t anticipated until March 2024. This survey drops just as markets approach the annual Jackson Hole Economic Symposium scheduled for next week. All eyes are on Fed chairman Jerome Powell, as investors eagerly await his remarks.
Market Forecasts No Rate Cuts Through 2023; Powell’s Jackson Hole Remarks Could Shift Outlook
Following the recent uptick in the federal funds rate (FFR), the U.S. central bank is seemingly hitting the brakes. This sentiment is echoed by the lion’s share of economists surveyed by Reuters. Of the 110 economists polled, a staggering 90% – 99 of them – predict the rate will remain unchanged this September at the forthcoming Federal Open Market Committee (FOMC) meeting. Furthermore, about 80% opine that we won’t see any additional rate hikes for the remainder of the year.
CME Group’s Fedwatch Tool shows that the market is pricing in the belief that there will be no rate hike this September. There’s roughly an 89% probability of no changes at the September 22 FOMC gathering and an 11% chance that there will be a 25 basis point rise. Out of the polled participants, 23 anticipate one more rate hike this year, while a pair of economists foresee the FFR jumping twice more. Approximately, 48 out of 95, predict the Fed will maintain rates till the end of March.
Two economists bet a rate cut could take place by the end of 2023’s final quarter. “We have long seen a high threshold for cutting because Fed officials will want to minimize the risk they could regret cutting if inflation stays too high,” David Mericle, the chief U.S. economist at Goldman Sachs told Reuters. Predictions may change, however, after Fed chair Jerome Powell speaks at the Jackson Hole Economic Symposium on August 25. Investors are hoping Powell will shed light on policy for the end of the year.
CME Group’s Fedwatch Tool paints a clear market sentiment: a rate hike this September seems unlikely. The odds? An 89% likelihood that the Federal Open Market Committee (FOMC) will stand pat on September 22 and a slim 11% possibility of a 25 basis point ascent. Among those surveyed, 23 of them forecast a solitary rate increase this year, while two economists envision the FFR surging twice. Of the lot, nearly half, precisely 48 out of 95, believe the Fed will stay its hand on rate changes until March’s end.
Two financial seers are wagering on a rate decrease by the curtain fall of 2023. Goldman Sachs’ chief U.S. economist, David Mericle, conveyed to Reuters, “We have long seen a high threshold for cutting because Fed officials will want to minimize the risk they could regret cutting if inflation stays too high.” Yet, predictions might pivot post Fed chair Jerome Powell’s discourse at the Jackson Hole Economic Symposium on August 25. Investors are on edge, eager for Powell to illuminate the policy trajectory for the year’s end.
What do you think the Fed will do for the remainder of 2023? Do you expect a long pause? Do you expect rate cuts? Share your thoughts and opinions about this subject in the comments section below.
JPMorgan Economists Discard Prior Recession Prediction, Foresee US Economic Resilience
JPMorgan’s economists have jettisoned previous predictions of an impending U.S. recession. Their chief U.S. economist, Michael Feroli, is confident that the American economy will maintain a modest but steady growth trajectory throughout the remainder of the current year and well into 2024.
JPMorgan Foresees U.S. Economic Growth Amid ‘Ridiculous’ Fitch Downgrade and Recession Fears
Echoing Bank of America’s revision of its economic outlook, JPMorgan’s team of economists have likewise set aside their earlier recession projections. The top-ranking bank in the nation initially forecasted a downturn for 2023. However, their principal U.S. economist, Michael Feroli, now holds a more optimistic view that the U.S. can successfully dodge a full-scale recession.
“While a recession is no longer our modal scenario, risk of a downturn is still very elevated,” Feroli wrote on Friday. “One way this risk could materialize is if the Fed is not done hiking rates. Another way in which recession risks could materialize is if the normal lagged effects of the tightening already delivered kick in.”
Feroli, alongside his cohort of economists at JPMorgan, now foresees an economic resurgence in 2023, followed by a period of “modest, sub-par growth” in the subsequent year. This projection defies the widespread dissenting opinion that a recession, or even a depression, within the U.S., is inevitable. Danielle DiMartino Booth, the CEO and chief strategist at QI Research, argues that the repercussions of the Federal Reserve’s interest rate increments and quantitative tightening have yet to fully manifest in the U.S. banking industry.
Moreover, JPMorgan’s perspective comes on the heels of Fitch Ratings’ decision to lower the credit rating of the United States. Unfazed by Fitch’s downgrade, JPMorgan’s chief, Jamie Dimon, dismissed the move as “ridiculous” in an interview. Speaking to CNBC, Dimon downplayed the significance of the downgrade, saying “it doesn’t really matter that much,” and emphasized that the United States remains “the most prosperous nation on the planet, [and] the most secure nation on the planet.”
Dimon and his team at JPMorgan perceive a budding growth in the U.S. economy, prompting their economists to doubt their previous forecasts. “Given this growth, we doubt the economy will quickly lose enough momentum to slip into a mild contraction as early as next quarter, as we had previously projected,” Feroli concluded in his missive to investors last Friday.
What’s your take on JPMorgan’s about-face concerning its earlier recession projections for the United States? Share your thoughts and opinions about this subject in the comments section below.
End of Fed’s Tightening Cycle: Bernanke, Majority of Polled Economists See Terminal Rate Hike Ahead
With just a four-day window to go, the U.S. Federal Reserve appears primed to raise the federal funds rate by 25-basis-points (bps) at the forthcoming Federal Open Market Committee (FOMC) meeting scheduled for Wednesday. The market presently maintains the conviction that this quarter-point uptick is inevitable, and a group of 106 economists, according to a poll conducted by Reuters, are of the view that this will signify the concluding escalation of the ongoing tightening cycle.
Former Fed Chair Ben Bernanke and Polled Economists Echo Anticipation of Final Federal Rate Hike
This Wednesday, all eyes are on the U.S. central bank as it stands on the threshold of a potential 25bps boost to the pivotal bank rate, pushing it to hover within the 5.25%-5.50% spectrum. The market has preemptively accepted the likelihood of this quarter-point advancement.
To illustrate, data from CME Group’s Fedwatch tool as of Saturday, July 22, 2023, signals a near-certain 99.2% probability of this 25bps escalation. On the other end of the spectrum, the same Fedwatch tool from CME conveys a relatively minuscule 0.8% chance for the rate to remain static.
Moreover, a survey published by Reuters on July 19, a majority of 106 economists suggest it will be the last federal funds rate increase for the tightening cycle. The poll’s participants surveyed between July 13-18 show that the perception that rates will remain high for a longer period of time has increased.
Jan Nevruzi, the U.S. rates strategist at Natwest Markets said that “despite the soft CPI print, we still anticipate a hike in July … (and) while we hope the softness in inflation persists, it is unwise from a policymaking standpoint to bank on that.” The Natwest strategist added:
We do not want to rush ahead and say the fight against inflation has been won, as we have seen head-fakes in the past.
Former Federal Reserve chair Ben Bernanke shares a similar view with the economists polled by Reuters. At a webinar event held by Fidelity Investments, Bernanke suggested that the 25bps rise in July could very well be the final hike. “It looks very clear that the Fed will raise another 25 basis points at its next meeting,” Bernanke said on Thursday. “It’s possible this increase in July might be the last one.”
The former central bank chair believes inflation will continue to drop and told investors he expects the inflation rate to range between 3% to 3.5%. While Bernanke acknowledged that the United States could see a slowdown in economic growth, he doesn’t envision a massive recession in the future.
“What we’ll see is a very modest increase in unemployment and a slowing of the economy,” Bernanke explained during the webinar. “But I’d be very surprised to see a deep recession in the next year.” While the Fed’s “dot-plot” shows the federal funds rate could reach 5.50%-5.75%, Reuters’ poll shows that only 19 economists out of the 106 surveyed suspect it will get that high.
How do you foresee the predicted final rate hike impacting the broader economy? Do you agree it’s the last one? Share your thoughts and opinions about this subject in the comments section below.
IMF Economists Say Countries Should Address Crypto Demand Drivers Instead of Banning
The International Monetary Fund’s (IMF) economists have cautioned that banning cryptocurrency “may not be effective in the long run.” Instead of outlawing crypto, they suggest countries should address “the drivers of crypto demand, including citizens’ unmet digital payment needs.”
IMF Economists on Crypto Adoption, Banning, and Regulation
The International Monetary Fund (IMF) published an article titled “Interest in Central Bank Digital Currencies Picks Up in Latin America and the Caribbean While Crypto Use Varies” on Thursday. The article is authored by IMF senior economist Rina Bhattacharya, economist Dmitry Vasilyev, and Mauricio Villafuerte, a division chief in the IMF’s Western Hemisphere Department.
The IMF economists highlighted that four Latin American countries (Brazil, Argentina, Colombia, and Ecuador) ranked among the top 20 countries globally in terms of crypto adoption according to Chainalysis. However, they stressed:
Crypto asset adoption also presents numerous challenges and risks, particularly for vulnerable LAC [Latin America and the Caribbean] countries with a history of macroeconomic instability, low institutional credibility, substantial capital flows, corruption, and extensive informal sectors.
The economists explained that crypto regulations vary across Latin America and the Caribbean countries. While noting that El Salvador has made bitcoin legal tender, they pointed out: “Other countries like Argentina and the Dominican Republic have prohibited the use of crypto assets due to concerns about their impact on financial stability, currency and asset substitution, tax evasion, corruption, and money laundering.”
Noting that “Crypto assets present risks that vary by country circumstances,” the economists concluded:
While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run. The region should instead focus on addressing the drivers of crypto demand, including citizens’ unmet digital payment needs, and on improving transparency, by recording crypto asset transactions in national statistics.
What do you think about the IMF economists’ advice regarding crypto? Let us know in the comments section below.
Economists Expect the Fed to Reveal Another 25bps Rate Hike Before Pausing for the Rest of 2023
After the March rate hike by the Federal Reserve, economists believe that the recent move by Saudi Arabia and several members of the Organization of the Petroleum Exporting Countries (OPEC) to cut oil production could complicate the central bank’s mission. Additionally, the majority of the market is pricing in another 0.25% increase for the May 3 meeting of the Federal Open Market Committee (FOMC), and several analysts suspect it may be the last hike for quite some time.
Economists Attempt to Predict Fed’s Next Decision — ‘Peak Rates Are in Sight’
This week, market investors are focused on several factors, including the Consumer Price Index (CPI) report and earnings reports from some of the largest banks in the United States. However, one of the biggest factors investors are eyeing will take place in 23 days when the Federal Open Market Committee (FOMC) meets to potentially raise the federal funds rate. According to statistics from CME Group’s Fedwatch tool, there is a 66% chance the Fed will raise the rate by 25 basis points (bps). Conversely, there is a 34% chance the Fed won’t raise the rate in May, and some believe that after a 25 bps rate hike, May will be the last increase for 2023.
Although the Federal Open Market Committee (FOMC) will be monitoring this week’s CPI report, senior economist Sarah House at Wells Fargo described how the recent decision by Saudi Arabia and OPEC to cut oil production could affect the Fed’s future policy. “The Fed sees OPEC decisions as mostly geopolitical, but they can impact production of goods and the transportation of other items, so those higher oil prices can bleed into that core component, which the Fed does tend to focus on a little bit more in terms of setting policy,” House explained to CNN reporter Bryan Mena.
Economists surveyed by Bloomberg Economics expect the federal funds rate to reach 5.25% at the end of 2023. Economist Anna Wong stated in the forecast, “We expect the Fed will hike by another 25 basis points at its May meeting, when the upper bound of fed funds rates reaches 5.25%. With the recent production cuts by OPEC+ and the still-tight U.S. labor market, inflation will likely remain in the vicinity of 4% in 2023, and keep the Fed from rate cuts, as markets currently foresee.” Wong added:
We see the Fed holding rates at the peak level for the duration of this year, even as a mild recession is likely to develop in late-2023.
Portfolio manager Michele Morra at Moneyfarm believes that investors have shifted their focus away from inflation and are now fixated on a recession. With inflation slowing down and “even if taking into account a more dovish monetary policy, the main focus is recession,” Morra opined. Bloomberg economist Tom Orlik believes that the interest rate will soon peak for various reasons.
Economist Tom Orlik told Bloomberg Economics, “Since the start of the year, central banks have been buffeted by rival forces. Faster China reopening, Europe dodging a downturn, and tight U.S. labor markets all argue for higher rates. The collapse of Silicon Valley Bank and Credit Suisse pull in the opposite direction. So far, with limited signs of a broader banking crisis, it’s the arguments for tightening that are winning the day. Peak rates are in sight, but we’re not quite there yet,” the economist added.
What do you think about the economists’ predictions? What do you think the impact of the recent OPEC+ oil production cuts will be on the Fed’s future policy decisions, and how will it affect the economy and financial markets? Share your thoughts about this subject in the comments section below.
Ripple Price Analysis: XRP Reject Losses, IMF Economists Pro Crypto?
- Ripple price stable, reject lower lows
- IMF proposes a duo cash system with virtual currencies and cash in circulation
- Transaction volumes low, likely to spike as prices recover
Finally, IMF economists agree that there is a way governments can incorporate virtual currencies in their economies. Any assimilation would be an endorsement that would see prices of digital assets including XRP claw back losses.
Ripple Price Analysis
Fundamentals
The global economy is yet to recover from the GFC of 2008-09. With trillions gone down the drain, Satoshi took advantage of this mayhem, releasing an alternative. Soon after, Ripple Inc rolled out a blockchain based system that banks can use to move value instantaneously in a trustless environment. Strides are visible.
As Ripple Inc try to wrestle out dominance from SWIFT and penetrate China, the IMF economists Ruchir Agarwal and Signe Krogstrup are floating an idea. That of creating a dual system of fiat and digital currencies allowing central banks to cut interest rates and even driving them to sub-zero levels. Here’s what they think:
“The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money). E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money.”
Candlestick Arrangements
After yesterday’s slide, XRP prices are back to positive territory, rejecting lower lows. In an effort versus result point of view, this is bullish, and as mentioned before, every dip is technically a buying opportunity. It is easy to see why.
From the charts, it is clear that bears did struggle to reverse gains of Jan 30. Behind their consistency were below average volumes paling in comparison with those of Jan 30’s 47 million versus 17 million. Considering our position, it is likely that the double bar pattern of Jan 29-30 will be confirmed.
That means rejection of lower lows and reversal of Feb 6 losses. After that, it will be a matter of time before XRP will surge past 34 cents triggering longs.
Technical Indicators
Volumes are low and marking trend resumption will be a spike in market participation driving prices above the 61.8 percent Fibonacci level. Ideally, volume accompanying this uptick should, first of all, exceed averages of 17 million and 47 million of Jan 30.
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