Operation chokepoint was engaged about a week ago, give or take. The following Bitcoin banks were shut down by the Fed and taken over. Silvergate Bank and Signature Bank. Several other banks like Credit Suisse, SVB, First Republic have also been taken over by regulators and Credit Suisse was just sold off to UBS, click here to read
What is significant is that onramps and offramps in and out of Bitcoin from the SWIFT banking system have been cut off. Neutral ATM has found work arounds, but it is less convenient. Customers are now clamering for Bitcoin and the price is up 66.5% year to date! Operation chokepoint has failed. Will more banks open up offering Bitcoin services? Eventually yes! Levelfield Financial CEO Gene Grant ll wrote this article in January about Silvergate Bank. They have now been shutdown and liquidated. Here is his January article, click here to read
Then last week Gene Grant ll wrote this about how this chokepoint relates to Bitcoin and Crypto in general:
“Bitcoin and digital assets rallying strongly today. Suggests that disruption of access to the U.S. banking system can only be temporary as the asset class is resilient and clearly of interest to investors.”
Subsuquently, banking access from the SWIFT system directly in to Bitcoin is not required. Longterm, it will come back with a vengeance. The monetary system is resetting itself right now, this had to happen. Bitcoin is pumping (+66.5% YTD). Bitcoin is not blinking in this crisis. Outside of the current system are two good options; BRICS reserve currency which is precious metal based with Bitcoin for international settlements, or just Bitcoin itself. That’s it. CBDC is dead on arrival. Many will choose it, and rue the day they did! We know that is true!
The Fed’s balance sheet has jumped from $8.35 Trillion to $8.64 Trillion in one week. That is half of the drawdown from the last year of quantitative tightening the Fed had been doing all of 2022. Here is a chart from Carl Menger about this:
Did the rate hikes of 2022 from 0.8% Fed Fund Rate to 4.5% Fed Fund Rate so far, slow down inflation? Was it worth it? See this tweet from Lyn Alden:
“Inflation from 2000 to 2022:
- Gold price: 8.4% per year
- Money supply growth: 6.8% per year
- Oil price: 4.7% per year
- Median house: 4.6% per year
- Education: 4.6% per year
- Medical services: 3.4% per year
- CPI: 2.6% per year
- Deposit yields: <2%
- Apparel: flat
- Electronics, software: down”
Inflation is not down, perhaps in some areas, but compared to where it was in 2019 and 2020, it is way up. Yet now short term bonds are inverted to long term bonds, which stresses all Banks. 90 day T Bills pay 100 bps more than the Fed Funds Rate. So in general, Banks are borrowing at higher rates than they are loaning. A losing situation. Yet, inflation is way up over two to three years! We believe the Fed will likely pause rates on Wednesday. We will see, if not a 25 bps rate hike is worst case. The chokepoint to keep the public away from Bitcoin did not work. It backfired:
We are not financial advisors and this is not financial advise. Holding Bitcoin is not really a choice now, it is becoming a requirement for survival! There is massive MORAL HAZZARD in the monetary system. Any wealth, or job that relies on the fiat monetary system has MORAL HAZZARD! Owning Bitcoin is just the first step in eliminating that. Mining Bitcoin offgrid and obtaining it KYC free is step two! More on that later!
401K rollovers into Bitcoin:
Levelfield Financial is working to get a Bitcoin Bank approved, soon they will have Bitcoin credit cards, OTC desk, and Bitcoin custody solutions.