What the Fed’s ‘Hawkish’ Turn Means for Bitcoin

The Breakdown

Blockworks

Business, Investing

4.8 • 806 Ratings

🗓️ 17 December 2021

⏱️ 16 minutes

🔗️ Recording | iTunes | RSS

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Summary

This episode is sponsored by NYDIG. Yesterday in the wake of the FOMC meeting, the Federal Reserve signaled a hawkish turn. Asset purchases will be tapered at twice the speed, and the Fed is now anticipating three rate hikes next year. So why, in the wake of all that, are risk assets going up, and five-year inflation expectations climbing? Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW NYDIG, the institutional-grade platform for bitcoin, is making it possible for thousands of banks who have trusted relationships with hundreds of millions of customers, to offer Bitcoin. Learn more at NYDIG.com/NLW. “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Dark Crazed Cap” by Isaac Joel. Image credit: Michael Nagle/Bloomberg/Getty Images, modified by CoinDesk.

Transcript

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0:00.0	My point is that every time Bitcoin seems correlated to a macro event, people come out of the
0:04.8	woodwork to critique it for that when it's really not that complicated and it doesn't somehow
0:09.3	hand-wavily undermine Bitcoin. The difference in Bitcoin has always been and will always be
0:14.7	the large and growing group of hoddlers who are not affected by macro events and Fed policy changes and who continue to deepen their
0:23.4	exposure and provide an ever-increasing floor for this asset.
0:29.0	Welcome back to The Breakdown with me, NLW.
0:33.1	It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world.
0:40.2	The breakdown is sponsored by Nidig and produced and distributed by CoinDesk.
0:46.8	What's going on, guys? It is Thursday, December 17th.
0:50.6	And if you are a regular listener, you will have heard throughout 2021 that the central macroeconomic battle, the battle that has defined, at least mainstream media coverage of U.S. markets, has been all about the threat and then the reality of inflation.
1:10.0	The question has been, how long could the Fed keep
1:14.6	the pedal on the metal to help bring the economy back in a post-COVID or at least post-vaccine
1:21.1	COVID world versus having to turn hawkish to fight growing inflation? Part one of the year was what we'll call the transitory phase.
1:32.0	During this phase, as inflation started to show up, the Federal Reserve aggressively stuck to the
1:38.1	notion that any inflation was simply transitory. It was caused by supply chain dislocations in the wake of COVID-19 shutdowns
1:47.1	and a supply demand mismatch. This makes sense in a theoretical way, right? We had gone from
1:52.9	near zero demand in a lot of areas during shutdowns to not only the return of normal demand,
1:58.9	but a catch-up demand that exceeded normal demand because
2:01.9	people hadn't been engaging in their normal economic activity. Meanwhile, on the supply side,
2:07.2	you have all sorts of manufacturers, producers, suppliers who haven't been doing anything,
2:12.0	who have also been shut down, who have to get their capacity back up and running. And so they're
2:16.5	not even able to meet normal
	...

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