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Gold, Bitcoin or DeFi: How can investors hedge against inflation?

Over the last 10 years, Bitcoin has been through 20 different bear markets. Is it finally starting to prove itself?
Bitcoin (BTC) was created in the aftermath of the 2008 financial crisis and planned to solve the problems created…

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Over the last 10 years, Bitcoin has been through 20 different bear markets. Is it finally starting to prove itself?

Bitcoin (BTC) was created in the aftermath of the 2008 financial crisis and planned to solve the problems created by loose monetary policies. The cryptocurrency’s creator, Satoshi Nakamoto, said in late 2008 that the cryptocurrency’s supply increases “by a planned amount” that “does not necessarily result in inflation.”

The cryptocurrency’s inflation rate has been fixed and its circulating supply is capped at 21 million coins, expected to be mined by 2140. By then, BTC’s inflation rate will drop to zero. In contrast, fiat currencies have no finite supply and can be printed to adjust monetary policy.

An expansionary monetary policy, such as the one that has been pursued over the last few years by most countries throughout the world, aims to expand the money supply by lowering interest rates and seeing central banks engage in quantitative easing.

This expansionary monetary policy has long been believed to lead to higher inflation, defined as the devaluation of a payment vehicle amid the rising cost of goods and services. In November, inflation in the United States rose to a 30-year high while Eurozone inflation recorded the highest figure in the 25 years that data on it has been compiled.

Cointelegraph reached out to various experts in the industry for comment on these figures, and virtually all of them pointed the finger at expansionary monetary policies. Speaking to Cointelegraph, Chris Kline, chief operations officer and co-founder of crypto retirement platform Bitcoin IRA, said that inflation isn’t transitory and is forcing people to “find an alternative to protect their assets.”

Kline noted that while gold and real estate were strong options in the past, real estate prices are now “off the charts” while gold is “inaccessible to the average American.” Bitcoin, he added, is now a part of the “inflationary hedge mix” because its supply cannot be manipulated the same way the supply of fiat currencies can.

Speaking to Cointelegraph, Martha Reyes, head of research at cryptocurrency exchange Bequant, pointed out that the market quickly reacted to the latest inflation figures by pricing in potential interest rate hikes from central banks. To Reyes, the “root cause of these high inflation readings is a large increase in money supply, as trillions of dollars of new money were created due to the pandemic.”

Historically, gold has been used as a hedge against inflation. Bitcoin and other cryptocurrencies have often been referred to as “gold 2.0” because they possess properties that could make them a digital version of the precious metal.

Crypto as a solution against inflation

Cryptocurrencies are known for their sharp volatility, with crashes of up to 50% occurring in short periods of time even for blue-chip crypto assets. This type of volatility has left many questioning whether BTC and other cryptocurrencies could be a viable inflation hedge.

In a note sent to clients, strategists at Wall Street banking giant JPMorgan have suggested that a 1% portfolio allocation to Bitcoin could serve as a hedge against fluctuations in traditional asset classes. Billionaire investor Carl Icahn has also endorsed BTC as a hedge against inflation.

Speaking to Cointelegraph, Adrian Kolody, founder of non-custodial decentralized exchange Domination Finance, echoed Kline’s sentiment on Bitcoin being a solution to inflation but noted that in the cryptocurrency space, there are other ways to hedge against inflation.

Kolody pointed to the decentralized finance (DeFi) sector as a viable alternative. He suggested that by using stablecoins — cryptocurrencies with a price control mechanism — and decentralized applications (DApps), investors could “outpace inflation” while resisting the “risks of a spot position.” To do this, they would simply have to find a way to earn interest on their stablecoins that would be above annual inflation rates. Kolody said:

“The best way to look at it is that crypto gives you the flexibility to take control of your finances in a variety of methods instead of being at the mercy of the federal government.”

Reyes noted that Bitcoin is “more attractive as a store of value than other assets such as commodities,” as growing demand can only be met by rising prices and not additional production.

The exchange’s head of research added that the cryptocurrency is in an “early stage adoption phase” which means it “does not tend to have consistent correlations with other assets, and its price appreciation should come from the halving cycles and the growth of the network.”

Bitcoin, she added, is, as such, more “resilient to economic downturns, though in a sharp market selloff, it would probably initially also be impacted as some investors trim position across the board.”

Earlier this month, Bitcoin seemingly showed off its potential as a hedge against inflation as it hit a new all-time high in Turkey as the country’s fiat currency, the lira, went into freefall. Others maintain that people in Turkey would have been better off investing in gold.

Utility and freedom, or a legacy asset?

Bitcoin has greatly outperformed gold so far this year, as it has already moved up 94% since early January. Gold, in comparison, dropped by over 8% during the same period, meaning it has so far failed investors who bet on the precious metal to hedge against inflation.

Over the short term in Turkey, the precious metal did exactly what it needed to do: It protected people’s buying power by maintaining its value while the lira plunged. Over the last 30 days, it even outperformed BTC in lira terms.

Zooming out, it’s clear BTC was a much better bet, going up 270% against the fiat currency so far this year compared with gold’s 70%. Data shows that investors would have only been better off betting on gold when the crisis escalated but that in the long run, BTC would have been a better bet.

On whether investors should choose Bitcoin or gold as an inflation hedge, Kolody argued that a “Bitcoin and crypto standard” is a better alternative to a fiat currency or the gold standard, adding that being trustless and permissionless helps crypto stand out.

This, he said, allows crypto and DeFi structures to be as powerful as they are, as investors “don’t have to worry about a political figurehead” who can “nuke” the value of their money by “simply throttling the system.” While he sees gold as a proper inflation hedge, to him, BTC is “the clear choice:”

“Investors who are trying to decide whether they should go into BTC or gold as an inflation hedge need to ask themselves if they want utility and freedom with their hedge, or a legacy asset.”

Karan Sood, CEO and managing director at Cboe Vest, an asset management partner of Cboe Global Markets, told Cointelegraph it’s worth noting that Bitcoin’s relatively nascent history has “cut both ways in the past” as there have been “periods where both Bitcoin and inflation have risen and fallen in tandem.”

Sood added that Bitcoin’s inherent volatility has the potential to magnify these moves. As an example, he said that if current inflation levels prove transitory and fall from their highs, Bitcoin “may also fall precipitously, exposing investors to significant potential losses.”

As a solution, Sood suggested investors looking to use BTC to hedge against inflation may “benefit from accessing Bitcoin exposure via a strategy that seeks to manage the volatility of Bitcoin itself.”

Speaking to Cointelegraph, Yuriy Kovalev, CEO and founder of crypto trading platform Zenfuse, said that while the lira’s freefall could have meant betting on gold was a good move, for U.S.-based investors it wasn’t:

“Gold has underperformed this year, dropping by 8.6% against the dollar while the CPI in the U.S. moved up 6.2%. Gold failed investors who bet on it while BTC is up 92.3% year-to-date, rewarding those who believed in it as a hedge.”

Reyes conceded that while Bitcoin offers better returns as measured by the Sharpe ratio, investors may “want gold in their portfolio for diversification purposes even though it has not performed well this year.”

A diversified portfolio may, for more conservative investors at least, be a more sensible solution to hedge against inflation, as it isn’t yet clear how Bitcoin’s price will move if inflation keeps rising.

A muddied truth

Whether Bitcoin and cryptocurrencies, in general, offer a better solution to the current financial system isn’t clear. To Stephen Stonberg, CEO of crypto exchange Bittrex Global, a “balanced combination of both systems is what we should be striving for.” Stonberg said:

“There are advantages to both models, but Bitcoin and the entire digital asset economy need to be further integrated into the traditional financial system if we want to reach those who are unbanked in the world.”

Caleb Silver, editor-in-chief of the financial information portal Investopedia, told Cointelegraph that the “truth is muddy” when it comes to Bitcoin acting as a hedge against inflation.

Per Silver, Bitcoin is a relatively young asset compared to traditional inflation hedges like gold or the Japanese yen, and while it has features that are “important ingredients in its perception as an inflation hedge,” its wild price swings affect its reliability.

To him, investors need to keep its volatility over the past decade in mind:

“It has entered 20 distinct bear markets over the past ten years and experienced a 20% or greater drawdown for nearly 80% of its history. Consumer prices, until the pandemic, have been distinctly non-volatile for the past decade.”

Silver added that Bitcoin is a “highly speculative asset” even though institutional investors have been adopting it for more than two years. He concluded by saying that Bitcoin not being seen as a store of wealth by most market participants “hurts its credibility as an inflation hedge.”

To hedge against inflation, investors have a plethora of tools at their disposal, not just Bitcoin. Only time will tell what will and won't work, so a diversified portfolio may be the answer for some investors. Tools at their disposal, according to our experts, include BTC, gold and even DeFi protocols that help them outpace inflation.

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Spread & Containment

The Coming Of The Police State In America

The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now…

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The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now patrolling the New York City subway system in an attempt to do something about the explosion of crime. As part of this, there are bag checks and new surveillance of all passengers. No legislation, no debate, just an edict from the mayor.

Many citizens who rely on this system for transportation might welcome this. It’s a city of strict gun control, and no one knows for sure if they have the right to defend themselves. Merchants have been harassed and even arrested for trying to stop looting and pillaging in their own shops.

The message has been sent: Only the police can do this job. Whether they do it or not is another matter.

Things on the subway system have gotten crazy. If you know it well, you can manage to travel safely, but visitors to the city who take the wrong train at the wrong time are taking grave risks.

In actual fact, it’s guaranteed that this will only end in confiscating knives and other things that people carry in order to protect themselves while leaving the actual criminals even more free to prey on citizens.

The law-abiding will suffer and the criminals will grow more numerous. It will not end well.

When you step back from the details, what we have is the dawning of a genuine police state in the United States. It only starts in New York City. Where is the Guard going to be deployed next? Anywhere is possible.

If the crime is bad enough, citizens will welcome it. It must have been this way in most times and places that when the police state arrives, the people cheer.

We will all have our own stories of how this came to be. Some might begin with the passage of the Patriot Act and the establishment of the Department of Homeland Security in 2001. Some will focus on gun control and the taking away of citizens’ rights to defend themselves.

My own version of events is closer in time. It began four years ago this month with lockdowns. That’s what shattered the capacity of civil society to function in the United States. Everything that has happened since follows like one domino tumbling after another.

It goes like this:

1) lockdown,

2) loss of moral compass and spreading of loneliness and nihilism,

3) rioting resulting from citizen frustration, 4) police absent because of ideological hectoring,

5) a rise in uncontrolled immigration/refugees,

6) an epidemic of ill health from substance abuse and otherwise,

7) businesses flee the city

8) cities fall into decay, and that results in

9) more surveillance and police state.

The 10th stage is the sacking of liberty and civilization itself.

It doesn’t fall out this way at every point in history, but this seems like a solid outline of what happened in this case. Four years is a very short period of time to see all of this unfold. But it is a fact that New York City was more-or-less civilized only four years ago. No one could have predicted that it would come to this so quickly.

But once the lockdowns happened, all bets were off. Here we had a policy that most directly trampled on all freedoms that we had taken for granted. Schools, businesses, and churches were slammed shut, with various levels of enforcement. The entire workforce was divided between essential and nonessential, and there was widespread confusion about who precisely was in charge of designating and enforcing this.

It felt like martial law at the time, as if all normal civilian law had been displaced by something else. That something had to do with public health, but there was clearly more going on, because suddenly our social media posts were censored and we were being asked to do things that made no sense, such as mask up for a virus that evaded mask protection and walk in only one direction in grocery aisles.

Vast amounts of the white-collar workforce stayed home—and their kids, too—until it became too much to bear. The city became a ghost town. Most U.S. cities were the same.

As the months of disaster rolled on, the captives were let out of their houses for the summer in order to protest racism but no other reason. As a way of excusing this, the same public health authorities said that racism was a virus as bad as COVID-19, so therefore it was permitted.

The protests had turned to riots in many cities, and the police were being defunded and discouraged to do anything about the problem. Citizens watched in horror as downtowns burned and drug-crazed freaks took over whole sections of cities. It was like every standard of decency had been zapped out of an entire swath of the population.

Meanwhile, large checks were arriving in people’s bank accounts, defying every normal economic expectation. How could people not be working and get their bank accounts more flush with cash than ever? There was a new law that didn’t even require that people pay rent. How weird was that? Even student loans didn’t need to be paid.

By the fall, recess from lockdown was over and everyone was told to go home again. But this time they had a job to do: They were supposed to vote. Not at the polling places, because going there would only spread germs, or so the media said. When the voting results finally came in, it was the absentee ballots that swung the election in favor of the opposition party that actually wanted more lockdowns and eventually pushed vaccine mandates on the whole population.

The new party in control took note of the large population movements out of cities and states that they controlled. This would have a large effect on voting patterns in the future. But they had a plan. They would open the borders to millions of people in the guise of caring for refugees. These new warm bodies would become voters in time and certainly count on the census when it came time to reapportion political power.

Meanwhile, the native population had begun to swim in ill health from substance abuse, widespread depression, and demoralization, plus vaccine injury. This increased dependency on the very institutions that had caused the problem in the first place: the medical/scientific establishment.

The rise of crime drove the small businesses out of the city. They had barely survived the lockdowns, but they certainly could not survive the crime epidemic. This undermined the tax base of the city and allowed the criminals to take further control.

The same cities became sanctuaries for the waves of migrants sacking the country, and partisan mayors actually used tax dollars to house these invaders in high-end hotels in the name of having compassion for the stranger. Citizens were pushed out to make way for rampaging migrant hordes, as incredible as this seems.

But with that, of course, crime rose ever further, inciting citizen anger and providing a pretext to bring in the police state in the form of the National Guard, now tasked with cracking down on crime in the transportation system.

What’s the next step? It’s probably already here: mass surveillance and censorship, plus ever-expanding police power. This will be accompanied by further population movements, as those with the means to do so flee the city and even the country and leave it for everyone else to suffer.

As I tell the story, all of this seems inevitable. It is not. It could have been stopped at any point. A wise and prudent political leadership could have admitted the error from the beginning and called on the country to rediscover freedom, decency, and the difference between right and wrong. But ego and pride stopped that from happening, and we are left with the consequences.

The government grows ever bigger and civil society ever less capable of managing itself in large urban centers. Disaster is unfolding in real time, mitigated only by a rising stock market and a financial system that has yet to fall apart completely.

Are we at the middle stages of total collapse, or at the point where the population and people in leadership positions wise up and decide to put an end to the downward slide? It’s hard to know. But this much we do know: There is a growing pocket of resistance out there that is fed up and refuses to sit by and watch this great country be sacked and taken over by everything it was set up to prevent.

Tyler Durden Sat, 03/09/2024 - 16:20

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Government

Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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Uncategorized

February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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