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US debt ceiling crisis: A catalyst for crypto’s ultimate decoupling?

Many in and beyond the crypto industry believe that the political standoff around the debt ceiling increase makes digital assets more attractive in the long run.
The United States federal government’s default on its debt has been…

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Many in and beyond the crypto industry believe that the political standoff around the debt ceiling increase makes digital assets more attractive in the long run.

The United States federal government’s default on its debt has been averted — at least for now. On Oct. 7, the Senate voted to increase the debt limit by $480 billion, a sum needed for the world’s biggest borrower to keep paying off its obligations until early December.

The deal secured a temporary resolution for a weeks-long partisan standoff that had investors both within and far beyond the U.S. unsettled. The once unimaginable prospect of a U.S. default seemed more conceivable than ever before.

As the system-wide uncertainty peaked ahead of the vote, the cryptocurrency market has been doing just fine, led by Bitcoin’s (BTC) biggest bull run in months. This has spurred customary narratives of crypto’s decoupling from more traditional asset classes and of Bitcoin as a safe haven in times of looming financial disasters.

So, what are the possible effects of the debt limit crisis on the role of digital assets in the global financial system?

Increasing own credit card limit

The U.S. government, thanks to controlling the printing press for the world’s reserve currency, has a unique power to set its own debt limit. Congress had first imposed a cap on the aggregate national debt in 1939, increasing this limit on more than 100 occasions since then.

While the debt ceiling increase is normally not a partisan issue, things were different this time around. Embittered by Democrats’ ambitious social and climate spending agenda, Senate Republicans took a principled stand refusing to back their opponents’ attempts to address the impending deadline for either raising the debt limit or defaulting on federal debt.

The lack of Republican support for increasing the debt limit, which requires sixty votes to pass the Senate rather than the simple majority that Democrats already wield, could be considered a symbolic move. Raising the amount of money that the Treasury can borrow does not authorize new spending in itself, but rather is meant to allow it to cover existing obligations.

Partisan politics aside, some critics believe that the federal debt policy that relies on constantly increasing the borrowing cap is not great for the wallets of regular Americans. Chris Kline, co-founder and chief operating officer of cryptocurrency retirement investment provider Bitcoin IRA, noted to Cointelegraph:

“The government has given itself the ability to increase its credit card limit every year for the last hundred years on average and that has ramifications for the middle class. Middle class Americans are feeling the biggest pinch in their wallets from inflation and rising costs, all spawned from a monetary policy that is expanding the USD balance sheet.”

A risky haven

The temporary patch of a solution that the Senate has agreed on only staves off the debt ceiling issue until early December, effectively perpetuating the macroeconomic uncertainty. One prominent argument is that this uncertainty can play into Bitcoin’s hands in the coming weeks.

Arina Kulackovska, head of corporate payment solutions at cryptocurrency exchange CEX.IO, believes that “This uncertainty could potentially continue to be a driver of a BTC rally.”

At the same time, Kulackovska notes that cryptocurrencies are starting to “trade apart from the legacy markets,” which could lead to them being less malleable to macroeconomic dynamics that considerably affect more traditional asset classes.

Kay Khemani, managing director at online trading platform Spectre.ai, believes that the impact of the debt limit suspension on financial markets in general, including digital assets, is “likely to be favorable as it would mean more liquidity in the system (read: more debt),” which tends to flow to financial assets first.

Khemani further remarked: “Higher debt does erode the value of the dollar over time and this further strengthens the narrative — however misguided it may be — that crypto is a safe haven asset.”

Still, the degree to which cryptocurrencies have decoupled from other assets like stocks is still a matter of debate. Eric Bleeker, analyst at investment advice company The Motley Fool, commented to Cointelegraph:

"As the kind of currency that relies on predetermined math instead of political brinkmanship, you’d figure Bitcoin would benefit from events like debt ceiling stand-offs. […] While most Bitcoin fans point to it being an asset with a limited supply that should gain in value while the U.S. prints more debt, the reality is that it’s been most closely correlated to the value of other risky assets in short-term sell-offs.”

One example that Bleeker invoked was Bitcoin briefly dropping more than 50% last March at the beginning of the pandemic. He also added that things may play out differently in the long run, as events like the debt ceiling crisis degrade trust in the dollar and make alternatives like Bitcoin more attractive.

Longer-term benefits

While industry participants and analysts differ on the short-term effects of the U.S. federal debt limit uncertainty on the cryptocurrency market, most of them sound remarkably consonant when discussing how it can influence the market in the long run. Two concurrent trends that are often mentioned are the erosion of trust in the dollar and institutions backing it, and rising demand for crypto.

Related: Crypto and pension funds: Like oil and water, or maybe not?

Haohan Xu, CEO of digital asset trading platform Apifiny, expects that raising the debt ceiling “will steadily apply more buy pressure on BTC, causing prices to steadily rise over time.” Marie Tatibouet, chief marketing officer at cryptocurrency exchange Gate.io, thinks that “crypto's quality as a market hedge will shine through.” Tatibouet added that the crypto market has already outgrown stocks and gold since the pandemic began, adding: “If there is indeed a financial crisis due to the government defaulting, then crypto will be a safe haven in the long term, as it has already proven to be.”

Daniel Gouldman, CEO and co-founder of financial services provider Unbanked, calls the entire dance around the debt limit increase “absolutely ridiculous,” as it makes the United States’ credit score hostage of partisan politics:

“We welcome more people into crypto as our elected officials continue to play chicken with the full faith and credit of the U.S. dollar and U.S. government's commitment to its own prior spending decisions.”

Ron Levy, CEO of blockchain education and training firm The Crypto Company, notes the contrast between the two financial systems that the debt ceiling crisis makes conspicuous. Levy commented to Cointelegraph, that this might be the time when the crypto industry may finally decouple from traditional finance:

“On the traditional side, we have inevitable continued money printing, growing inflation and economic uncertainty. On the crypto side, we have an industry that has grown and continues to grow exponentially."

It is likely impossible to tell if the ultimate decoupling is attainable at all, let alone when it can be achieved. Yet, the debt ceiling crisis goes a long way toward highlighting the difference between how traditional and digital money is governed — and this comparison is not particularly favorable to fiat currencies.

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Homes listed for sale in early June sell for $7,700 more

New Zillow research suggests the spring home shopping season may see a second wave this summer if mortgage rates fall
The post Homes listed for sale in…

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  • A Zillow analysis of 2023 home sales finds homes listed in the first two weeks of June sold for 2.3% more. 
  • The best time to list a home for sale is a month later than it was in 2019, likely driven by mortgage rates.
  • The best time to list can be as early as the second half of February in San Francisco, and as late as the first half of July in New York and Philadelphia. 

Spring home sellers looking to maximize their sale price may want to wait it out and list their home for sale in the first half of June. A new Zillow® analysis of 2023 sales found that homes listed in the first two weeks of June sold for 2.3% more, a $7,700 boost on a typical U.S. home.  

The best time to list consistently had been early May in the years leading up to the pandemic. The shift to June suggests mortgage rates are strongly influencing demand on top of the usual seasonality that brings buyers to the market in the spring. This home-shopping season is poised to follow a similar pattern as that in 2023, with the potential for a second wave if the Federal Reserve lowers interest rates midyear or later. 

The 2.3% sale price premium registered last June followed the first spring in more than 15 years with mortgage rates over 6% on a 30-year fixed-rate loan. The high rates put home buyers on the back foot, and as rates continued upward through May, they were still reassessing and less likely to bid boldly. In June, however, rates pulled back a little from 6.79% to 6.67%, which likely presented an opportunity for determined buyers heading into summer. More buyers understood their market position and could afford to transact, boosting competition and sale prices.

The old logic was that sellers could earn a premium by listing in late spring, when search activity hit its peak. Now, with persistently low inventory, mortgage rate fluctuations make their own seasonality. First-time home buyers who are on the edge of qualifying for a home loan may dip in and out of the market, depending on what’s happening with rates. It is almost certain the Federal Reserve will push back any interest-rate cuts to mid-2024 at the earliest. If mortgage rates follow, that could bring another surge of buyers later this year.

Mortgage rates have been impacting affordability and sale prices since they began rising rapidly two years ago. In 2022, sellers nationwide saw the highest sale premium when they listed their home in late March, right before rates barreled past 5% and continued climbing. 

Zillow’s research finds the best time to list can vary widely by metropolitan area. In 2023, it was as early as the second half of February in San Francisco, and as late as the first half of July in New York. Thirty of the top 35 largest metro areas saw for-sale listings command the highest sale prices between May and early July last year. 

Zillow also found a wide range in the sale price premiums associated with homes listed during those peak periods. At the hottest time of the year in San Jose, homes sold for 5.5% more, a $88,000 boost on a typical home. Meanwhile, homes in San Antonio sold for 1.9% more during that same time period.  

 

Metropolitan Area Best Time to List Price Premium Dollar Boost
United States First half of June 2.3% $7,700
New York, NY First half of July 2.4% $15,500
Los Angeles, CA First half of May 4.1% $39,300
Chicago, IL First half of June 2.8% $8,800
Dallas, TX First half of June 2.5% $9,200
Houston, TX Second half of April 2.0% $6,200
Washington, DC Second half of June 2.2% $12,700
Philadelphia, PA First half of July 2.4% $8,200
Miami, FL First half of June 2.3% $12,900
Atlanta, GA Second half of June 2.3% $8,700
Boston, MA Second half of May 3.5% $23,600
Phoenix, AZ First half of June 3.2% $14,700
San Francisco, CA Second half of February 4.2% $50,300
Riverside, CA First half of May 2.7% $15,600
Detroit, MI First half of July 3.3% $7,900
Seattle, WA First half of June 4.3% $31,500
Minneapolis, MN Second half of May 3.7% $13,400
San Diego, CA Second half of April 3.1% $29,600
Tampa, FL Second half of June 2.1% $8,000
Denver, CO Second half of May 2.9% $16,900
Baltimore, MD First half of July 2.2% $8,200
St. Louis, MO First half of June 2.9% $7,000
Orlando, FL First half of June 2.2% $8,700
Charlotte, NC Second half of May 3.0% $11,000
San Antonio, TX First half of June 1.9% $5,400
Portland, OR Second half of April 2.6% $14,300
Sacramento, CA First half of June 3.2% $17,900
Pittsburgh, PA Second half of June 2.3% $4,700
Cincinnati, OH Second half of April 2.7% $7,500
Austin, TX Second half of May 2.8% $12,600
Las Vegas, NV First half of June 3.4% $14,600
Kansas City, MO Second half of May 2.5% $7,300
Columbus, OH Second half of June 3.3% $10,400
Indianapolis, IN First half of July 3.0% $8,100
Cleveland, OH First half of July  3.4% $7,400
San Jose, CA First half of June 5.5% $88,400

 

The post Homes listed for sale in early June sell for $7,700 more appeared first on Zillow Research.

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Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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