Banks are threatened by Bitcoin
- Nicholas Merten says Bitcoin is facing a make-or-break moment this week ahead of the release of the CPI report.
- Circle CEO says traditional financial institutions feel threatened by the idea of full reserve banking systems.
Famous YouTuber and cryptoanalyst Nicholas Merten suggested that the release of the Consumer Price Index (CPI) report later this week would have a massive effect on Bitcoin’s price. In his latest video, Merten told his over 500,000 subscribers that this week is a make-or-break period for the leading digital resource. He noted that the previous CPI report caused Bitcoin’s price to drop by around 10 percent within 24 hours.
The release of the CPI report is an important event because it has significantly affected Bitcoin’s price in the past. Also, the crypto market (including Bitcoin) and the entire stock market are trading around their lowest levels in this bearish season. However, a positive surprise in the CPI report could lead to bullish financial markets. However, if the opposite is the case, crypto and stock prices may pull down to lower levels.
Merten claims that technical indicators suggest another bearishness for Bitcoin, with a further price drop. The YouTuber added that the Fed is unlikely to change its hawkish stance until inflation falls significantly and there is a weakening or softening in the labor market.
He said the Fed would only change its hawkish stance once inflation reaches a 2 percent annual target, which is their key target. Merten added that the Fed also wants to see a weakening trend in the labor market (lower number of vacancies).
A full reserve banking system threatens traditional financial institutions – Jeremy Allaire
Meanwhile, Circle CEO Jeremy Allaire has said that JPMorgan and other traditional financial institutions feel threatened by the idea of a full reserve banking system. Allaire made these claims in a recent interview with Kevin O’Leary, the shark tank investor. He further said that the banks’ system for moving and tracking money is outdated and less efficient than blockchain technology.
According to him, the blockchain infrastructure is more open, publicly available, auditable, real-time, accessible and transparent. Allaire claims that major financial institutions such as JPMorgan are yet to embrace stablecoins and blockchain technology because it is a threat to them.
The Circle CEO explains that a payment stablecoin is like short-term US Treasuries and cash on the Fed reserve. He also said that stablecoins can be considered the safest digital dollar worldwide. In contrast, a deposit in any commercial bank like JPMorgan is a loan to the bank, which they can use to make more money through lending.
Allaire added that a full reserve dollar payment and banking system is an idea whose time has come. However, traditional institutions feel threatened because they base their payment systems on fractional reserve lending. In August 2021, Circle (the company behind the USDC stablecoin) revealed plans to become a full reserve commercial bank under agencies controlled by the US Treasury Department and the Federal Reserve.
