6th January 2026 > > The Fed & Venezuala.
- Jan 6
- 3 min read
tl;dr
Change of the Chair of the Fed, and the Venezuelan situation, are both factors in BTC’s favour.
Market Wrap
In just two days, we have seen nearly $1.2bn net inflows to the spot BTC ETFs in 2026. Retail risk appetite is back as evidenced by the outperformance of memecoins. If the rest of this week continues in the same vein for the ETFs, I will become increasingly confident that institutional risk appetite is back, and that the travails of the final quarter of 2025 are firmly behind us.
Special mention must also go to XRP, up 9% in the last twenty-four hours, and a tasty 25% in the last week. I must admit I was a long-term XRP-sceptic. The 2022 bear market revealed many bargain basement prices, but I felt most of all that whatever my personal concerns around XRP and its centralisation, at around 40c it probably topped the list of bargains available at the end of 2022. That was merely a relative value assessment, but more interestingly the opportunities for XRP grow with the adoption of stablecoin settlement systems within TradFi. I have convinced the CC Treasury committee that XRP is now a core, long-term holding, once the initial investment has been realised from some (hopefully) imminent sales.
Curious Crypto’s Commentary – US debt & the Fed
US debt has reached a record high of £38.6 TRILLION, an infeasibly large number that can never be repaid:
Annual interest payments are now more than $1 TRILLION, putting the UK’s own fiscal incontinence firmly in the shade.
In May there will be a new Chair of the Fed, picked by Trump, whose primary objective will be to ensure that the November mid-terms are successful for the Republicans.
The so-called great and good are already out ramping up the hysteria that the Fed must remain independent, though it never has been. The 1951 Treasury-Fed Accord made the pretence that the Fed had independent operational control over manipulating the short-end of the yield curve with the twin objectives of maintaining stable inflation and a stable jobs situation. But both those objectives are firmly in the control of the governing party, whose political agenda feeds directly into both outcomes. There is an influence from the global background that impacts inflation and jobs at the margins, but make no mistake, for any sovereign country, blame for all economic woes, or plaudits for economic joy, are the sole responsibility of the government.
In any case, the imposition of QE during the illegal and immoral period of lockdown destroyed for evermore the concept that central banks can ever be independent of their political masters.
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Polymarket (I think Austria as your VPN location works best) currently rates the contenders thus:
My original pick, Stephen Miran, is polling at less than 1%, so the CCC does occasionally get stuff wrong, however surprising that may be to you. What we can be almost sure of is that the next Chair of the Fed is called Kevin.
Both candidates have expressed criticism of QE and YCC, on the basis that they undermine price discovery, and therefore fiscal discipline. I applaud their collective purist approach, but I feel I should point out that the horse long bolted on the latter point after Clinton was succeeded by Bush. Under Clinton there was an annual surplus on the government current account, an inconceivable proposition today. Sure, there has been the GFC, several wars, and Covid, but the maxim about fixing the roof has long been forgotten. Every economic hiccup is now met with ever-increasing government expenditure with no countenance of reducing it during the better times. It’s one way traffic on this front, and one day this dreadful mistake will bite back with a vengeance.
In the meantime, from May onwards we will undoubtedly see lower interest rates in the short end, a development that is generally interpreted as positive for risk assets. But the long end plays its part too, sometimes more so. Without QE or YCC, the markets will decide the trajectory of long-term rates, of which a key factor is the price of oil. The US has some of the lowest energy costs in the world. Here in the UK, we have some of the highest, an obviously self-harming political decision that was implemented from 2010 onwards. If your objective is to boost growth and productivity i.e. make life better for your own citizens, it is clear which of those two scenarios works best.
So, for Trump, lower interest rates at the short end because of rate cuts, and lower interest rates at the long end, because of cheaper oil, is the ideal backdrop to the November mid-terms. It is also the ideal backdrop for BTC. If you want to know how Venezuela fits into this, Arthur Hayes tells it here:
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