9th November 2023 > > ETFs & CBDCs.

tl;dr

Banging on about spot BTC ETFs again. Ranting about CBDCs, though with an important clarification that I had not made plain before today.

Market Snap

Market Wrap

BTC made its third assault on $36k in the last week as institutional interest grows (see below) raising the tantalising prospect of a 40-handle looming into view. Alts are responding with some dramatic price increases. Investors’ attention has been on XRP (up 40% since mid-October) and LINK (up 25% in less than a week) amongst others.

Curious Cryptos’ Commentary – spot BTC ETF (again …)

The last six weeks have seen $767mm net inflows from institutional investors into crypto related funds in the US, more than the whole of 2022, which admittedly may not be the most enlightening comparison.

There has been speculation that this is a mere taster of the expected inflows once a spot BTC ETF is approved. Or, perhaps, that this amount of money is the entirety of TradFi interest in a regulated investment into BTC with totally secure storage. I suspect that BlackRock et al go with the former suggestion and not the latter, but I haven’t yet had the chance to ask Larry Fink about his company’s internal forecasts on this matter. When I do put the question to him, you will be the very first to know his answer.

BTC has a market cap of close to $700mm but with only 30% of coins or so available for sale (possibly less), a supply squeeze looks to be on the cards when Gary Gensler gets around to accepting the inevitable.

Curious Cryptos’ Commentary – CBDCs, and a partial clarification

Regular reader Matthew alerted me to this report from Reuters:

https://www.reuters.com/technology/swiss-national-bank-pilot-wholesale-digital-currency-with-ubs-other-banks-2023-11-02/

Quite rightly, he pointed out that I have frequently stated that there are three countries leading the good fight against the imposition of CBDCs – the US, Slovenia, and Switzerland.

At first sight, the Reuters article above would suggest that this holy cohort is reduced to just two, which would be a body blow. But that isn’t the case, and it is my fault for not being a little more explicit about the application of CBDCs.

Let me now set the record straight if you allow me the courtesy of doing so.

…

My principled stand (though some may call it ranting) against the pernicious nature of CBDCs is rooted in the need for individuals to retain financial privacy, away from the prying eyes of bureaucrats. Bureaucrats who have little better to do with their days than pass judgement on the legal actions of law-abiding citizens.

These privacy concerns do not apply to financial transactions made by companies. To the contrary, no company can lay moral or legal claim to financial privacy.

Private blockchains (essentially a souped-up database) will be used to reduce costs and frictions in commercial transactions, and that is a perfectly valid application of this technology, though it fails to reap the full benefits of a truly distributed ledger. CBDCs fall into this category.

If private blockchains are used for commercial transactions between companies, increasing efficiency, reducing costs, allied with faster settlement times, no-one can complain about that. In fact, we should all support it, as a means of reducing the capital cost for companies making us all richer over any timeframe you care to quote. I suspect that private blockchains will be far better than any government version, but the market will decide.

The danger lies when CBDCs are applied to private individuals. Only governments who wish to enforce coercion and control on their citizens would think about going down such a path.

The US, Slovenia, and Switzerland, stand apart as the only countries who have definitively refuted that dystopian future.