Wall Street is Suppressing Bitcoin! (BTC Short Squeeze?) – Last Week Crypto

Here we are, in the fabled month of September, a 
month that historically proves bearish for crypto.   But what does this September have in store for us? Hello, I’m Crypto Casey and welcome to 
another episode of Last Week Crypto. Every Sunday, we review the performance of 
the largest cryptocurrencies, top gainers,   as well as the latest global news stories 
affecting the crypto markets this past week. This week we will discuss a few economic 
events influencing the crypto markets,   whether September will prove bearish or bullish 
for bitcoin’s price, what just happened with   the supply of ether, and how Wall Street could 
be massively suppressing the price of bitcoin. This week’s episode is brought to you 
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ask me anything you want, every Wednesday. Awesome. It’s time for Last Week Crypto. Looking at the top cryptocurrencies by market 
cap, bitcoin up 1.9%, ETH on a tear, up 19.1% Cardano, finally cooling off a bit, 
down 2.2%, and Binance Coin, up 0.6%. Looking at the top gainers this week: Bitcoin Cash ABC a top gainer yet again this 
week, up an insane 287.3%, Fantom up 113.4%, IOTA, a blast from the past, up 
71.4% and Solana, still crankin’,   up 59.8%
____________ Nice. So let’s do a quick recap 
of some of the less interesting   economic events influencing 
the crypto markets by proxy.   As we discussed last week, did the optimism 
surrounding the impending jobs report pan out? Eh, not exactly: Jobs report disappoints — only   235,000 positions added vs. 
expectations of 720,000.

And Weak Job Gains Leave Washington on High Alert. The Federal Reserve and White House 
had hoped for strong job gains,   and the August report did not deliver. 
That makes coming numbers critical. And “coming numbers” refers to the 
release of the CPI or consumer price   index report on September 14th that will 
likely further stoke inflation concerns,   which, in tandem with jobs report numbers, will 
dictate what is likely to play out at the FOMC,   or Federal Open Market Committee 
Meeting on September 22nd. The to taper or not to taper conundrum in 
the short term will resolve to the latter,   meaning the Fed will probably 
not start tapering any time soon. And by tapering, we mean that the Fed will 
continue buying bonds to keep the money   supply flush and interest rates, or the cost 
to borrow money, pretty much non-existent. We’ve dug into that quite a bit over 
the past few weeks, so basically   it means bullish sentiment in the traditional 
markets will likely continue in the short term: even though it’s becoming quite clear that 
more liquidity is not having an impact on jobs,   managing inflation, or anything really except 
keeping reverse repo activity high and keeping   the stock market propped up, which, by proxy, 
keeps the crypto markets rockin’, for now.

Sweet. Next, let’s think about 
if September 2021 will defy   historically bearish performance or capitulate. So over the past 8 years, Septembers harbor 
a negative 8% price decrease for bitcoin,   with the exception of only two 
out of the past eight years: In 2015, the price of bitcoin in September went up 
4%, and in 2016 the price of bitcoin went up 7.5%. So, what about this year in 2021?   Well, so far bitcoin has performed 
contrary to previous year’s months.   However, there seems to be a fairly equal split 
between people with bull versus bear sentiment. Some are calling for a peak in 
bitcoin’s price around September 27th   where the golden 51/49% ratio predicts 
the end of the bitcoin bull cycle. While others turn to the bitcoin 
stock-to-flow model which predicts $100K   per bitcoin by Christmas. Note here that we are 
currently between a bottom and top here.

This   model also predicts bitcoin could reach a floor 
of $43,000 per bitcoin at the end of September. As usual, it’s anybody’s guess when trying 
to predict the short term price of bitcoin   and when the bull cycle will end, assuming 
it’s still raging in the first place. So let’s break down this interesting revelation 
I’ve been pondering this week into different   concepts that paints an extremely bullish scenario 
for the price of bitcoin short and long term. Concept 1: Equity vs Debt-based money Bitcoin is equity-based 
money, meaning there is a real   underlying asset behind the value of 
the money determined by the free market. Before the US went off the gold standard, the US 
was an equity-financed economy until 1968, meaning   all of the debt borrowed by corporations outside 
of the financial realm was backed by real savings.

Basically, the total dollar value of savings made 
by individuals and companies in the real economy   equaled the total amount of debt corporations 
borrowed to grow their businesses. During this time, we were saving more of the 
money that we earned rather than using it to   consume or buy products and services. 
So we consumed less than we produced. So during this time, debt in the US 
economy was backed by real US dollars,   and US dollars were backed by gold. 
Hence the equity-based monetary system,   where money was backed by underlying assets.

After we abandoned the gold standard, 
the US turned into a debt-based economy   and started using circulation credit, 
or fractional reserve banking. If you’d like to learn more 
about fractional reserve banking   and the current structure of the 
traditional financial ecosystem,   check out my video breaking it down for 
beginners’ by clicking on the link above. In a debt-based economy that uses circulation 
credit, or fractional reserve banking,   instead of debt being 
completely backed by 100% cash,   the banks are allowed to keep only a fraction 
of the cash and lend out the rest in ad finitum. For example, let’s say for every 
$100 you deposit into your account,   per the fractional reserve banking system,   the bank only has to keep $10 of the total 
deposit and is allowed to lend out the rest. This fraction of deposits banks are required 
to maintain are known as reserves.

So the $10   fraction of the $100 you deposit into 
your bank account, is held as reserves. And the fraction of deposits banks are required 
to maintain are known as reserve requirements. Hence the term, fractional reserve 
banking. So, since bitcoin has garnered   the attention of the traditional financial 
sector, Wall Street has started to treat   bitcoin, an equity-based instrument, as a 
debt-based one by piling debt claims on it. Let’s explore this in our next concept. Concept 2: Real Demand vs Artificial Supply If you watch this channel frequently, you know 
that prices of assets like gold and bitcoin   are determined by supply and 
demand. When demand is high,   and the supply is low, we see 
the price of the asset increase. When demand is low, and the supply is high,   we will see the price of the asset decrease. 
But there’s something interesting going on. Wall Street is treating bitcoin 
the same way they treat gold,   except in the scenario of 
gold, they have the market   cornered and can largely control it, for now. 
However with bitcoin, it’s not the case at all.

Let’s talk about how Wall Street 
has been suppressing the price   of gold for years by piling debt claims on it,   and how they have potentially been suppressing 
the price of bitcoin using the same antics. The long and short with gold, is that there are 
more paper claims to gold than actual, physical   gold. Sure, people can buy and store physical gold 
themselves, however most of the “gold” people own   is just a paper saying they own “x” amount of gold 
and it’s stored in some vault in another country. Thinking back to the relationship of the 
price of assets and supply versus demand,   imagine if the real demand for gold is being met 
and satisfied with an artificial supply of gold. Yep, and that’s absolutely how the gold 
market works. The upperhand Wall Street   has in the gold market is they pretty much 
own, operate, and control the clearinghouses. Wall Street controls most of the gold 
in the world, and by Wall Street I mean   all of the global banks. The central Banks and 
the LBMA, or London Bullion Market Association,   control most of the underlying 
collateral gold – not individuals.

So as people want to redeem their actual gold, 
Wall Street and banks can pretty much trade   with each other and fulfill any demand 
because they control the actual supply. This, however, is not the case with 
bitcoin. The opposite is true with bitcoin,   most bitcoin is owned and controlled 
by individuals. But let’s talk about   the similarities between Wall Street’s 
relationship with gold and bitcoin first. Just like with gold, currently there are more 
paper claims to bitcoin than actual bitcoin. How is it so? Well, with the 
introduction of leverage,   margin, and futures trading in cryptocurrency, 
basically Wall Street applying old debt-based   activity to an equity-based money system, 
bitcoin is heavily rehypothecated.

But instead of Wall Street owning, operating, 
and controlling the supply of bitcoin, in the   event of a run on bitcoin, there absolutely will 
not be enough bitcoin to fulfill demand, because   most bitcoin is actually stored in privately owned 
wallets off of exchanges and out of circulation. So let’s imagine a scenario where Wall 
Street has largely shorted bitcoin,   meaning they expect the price to go down, 
but then, the price goes up and Wall Street   is forced to close their positions regardless of 
the price of bitcoin, that could be a problem.

Bitcoin is currently scarce on exchanges, 
and during bull markets like what we are   likely still in at the moment, 
bitcoin gets even more scarce. If you had a big intermediary like Coinbase, 
Binance, or Bitfinex with lots of open leveraged   short positions experience a classic run on 
the bank for bitcoin and there’s not enough   of the underlying collateral to deliver, the 
price of bitcoin could spike. Spike by a lot. These big institutions would be 
desperately trying to find collateral   that they ultimately wouldn’t be able 
to get because it simply doesn’t exist. Wall Street and institutions do 
not own or control most of bitcoin,   and never will at this point.

It’s far 
too late when you look at the current   amount of bitcoin in circulation and the 
velocity with which new bitcoin is minted. So let’s think about it, if there is real demand 
for bitcoin and it’s being met and satisfied by   an artificially inflated supply of available 
bitcoin, what is the true price of bitcoin? Well, it should be much much higher. If you 
create an artificial supply of something,   which Wall Street has done with 
gold and is now doing with bitcoin,   all else equal, the price 
of the asset is suppressed. And if, but more likely when, a short squeeze 
occurs, bitcoin hodlers will have the last laugh. This is why it’s so important to make 
sure you are transferring your crypto   off of exchanges to hold safely 
in a cold storage hardware wallet. You can scroll down to the description 
area below to access the correct and   official sites of my recommended hardware wallets.

BC Vault is my personal favorite,   another option is the Ledger nano backup 
pack. So Scroll down to check them out. Protecting your ability to generate income so 
you can buy more crypto is another important   thing to consider. So if you’d like to learn 
more about the advanced technical concepts of   blockchain and become a developer in the 
space, check out Ivan on Tech’s academy. If you use the link below, you can 
access the academy at a discounted price,   so scroll down, and check it out. Cool. And as if real demand for bitcoin 
being met with an artificially high supply   due to leverage and rehypothecation causing price 
suppression isn’t exciting enough, check this out: More Ethereum Has Been Burned Than Minted 
in the Past 24 Hours. EIP-1559 was supposed   to bring deflationary pressure 
to the network. It's working. Ethereum records negative daily 
issuance for first time after EIP-1559 So as the bitcoin supply slowly 
increases at about a 1.77%   inflation rate, the ether supply 
is shrinking, hence deflation. Imagine how much havoc an eth short 
squeeze would have on the price. Awesome. Well that was Last Week 
Crypto, with me Crypto Casey.

If you enjoyed the episode, please 
make sure to like this video and   subscribe to my channel for more crypto content. So what do you think of the possibility of 
Wall Street suppressing the price of bitcoin? Is the short squeeze of all 
short squeezes on the horizon? Could a WallStreetBets-esque effort to get as many 
people as possible to transfer their bitcoin from   exchanges to their own private wallets, and taking 
advantage of a potential short squeeze possible? Let me know in the comments below. Be safe out there..

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