Wednesday's Market Minute: The Fed Should Hike Bitcoin Into Oblivion

Ask any laser-eyed bitcoin bro on Twitter the past year "why?", and the answer would be something like: “the U.S. is printing too many dollars so people will need this digital token to save them from inflation.” 

Ask who's responsible for that situation, and their answer would invariably come back: the Federal Reserve. Specifically, people like Neel Kashkari of the Minneapolis Fed, who was arguably the strongest advocate for loose monetary conditions leading up to and during COVID. Coiners literally trolled him on Twitter for being the inadvertent supplier of their Riches.

Now as the leading hawk on the Fed, he's their biggest enemy. Or so he says. 

Fed officials are getting out the word this month that they see falling asset prices as a natural complement to stamping out inflationary forces in the economy. Kashkari is on the frontlines of this battle. He told Bloomberg earlier this week he was happy to see stocks crash after Chair Jerome Powell's hawkish speech at Jackson Hole last Friday. And when stocks crash, crypto crashes even harder.

If Kashkari and the Fed are serious about pressuring the economy, then they won't stop until bitcoin disappears from the dialogue. As the biggest digital asset, BTC sits atop the mountain of financial waste that's accumulated in crypto throughout the biggest investing bubble in history. Most of it is likely worthless, but bitcoin's purported use-case as a hedge against the profligacy of the State is specifically an affront to the Fed itself. If the Central Bank really intends to eliminate the superfluous, there should be no easier target than the $400 billion of bitcoin literally betting on the idea that Powell & Co. won’t be able to do what they say. 

Far from a portfolio hedge, bitcoin is the laughingstock of the post-COVID inflationary era. It’s down more than any traditional asset class since CPI broke through 2%, and its proselytizers' tall tale of monetary inefficacy is being disproven in plain sight. It’s down 70% during the same period in which the Nasdaq is down 24%, and even the most famous crypto firms and traders have gotten blindsided by the amount of fraud and deception in the industry.

Coiners started latching onto the “monetary hedge” narrative long before bitcoin even crossed $1,000. If Powell and the Fed have the bite to back up their bark, they should hike it into oblivion. Does Kashkari have what it takes to make the trolls cry uncle? We'll find out soon.

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