BTC Sessions - First US Bank Fails, Fed Says Economy Is Fine, Coinjoin Day, Bitcoin Hashrate Increase EP040

Starting point is 00:00:01 Wasabi wallet and fairly private. What's up everyone? I'm Ben with the BTC Sessions and this is your daily session. Before we dive into the news, of course, shout out to sponsors of the show, leaden.io. This is where you can use your Bitcoin for a few different services. They've got Bitcoin savings accounts where you can earn interest on your Bitcoin. They've got Bitcoin-backed loans. This is where you use your Bitcoin as collateral to obtain a Canadian or US dollar loan. And this is actually the first service of theirs that I used. It was around early March of last year. I was in a pinch. I needed to get my hands on dollars, but I did not

Starting point is 00:00:44 want to sell my Bitcoin. I was worried I wouldn't be able to buy it all back easily. And so what I was able to do is put my Bitcoin into a dedicated address that I could audit 24-7. And when I repaid my loan in dollars, I got all of my Bitcoin back. In fact, the exact same UTXO. And I, luckily, I did that because I would have been spending a lot more to get back the same amount of Bitcoin. So I did not put the Bitcoin at risk in terms of not being able to buy it back. So that was a lifesaver. And then finally, they've got their B2X offering. This uses the same loan mechanism where you use your Bitcoin as collateral to get a loan.

Starting point is 00:01:24 But then it buys even more Bitcoin with that collateral, doubling your Bitcoin on the spot. So if you want to check out any of those services down below, there's a link there. And if you use that link and opt to get a loan with it, they will give you 50 bucks worth of Bitcoin for free. And secondly, sponsors of the show CoinBerry, this has been my go-to for buying Bitcoin the past few months just because of the ease of use. Website is super easy to navigate really, really clean and easy. Also, they've got an excellent paired app. So on-the-go funding and purchasing is great. The thing that stands out to me the most that I really love about is the same.

Starting point is 00:02:04 speed of funding. These e-transfers that I usually use to fund my account are super, super fast. In my experience, I've only ever experienced maybe like a 20-minute wait max to fund my account. Now, it can vary depending on what bank you're with, so and so forth, but that's been my experience thus far. And I also really like that they have this autopilot thing where you can fund your account and then make regular buys at certain intervals for certain amounts. So you dollar cost average and take the emotion out of buying Bitcoin trying to time things because that tends to not work very well in my experience. So if you want to check out CoinBerry, there's a link down below. And actually, they've got a deal where if you use that link, you will get $20 for free after your first $100 purchase.

Starting point is 00:02:51 With that, let's dive into the news. So we have officially seen the first U.S. bank fall amid this recession. And so what bank was it? Where was it? What happened? Let's get into that right now. So I'm going to read from this decrypt article. The Federal Deposit Insurance Corporation, or the FDIC, the government corporation that insures Americans' banks in case of failure, announced on Friday that a West Virginia bank, the first state bank of Barbersville, was closed by the West Virginia Division of Financial Institutions. The Fallen Bank was immediately bought by the MVP Bank, Inc. of Fairmont, West Virginia. Its four branches will reopen as branches of MVP Bank on Sunday, according to the FDIC. The bank has been struggling with longstanding capital and asset quality issues since 2015, said the FDIC in its press release.

Starting point is 00:03:48 A financial report at the end of 2019 indicated capital levels were too low to allow continued operating. under federal and state law. Now, this statement is very interesting in that they're saying capital levels are too low to allow continued operations because if you've been paying attention, the new bill that was just passed in response to the coronavirus and for some economic relief essentially takes reserve requirements of banks to zero. That's right. banks no longer have to have capital to make loans.

Starting point is 00:04:28 They can just type it in. It exists. They don't have to have anything to back that up. They only get in trouble now if people try to take out cash. So obviously that did not exist when the financial report for this bank was made. But that statement is now null and void. So that makes me wonder what happened to this bank? Because if they have zero capital requirements for loans,

Starting point is 00:04:53 what would cause them to go under. And maybe, potentially, it was people taking out cash. We did see the FDIC put out a video warning people saying, hey, there's no need to take out cash. It's totally fine. You don't need it. We insure everything, which, I mean, they kind of do, but there's not enough cash to go around.

Starting point is 00:05:15 That's a fact, because only 8% of all money in the world right now is cash, probably less now that they've gone on these printing sprees by, I guess, typing sprees, because this money isn't actually being printed. Anyways, I'll read a little bit more from this article here. It says the FDIC insures each customer of doomed banks up to $250,000. So if you have anything above $250K, that's not insured. It has a $100 billion line of credit with the U.S. Treasury. MVP Bank bought up most of this.

Starting point is 00:05:50 failed banks assets, but the closure will still cost the FDIC $46.8 million. So MVB bought up pretty much everything it could, but could not cover the end of this, the $46.8 million. That's covered by the FDIC using their line of credit. Yeah, so is this just the first of many? I don't know, but this is kind of echoing some of the stuff that we saw in 2008 and leading up to the financial crisis then was the, the little guys get hit first and the ripple effects are felt eventually way up the chain until

Starting point is 00:06:26 larger banks are affected. So I hope that's not the case for the sake of everybody that uses a bank, which is most people, but it doesn't look nice. And so I wanted to move on to this CNBC article with the St. Louis Reserve President James Bullard doing an interview. And this article, I've got to say, and these quotes of his did make my blood boil because he is essentially saying that everything's fine, it's just the virus, and once this is gone back to normal, business as usual. It's really unbelievable. So he said, I'll read a little bit here. So St. Louis Federal Reserve President James Bullard said Sunday he did not believe the U.S. economy or jobs market was in freefall as the coronavirus sweeps the country. Quote, we're asking people to stay home to invest in

Starting point is 00:07:16 national health and we're going to ask them to use the unemployment insurance program in order to get the transfers they need to be able to pay bills while they're at home while they're not able to work because health authorities are trying to get the virus under control. This is on CBS's face the nation. So Buller's comments come days after the latest weekly jobs report showed 6.6 million Americans filed for unemployment, bringing the two-week total to 10 million jobless claims. Now, this is the dozy here. The Fed's St. Louis District in late March estimated the U.S. could see as many as 47 million people lose their jobs at a result of the coronavirus shutdown. Job losses of that magnitude would bring the country's unemployment rate to about 32% a figure higher than was seen during the Great Depression.

Starting point is 00:08:10 With all that, his quote, he's saying, let me go on and read some of these quotes from him. He said, in some ways, the uptake on the unemployment insurance program is a good thing because it means you're getting the transfers to the people that are being disrupted by this health ordered shutdown. He said and stressed that the U.S. economy was actually doing quite well before the coronavirus pandemic intensified. there's nothing wrong with the economy itself. He went on to say, this is a special quarter. And once the virus goes away, and if we play our cards right, and keep everything intact, then everyone will go back to work, and everything will be fine.

Starting point is 00:08:53 He said, I think it can be done. Whether it will depends on execution. I thought Congress did a great thing in passing their bill. I thought it was appropriately sized for the situation. The object is to keep everybody whole during a period when you're asking people not to go to their jobs or not to go to shops and basically not participate in the economy. Unbelievable. Again, him saying that there's nothing wrong with the economy. And the first response that I saw to this tweet from Face the Nation with his quote

Starting point is 00:09:24 about it being fine. From Megan J.G. on Twitter, she said, When most Americans couldn't go without a single paycheck and nearly no Americans have savings to cover expenses for longer than a month, the economy was not doing well. Couldn't have put it better myself. And then I wanted to move on a little bit here. Further, Michael J. Burry, if that name sounds familiar, he's the guy portrayed by Christian Bale in the big short. He's the guy who predicted the financial crisis of 2008 and bet against the housing market when everybody thought he was fucking insane and made billions on it. And so he just signed up for Twitter because he needed to get some stuff off his chest from what he was seeing. This is one of the things that he tweeted out.

Starting point is 00:10:15 He said, note what sector is gaining the most jobs. That sector is the one forcing the collapse of the private sector economy. He brought up a jobs report from March and that shows the job losses and gains in different sectors. And obviously, leisure and hospitality down 459,000 jobs, healthcare and social assistance, all the enough next was 61,000 professional and business services, 52,000, and it goes down the line. But then when you get to the top, and there's only really a few sectors that gained, which not much, and then you see one that gained a fair amount. And what was that sector? It's the government with 12,000 new jobs. Of course it is. government never shrinks. It always grows. It always grows. Yeah, because it can. It doesn't want to shrink, even though it should in times like this. You think we should be spending less money on government and getting more money to people, potentially, if that's the way we're going to do things, but that doesn't seem to be the case. Now, I did want to touch on a tweet here from Mauricio di Bartolomeo, and he's co-founder of Leden.

Starting point is 00:11:28 He also hails from Venezuela and has family there and grew up there. So he has a very unique perspective on what's happening in the U.S. and the response to this crisis. And it can be worrying. And so this is what he had to say. He said, the last few days have brought eerie reminders of Venezuela. The daily presidential addresses watched in a collective gasp to see the size of your benefit. the panic buying empty shelves in some places. Casarolo.

Starting point is 00:12:02 I'm not going to butcher this. Casaralazos or clapping for health workers and then general restrictions like not being able to move around. And so he is drawing a lot of comparisons from the current state of the U.S. to what happened in Venezuela leading up to and well into the crisis there with hyperinflation. And it is, it is worrying. Now, what's the answer? I don't know. Do you just let everybody starve while the economy is shut down?

Starting point is 00:12:34 Do you let everybody go back to work and let everybody get sick? Do you find a middle ground? There's no, there's no super, super easy answer. But looking at lines of hundreds of cars in Pittsburgh for the food bank, looking at essentially what amounts to breadlines in New York that look like the Great Depression. It's pretty wild to see how quickly everything collapsed. And in the face of it, if we take a look at the stock market today, the Dow is up 1,200 points. That's somewhere between 5.5 and 6% on the day.

Starting point is 00:13:15 The S&P is up 5.5%. The NASDAQ's up 5.5%. people are are running out of food and the stock markets are pumping because that appears to be what's important in the U.S. That appears to be their priority. And so the money printers are going wild. That money is being funneled into equities to keep people who own assets afloat and those at the bottom rungs are are more or less still screwed. They're the parents. there's government money coming, but who knows how long that's going to take. It doesn't seem to really be a priority. If you're going to bail out anybody, which again, I'm more of a free market

Starting point is 00:13:59 kind of person in a free market that's truly free where there's consequences for irresponsible actions, then people tend to prepare a little bit more, including companies, and they don't make such irresponsible over-leveraged idiotic calls because they're not expecting to get bailed out. There's an expectation of bailouts in the states now, and that president was sent even in the dot-com bubble, but more so in 2008-2009, where essentially the Fed just swooped in and was like, okay, who needs money? Who's screwed up? We'll fix it. Meanwhile, the average day-to-day person is pretty much on their fucking own and is just told, well, just go into debt. Just go into debt.

Starting point is 00:14:43 In Canada here, you're allowed to now defer your mortgage. The thing about that is you can defer it up to six months, but the interest keeps accumulating and gets tacked onto your mortgage in the long term. Of course the banks are going to want to do that. That's making them thousands of dollars. It's adding thousands of dollars to people's mortgages and they don't realize what's going on and they don't realize how badly they're going to screw themselves. Some people think they're taking advantage of it by doing this and saying, oh, yeah, I'll defer

Starting point is 00:15:13 the payments and I can keep that money. you're fucking yourself by doing that. The banks know this and is really meant for just people that can't, literally can't make people, make ends meet. But the banks don't care. They'll do it for whoever. Anyways, I'm going to leave that. But anyways, in summary, things are not okay, and it's not okay to pretend they're okay. That's what I'm getting at.

Starting point is 00:15:38 Especially if you're the head of the Federal Reserve and wherever the hell. Oh, God. Okay. on. More positive news. Yesterday was Coin Join Day, if you're unfamiliar. Coin Join Day. Coin Join is basically just breaking the links between you and your Bitcoin. This is important. It's important for privacy because if everybody can see the history of the coins that you own, you can become a target. They can want to steal your coins. So Wasabi had a new release yesterday for Coin Join Day. They celebrated it with the release of Wasabi version 1.1.11. This included multi-wallet support. So you could

Starting point is 00:16:14 have multiple wallets before, but you could only open up one at a time. No longer the case. Faster load times, you can now coin join into other wallets. So you can have your coin join wallet automatically mix into a hardware wallet to store for long term. So you don't need to manually do that process. They've got new icons, custom change addresses, RPC server, Bitcoin nots, so a whole bunch of different stuff. So kudos to the Wasabi wallet team for pumping that out for CoinJoin Day. I'll have a link to that down below for this tweet. You can update your client, or if you've never tried it before, you can always check it out. I highly recommend it.

Starting point is 00:16:50 Moving on, New Zealand financial regulators warn the public about profit Bitcoin, which is basically just a giant Ponzi scheme. We've seen plenty of these before. It's total trash. Take a listen to this. So this is a quote from their website. They say, profit Bitcoin members typically profit a minimum of $13,000 a day. Sounds reasonable. Our members work an average of 20 minutes.

Starting point is 00:17:14 a day or less because software handles the trading, the amount of work required is minimal. Yeah, that doesn't sound like a fucking scam. Of course, this is garbage. Of course, you know it's garbage because you're watching the show and you're already privy to a lot of this information. People who may not know it's garbage is some of your friends and family. And so I'm just calling on people that are watching this right now. Be aware that people may be falling into these traps. And why might they? You might say, well, people that fall for the. this are idiots, but not always because on the outside looking in, if you don't know a lot about Bitcoin and you look at the performance of Bitcoin over the past 11 years, how many million

Starting point is 00:17:55 percent is it up? Sounds ridiculous, but if it's still around, then it stands to a reason that this could be a real thing. And people don't know the difference. So I'm bestowing it upon you, well, and myself, to keep an eye out. And if you see people looking at stuff like this, Don't call them idiots. Try to educate them. Try to say, here's the reason that Bitcoin was a black swan event and what allowed it to grow in such incredible fashion. But there's no such thing as free money. And saying that you will profit a minimum of $13,000 daily is absolutely insane. Maybe point them to previous scams that happen like BitConnect or one coin and just say this is just another iteration. It will happen again. Anyways. Moving on, I like this headline from Coin Delacraft. No bailouts required Bitcoin difficulty to rise as hash rate recovers. So we saw the Bitcoin hash rate, the amount of mining, the amount of computing power on the Bitcoin network securing it dropped by 16% recently.

Starting point is 00:19:01 And that's because of a drop in price. A lot of Bitcoin miners, if they're running old equipment and they have expensive electricity, when Bitcoin drops below a certain price, it forces them to turn off the power. But what happens to that reward that they would have been reaping from having those miners on, it doesn't disappear, it just gets reallocated to the miners that were more efficient, that had cheaper power and more up-to-date machines. And so because of that, we see, yes, there was a drop in hash rate recently, but now the hash rate has expanded about 10%. So we went from pretty close to 140x a hash all the way down to around 80x. X-a-hash and now we're back up at 120 X-a-hash. So what happens is when the efficient miners reclaim those profits as their own, they can reinvest in more machines so that some of that

Starting point is 00:19:53 is probably happening. But also potentially, because the Bitcoin price has recovered from a low of sub-4K to over 7,000 now, some of those less efficient miners may have turned back on. So Bitcoin is very self-correcting in this stance. If you're inefficient and you can't keep up, well, we push you out and people who can run businesses with good profit margins are the ones that will succeed. So in that vein, let's look at what could potentially be happening with Bitcoin price with the coming halving. Those not privy, the having means the issuance of new coins. When Bitcoin started, 50 new coins every 10 minutes. That was cut in half in 2012 to 25 new coins every 10 minutes.

Starting point is 00:20:42 Again in 2016 to 12 and a half coins every 10 minutes. And it's about to be cut again in May. And so Plan B is a guy who did a model on the price of Bitcoin and how it relates to issuance, which hopefully is correct. But he was able to map out potentially where the price. of Bitcoin could go if the model holds, which is projecting over $100,000, well, around $100,000 Bitcoin within a year and a half, possibly more because the model does tend to overshoot, or the price of Bitcoin does tend to overshoot and then kind of elastic band back to the

Starting point is 00:21:22 median. Anyways, this was the tweet. He said, to maintain a $7,000 price tag of Bitcoin since October 2017, we must have had about $400 million of new cash inflow every month for the last 2.5 years. You put this together by saying 30 days times 24 hours a day, times six blocks an hour, times 12 and a half Bitcoin every 10 minutes, times $7,000 a Bitcoin. This is assuming that all trading is a zero-sum game. So after the halving, we only need half of that or $200 million per month to keep Bitcoin at its current price. If the $400 million on average of new capital inflow remains constant,

Starting point is 00:22:08 then the Bitcoin price should, in theory, go up. That's if that $400 million of capital inflow maintains. Now, obviously, it fluctuates. This is an average estimate over the past number of years here, but we will see. Now, with that, the block having is counting down. We're 36 days out. is coming. It cannot be stopped. This is just how Bitcoin works. In the face of the craziness, and I've said this so many times, especially since the craziness we've seen in the markets, regardless, Bitcoin does not need bailouts. It will reduce supply of new coins in 36 days. And that is coming. And if the inflow of new capital remains constant, then the price has to go up. because there are less coins available.

Starting point is 00:23:03 And in order to get your hands on one, you may need to bid up the price to obtain them. So we'll see. We'll see how well-planned B's model maps out. We'll see how it goes. I'm looking at the price of Bitcoin now. We are at, at the time of recording this, we're at $7,250,

Starting point is 00:23:20 which seems to be going up and up. As of late, we have rebounded quite a bit from the sub-4,000 dollar low that we saw with the dump in, equities across the board. And yeah, we'll see, but it's, it's, it's looking good. We've recovered quite a bit. And so I'm, I'm feeling good.

Starting point is 00:23:39 But who knows, we could have those dips. You got to have strong hands. You got to huddle if you're, if you're in this thing, I suppose. If you're freaked out by those dips, then this might not be the place for you. With that, I'm going to wrap up. Thank you so much for watching you guys. As always, if you're on YouTube, do hit like, subscribe, and share. If you are listening to this audio only on the.

Starting point is 00:24:01 podcast, then please do share that on your social media. And of course, do drop a review because those reviews really help with visibility. Outside of that, if you want to help with the show in another way, you can hit up the sponsors. I mentioned down below, that was Leden and Coinberry and Wasabi Wallet. Those are all down below, and a couple of those have some deals for you. And finally, if you really liked what you saw, you can always drop me a Lightning Network tip at my tippin.combe page. That's tippin.combe slash at BTC sessions. And with that, I am out, Have a wonderful evening, and I will see you next time for your daily session.

BTC Sessions - First US Bank Fails, Fed Says Economy Is Fine, Coinjoin Day, Bitcoin Hashrate Increase EP040

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