Cryptocurrency 18 minutes ago (Oct 10, 2022 02:00PM ET)
Shutdown of the Fed’s “Money Printer” Leaves Bitcoiners in a Loop
- A famous crypto meme said Fed’s “created” an endless supply of dollars.
- The meme is as a result of a dramatic decrease in the money supply, M2.
- The price of bitcoin has decreased by more than 50% this year.
During Covid, one of the popular crypto memes revolved around the fact that the Federal Reserve was “producing” an unending supply of dollars which in Twitter parlance was articulated as “money printer go brrr,” referring to the sound of the machine printing money.
However, the unending supply of dollars was said to have increased the value of , which has a cap on the number of tokens.
The creation of Bitcoin occurred during the 2008 financial crisis as a response to what was perceived as widespread money printing. Due to its scarcity, its value was believed to hold considerably better when central banks or governments implemented loose monetary and fiscal policies.
But with the central bank hiking interest rates and the most significant digital token’s price dropping by more than 50% this year, the proverbial printer has now been turned off, and the typical investor no longer cares if there is a finite supply of Bitcoin.
A sharp decline in the money supply, or M2, a gauge of the volume of money in the US banking system, led to the meme’s extinction.
Due to a decline in the amount of money in the US financial system, the price of bitcoin has fallen by more than 50% this year.
According to Art Hogan, Chief Market Strategist at B. Riley: “The logic would be that with the money supply, or M2, coming down, there’s less money floating around that could find its way into risk assets, and cryptocurrencies have proven to be risk assets over the last 12-18 months.”
Furthermore, he added, “You’d suspect that would be a negative for some of the riskier edges of the investment universe.”
Recently, the Federal Reserve Bank of St. Louis estimated that the M2 money supply fell by $68 billion between January and July of this year.
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