Digital assets climbed the wall of worry surpassing a market cap of $3 trillion only just last November and that is just a small taste of things to come.
It was only at $14 billion just five years before that and sure, it’s retraced somewhat back to around $2 trillion in market cap now, but the proof is in the pudding.
When conditions align yet again in a quantitative easing type of way, expect the price of Bitcoin to take off.
Imagine how well Bitcoin is doing in an aggressive tightening cycle, stubbornly staying over $40,000 per BTC, it has proved its worth as a store of value.
US Treasury Secretary Janet Yellen dived into the topic of cryptocurrency at a speech the other day and much of what she talked about was net positive for the asset.
This will go a long way to legitimizing the digital token because this level of power broker also has the clout and authority to shut down an industry like cryptocurrency.
Yellen referenced the onset of the Internet in the early 1990s as an analogy for crypto, Yellen said while digital assets may be relatively new, they are part of the larger trend of the digitization of finance that has been in the making for decades.
I wouldn’t quite lump in crypto with the rest of digital finance, it’s quite a different animal yet if that is what it takes for her to understand what it is, then more power to her.
Yellen believes the development of digital technology can help create a more efficient payment system with instantaneous transactions and lower costs.
She also mentioned sizing up the risks, not technologies, and I would argue that the risk of not greenlighting crypto at the Federal level means that a country like Russia could forge ahead in crypto development.
What I liked about Yellen was she began to normalize the currency in terms of describing it as the next piece of financial development in a long history of digital progress.
Almost nothing she said felt like she would suddenly make a u-turn and squash the whole process.
She again pulled out the “caution” card which is really a central feature of bureaucrats and ensured the public that there won’t be any snap decisions made any time soon.
I am still not sure if this will be a kick the can down the road type of phenomenon, but she has left that possibility open as well.
What she plans to do is to sit back and allow the technology and the risk levels to emerge then to prove to her whether its ready or not so taking a passive role in this matter also means that the government will treat this as a slow play type of deal.
The last issue she brought up is the systemic risk aspect of cryptocurrency and if this asset could withstand widespread stress.
The Federal government will need to develop certain processes and mechanisms to solve contagion in the markets.
If one firm fails, then surviving a fatal blow to the overarching system is paramount.
Unfortunately, I believe Yellen is not suitable for safeguarding and promoting cryptocurrency.
Although she didn’t do anything overt to shut down the progress of crypto, it seems like she is biding her time in office until someone younger can come in who actually knows a thing or 2 about crypto.
It’s painfully obvious when someone has a scant idea of how crypto functions and Yellen is one of these people.
She simple is a bureaucrat placed in the Federal government at this particular time when crypto is developing wildly and she must answer to it because her position requires her to do so.
Only the real crypto people know what is going on.
The bar has been set naturally low for her and she succeeded.
In the meantime, crypto will keep developing and the price of Bitcoin will grow parallel to the inertia in Washington.
