According to analysts, the announcement by the US central bank that it will continue to print huge amounts of money in the coming years will look like advertising for Bitcoin Bank. That could further heat up the market for the king of cryptocurrencies, it said.

The last few days have brought exciting things. On December 16, the Federal Reserve (simplified: the US central bank, Fed) declared in a press release that it would continue to support the US economy in the coming years. Specifically, they want to buy US government bonds for $ 80 billion a month. Another $ 40 billion is expected to be spent each month buying up mortgage-backed securities. This is to be maintained until the employment targets and inflation of 2 percent are stable.

How long will the Fed support the US economy?

As things stand at present, it may take two to three years to achieve this goal. That would mean the Fed is pumping at least $ 1,440 billion, or over $ 1.4 trillion, into the US economy every year. That would be about 20 percent of total US tax revenue.

Such an expansion of the money supply could lead to inflation, although some experts deny it. In any case, there is a risk of a loss of confidence in the purchasing power of the US dollar.

Mark Haefele, Chief Investment Officer at UBS Global Wealth Management told Reuters :

We see further weakness [in the US dollar].

What impact does the announcement have on Bitcoin?

The first effects of the announcement were already evident yesterday, when Bitcoin (BTC) reached a new all-time high seemingly effortlessly. The price rose to well over 23,400 US dollars per Bitcoin.

Bitcoin has the advantage that it is limited to 21 million pieces and is therefore not subject to inflation. In addition, most classic asset types are heavily overbought (in Germany, for example, real estate), so that many investors try to switch to other assets.

Vishnu Varathan, the chief economist of Mizuho Singapore, one of the largest financial services companies in the world, told Reuters that he expected the Bitcoin price to rise further. One of the reasons for this is the Fed’s US monetary policy.

What else speaks for Bitcoin?

Meanwhile, more and more institutional investors are realizing the value of Bitcoin and other cryptocurrencies. Investments by the major financial service providers from the USA, Europe, Great Britain and Japan could drive the Bitcoin price even further. The Bitcoin market currently has a capitalization of USD 422 billion. If the big financial service providers invest only 1 percent of their funds in Bitcoin, 600 billion US dollars could be added.

Its XRP burns its hands – One of the main problems with XRP is that Ripple Labs and its founders hold astronomical amounts of it. This has become all the more problematic since Jed McCaleb, former founder of Ripple, decided to get rid of his tokens as quickly as possible.

Billions of XRP to spare

In July 2013, Jed McCaleb definitively slammed the door of Ripple (then called OpenCoin ), of which he was however one of the main initiators.

Since then, although he has moved on to his new cryptocurrency project – Stellar (XLM), launched in 2014 – Jed McCaleb has nonetheless retained a large indirect influence on Ripple’s XRP .

Indeed, when he left his previous project, due to differing views, he took away no less than 9.5 billion XRP , or 9.5% of all existing XRP .

After a lengthy legal battle that ended in February 2016, Ripple Labs and Jed McCaled managed to come to an agreement on how to liquidate their XRP which, from the start, expressed a desire to resell them.

The amount of XRP that the former founder of Ripple can resell depends on the global trading volumes of this interbank token. And as these volumes have increased … guess what!

Jed McCaleb steps up XRP liquidation

Stellar’s current CTO can resell up to 1.5% of the global XRP trading volume every day . If this represented “only” 2 million XRP per day last May, the pace has accelerated sharply in recent days.

As anyone can see from Jed McCaleb’s XRP address (thanks to the blockchain transparency ), his liquidation saw a first sharp increase since late last month. Eh yes ! Since November 29, our friend has gone from less than 4 million XRP resold every day to over 9.9 million XRP , or almost $ 6 million.

But since December 6 , the “dump machine” has been racing again . Jed McCaleb has effectively disposed of over 29.57 million XRP in each of the past 2 days , or around $ 35.5 million in tokens resold within 24 hours.

Knowing that there are still nearly 3.7 billion XRP to get rid of, it may end up hurting a lot at this rate, even through OTC transactions (over-the-counter) which nevertheless influence a lot. minus the prices compared to trading on crypto exchanges.

While there is an uncertain future for the development of the digital currency under the presidency of Joe Biden, China is leading the race.

The world is in the throes of a financial war and China is winning. China’s digital Yuan, also known as digital currency electronic payment or DCEP, will soon be used worldwide. The People’s Bank of China is one of the most advanced central banks in the world. For that reason, it has been advancing on the digital currency front, while the United States Federal Reserve appears not to have done so.

And now that Donald Trump and his “United States first” policy have been defeated, although the count is still on and court cases on the results are pending, China’s supremacy in the area of digital currency is assured.

Joe Biden has not outlined a clear technology policy, let alone a digital currency policy. This will ensure China the opportunity to increase its leadership in the digital currency race. Maintaining the US position as a global superpower is nowhere on Biden’s agenda. In 2015, as Vice President, Biden once made a toast to China:

“To the hope and expectation that 50 years from now our great-grandchildren will look back and tell the beautiful story we wrote together.

In 1979, Biden traveled to China as a junior senator after President Richard Nixon normalized U.S.-China relations. During his visit to Sichuan University as Barack Obama’s vice president in 2011, he said:

“I believed in 1979 and said so and I believe now that a rising China is a positive development, not only for the people of China, but for the United States and the world at large. A rising China will drive economic growth and prosperity and bring to the fore a new partner with whom we can tackle global challenges together.

Meanwhile, China is moving forward, launching the world’s first digital currency.

According to the announcements, the Biden and Kamala Harris administration is focusing on the coronavirus, racial equality and climate change. In their foreign policy and leadership plan, called “The Power of America’s Example: Biden’s Plan to Lead the Democratic World in Meeting the Challenges of the 21st Century”, the word “digital” does not appear once. Moreover, Biden has longstanding ties with China and has long been an advocate of its industrialisation and growth into a world leader. When asked by a National Public Radio journalist if he, as president, would maintain Trump’s tariffs on China, Biden replied with a resounding “No”.

The Chinese yuan through the DCEP will become the dominant world currency. The DCEP will not only be successful because of the forward-looking PBoC, but also because of the fact that over 12 million Chinese live outside China; in fact 2.5 million live in the US. They could adopt the digital currency and spread the yuan worldwide.

With their help, the Chinese Yuan can become an international currency Bitcoin Profit. If the Chinese Yuan is used by these people all over the world, the Chinese currency can surpass US monetary sovereignty.

The current situation has been made possible by the COVID-19 pandemic, which has increased dependence on digital services. As tensions rise in the United States, China could divert global influence. While the Federal Reserve has experimented with distributed accounting platforms to understand their potential benefits and trade-offs, it has apparently not made a final decision to adopt such a currency.

Federal Reserve Chairman Jerome Powell has said that the US government is not particularly concerned about speed when it comes to developing a digital central bank currency. Morgan Creek Digital co-founder Anthony Pompliano sounded the alarm on this neglected approach.

Powell explained the slow efforts of the United States:

“We have not made the decision to issue a CBDC and we believe there is still a lot of work to be done.

Powell suggested that developing a CBDC properly was more important than winning the digital currency race. Meanwhile, China is making progress. Pompliano sees this as an existential threat to the US dollar. “They are talking about, like, maybe we will create one in the next few years,” Pompliano said of Powell’s recent comments on CBDCs. “This is not a matter of the next few years. He added:

“This is something that is happening right now, and if they don’t act, the United States will fall far behind China because it all comes down to accessibility.

Pompliano said that the accessibility of a digital trust currency will determine the winner in this new frontier of financial technology. “If I’m sitting somewhere in the world and I can use the internet connection and I want a global currency, can I get a yuan, or can I get the dollar?

Pomp is right. The relevance of the US dollar is at stake. But the time is late, perhaps too late.