Banks are threatened by Bitcoin

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  • Nicholas Merten says Bitcoin is facing a watershed moment this week ahead of the CPI report release.
  • Circle’s CEO says traditional financial institutions feel threatened by the idea of ​​full-reserve banking systems.

Well-known YouTuber and crypto analyst Nicholas Merten has suggested that the release of the Consumer Price Index (CPI) report later this week would have a massive effect on Bitcoin’s price. In his latest video, Merten told his over 500,000 followers that this week was a breakthrough time for the leading digital asset. He pointed out that the previous CPI report caused the price of Bitcoin to drop by around 10% in 24 hours.

The release of the CPI report is an important event as it has had a significant impact on the price of Bitcoin in the past. Additionally, the crypto market (including Bitcoin) and the broader stock market are trading around their lows during this bearish season. However, a positive surprise in the CPI report could lead to bullish financial markets. But, if the reverse is the case, then crypto and stock prices could decline to lower levels.

Merten claims that technical indicators suggest another downtrend for Bitcoin, with prices falling further. The YouTuber added that the Fed is unlikely to change its hawkish stance until inflation drops significantly and there is a weakening or easing in the labor market.

He said the Fed would only change its hawkish stance when inflation hits a 2% annualized target, which is their key target. Merten added that the Fed would also like to see a weaker trend in the labor market (fewer job offers).

A full-reserve banking system threatens traditional financial institutions – Jeremy Allaire

Meanwhile, Circle CEO Jeremy Allaire said JPMorgan and other traditional financial institutions feel threatened by the idea of ​​a full reserve banking system. Allaire made these claims in a recent interview with Shark Tank investor Kevin O’Leary. He added that banks’ system for moving and tracking money is outdated and less efficient than blockchain technology.

According to him, blockchain infrastructure is more open, publicly available, auditable, real-time, accessible and transparent. Allaire claims that major financial institutions like JPMorgan have yet to embrace stablecoins and blockchain technology because it is a threat to them.

The CEO of Circle explains that a stablecoin payout is like short-term US Treasuries and cash in the Fed reserve. He also said that stablecoins could be considered the safest digital dollar in the world. In contrast, a deposit in a commercial bank such as JPMorgan is a loan to the bank, which it can use to earn more money by lending.

Allaire added that a full reserve dollar banking and payment system is an idea whose time has come. However, traditional institutions feel threatened because they base their payment systems on fractional-reserve lending. In August 2021, Circle (the company behind the stablecoin USDC) disclosed its intention to become a full-reserve commercial bank under the control of agencies controlled by the US Treasury Department and the Federal Reserve.

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