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HEALTH, WEALTH, AND HAPPINESS

March 15, 2022

This Thursday 3/17 at 6:30 pm ET: Legendary bitcoin programmer Jimmy Song joins us to answer your hardest questions about bitcoin.

This online event is free and open to all. Click here to RSVP, which will give you the link to attend, and let you submit a bitcoin question for Jimmy.

Stablecoins Shine as Safe Haven Crypto Assets (Coin Metrics): When times get tough, investors flock to gold. Today, they're flocking to gold-backed stablecoins instead.

This report shows that the number of users holding Paxos Gold (the cryptocurrency backed 100% by gold reserves) has rapidly increased, from 6K to almost 16K, since the beginning of the year.

Investor takeaway: If market uncertainty continues to increase, expect the price of PAXG (and thus the underlying gold) to increase as well. See charts below.

Here's a look at the number of users, and the overall market capitalization, of Paxos Gold (PAXG), showing crypto investors moving into gold since the conflict in Russia and Ukraine:

Courtesy Coin Metrics

Think of PAXG as a stablecoin that is "wrapping" gold in a crypto token. But it's easier to hold than gold coins, and more convenient for investors.

Investor takeaway: In times of economic and political uncertainty, gold is the traditional "safe haven" asset. Consider further diversifying a bit of your crypto into gold-backed stablecoins.

Two millennia later, we see the Federal Reserve embark on its two-day Federal Open Market Committee meeting. 

Markets have largely priced in a 25-basis-point increase in the federal funds rate. 

Two years ago, the central bank cut rates close to zero and launched an open-ended, liquidity boosting, asset-purchasing program to counter the adverse economic effects of the coronavirus pandemic.

According to figures provided by the U.S. Department of Treasury's website Fiscal Data, the nation's total public debt is over $30 trillion. 

Producer price index

The Fed received more impetus to raise rates with the February producer price index (PPI). According to the Bureau of Labor Statistics, the PPI “measures the average change over time in the selling prices received by domestic producers of goods and services."

"PPIs measure price change from the perspective of the seller," the government organization added. 

The Fed uses the PPI for a different perspective on inflation from the personal consumption expenditures index (PCE). The PPI reflects the movement of price changes before they reach consumers, and it is viewed as an earlier predictor of inflation than the PCE.

Looking back to the last time the Fed raised rates in 2016, the mood was quite different. Treasury Secretary Janet Yellen, who was Fed chair at the time, said the following: 

"So let me say that our decision to raise rates is—should certainly be understood as a reflection of the confidence we have in the progress the economy has made and our judgment that that progress will continue." 

While markets are not saying “finally” today as they did in 2016, they do seem to be in good spirits. In morning trade, the Cboe Volatility Index was down almost 3%, the Dow Jones Industrial Average was in the green, and oil was trading below $100. However, gold was trading lower, as was bitcoin. 

And what would the Ides of March be without a betrayal?

Today, The Wall Street Journal reported, citing individuals familiar with the situation, that Saudi Arabia has been discussing the possibility of denominating a portion of the oil sales it makes to China in the Asian nation's native currency. 

The kingdom exported over six million barrels per day of crude in 2020, all based in dollars, and a move to anything outside the U.S. dollar would be a shock to the currency. Saudi Arabia has traded oil solely in dollars since brokering an agreement with the Nixon administration in the 1970s. 

These discussions have been taking place intermittently for years, but recently, Saudi Arabia has been strengthening its ties with China—including extending an invite to Chinese President Xi Jinping to visit the kingdom. A move to the yuan—even a minor one—could provide a basis for other exporters to be priced outside the U.S. dollar.

I appreciate all your likes, follows and comments! As always, thank you for reading. 

Make it a great day.

Evamarie Augustine

Market Analyst

Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.

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