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Why The United States is Likely to be One of The Most Bitcoin Friendly Jurisdictions

By the end of 2022, one-third of Americans may hold bitcoin. The US government will try to satisfy this voting group by enacting pro-bitcoin policies.

A BITCOIN VALUATION MODEL

Several weeks ago, Log Scale started a very intriguing Twitter thread. He lays out the arguments he made there in the first section of this podcast. Over the last year or so, corporate treasuries diversifying into bitcoin has been a big source of optimism in the Bitcoin ecosystem, but according to Log Scale, they account for only 2% of all investable wealth in the globe. There are signs that the other $500 trillion is taking a look at bitcoin as well.

Estimates of total investable wealth can be found from a variety of sources. In this episode, Log Scale mentions Credit Suisse, and in his tweet thread, he mentions McKinsey. Both estimate total worldwide investable wealth to be in the multitrillions of dollars.

Of course, every dollar spent on bitcoin will not have a one-to-one impact on the market capitalization of bitcoin. The multiplier is not a constant quantity; Bank of America estimates it as 107 times, but Log Scale employs three times in his conservative valuation model. His model now requires an estimate of the quantity of money that will enter bitcoin.

Log Scale bases this on Brian Anderson’s analysis of Ric Edelman’s bitcoin estimates for 2022. Edelman is the founder of Edelman Financial Engines and one of the most renowned thought leaders in the financial advisory business, according to Anderson. Almost all of Edelman’s predictions from 2021 came true, and he has a few significant ones this year. According to him, by the end of the year, (1) one-third of Americans will possess bitcoin, and (2) financial experts will propose allocating between 3% and 5% of one’s portfolio to bitcoin.

With those figures, Log Scale’s valuation model is as simple as typing in the numbers, resulting in a prediction that the bitcoin market cap will rise by $11 trillion this year.

GENSLER AND WHY THE UNITED STATES WILL BE BITCOIN FRIENDLY

The following segment of the podcast may be contentious. We spend some time talking about Gary Gensler and the likely reasons for his appointment as chairman of the United States Securities and Exchange Commission (SEC) at such a crucial time, with such a strong pro-bitcoin slant.

The majority of people believe that the US government will combat Bitcoin adoption, but Log Scale demonstrates why this will be futile. Bitcoin’s incentives work the same way on regulators as they do on everyone else. As an aside, we can witness the ineffectiveness of government regulation in Ukraine and Russia right now, with favorable bitcoin policies resulting from the ownership of large amounts of bitcoin by wealthy and powerful people in these nations.

It’s simple enough for the US government to buy bitcoin and back the dollar if it’s concerned about losing its alleged currency advantage. It is a simple choice between losing the dollar’s worldwide dominance and purchasing bitcoin. In this case, there is effectively no downside for the US government. The alternative is for the US government to go after bitcoin and impose sanctions, which would be politically unpopular with the estimated one-third of Americans who possess bitcoin by the end of the year.

Back to Gensler, according to Log Scale, he is a big Satoshi fan and taught a course on Bitcoin and blockchain technology at MIT before becoming SEC chairman. Gensler’s one distinct advantage over other candidates for the SEC was that he is a Bitcoin specialist and enthusiast.

QUESTIONS AND ANSWERS ON POWELL AND THE FEDERAL RESERVE POLICY

Log Scale and CK had to depart before the end of the show, but there were still a few minutes on the livestream segment before the next guest came on. This provided me with an excellent opportunity to respond to questions from the Livestream host, Q, regarding Powell, the Federal Reserve’s expected policy path this year, and other central banking themes.

People believe the Fed will crash the market by raising interest rates, which is a constant issue in the queries I get from viewers and listeners. The powerful revelation is that the markets, not the Fed, are in charge. Their role is to forecast where the market will be in six to twelve months, and sometimes even 24 months, and then position a narrative for monetary policy to anticipate that movement. They can only try to influence market sentiment.

The Fed would not require such specialized and exact wording if their monetary tools truly operated as they are supposed to, through concrete quantitative impacts, and there would be less misunderstanding about the path of inflation or the economy. The Fed may just turn the knobs to achieve the desired economy. That isn’t the case at all.

Listen to the conclusion for additional truth bombs about the Fed’s plans for 2022.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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