beehiiv-import

⚡Federal Reserve Paper Suggests Bitcoin Should Be Taxed or Banned💱

Croxroad

22 Oct 2024 — 4 min read

In partnership with

VaultCraft V2 secures $100M+ BTC from Matrixport

VaultCraft launches V2 in partnership with Safe, lands $100M+ in Bitcoin

Visit VaultCraft

☕️ GM Dear Plebs!

Here is Crox Road, your daily dose of orange pill that will turn you into a Bitcoin Maxi.

The menu for today:

👺 Federal Reserve Research Warns

A recent research paper by the Federal Reserve Bank of Minneapolis has suggested that assets like Bitcoin should either be taxed or banned to help governments maintain permanent deficits. In a working paper released on October 17, the Minneapolis Fed argued that Bitcoin creates challenges for policy implementation, especially in economies where governments try to sustain nominal debt. The paper explains that Bitcoin introduces a “balanced budget trap,” forcing the government to balance its budget, an outcome undesirable for those aiming to sustain permanent deficits.

The researchers classified Bitcoin as a fixed-supply "private-sector security" without real resource claims, advocating for a tax or outright ban to resolve the issue. According to their analysis, legal prohibition or taxation of Bitcoin could allow governments to continue running deficits indefinitely. This idea ties into the broader context of the U.S. national debt, which has reached $35.7 trillion, with the primary deficit for fiscal 2024 standing at $1.8 trillion. Interest costs for Treasury debt, fueled by rising rates, have been a significant factor in increasing the deficit, as reported by Reuters.

Some experts in the digital asset space have criticised the paper, seeing it as part of a broader attack on Bitcoin. Matthew Sigel, head of digital asset research at VanEck, suggested that the Federal Reserve's stance mirrors that of the European Central Bank, which also advocates for regulation or prohibition of Bitcoin. In an interesting twist, Messari co-founder Dan McArdle highlighted a 1996 Minneapolis Fed paper that seemingly argued the case for Bitcoin, years before it existed. Despite these criticisms, the push from central banks to curb Bitcoin’s growth continues, driven by concerns over its impact on traditional economic models.

🙀 Bitcoin Holdings Double in 10 Months

CryptoQuant analyst Burak Kesmeci’s recent report highlights a remarkable rise in Bitcoin accumulation addresses, which have now exceeded 2.9 million BTC. These addresses, characterised by steady increases in holdings without any outflows, have doubled their Bitcoin reserves within just 10 months. Despite market uncertainty, long-term investors—both individual and institutional—are demonstrating significant confidence in Bitcoin’s future by continuing to accumulate. This trend indicates a broader market sentiment where these holders remain unfazed by short-term volatility and are fully committed to a long-term “HODL” strategy.

Kesmeci’s analysis delves into the unique nature of these accumulation addresses, which have made at least two transfers and have remained active for the past seven years. Unlike typical investors, these addresses have never sold any Bitcoin, representing the epitome of long-term investment strategies. In 2018, these addresses held just 100,000 BTC, but by the 2021 bull run, the figure had grown to 700,000 BTC. The rapid accumulation seen in 2024 is unprecedented, suggesting that these holders are deeply confident in Bitcoin’s long-term value, with some wondering what insights these investors may have that others in the market might not.

Looking ahead, Kesmeci predicts that by the end of 2024, these addresses could hold over 3 million BTC, potentially valued at more than $210 billion if Bitcoin’s price reaches $70,000. This accumulation could have a significant impact on Bitcoin’s market, reducing selling pressure and potentially driving a sustained price rally. The growing influence of these long-term holders, whose collective value could surpass major corporations like General Electric, underscores the increasing strength of Bitcoin as a key financial asset.

⏮️ The last Bitcoin

The last Bitcoin is expected to be mined in the year 2140, due to Bitcoin's halving process, which reduces the mining reward approximately every four years. Once the final Bitcoin is mined, no new Bitcoins will enter circulation, capping the total supply at 21 million. After this point, miners will rely solely on transaction fees for revenue, as the block rewards will no longer exist. This gradual reduction in supply is designed to ensure Bitcoin's scarcity, potentially boosting its long-term value as demand grows.

🤣 Crox Road Memes

“Bitcoin is not a currency for a government; it is a global currency for the people.”

Step into the world of cryptocurrency with the Bitcoin Genesis Mug, a bold tribute to the revolutionary moment that started it all. This exquisite piece of ceramic craftsmanship is more than just a mug; it's a symbol of the pioneering spirit that launched Bitcoin into the stratosphere. Every sip from this elegant vessel is a nod to the audacious vision of Satoshi Nakamoto and the birth of a financial revolution that continues to reshape the world.