[ad_1]
Original Caption: Who Pecked Bitcoin In Response To The Words Of The US Secretary Of The Treasury
Bitcoin, which rushed all the way, was drenched in blood after a word from US Treasury Secretary Yellen, plummeting 16%. Strong speculation, high risk, active illegal transactions … Yellen nailed it. This is not surprising. After all, there is a calm voice accompanying the rapid rise. High yields on US bonds have made risky assets nowhere to escape. Even Tesla CEO Musk, who has always been chanting multiple bitcoins, has started to doubt Up. Of course, Yellen not only hit Bitcoin’s weak spots, corporate taxes will also come.
“Highly speculative assets”
Bitcoin scared all night. On the night of February 22, the price of Bitcoin, which was approaching US $ 60,000, suddenly fell dramatically. 10 minutes before the opening of US stocks on Monday, Bitcoin fell more than US $ 3,000 in 5 minutes and it quickly fell to 48,000. after falling below the US $ 50,000 mark. Below the US dollar, it fell more than 17% in 24 hours, and fell to $ 47,668 that night.
By the 23rd, the decline continued. On the afternoon of the same day, the price of Bitcoin broke down to $ 45,000 and then rallied in shock. At 20 o’clock on the 23rd Beijing time, the price of Bitcoin was reported at $ 45,900, a drop of more than 16% in 24 hours. Furthermore, in 24 hours, a total of 29.9 billion yuan in digital currency contracts were sold, involving more than 490,000 people.
Yellen may have “contributed to this round of Bitcoin’s decline.” On February 22 local time, Yellen took part in an online event hosted by the New York Times and brought up her views on US debt, Bitcoin, and corporate taxes.
Regarding Bitcoin, Yellen stated bluntly that using Bitcoin for transactions is an “extremely inefficient way” and the energy consumed to process these transactions is staggering. Bitcoin is often used for illegal financing and is inefficient. Bitcoin still has major issues in terms of legality and stability. Therefore, Yellen does not believe that Bitcoin can be widely used as a transaction mechanism.
“Bitcoin is still a highly speculative asset. Digital currency can provide a faster and cheaper payment experience, but there are many issues that need to be studied, including consumer protection and the fight against money laundering,” Yellen said.
Before the sudden crash that day, after a period of rapid rise in Bitcoin, the price has reached unprecedented levels. Data shows that since the beginning of this year, the price of Bitcoin has risen 86.96%, and last year’s increase is as high as 446.36%. The highest point on February 21 reached 57,492.9 US dollars.
It is not uncommon for Bitcoin prices to rise and fall sharply. In 2017, in the second Bitcoin bull market, its price once rose to almost $ 20,000, but in the second year after that, its price fell 80%.
Before Yellen, Musk, who has always been a loyal supporter, also had doubts about the rapid rise of Bitcoin. On the day the price rose more than $ 57,000, Musk said on Twitter: “The currency is just data, which saves us the hassles of bartering. This data, like all data, has lags and errors. So, Bitcoin and Ethereum appears to be very high. “
It seems that the Bitcoin throttling is not surprising when the big boys voiced their opinions, after all, the former represents US regulators, while the latter implies current institutional investment attitudes. Nikolaos Panigirtzoglou, a strategist at JPMorgan Chase, has also stated that Bitcoin has risen roughly twice in the last three months, but that the liquidity of the Bitcoin market has deteriorated.
The possibility of a digital dollar
“It goes without saying that new investors in Bitcoin should be prepared for big swings. The price may plummet, just like the previous surge,” said Markets.com chief analyst Neil Wilson.
Liu Xiangdong, deputy director of the Economic Research Department of the China International Economic Exchange Center, analyzed that risk assets like Bitcoin, if there is no oversight, there will definitely be some speculation. Now that this form of currency already exists, then for the United States government. The question is how to incorporate it into the formal regulatory framework.
Liu Xiangdong further stated: “It is impossible for countries to allow another set of monetary systems in addition to fiat currencies, which will reduce the status and credit of fiat currencies. Yellen’s statement may also imply that the government will avoid excessive speculation. of Bitcoin and future market manipulation., Leading cryptocurrency in a more formalized direction. “
In fact, even if prices soar all the way, Bitcoin still seems like a scourge in the eyes of regulators in various countries. Similar to Yellen’s attitude, the president of the European Central Bank, Christina Lagarde, is also pessimistic about Bitcoin.
On February 10, Lagarde stated that he did not consider Bitcoin to be a real currency and that central banks would not be holding it as a reserve currency soon. In early January, he also called for more regulation of cryptocurrencies, saying that Bitcoin has been used in some “interesting businesses,” including money laundering.
In fact, although Bitcoin has been bombarded, countries are somewhat relaxed when it comes to digital currencies. Lagarde has stated that he hopes to make the digital euro a reality within five years.
Compared to Europe, Japan has been ready to move for a long time. The top three commercial banks and more than 30 companies have jointly established a digital currency research group. The Bank of Japan plans to start empirical digital currency experiments in spring 2021. In South Korea, the central bank governor Li Juyeol also stated that the central bank digital currency will build a test system in a virtual environment of according to the established plan and will perform the related tests.
In this conversation, Yellen pointed out that the digital dollar issued by the Federal Reserve can help solve the obstacles to realizing inclusive finance for low-income families in the United States. “Too many Americans don’t have convenient bank accounts and payment systems. . I think digital dollars will help in this regard. This can lead to faster, safer and cheaper payments, which I think is an important goal. “
However, like the concerns about Bitcoin, Yellen also added that there are “many things to consider” before the possible launch of a digital dollar, such as how regulators will “handle money laundering and illegal financing” and how the dollar digital The influence of banks and the Federal Reserve is questionable.
Gradual increase in corporation tax
In this statement, Bitcoin is the focus, but in addition to Bitcoin, Yellen, the Secretary of the Treasury of the United States, also revealed some future trends in fiscal policy.
Take the issue of high-profile corporate taxes, for example. Yellen said President Biden hopes to increase the corporate tax from 21% to 28% to support the long-term economic reconstruction plan and ensure debt sustainability. In addition, Yellen also said that raising the capital gains tax is “worth considering.” The impact of the financial transaction tax on ordinary investors will be carefully studied, but at the same time the wealth tax will be avoided.
“In fact, regarding the corporate tax increase, in July last year, the Democratic Party program expressed its will.” Yang Shuiqing, an assistant researcher at the Institute of American Studies of the Chinese Academy of Social Sciences, analyzed that the Trump administration had previously cut corporate tax from 35% to 21%. At the hearing on January 19 this year, Yellen said that tax increases will not be increased until the economy has fully recovered. At the time, the market speculated that the tax increases could not be increased before 2022. But last week, the wind direction has changed. Yellen’s statement is that any tax increases the government seeks to help pay for the huge expenses will be phased in or introduced later in 2021.
Yang Shuiqing pointed out that the scope of corporate tax collection is relatively large, except for some special industries that can be reduced or exempted. The current change in Yellen’s attitude must have something to do with America’s tight finances. To recover the economy, the Biden administration requires money for many projects, and unlimited printing of money is also impossible.
In Yang Shuiqing’s view, in addition to raising corporate tax, the US government may also make a capital gains tax scandal. Now, this tax is below 20% and it is not ruled out that it may be increased to a level that matches the tax in the future.
It is true that debt is an issue the United States cannot ignore today, but the $ 1.9 trillion stimulus plan is also at stake and must be issued. Liu Xiangdong pointed out that the Democratic Party has always advocated for government actions, but all spending requires money, but in the quantitative easing situation, the current debt scale of the United States is very high, so the tax increases are a very likely option.
However, although he advocated tax increases on the one hand, on the other hand, even with a high debt, Yellen did not give up the possibility of continuing to launch an economic stimulus plan. Yellen said that in today’s low interest rate environment, the debt-to-GDP ratio, a traditional indicator of debt assessment, is no longer important. The most important indicator is the interest-to-GDP ratio of the federal debt, which is currently about 2%, not higher than the 2007 level. Yellen said the cost of debt can be partially recovered through stronger economic growth.
According to Yang Shuiqing’s analysis, the current US debt-to-GDP ratio is about 120%. There is an opinion in the market that as long as tax revenues can pay the interest generated by the debt, they can continue to expand. The current US interest rate is negative so interest earns very little so you can gradually increase taxes to offset tax revenue. Of course, whether or not to raise taxes still have to wait for economic recovery. Compared to the growth rate of the economic recovery, Yellen’s speech is more about employment indicators. If the pre-epidemic level is reached, tax increases can be promoted Beijing Business Daily Reporter Tao Feng Tang Yitian
