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When you have the Minneapolis Federal Reserve and the European Central Bank (ECB) castigating Bitcoin with near-synchronicity, odds are that it is a coordinated attack. Yet, some of the hallmark characteristics of Bitcoin that these monetarists so vehemently attack are, confoundingly, the ones most cherished by Bitcoin maximalists, hinting towards a fundamental chasm that refuses to yield to any attempt at reconciliation.
Government-Backed Papers On Bitcoin
1/ This new paper is a true declaration of war: the ECB claims that early #bitcoin adopters steal economic value from latecomers. I strongly believe authorities will use this luddite argument to enact harsh taxes or bans. Check 🧵 for why: pic.twitter.com/qg31YenTSC
— Tuur Demeester (@TuurDemeester) October 19, 2024
First, the ECB published a paper on the 12th of October, asserting that the early adopters of Bitcoin steal value from "latecomers." The paper notes:
"The new Lamborghini, Rolex, villa, and equity portfolios by early Bitcoin investors do not stem from an increase in the economy's production potential; rather, they are financed by diminishing consumption and wealth of those who initially do not hold Bitcoin."
Then, the ECB paper advocates for legislation to prevent Bitcoin's price from rising, all in a bid to prevent the "division of society."
🚨Minneapolis Fed Joins ECB With #Bitcoin Attack 🚨
New Paper Claims Governments Can Run Permanent Deficits if Consumers Don't Notice & Adopt New Money Like BTC.
Fantasizes About "Legal Prohibition" & Extra Taxes on BTC to Ensure Govt Debt Remains "Only Risk Free Security" https://t.co/IMOqZbYce0 pic.twitter.com/quRthS6Znl
— matthew sigel, recovering CFA (@matthew_sigel) October 20, 2024
Now, as the crypto sphere at large continues to debate the de-merits of the ECB's paper, the Minneapolis Federal Reserve has decided to jump into this melee with another wild take.
To wit, in a paper that explores the ability of the government to run "permanent primary deficits," the Minneapolis Federal Reserve identifies Bitcoin as one of the most important impediments:
"But this result fails if there are also useless pieces of paper (bitcoin for short) that can be traded."
The paper also calls for either a blanket ban or a tax on Bitcoin to allow governments to run perennial deficits:
"A legal prohibition against bitcoin can restore unique implementation of permanent primary deficits, and so can a tax on bitcoin at the rate -(r - g) > 0."
Of course, this development comes as the Minneapolis Federal Reserve President, Neel Kashkari, recently raised three major points against the world's pre-eminent cryptocurrency in a public talk. First, he asserted that he has never met anyone who had bought a common staple using Bitcoin, questioning the cryptocurrency's role as a medium of exchange. He then cited the example of the post-pandemic inflationary impulse, where Bitcoin plunged with the rest of the risky asset universe, to posit that the cryptocurrency remains a "terrible inflation hedge." Finally, Kashkari proclaimed that the cryptocurrency is nothing but a vehicle for speculation.
The Cryptocurrency's Improving Fundamentals
BITCOIN ETFS INFLOWS HIT $20B, OUTPACE GOLD ETFS 10X: WHAT’S NEXT?
While ETFs are seeing heavy inflows, Bitcoin’s exchange inflows have dropped significantly by over 95.93% in the last 48 hours.
This suggests a shift in investor behavior as fewer participants are moving their…
— *Walter Bloomberg (@DeItaone) October 21, 2024
Interestingly, these papers come at a time when the world's apex cryptocurrency is near its all-time highs. What's more, the spot Bitcoin ETFs have now attracted a whopping $20 billion in inflows, that too within just a year of their launch.
It took Gold ETFs 5 years to break $20b inflows.#Bitcoin did it in 10 months.
The most successful ETF launch in history! pic.twitter.com/XngeuiWTQy
— Bitcoin Archive (@BTC_Archive) October 20, 2024
For context, it took gold ETFs 5 years to attract this quantum of inflows.
The retest is now in progress$BTC #Crypto #Bitcoin https://t.co/Ytarr8A746 pic.twitter.com/pUVQ5JxtIw
— Rekt Capital (@rektcapital) October 21, 2024
Also, Bitcoin appears to have broken out of its channel just ahead of the presidential elections in the US.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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