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10/10 update below. This post was originally published on October 8

BitcoinBTCalongside other major cryptocurrencies ethereum and XRPXRPhave lost momentum after surging into 2023 (though a surprise leak from a major tech company could mean that's about to change).

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The bitcoin price has lost around 60% since peaking at almost $70,000 per bitcoin in late 2021, wiping around $2 trillion from the price of ethereum, XRP and the rest of the crypto marketeven as a BlackRock insider primes the market for a $17.7 trillion earthquake.

Now, as the Federal Reserve grapples with a $33 trillion U.S. "debt death spiral," Jefferies' analysts have warned the Fed will be forced to restart its money printerpotentially collapsing the U.S. dollar and fueling a bitcoin price boom to rival gold.

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"G7 central banks, including most importantly the Federal Reserve, will not be able to exit from unconventional monetary policy in a benign manner and will ultimately remain committed to ongoing central bank balance-sheet expansion in one form or another," Christopher Wood, global head of equity strategy at Jefferies, wrote in a note to clients seen by CNBC, calling bitcoin and gold "critical hedges" against the return of inflation.

The Fed began the laborious task of shrinking its swollen near-$9 trillion balance sheet in the spring of 2022 following huge expansion though the Covid-19 pandemic and economically disastrous lockdowns. So-called quantitative tightening sees the Fed suck liquidity out the financial system, passing on the burden of freshly issued debt to the private sector.

As well as reducing its balance sheet, the Fed has been hiking interest rates at a historic clip as it struggles to bring soaring inflation under control, creating what some fear could become a counter-intuitive "death spiral" for the U.S. dollar that ultimately pushes up the bitcoin price.

10/10 update: Analysts at Wall Street giant Deutsche Bank have warned the world could be headed for 1970s stagflation, where inflation remains elevated alongside a lack of economic growth.

"So given inflation is still above its pre-pandemic levels, it is important not to get complacent about its path," macro strategist Henry Allen and research analyst Cassidy Ainsworth-Grace of Deutsche Bank wrote in a note seen by MarketWatch. "After all, if there is another shock and inflation remains above target into a third or even a fourth year, it is increasingly difficult to imagine that long-term expectations will repeatedly stay lower than actual inflation."

The analysts pointed to soaring oil prices following the outbreak of war between Israel and the Palestinian militant group Hamas, as well as an increase in worker strikes this year and meteorological trouble brewing for commodity prices thanks to the El Nio weather pattern.

The Fed could be forced to suddenly flip dovish in the face of a U.S. recession due to a larger-than-usual lag in the Fed's inflation reducing interest rate hikes following the money supply explosion through 2020 and 2021, according to Wood.

"Such a failure to exit from unorthodox monetary policy in a benign manner is likely to culminate in the collapse of the U.S.-dollar paper standard to the benefit of both gold bullion owners and also owners of bitcoin," Wood wrote.

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Meanwhile, bitcoinand to a lesser extent other major cryptocurrencies such as ethereum and XRPhave seen a sharp rise in institutional interest, led by the world's largest asset manager BlackRock.

"Bitcoin has now become investible for institutions, with custodian arrangements in place for digital assets, and represents an alternative store of value to gold," Wood wrote.

In June, BlackRock sparked a Wall Street rush toward bitcoin and crypto, with its legendary chief executive Larry Fink flipping bullish on bitcoin after years of skepticism.

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

Originally posted here:

U.S. Dollar CollapseShock $8 Trillion Predicted Fed Inflation Flip To Spark A Critical Bitcoin, Ethereum, XRP And Crypto Price Boom To Rival Gold -...