Global Leaders Voice Concerns About Inflation

Will Nemirovsky -

Last week, Janet Yellen acknowledged the threat of an overheated economy. Warren Buffett stated that outsized inflation is already here and he expects it to continue. The Fed acknowledged the risk that current high valuations present for economic stability. Bitcoin received support from several large institutions this week, including Goldman Sachs and S&P indices.  

Janet Yellen Hints At Future Inflation But Warren Buffett Says Its Already Here

Janet Yellen discussed Biden’s spending plans and acknowledged that the economy was at risk of overheating. She noted that “it may be that interest rates will have to rise” in order to compensate for the increased money supply. This comment was at odds with the optimistic messaging about inflation that the administration has vocalized so far. The private sector has been much more concerned about inflation, with Warren Buffett noting that “we are seeing substantial inflation” already. He added that “people are raising prices to us, and it's being accepted." The governor of the Bank of England directly discussed inflation, noting that it may be “a bit bumpy” this year. The U.S. economy has begun to face a labor shortage as job openings are increasing, particularly in retail and service industries. The country added 266,000 jobs in April, well below the expected estimates of about 1,000,000 new jobs. The Fed’s semi annual financial stability report stated that “a range of asset prices could be vulnerable to large and sudden declines” if investor sentiment or risk tolerance changes.

Digital Assets Gain Acceptance From Goldman Sachs And S&P

The S&P launched several new digital asset indices, including a Bitcoin index and a broader cryptocurrency index. An internal memo from Goldman Sachs revealed that the firm has created a cryptocurrency trading team. The trades will likely rely heavily on derivatives and be settled exclusively in cash. Galaxy Digital acquired digital asset custodian and trading platform BitGo for $1.2 billion worth of cash and shares, in one of the industry’s largest deals ever. NYDIG stated that many U.S. banks will be offering Bitcoin to their clients in 2021. NYDIG expects to manage the custody and trading execution components of these product offerings. John Dalby, who was previously the CFO at Bridgewater Associates, has joined NYDIG as CFO.

Bitcoin Services Drive Revenue For Tech Companies

San Francisco-based insurer Metromile announced that it will be purchasing $10 million worth of Bitcoin to hold on its balance sheet. Additionally, the firm will allow clients to pay premiums and receive payouts in Bitcoin. Grayscale and the New York Giants announced a partnership which will include charitable events and educational seminars for now, but could pave the way for more meaningful engagement from the Giants in the future. The Giants are the first NFL team to partner directly with a cryptocurrency organization. Square announced a very positive earnings report, with Bitcoin transaction volume approximately 11 times as high as one year prior.

Concerns about inflation are reaching every sector of the economy and many believe that it is already having a significant impact. This remains as one of the largest risks to economies that are beginning to recover from the direct impacts of COVID-19. Bitcoin continues gaining ground within the legacy financial system as faith in fiat currencies decreases.