Jerome Powell and Janet Yellen both acknowledged that inflation levels are concerningly high, but do not have immediate plans to correct the current trend. A broad range of financial institutions are adding support for Bitcoin services. Paraguay’s Bitcoin legislation is less Bitcoin-friendly than anticipated.

Powell Will Not Respond To Inflation Unless It Persists Long-Term

The June New York Fed Survey found that consumer expectations for inflation were 4.8% over the next 12 months. This is the highest expectation since the Fed Survey began collecting this data in 2013. The June CPI level was 5.4% higher than June 2020, representing the largest annual gain since August of 2008. Jerome Powell conceded that the United States is facing inflation “which is larger than we had expected or that anybody had expected.” Powell intends to continue monitoring the situation, but does not intend to react if the situation proves to be short-term. Janet Yellen asserted that “we will have several more months of rapid inflation.” Jobless claims reached yet another post-pandemic low of 360,000. Senate Democrats announced a budget agreement that includes $3.5 trillion in spending over the next decade, but the proposal currently does not have enough votes to pass. Senate Majority leader Chuck Schumer has set a deadline of Wednesday for a vote on the budget agreement and the infrastructure bill.

Bitcoin Services Expand Across Large Financial Institutions

Jack Dorsey announced Square is building out a new business that will support “decentralized financial services” where the “primary focus is Bitcoin.” Grayscale has partnered with BNY Mellon to convert GBTC into an ETF, indicating confidence that the United States will approve a Bitcoin ETF in the near future. Fidelity Digital Assets is expanding its team by 70%, due to consistent high demand from institutional investors. Bank of America is now reportedly facilitating Bitcoin futures trading for a select group of clients. Capital International Group disclosed a 12.2% stake in MicroStrategy, which is worth nearly $600 million. NFL star Saquon Barkley will exclusively be accepting Bitcoin as payment for all future endorsements earnings.

Global Regulators Refine Bitcoin Legislation

Visa has approved an Australian debit card, which would allow users to directly pay merchants in Bitcoin. Paraguay introduced a Bitcoin bill primarily aimed at regulating cryptocurrency activity. This is contrary to early news about the bill, which suggested it would facilitate the adoption of Bitcoin within the country. Italian regulators announced that Binance is not authorized to provide investment services in the country, joining several other countries in a recent crackdown against the exchange. The Governing Council of the European Central Bank launched the "investigation phase" of its digital Euro project. Chinese Bitcoin mining, which represented 46% of total network capacity prior to the government crackdown, continues to decline. The United States and Kazakhstan now collectively represent roughly a quarter of global bitcoin mining.

Market Recap

Jerome Powell does not have any immediate plans to curtail inflation, despite acknowledging that current rates would cause significant issues if they persisted long-term. Inflation issues may be exacerbated by increased spending goals from the Biden administration and the ongoing economic recovery. Large financial institutions continue pushing forward with Bitcoin offerings, despite the fact that U.S. regulators are dragging their feet on providing clarity around Bitcoin regulation.