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Why This Billionaire Continues To Advocate For Bitcoin Amid Surging US Debt?

Bitcoin (BTC) has continued to occupy center stage, drawing varied reactions from different financial pundits. One of these voices is billionaire investor Mike Novogratz, who has yet again reiterated his support for the top cryptocurrency despite the unsettling dynamics in the United States economy.

The Growing Concern: Skyrocketing Interest Payments

The US is currently experiencing an unprecedented increase in debts as its interest payments reach $970 billion. This figure represents a leap of $41 billion in the second quarter alone. Observers anticipate that the rising trajectory could soon see the country’s debts surge resulting in the interest payments hitting the $1 trillion milestone, which has set off alarm bells in financial circles.

Related Reading: Bitcoin Retreat Below $30,000: A Threat To Crypto’s 2023 Dominance Over Stocks?

To clarify, interest payments are the actual payments that the borrower makes to the lender, typically on a regular schedule, to repay the interest on a loan or debt. The amount of each payment is determined by the interest rate and the terms of the loan.

As such, the sustained upsurge of interest payments in the US economy has triggered growing unease among financial experts. Tax receipts are currently failing to keep pace with the ballooning sovereign debt.

Consequently, the issuance of more debt to fund interest payments is becoming an increasingly common occurrence. This scenario has created a vicious cycle, causing concern about the potential repercussions on the nation’s fiscal health.

In light of this, Mike Novogratz has once again expressed his firm support for Bitcoin. His latest advocacy came to the forefront recently when he urged investors to buy Bitcoin as the US national debt spiked by $1 trillion between June and July.

Novogratz’s Stance: Bitcoin As A Safe Haven

Despite expressing caution regarding the broader economy, Novogratz holds a sanguine view of Bitcoin’s prospects. He envisions that the cryptocurrency is on the cusp of another growth cycle, following a consolidation phase oscillating between the $28,000 to $32,000 range.

However, Novogratz maintains that a significant shift in policy by the Federal Reserve, specifically a reduction in interest rates, is key for this expected surge to come to fruition.

Meanwhile, recent indicators suggest that the central bank may have different intentions. The Federal Reserve’s current stance seems to diverge from the conditions that Novogratz believes are necessary for a Bitcoin rally. Despite this, the experienced investor continues to champion Bitcoin, viewing it as a potential safe haven amid economic uncertainties.

In the meantime, Bitcoin’s valuation is still persistently working to rise above the recent downward trend. The digital asset experienced a slight dip of 1% in the last day and now has a market cap of $567.5 billion.

BTC’s market price currently stands at $29,309, at the time of writing. This price action follows the asset’s unsuccessful endeavor to reclaim the $30,000 mark earlier this week. 

Bitcoin price chart on TradingView.com

Featured image from Unsplash, Chart from TradingView

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Bitcoin Set To Accelerate As A Store Of Value In Wake Of Bank Collapses, Cathie Wood

ARK Invest CEO and crypto proponent Cathie Wood says that Bitcoin is set to grow massively as a store of value following the recent bank collapses. She believes that Bitcoin’s stability and a huge rally in the wake of US regional banks collapsing is a major testament to the fact that Bitcoin is the future of money.

Cathie Wood Remains Bullish On Bitcoin

In a recent interview with Barron’s, Wood maintained that she remains bullish on digital assets and highlighted three reasons she won’t be backing down on her investments. According to her, Bitcoin stood tall and rose by 60%, from $19,000 to $30,000, when regional banks like First Republic, SVB, and Signature Bank collapsed. She attributed this run to investors seeing the asset as a safe alternative for storing their wealth. 

Wood explained:

We see three revolutions taking place because of crypto. Bitcoin will dominate the first one, the money revolution. The biggest proof is that when regional-bank stocks were falling apart earlier this year, Bitcoin went from $19,000 to $30,000. That was a flight to safety, and we expect it to accelerate. The centralized monetary system we have today is an aberration. We could be going back to the future – before the Federal Reserve existed – under a digital, rules-based monetary system with no government oversight.

The other reasons for her bullishness on digital assets relate to decentralized finance (DeFi) and digital property rights involving tokenizing several physical assets in real estate and other relevant industries. 

“The second revolution is in financial services, or the so-called DeFi, which will be Ethereum-based. There are a number of infrastructure providers out there. It’s the survival of the fittest, and I’m excited to see who wins,” the CEO said.

Last but not least, according to Woord, “is digital property rights, or what many call NFT or the metaverse. People are already buying real estate in virtual worlds. Our young research associates come into the office wearing jeans and T-shirts with no logos, but they are getting their status in the virtual world.”

Bitcoin (BTC) price chart from Tradingview.com

Weighing In On Coinbase’s Battle With SEC

During the interview, Cathie Wood also discussed Coinbase’s ongoing battle with the United States Securities and Exchange Commission (SEC). Wood’s ARK holdings are one of the largest holders of Coinbase’s stock. She believes that the crypto exchange will ultimately get victory in the SEC’s lawsuit against it for the sale of unregistered securities. 

According to her, the court will rule that the SEC has gone beyond its regulatory purview, and in the long run, the US Congress will pass crypto-friendly bills. 

“Meanwhile, the legislative branch has awakened to the fact that crypto is a new asset class and we might need new legislatures to give the regulators some guidance,” the ARK Invest CEO added.

“Those two branches of government have given us great confidence that Coinbase will come out of this as a winner. Many Coinbase competitors either haven’t entered the US or moved out because of our regulatory system. Coinbase has stayed to fight. We think they’ll be rewarded accordingly.”

Cathie Wood’s ARK had bought $21.6 million worth of Coinbase’s stock in early June, just immediately after the SEC filed a lawsuit against the crypto exchange.

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DeFi Protocol Sparks Speculation Of $16 Million Rug Pull After Severing Lines of Communication

DeFi protocol, Hector Network, has closed its official Discord server, leaving many investors in the dark. The move comes amidst growing suspicions of a $16 million rug pull engineered through a so-called hard rug, a process where funds are quickly moved, leaving investors with shitcoins. This comes after a controversial rage-quit vote organized by the project’s DAO. 

DeFi Protocol Hector Network Leaves Investors In Limbo

Hector Network investors woke up to the news that the DeFi protocol had cut off communications on its official Discord server. The Discord server was the only means of communication between the network’s team and its investors which was established after the Hector Network team censored them from the official server in April. 

The server was meant to run parallel to the official Discord, preserving data from the latter. Since then, it has become the only means of communication among DAO members.

The move has left the network’s investors in a state of shock since they no longer have any means of communication with the network’s team. This has led to a lot of backlash, and according to Libagscientist, an investor and vocal critic of the platform, “there is no backchannel open anymore.” 

In the absence of any official communication, dejected investors are accusing the network of siphoning the $16 million left in its treasury. 

According to investors, the team embezzled the project’s funds over an 18-month period starting in 2021. According to records of DAO votes, the Hector team received over $51 million in salaries during this period without delivering on any meaningful milestone. An aggrieved investor identified as Jintu said, “..not one thing has actually moved forwards.”

A Story of Sheer Incompetence and Greed

The Hector Network is part of several Olympus DAO forks, a prominent cryptocurrency reserve currency project that peaked during the DeFi summer of 2021. The Hector Network, like other Olympus DAO forks, promised huge annualized yields of about 100,000% in the beginning, and the early successes of Olympus DAO attracted many investors hunting for massive returns. 

During its hay days, Hector Network’s native token, HEC reached $357 in late 2021. However, the platform’s challenge lies in the fact that its inflationary yield needs to be supported with a steady influx of investor cash to keep the HEC token valuable and maintain its high yields. 

Following the crypto winter that began in November 2021, the platform has been unable to recover. Aggrieved investors believe that the team should have applied the funds held in its treasury toward developing value for token holders. 

Many have now accused the team of being greedy and unconcerned about meeting the targets of the network and the current saga might eventually end up in the courts. However, investors’ top priority remains to recoup their funds. Hector Network has declined requests for comments but has unequivocally rejected the allegations in a statement released on June 14.

Hector Network (HEC) token price chart from Tradingview.com (DeFi)