12/19/24 Roundup: Dollar Debasement Realities
Onramp Weekly Roundup
Written By Brian Cubellis
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Dollar Debasement Realities
This week, as widely anticipated, the Federal Reserve cut its benchmark interest rate by 25 basis points, marking a decision that carried a 97% probability heading into the announcement. Despite the mechanical predictability of the rate reduction, market reactions were anything but calm. Equities registered their largest post-Fed selloff since March 2020, erasing $1.8 trillion in market capitalization.
The decline was not triggered by the cut itself, but by Chair Jerome Powell’s unexpectedly hawkish tone and revised projections: the Fed’s 2025 rate path narrowed from three cuts to two, and its long-run inflation outlook was lifted. Such changes underscore that inflation, once again, has not been fully subdued, necessitating more restrictive policy for longer.
Within this environment, bitcoin did not remain immune to the reflexive selloff that swept through global risk assets. After reaching a new all-time high of approximately $108,389 on December 17, bitcoin has retraced to around $97,000—down roughly 10.5%—at the time of writing. While short-term volatility persists, the long-run narrative remains undisturbed, with bitcoin’s network fundamentals and underlying monetary properties standing firmly intact.
The central theme emerging from these dynamics is that fewer expected rate cuts in 2025 reflect a tacit admission by the Fed that inflation is more entrenched than previously acknowledged. In turn, investors expecting near-term policy accommodation found themselves facing a less dovish outlook, prompting a broad risk-off move.
While bitcoin often gets lumped in with equities and other risk-on assets, its brief correlation-driven pullback masks the deeper truth: bitcoin’s fundamental value proposition is independent of central bank policies. As a presentation slide from BlackRock (pictured below) highlights, bitcoin is truly a “risk-off” asset, not a “risk-on” asset, as many still believe.
For long-term allocators, the temporary decline in bitcoin’s price represents a strategic entry point. The asset’s transparent, immutable monetary policy—governed by code and set at a strictly limited supply—stands in stark contrast to the changing narratives and fluctuating targets of global monetary authorities. Whether inflation surprises to the upside or liquidity surges after a future pivot, bitcoin’s structural immunity to dilution remains its primary appeal. As Lyn Alden aptly notes, there is nothing stopping the “debasement train”; holding bitcoin is simply a way to step off the platform.
This perspective aligns with our previous commentary: short-term market responses to the Fed’s pronouncements are often noise, while the underlying structural case for bitcoin strengthens over time. Key metrics—rising hash rate, increasing on-chain activity, expanding network participation, and greater cultural adoption (see the uptick in sales of “The Bitcoin Standard” pictured below)—continue to point in the same direction.
Strategic Reserves & the Geopolitical Game Theory of Bitcoin
In parallel to the shifting macroeconomic backdrop, a conversation has emerged around the possibility of the United States government establishing a Strategic Bitcoin Reserve. Discussion has centered on proposals, such as Senator Cynthia Lummis’ bill suggesting the accumulation of 1 million BTC over five years, as well as the notion of a potential executive order from Trump to acquire a likely smaller position, but in an expedited fashion (not requiring approval from Congress).
Detractors argue that such a move could signal weakness in the U.S. dollar, an acknowledgment of the debt problem and the dollar’s steady erosion in purchasing power. Yet others counter that, in a world where other sovereign nations may accumulate bitcoin, the U.S. has a clear incentive to ensure it is not left behind.
Viewed through a geopolitical lens, bitcoin accumulation by sovereign states may become a game-theoretic necessity rather than a mere ideological statement. As Michael Goldstein (Bitstein on X) puts it, “bitcoin is a strange game where the only winning move is to play.” If competitors secure a reserve position in an uninflatable, universally accessible monetary asset, while the U.S. stands aside, this could erode American influence over time.
Moreover, holding bitcoin is not inherently different from maintaining gold reserves, which have coexisted with the U.S. dollar system for decades. If anything, a strategic position in bitcoin could strengthen the broader currency framework by aligning the dollar with the best emerging reserve asset on the planet, shoring up its stability and credibility in the long run.
Chart of the Week
“BlackRock’s gold ETF took 20 years to reach $33B AUM, while their #Bitcoin ETF nearly doubled gold’s AUM in less than a year.”
Quote of the Week
“If you are against the SBR [Strategic Bitcoin Reserve], you prefer UAE, Qatar, Saudi, Oman, Bahrain, China, and Russia to have more Bitcoin than the U.S. That’s fine, but accept that this opposition equates to a desire that we lag monarchies & authoritarian rivals in holding Bitcoin as a national asset.
If Bitcoin never monetizes to any meaningful fraction of gold, the geopolitical risks to the U.S. of lagging other nations are minimal. However, if it monetizes to large fraction, parity, or even > gold w/o the U.S. holding a position, the geopolitical risks would be profound.”
Podcasts of the Week
Onramp Webinar Series E005: Bitcoin is the Ultimate Savings Technology
In this session of the Onramp Webinar Series, Onramp’s Jesse Myers and Bram Kanstein explore bitcoin’s full potential and its critical role as a savings technology. We discuss bitcoin’s scarcity dynamics, market cycle positioning, and how it offers a solution to continued monetary debasement caused by unsustainable debt and money creation.
Scarce Assets E023: Dennis Porter – Bipartisan Bitcoin Breakthroughs
In this episode of Scarce Assets, hosts Andy Edstrom & Jesse Myers are joined by Dennis Porter, CEO & Co-Founder of the Satoshi Action Fund, to discuss election impact on policy, state-level legislative initiatives, bitcoin progressive states, strategic bitcoin reserve urgency, & more!
Closing Note
Onramp provides bitcoin financial services built on multi-institution custody. To learn more about our products for individuals and institutions, schedule a consultation to chat with us about your situation and needs.
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Until next week,
Brian Cubellis