Bitcoin as a Hedge Against a Weakening Dollar
In a world of economic uncertainty, Bitcoin is increasingly being seen as a safe haven asset. This week, we delve into the strategy of Ledn co-founder Mauricio di Bartolomeo, who has found a compelling reason to continue “stacking sats” even as Bitcoin’s price continues to rise.
Drawing from his experience shorting the Venezuelan Bolivar during its hyperinflationary period in the 2010s, di Bartolomeo believes that borrowing against Bitcoin to hedge against the US dollar is a viable strategy. He argues that by doing so, investors are effectively “holding the hard money, which is Bitcoin, and taking a borrow [position] on dollars, which is a weaker currency.”
This approach has resonated with many Bitcoiners, and it’s evident in Ledn’s booming business. By the end of Q4 2023, the company’s loan book value reached a staggering $9.9 billion, according to Galaxy Research. This significant growth underscores the increasing popularity of Bitcoin-backed loans, which offer a way for investors to access dollar liquidity without relinquishing their Bitcoin holdings.
Crypto Integration: A Guatemalan Success Story
Beyond the realm of Bitcoin-backed loans, crypto adoption is making strides in Latin America. Banco Industrial, Guatemala’s largest bank, has integrated SukuPay, a crypto infrastructure platform, into its mobile banking app.
This integration is a significant milestone, marking the first time a major Latin American retail bank has adopted a crypto-native protocol for its payment services. With SukuPay, Banco Industrial app users can now receive US dollars from the US for a flat fee of $0.99, significantly lower than the typical 6% to 10% fees they currently pay.
SukuPay CEO Yonathan Lapchik believes this integration is a key step toward mainstream crypto adoption. “The key to mainstream adoption of blockchain technology is making it invisible to the end-user,” he said, emphasizing the importance of a user-friendly experience.
Yield-Bearing Stablecoins: A Threat to Traditional Banking?
Meanwhile, the emergence of yield-bearing stablecoins has sparked unease among traditional bankers. According to NYU professor Austin Campbell, America’s banking lobby sees these stablecoins as a threat to their business model, which relies on taking deposits, paying depositors minimal interest, and using those funds for higher-risk investments.
Campbell claims that there is “panic” among bankers over stablecoins offering interest payments and other monetary rewards to holders. He asserts that banks are lobbying for regulations to protect their interests, arguing that they are “trying to keep screwing your voters.”
While Campbell did not name specific stablecoin assets, the Securities and Exchange Commission approved Figure Markets’ YLDS stablecoin in February 2023, marking the first yield-bearing stablecoin security in the US. With its 3.85% yield at launch, YLDS is not the only stablecoin offering interest-bearing features. Pi Protocol and Spark Protocol have also developed similar tokens.
The rise of yield-bearing stablecoins is a testament to the increasing competition within the financial landscape. As crypto continues to evolve, traditional institutions are facing pressure to adapt or risk losing market share to innovative players. Only time will tell how this dynamic will unfold, but one thing is clear: crypto is changing the game for everyone.
