First Mover: As Central Banks Print $1.4B an Hour, Bitcoiners Bet on Federal Reserve 'Capture'

Sep 14, 2020 at 12:34 UTCUpdated Sep 14, 2020 at 13:30 UTC.It might just take a big stock-market sell-off for the Federal Reserve to accelerate the pace of money printing.

According to Bank of America, that's the pace at which central banks around the world have been buying assets since the coronavirus-related lockdowns started in March.

"For much of the past 10 years, Wall Street has proved too big to fail, and monetary policy markets have implicitly supported asset prices to boost economic growth," Bank of America Chief Investment Strategist Michael Hartnett wrote earlier this month in a report.

That's the backdrop for the Federal Reserve's two-day, closed-door meeting this week, where top U.S. officials will evaluate what is perhaps the loosest monetary-policy stance in the central bank's 107-year history.

Interest rates have already been cut close to zero, and the Federal Reserve is buying $80 billion of U.S. Treasurys a month to keep markets afloat, with trillions of dollars more available through emergency-lending programs.

The central bank's balance sheet already has expanded this year by about $3 trillion to $7.1 trillion as of last week.

"The market has just become too reliant on the Fed being there," Brian Coulton, chief economist for the sovereign group at the bond-rating firm Fitch, said last week in a phone interview.

Imagine how consumers might rein in spending if the stock market tumbled 23%, as it did in the final quarter of 2008.

Bitcoin traders might try to frame the question in billions of dollars per hour.

Bitcoin is still down 75% from the record high of $20,000 reached in December 2017, and the market is pricing just a 5% probability of prices setting new lifetime highs by the year's end.