First Mover: Stimulus Bet Wins Even as Bitcoin Slips Below $18K – CoinDesk

Bitcoin (BTC) was lower for a second day, slipping below $18,000 to the lowest in almost two weeks. 

“The momentum that characterized bitcoin throughout October and November seems to have cooled down,” Matt Blom, head of sales and trading for the cryptocurrency-focused financial firm Diginex, told clients Friday in a note. “Prices retrace even in light of positive news.” 

In traditional markets, European shares fell as Germany reported record virus cases and deaths, and U.S. stock futures pointed to a lower open amid fading optimism over stimulus talks in Washington. Gold weakened 0.1% to $1,834 an ounce. 

If everyone says bitcoin is a hedge against central bank money printing, does that make it a hedge against central bank money printing?  

It looks that way. Or at least that’s one interpretation of recent news developments and market signals. 

Government-issued currencies like U.S. dollars are accepted as a form of payment because the government decrees they be so. Such tenders are often referred to as “fiat” currencies, from the Latin “It shall be.” 

Bitcoin was invented 11 years ago as a new form of electronic peer-to-peer payment built atop a blockchain network that no single government, company or person would control. But it’s the limits on the cryptocurrency’s supply, hard-coded into the underlying network programming, that have garnered so much attention recently from big investors: Only 21 million bitcoin can ever be created, a true stumper for monetary economists or analysts accustomed to the supply and demand calculations typically applied to commodity markets from gold to oil to cocoa to pork bellies.

As governments and affiliated central banks have created trillions of dollars of fresh money this year to combat the steep economic toll of the coronavirus, more big institutional investors are deciding that bitcoin will hold its value as fiat currencies become ever more abundant. 

Take the latest announcement from MassMutual, a U.S. life insurance company with $567 billion of assets under management as of Dec. 31. As reported by CoinDesk’s Danny Nelson, the insurance company said Thursday it would take a 5% equity stake in the cryptocurrency investment firm NYDIG while buying $100 million of bitcoin for a general investment account. 

“There is nothing surprising to me about MassMutual leading their industry yet again by both seeing and acting on the long-term value of the bitcoin monetary risk premium for their policyowners,” NYDIG Executive Chairman Ross Stevens said in a press release posted on the insurance company’s website. 

Notice that term: “monetary risk premium” – the idea that bitcoin will protect investors against the risk that monetary authorities just keep printing more money. It’s the linchpin of the entire announcement. 

“As we’ve seen throughout the last few weeks, the level of institutional involvement in this tiny market is growing at a very rapid pace,…