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Things are getting weird out there

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by Coinbits
Monday, Jan 19, 2026 - 23:51

Three former Fed Chairs – Bernanke, Greenspan, Yellen – joined four former Treasury Secretaries this week to deliver a verdict no one expected to hear about the United States: "This is how monetary policy is made in emerging markets with weak institutions."

Welcome to the emerging market.

The trigger took place on Friday when the Justice Department served the Federal Reserve with grand jury subpoenas threatening to indict Chair Jerome Powell. The nominal offense is lying to Congress about a headquarters renovation – specifically, whether the Eccles Building will feature premium marble, water features, and a rooftop terrace garden – a veritable palace build for the exclusive use of central bankers. Powell says no such features exist. The administration says otherwise.

Powell didn't play along. In an unprecedented move, he posted a video on Sunday evening to the Fed's official account where he framed the probe as something other than an architectural dispute: "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

Then the denials started rolling in, each contradicting the last.

Trump told NBC he knew nothing about it. "No. I wouldn't even think of doing it that way," he said, before adding that Powell is "certainly not very good" and "rates are far too high." So: no involvement, but also, the man deserves pressure.

Jeanine Pirro, who runs the D.C. U.S. Attorney's office, issued her own statement insisting this is all perfectly routine. "The word 'indictment' has come out of Mr. Powell's mouth, no one else's," she wrote. "None of this would have happened if they had just responded to our outreach." In other words: we weren't going to indict him, we just sent grand jury subpoenas to a sitting Fed Chair as a friendly nudge to return our calls. Standard correspondence.

Meanwhile, Treasury Secretary Scott Bessent – the adult in the room who has spent months trying to keep the Fed conflict from becoming a five-alarm fire – reportedly told Trump the probe "made a mess." Kevin Hassett, the National Economic Council chief and rumored frontrunner to replace Powell, offered the bureaucratic equivalent of backing away slowly: he "respects the independence of the Justice Department and the Fed." When the leading candidate to take your job has to clarify he respects institutional independence, you know the week has gone sideways.

So the official position is: the President didn't know, the prosecutor didn't threaten anything, the Fed Chair is lying about being threatened, and anyone concerned about central bank independence is overreacting – but also the Chair should cut rates immediately, the renovation is a scandal, and Powell is a "fool" and a "clown" who deserves whatever scrutiny he gets.

At least one thing is clear: the tension didn't start this week. It has been building for decades.

BitGo targets $2 billion valuation in U.S. IPO

Bitcoin custody pioneer BitGo filed for a New York Stock Exchange listing this week, seeking to raise $201 million at a valuation of roughly $2 billion. The Palo Alto-based firm will offer 11.8 million Class A shares priced between $15 and $17 under ticker BTGO, with Goldman Sachs and Citigroup leading the underwriting syndicate alongside Deutsche Bank, Wells Fargo, and Mizuho.

BitGo built its reputation on multi-signature security and institutional-grade controls when exchanges were still routinely losing customer funds. The company now claims over $100 billion in assets under custody, though the filing notes that figure dropped to $81.6 billion by Q4 2025 amid declining prices, with 42.8% concentrated in bitcoin.

The timing matters. In December, BitGo received conditional approval from the Office of the Comptroller of the Currency to become a nationally chartered trust bank – one of only five digital asset firms to receive that designation, alongside Circle, Ripple, Fidelity Digital Assets, and Paxos. That federal charter could eventually allow BitGo to operate as a qualified custodian under the GENIUS stablecoin legislation and potentially issue stablecoins.

Early reports suggest the offering is well oversubscribed. Analysts describe it as a "defensive play" in digital assets – revenue comes from custody fees, compliance services, and infrastructure rather than trading spreads or speculative activity. If the IPO succeeds, it means public markets are willing to differentiate bitcoin infrastructure from crypto speculation.

Real businesses wins when speculation fades

Getting bitcoin custody right has always been the first problem. Before anything else like trading, lending, corporate treasuries, and ETF wrappers, someone has to hold the keys without losing them, stealing them, or getting hacked.

As markets rotate toward regulation and balance-sheet resilience, custody emerges not as a commodity but as financial infrastructure. The firms that built it correctly when no one was watching now find themselves positioned as gatekeepers for the next wave of institutional allocation.

Iran's currency collapses completely

Iran's rial has hyperinflated to roughly 1.65 million per U.S. dollar, down from 817,500 at the start of 2025 – a loss of more than half its value in twelve months. The currency traded at 70 rials per dollar before the 1979 revolution, and traded at 32,000 per dollar when the nuclear deal was signed in 2015.

The crisis ignited mass protests that began in Tehran's Grand Bazaar on December 28 when shopkeepers, unable to reprice inventory fast enough to keep pace with currency collapse, shuttered their stores. Within days, demonstrations spread to all 31 provinces, drawing students, workers, and ordinary citizens into what observers describe as the largest uprising since 1979. Food prices have surged 72% year-over-year. Inflation exceeds 42%. Nearly one in five young Iranians is unemployed.

The government's response has been brutal. Reports from human rights groups suggest thousands of deaths, tens of thousands detained, and a near-total internet blackout imposed to prevent coordination and documentation. Supreme Leader Khamenei reportedly ordered live fire on protesters. The Revolutionary Guard has declared a "yellow" state of emergency. For the first time in decades, crowds are chanting pro-monarchy slogans and calling for the return of the Pahlavi dynasty.

As with many crises and revolutions, pageantry and violence covers the truth that economics are the key factor. Purchasing power for ordinary Iranians has fallen more than 90% over eight years. A country cannot function when the exchange rate halves every twelve months.

When fiat breaks, exit valves matter

Currency collapse exposes the limits of capital controls and sanctioned banking. When the rial loses half its value in a year, it means that every salary, savings account, and pension melts away to nothing.

In this environment, bitcoin is a lifeboat. For Iranians with access to it, bitcoin provides a portable store of value that doesn't require permission from a collapsing government.

The comparison to gold is instructive. Gold coins in Iran have surged to 1.7 billion rials, which is more than double pre-war levels. When money dies, hard assets matter. The difference is that gold is hard to hide or move. Bitcoin can be memorized, transmitted, and held without counterparty risk even when borders close and banks freeze.

What's happening in Iran is a textbook currency crisis accelerated by sanctions, war, and mismanagement. But this pattern has been followed by dozens of currencies in the past century. Capital flight seeks exit valves, and bitcoin's permissionless architecture makes it one of the few tools that works when everything else doesn't.

Bitcoin treasury consolidation accelerates

The bitcoin treasury merger wave continues. On Tuesday, Vivek Ramaswamy-backed Strive announced shareholder approval for its acquisition of Semler Scientific, combining 12,798 bitcoins to create the 11th largest corporate bitcoin holder, surpassing both Tesla and Trump Media. CEO Matt Cole called it "the first acquisition of a publicly traded Bitcoin treasury company."

The deal structure tells the story. Strive acquires Semler's 5,048 bitcoins in an all-stock transaction. Semler shareholders receive 21.05 Strive shares per share, adjusted for a 1-for-20 reverse stock split. Strive plans to monetize Semler's medical diagnostics business within twelve months and use proceeds to retire $120 million in legacy debt – a $100 million convertible note and a $20 million Coinbase loan. The stated goal is transforming the combined entity into a pure-play bitcoin treasury vehicle.

Markets weren't sure how to react. Both stocks fell over 10% on the announcement, with investors apparently confused by the reverse split mechanics. Strive shares have traded below $1 for months; the reverse split is meant to "align share price with institutional participation standards," according to management. Semler shares will be delisted from Nasdaq on January 20.

Meanwhile in Europe, Adam Back-backed Future Holdings agreed to acquisition by Sweden-listed H100 Group for roughly $753,000. Future was founded just two months ago by Back, Richard Byworth, and Sebastien Hess with $35 million raised for its bitcoin treasury. H100 views the deal as expansion into Switzerland's institutional market. Back had previously provided H100 with a $2.1 million convertible loan.

Bitcoin is an exit – for businesses, too.

Something new is happening in corporate finance: companies with bitcoin treasuries are becoming acquisition targets and growth vehicles regardless of – or even despite – their cashflow business.

Semler Scientific started as a medical diagnostics firm. Its product, a device measuring arterial stiffness, generated modest revenue and faced uncertain growth prospects. Then in May 2024, the company pivoted to a bitcoin treasury strategy. Within months, shares climbed from $30 to $67. The bitcoin on its balance sheet became more valuable than the business that generated it.

Now Semler is being acquired specifically for that treasury. Strive isn't so much buying a medical device company as it is acquiring bitcoin at a discount. Management explicitly states they will sell the operating business to focus exclusively on "bitcoin return" as a core metric.

This pattern has implications. Bitcoin treasury strategies create liquidity, enable growth, and generate strategic options impossible under traditional balance sheet management. A company trading at a discount to its bitcoin holdings can be absorbed by one with better capital market access.

Fidelity questions bitcoin's 4-year cycle

Fidelity Digital Assets released its 2026 outlook this week, examining a question on every investor's mind: is bitcoin's historical four-year halving cycle still intact, or have institutional dynamics replaced it?

Fidelity identifies bitcoin as a "liquidity sponge" – an asset that absorbs excess capital when global M2 money supply expands. The correlation is in fact striking: bitcoin moves in the direction of global M2 growth 83% of the time in any 12-month period, higher than virtually any other major asset class. Bull markets have historically aligned with monetary expansion; bear markets with tightening.

The bull case for 2026 centers on structural liquidity tailwinds. Quantitative tightening appears to be ending, and the Federal Reserve has begun cutting rates. Governments worldwide are prioritizing growth over austerity, with U.S. national debt exceeding $38 trillion and GDP running hot.

The bear case is equally important. Inflation remains sticky and the dollar is strong, dragging down global liquidity and risk appetite. Geopolitical tensions persist. And bitcoin's deep liquidity cuts both ways – in a risk-off environment, it can sell off hard alongside tech and other high-beta assets.

Fidelity's Jurrien Timmer, director of global macro, added a sobering note: "While I remain a secular bull on Bitcoin, my concern is that Bitcoin may well have ended another 4-year halving cycle phase, both in price and time." He places support at $65,000-$75,000 and warns that "Bitcoin winters have lasted about a year," making 2026 a potential "year off."

Structural forces reshape expectations

The halving-centric narrative served bitcoin well during its early adoption phase. Every four years, the block subsidy cuts in half, supply growth declines, and, if demand holds constant, price must rise. The math was elegant.

Fidelity's report suggests something more complex is emerging. Bitcoin increasingly behaves like a macro-sensitive instrument within the global financial system rather than an isolated alternative asset. Institutional participation through ETFs and corporate treasuries has reduced tail-risk volatility. Fidelity notes bitcoin is now less volatile than 33 S&P 500 stocks, while increasing exposure to broader liquidity conditions.

This integration has costs and benefits. The benefit is legitimacy and access: pension funds can now allocate through regulated wrappers. The cost is correlation: when liquidity tightens, bitcoin sells off alongside everything else.

The bull case centers on expanding global liquidity as governments choose growth over austerity. If that path continues, and history suggests it will, scarce assets denominated in depreciating currency should benefit.

BITCOIN ADOPTION CONTINUES

JAN3 founder Samson Mow says Elon Musk will "go hard" into bitcoin in 2026.

North American trading hours now generate 8% cumulative bitcoin returns, reversing 2025's pattern of U.S. session declines.

Corporate treasury purchases totaled 260,000 bitcoins over six months, outpacing mined supply three to one.

Bitcoin's 52-week correlation with gold reached zero, a pattern that has historically preceded 56% rallies within two months.

21Shares listed its BOLD ETP on the London Stock Exchange, combining two-thirds gold with one-third bitcoin.

Germany's DZ Bank secured MiCAR approval to launch "meinKrypto," a retail bitcoin platform rolling out across the cooperative banking network.

HOW BITCOIN WORKS

Learn one key idea about bitcoin each week. This week:

Why the Cantillion effect still matters

Most people have never heard of the Cantillon Effect. Once you understand it, it explains a lot about why getting ahead feels harder than it should.

In the early 1700s, economist Richard Cantillon observed that new money does not enter an economy evenly. It enters at specific points and spreads outward. Those closest to the source spend it first, before prices adjust. Those further away feel the effects later, mostly through higher costs.

That dynamic defines the modern monetary system, mostly in how insiders are more likely to have fast access to premium assets like real estate and equities than those in the broad middle and working classes.

After the U.S. severed the dollar's link to gold in 1971, money creation became unconstrained. New dollars began entering the economy primarily through central banks and commercial lending. Financial institutions, governments, and large borrowers gained early access to cheap capital. Asset prices responded first, with wages following much later, if at all. If and when wages do rise, the assets they can buy already command higher prices.

This helps explain why productivity and wages moved together for decades, then diverged. Workers kept producing more, but the gains flowed disproportionately to asset owners. Federal Reserve data makes this visible: the top 10% of households hold nearly 90% of equities, while the bottom half holds about 1%. Inflation shows up differently depending on where you sit in that flow.

The Cantillon Effect is simply observational, and it fits the logic of how money is created and distributed. Worse, it compounds over time. When the money supply grows faster than wages or savings, purchasing power quietly erodes.

Bitcoin changes this dynamic. Its issuance is fixed, transparent, and not tied to credit creation. New bitcoin enters the system through mining on a known schedule, not through discretionary policy or privileged access. There is no first-receiver advantage.

Understanding the Cantillon Effect does not stop debasement, but it clarifies why many people are rethinking money, savings, and ownership in a system built on perpetual expansion.

COIN CHECK

Which event permanently removed the monetary constraint that allowed governments to expand the money supply without any backstop related to gold?

A. The creation of the Federal Reserve in 1913
B. The Bretton Woods Agreement in 1944
C. President Nixon closing the gold window in 1971
D. The introduction of quantitative easing in 2008

Check your answer at the end of the page.

FROM THE MEME POOL

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ANSWER

Answer: C. President Nixon closing the gold window in 1971.

On August 15, 1971, President Nixon suspended the convertibility of dollars into gold, ending the last formal link between the world's reserve currency and a physical commodity. Before that moment, foreign governments could exchange dollars for gold at $35 per ounce, which imposed at least a theoretical constraint on how many dollars the U.S. could print. After the gold window closed, nothing backed the dollar except confidence in the institutions that issued it – a constraint that has proven, shall we say, considerably more elastic.

 

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