Will Switzerland Buy Bitcoin?
Swiss National Bank (SNB) President Thomas Jordan said yesterday that there is no technical problem, they can buy Bitcoin whenever they want. The statement created excitement in the crypto markets. However, Jordan continued in his speech that Bitcoin did not meet the reserve currency requirements, so they did not consider adding the largest cryptocurrency to their balance sheet.
If you ask me, Bitcoin does not have some of the reserve money features. First of all, Bitcoin price is extremely volatile. For example, according to a study by 'etoro', Bitcoin showed an average daily change of 2.67% between January 2018 and June 2019. In the same period, while Bitcoin climbed up to 16% in one day, it fell to 18% on the downside. In this way, it is difficult to use a currency that changes excessively in a short time as a means of payment in international trade.
But can't we still use Bitcoin as a long-term store of value? Or do central banks, especially the SNB, only keep international reserve currencies on their balance sheets?
Compared to its own economy, Switzerland is the country that prints unlimited money without being tied to anything in the world. The ratio of the money minted by the SNB to the annual production of Switzerland is 139.7%! This rate is 40% in the USA, despite the fact that it has printed 8 times the central bank money it produced in 200 years until 2008, in the last 14 years. 70% in the European Union, and 135% in Japan, which is closest to Switzerland.
The USA, Europe and Japan transfer these wildly printed coins to the banking sector through various mechanisms; banks are pumping this money from the air to the real estate sector and classical stock markets. So what does Switzerland, which prints the most money, do with these trillions created out of nothing? SNB does not deal with make-up at all, it goes directly and buys technology shares from the American Stock Exchange with these self-generated coins! According to the most recently published data for the end of the first quarter of 2022, 25% of SNB's balance sheet consists of stocks. In other words, the investment made by SNB in the stock markets with the money produced from the air is around $252 billion!
Nasdaq shares, in which SNB has made the biggest investment, increased by 15.5% in the last month; In the last 1 year, it has lost 11.6% in value. On the other hand, in the last 5 years, Nasdaq has earned SNB 98.6%. But what would happen if SNB invested in Bitcoin at the same time? Bank 17.9% in 1 month; In 1 year, it would lose 27.9%. But in 5 years, SNB's Bitcoin gain would be 2993%!!
If the SNB is only concerned with price stability, why is it investing so heavily in highly volatile Nasdaq stocks? For example, Amazon has dropped 14% just yesterday and 24% in the last month. Tesla 19% in 1 month; decreased by 28% in six months. Or Netflix yesterday 4.6%; It lost 49% in 1 month and 72% in the last 6 months.
So the Swiss National Bank's opposition to Bitcoin is not due to price stability. SNB executives see no harm in 'printing' their $100 billion from the air into the much more volatile Nasdaq shares. The SNB does not look for the 'international reserve money' condition that it puts forward when it comes to Bitcoin, in stocks. The fact that Bitcoin is not preferred is not because it brings less profit. Even if we leave other crypto assets aside in the last 5 years, the return of Bitcoin alone has tripled the Nasdaq earnings!
Switzerland is the heart of the classical unlimited money printing system. The country with the most unlimited money printing. It shamelessly tries to keep the US stock markets afloat with unlimited money that does not rely on anything it prints. Now, if the SNB were to buy Bitcoin with limited money as its basic philosophy, wouldn't they ask: "Why did you buy it?" Answer: “It gains value because it is limited.” Then won't everyone say: "What is this diet, what is this pickled cabbage? Why are you constantly printing unlimited money until the morning?”
This is the real reason why SNB stays away from Bitcoin guys!
It is natural that big central banks have not yet come close to Bitcoin, as they can still deceive the world with the unlimited money they produce.