good morning afternoon or evening thank you for tuning in my name is guy and what you're about to see is educational content not financial advice you can find any topics you're looking for using the timestamps in the video timeline and now for today's top stories late last week the crypto market crashed bitcoin dropped by NUMBER_TOKEN percent and most altcoins dropped by NUMBER_TOKEN percent or more in the middle of all the madness salvadoran president najib buchelli announced on twitter that his government had bought the dip yet again this time around it acquired NUMBER_TOKEN btc bringing el salvador's total holdings to NUMBER_TOKEN btc which works out to around NUMBER_TOKEN million dollars the last time el salvador bought the dip was just NUMBER_TOKEN days ago and this is around the time microstrategy executed its own btc purchase at the end of november microstrategy ceo michael saylor tweeted that the company had acquired an additional NUMBER_TOKEN NUMBER_TOKEN bringing its total holdings to over NUMBER_TOKEN NUMBER_TOKEN btc worth over NUMBER_TOKEN billion the reason why these two entities have been buying btc so aggressively is simple inflation fiat currencies are losing value by the day and in many countries this is happening at a record rate as i mentioned in my video about bitcoin adoption in latin america countries such as el salvador which have historically been dependent on the us dollar feel the effects of inflation much more severely as they rarely receive any of the freshly printed money as for tech companies like microstrategy many are sitting on millions of dollars of capital which can't be allocated to anything that would provide a meaningful return on investment and the longer they sit on it the more it loses value though these big btc purchases may sound preposterous to the average person they're the correct play in the eyes of many experienced investors who see btc as an inflation hedge the insane demand for bitcoin amongst experienced investors has essentially forced banks to provide crypto services of their own and it looks like big banks in the us are about to introduce bitcoin-backed loans citing quote three people familiar with the plans coindesk noted in a recent article that goldman sachs is one of many big banks that's working on making it possible to borrow against btc in addition to physical btc custodied by professional custodians such as coinbase and fidelity these banks will also accept bitcoin futures contracts as collateral which is pretty crazy even though two small banks in the united states have supported btc backed loans since march this year the same move by a big bank like goldman sachs could cause the entire banking sector to follow suit u.s banks have been able to hold bitcoin since last july and the reason why they haven't been offering btc-backed borrowing boils down to regulations about how much btc reserves they must keep as i mentioned in my video about cryptocurrency custody the money you have in the bank technically doesn't belong to you and the bank will almost always invest or lend out your cash elsewhere when it's deposited this is called fractional reserve banking and one of the big concerns about bitcoin in this context is what happens in the event of a massive crypto crash since banks must keep a minimum percentage of assets on their balance sheet relative to their liabilities funnily enough the federal reserve removed all reserve requirements at the start of the pandemic
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