Edit: this was actually supposed to be on r/wallstreetbets. Posted to wrong sub, but it still talks about BTC.
There’s as much political capital to use the R word as there is for austerity. None. Not from the party in power, not from the media that supports them, not from the institutions that need liquidity, or from central banks. Make no mistake, the previous president was a nightmare as well, and beyond symbolism, and symbolic legislation, did absolutely nothing but add to the national debt. That debt stands at $30T. That’s why the US government, the USD, and Federal Reserve are trapped in a corner with no way out. This is the Doom Vortex of the Triffin Dilemma, and more or less the end of the USD. If you raise rates say 1%, the interest on that is $300B annually. But inflation is set to break 10% (CPI). The below chart is a parabola. This is the absolute last thing you'd want to be doing in a high inflation environment with commodities surging and the demand for USD dwindling.
I wrote about the Doom Vortex and the dangers of sanctions which are symbolic, and about the coming shortages, immigration crisis, and exploitation by China as a non-sanctioned nation here:
A bear market is defined as any decline of 20% or more in the general market. We’ve had 9 such declines since 1950. The average bear market lasts 289 days AFTER a 20% decline.
Ultimately it will be taxes that have to be raised. Remember you’re the ones that pay taxes, not corporations or billionaires who can lever debt. Corporations made up 7% of federal tax receipts last year. That means corporate taxes are ripe to get hiked along with crypto taxes, capital gains taxes, etcetera. That’s likely where the GOP makes huge inroads with voters going into our elections this fall. Speaking of politics, anybody see France’s far-right candidate Marine Le Pen’s sudden surge in the polls against Macron? An insane upset in that election would send absolute shockwaves through the EU that you cannot imagine. If that happened only a month into the Ukraine War when the biggest fallout from it (shortages, immigration surge, inflation) has not been fully absorbed, it’s difficult to imagine an EU that would survive intact because I watched the last time immigration in an economy of plenty brought Brexit and a new political class to Europe. Imagine immigration 5x as bad in an economy of shortages, and rolling blackouts.
This is natural gas futures. This isn't going to last long before things stop wobbling and start breaking:
So what does this mean for markets? It means a wipe-out. It means the type of capitulation that proffers generational buying opportunities. I see it as more than this, in fact; I see it as a redistribution of wealth, blood on the streets style. My nephew who uses FBA to sell products on Amazon with margins of about $1, has already had to raise the product price 20% to make the same amount of money but his sales volume has plummeted. If he continued selling at the previous price, he'd be losing money with each item. That's an anecdotal and seemingly irrelevant example, but my point is that the weakest will get squeezed first and our economy IS NOT designed for oil over $95. The entire thing has adapted around certain energy input costs like our evolutionary biology has oxygen.
Look at the trucker tender reject index above... This is up exponentially from last year. This reading is actually worse than every recession on record.
This all sets the stage for the coming food crisis late summer into fall which I talked about in the Doom Vortex post. It'll destabilize the Middle East, and send a deadly wave of immigration into Turkey and Western Europe. Fertilizer price index:
Deadly
We'll look back and see that the bear market started in in November 2021, and was confirmed in April (or May) of 2022 with the 20% down breach. Then we'll look back and see the recession started early in 2022.
My prediction is that the Turkish Lira continues its hyper-inflationary moves, and goes bust in the next 12 months. That's dangerous because of the inbound immigration issues nobody is seeing play out. They'll be left with the choices of either moving closer towards China (an emerging debtor nation who can proffer money and commodities), or to sacrifice their children at the IMF altar, hoping its SDR (special drawing rights) has enough inputs to float them past outrageous fortune. Either way, they'll be giving away huge concessions. Or they can choose the digital gold pathway, which will cause all types of trouble early, and then later because digital gold over a long enough time period completely demonetizes the political class; but it makes sovereign citizens and the scarcity in the money leads to an abundance of everything else, meaning it would be great for the people at large. Turkey is a strategically located country in geographical terms, and has an enormous manufacturing base. The former is why it's so valuable to China, so EU would be willing to overspend to keep them in the fold, putting evermore pressure on the Euro. Money machine go brrrrr.
Lastly here's a thought experiment with an anecdotal example:
Assume that Starbucks made an NFT large latté. This NFT latté was exchangeable for a real latté at any Starbucks location. That latté is $5. But now assume that this NFT latté could be held on any non-custodial wallet in the world, which you could spend it from, and Apple integrated spending of such tokenized securities from ApplePay. Ok, but now assume there are DeFi marketplaces for these, meaning I can swap that latte for a Big Mac, some doughnuts, or sell it for bitcoin, HODL it, or gift it, take a loan on it, etcetera. Assume any trade of such tokenized securities cost less than a penny, settled instantly, and moved at the speed of light. Why would anybody hold USD (and thusly stablecoins) when they could hold these globally? Why not hold the NFTs instead ? Because they'll keep pace with inflation. Assume the network these all travel on can eliminate the 4% charged by Amex, Visa etcetera. That chargebacks dropped 50%. Refunds were instant. Settlement was instant. Global restrictions were gone. Liquidity could be acquired instantly, and it offered a revolutionary way to advertise like Facebook did a decade ago. That's the Lightning Network's future, and it's not good for banks, remittance, card processors, stablecoins, or paper money. Bitcoin can then start absorbing silly amounts of value.
The above is the Weimar papiermark versus gold chart. It took a decade for hyperinflation to play out fully, and the German reparations they owed were priced in gold. Volatility can be extreme and you can go broke even if you bet the direction correctly. This is why you don't max leverage if you're a bear, even in the market scenario I've laid out. Go 1.5x leverage max, don't be fearful of selling puts on bearish ETFs and volatility (at times). It will reduce your cash/margin requirements.
Judgement:
Exit this market tomorrow. If you don't own bitcoin, then get off zero. HODL until you see generational buying opportunities in stocks (indices at least 30% down).
If you're a newb who taught himself to trade during the lockdowns, fancy yourself a Gordon Gekko with his Robinhood app, and have never blown up an account yet, at least have the sense to sell calls on your positions to limit the damage.
If you're a bear, you'll be fine, just don't go more than 1.5x leverage. Volatility will smack you around but you'll always get closer to the capitulating bees' honey.
If you're a meme bro, then you're a gambling junkie masquerading as an investor and will go broke over time regardless of what you do. Just have fun doing it.
Lastly:
If a credit market develops around bitcoin because it surprises everybody and becomes less volatile than most fiat (already is more stable than Turkish Lira), this can be a straw that breaks the camel's back. If the fiat world gets whittled down to USD and DCEP, then BTC will win, because both of those are antagonistic, and will have trouble enforcing rules without making trouble. Bitcoin's network as the honest base layer that everything builds around enforces rules. Also remember a CBDC does not fix the USD's global problems. It's not even fungible money. Whatever happens, the world of money will look much different in just 2-3 years.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments