Thread by @dkcrypto13

Short thread on #macro drivers #bitcoin & #crypto are facing right now. $BTC $ETH

While #tether not immediately being wound up now, Yellen speaking negatively or Square buying definitely impacted price this week, there is a larger picture we should bear in mind & watch closely:

Due to other news in cryptoland, the larger macro picture (which, IMO was and is the main driver of #bitcoin since March 2020) has been a bit under the radar.

There are several future uses of the #bitcoin #blockchain, but it's current main use is vaccuuming up USD the Fed prints

$BTC is perfect for it. It is digital, fast (in comparison to Gold), very hypable and it has absolutely no intrinsic value yet without the speculation around it. So when the Fed started printing in response to #COVID, in order to prevent a new Great Depression, it rallied.

Alongside of #bitcoin, tech stocks rallied massively due to zero interest rates, abundant liquidity and the fact their business was least impacted by the pandemic. Zero interest rates mean that one USD in revenue / profits / fantasy will be valued higher by the market.

Tech stocks and $BTC have abundant fantasy and revenue, but not that much profits. Of course, it is logical that if base money increases 30%, valuations of everything would be 30% higher ceteris paribus. So tech stocks were the main beneficiary of QE along with real assets.

Traditional markets have been fretting about interest rates and tightening monetary policy for about a week now as the 10 year bond yields have risen "substantially" (relatively speaking) vs short term in the US, signalling higher inflation expectations and potentially rate rises

This only happens (usually) if the economy is doing better, so the result was that companies connected to the real economy (like airlines, industrials or entertainment parks) did really well, but tech stocks that had been driven more by monetary policy did poorly. #bitcoin is...

... a part of that equation whether you like it or not. Yesterday, Fed chief Powell calmed markets by saying that unemployment and inflation are not close to where the Fed wants them and they are not even thinking about reducing stimulus yet. This led to a turn around in...

...tech stocks and $BTC alike. As a matter of fact, #bitcoin hardly reacted to #tether not being killed by the NYAG, it only really rallied back after Powell's speech.

So what does this tell us?

Firstly, it reminds us that $BTC is currently foremost the mentioned vaccuum for USD. It is acting as a store of value indeed (albeit the most risky and volatile one). It is therefore heavily dependent on the Fed's policy stance and it gets jitters alongside tech stocks.

Secondly, given what Powell said, it seems the current macro tailwind for #bitcoin is not yet over. It seems there should be a bit of room. HOWEVER, given the market showing its cards with rising bond yields, we are certainly closer to the end than the beginning.

This does not mean anyone needs to change asset allocations in a panicky move, but it is a very welcome warning for all of us to be prepared for when the Fed reduces stimulus. This is the most essential input to $BTC prices today. That might change, but currently it's how it is.

TL,DR: #bitcoin is currently dependent on Fed QE and correlated with other such assets. Current QE is likely closer to the end than the beginning. Probably some room left though.

Not advice at all. My personal thoughts only.