Stack Hödler Profile picture
Jun 13 28 tweets 9 min read
We are living through the biggest economic shock of our lifetimes. And one of the most pivotal moments in human history.

The rules of the game are to stay solvent and secure your #Bitcoin in cold storage.

Megathread on what you need to know to keep your cool through the chaos:
Everything is breaking.

Years of 0% interest rates encouraged everyone to take on cheap debt. Corporations, countries, individuals... Everyone.

Most of the debt wasn't used productively - meaning most of it will never be paid off.

And now that interest rates are rising... 🗑️🔥
Our current economic system REQUIRES more debt to survive.

Just take a look at this graph and you'll see that the amount of debt only goes one direction.

If we don't pile on more debt, the entire thing collapses - and that's what we're flirting with now: Systemic collapse.
The amount of new debt required to keep things propped up is at truly silly levels.

And the Fed is making one last attempt to deny reality by raising rates...

But the only way to stop our momentum is to slam into a brick wall of economic pain - which is exactly what's happening
We're seeing the chaos play out in all markets:

- Equities are tanking
- Bond yields are surging
- Currencies are plummeting vs. USD
- #Bitcoin selling off
- Shitcoins evaporating

There are very few places to hide. And cash is being eaten by inflation of 8%+
Here are some charts that illustrate how crazy things are getting:

1. German 10 year yields just broke through a 4 decade long trend line.

The German economy is being crushed by inflation, but the EU can't raise rates without bankrupting Italy and Greece. The EU is trapped.
Read this to understand why the EU is basically screwed:

2. The Japanese Yen, the 3rd largest currency in the world, is being destroyed by its central bank.

The Bank of Japan is buying UNLIMITED quantities of Japanese Government Bonds to prevent yields from going above .25%

Why? Above .25% and the Japanese banking system implodes.
Watching the Bank of Japan destroy the Yen offers a glimpse into the future of other major fiat currencies, including the USD.

When the debt becomes too large, yield curve control and destruction of the currency becomes one of the only ways out

3. Dollar weakness vs. the Russian Ruble.

Russia is done accepting cheap fiat for scarce goods. This severely limits the ability of Central Banks to kick the can by printing.

Russia is calling the fiat bluff - and the implications are massive.
Check out this thread if you want to understand why Russia demanding Rubles is an existential threat to the current fiat system:

4. Corporate bonds are falling off a cliff as investors realize that a lot of companies won't be able to pay off their debt at higher interest rates.

Companies that can't afford to refinance will need to layoff employees and liquidate assets which is bad news for everyone.
5. Let's take a quick peek at how mortgage backed securities are holding up through all of this... YIKES.

Fun Fact: The Fed says they're going to sell some of the MBS that they bought during QE. Good luck.
By now you get the point: The entire system is crumbling. Cracks are opening up and portfolios are tumbling to hell.

And yet... What can the Fed do? With inflation absolutely crushing people, can they really reverse course and fire up the money printers again?
Inflation in the real world (with pressure applied by Russia) means we're now facing an impossible policy choice: Mass default leading to systemic collapse, or continuing down the path towards hyperinflation.

And this finally brings me to #Bitcoin and why I'm calmly stacking through the chaos.

Let's be frank: The #Bitcoin price is melting down. It's testing the low $20K range as Celcius blows up and shitcoins head to zero.

But the value prop of Bitcoin remains exactly the same.
Everything that is playing out right now is why we've been stacking #Bitcoin to begin with.

The fiat system is falling apart. And we need a form of money that can be held safely outside of the system without counter-party risk.
Risk is everywhere right now. And as an investor, you need to decide which risks you want to take on.

Let's look at your options:

1. USD. Low volatility, but guaranteed loss via inflation. Counter-party risk of your bank going insolvent. Massive loss if money printer turns on.
2. 60/40 Equities + bonds. This is one of the worse years on record for this allocation. Businesses are facing a recession and governments need to monetize debt.

It may be less volatile than BTC, but it's looking like a big loser long term.
3. Gold. I actually like gold. Its lack of volatility and ability to self-custody makes it nice to hold when things are melting down. But we've seen that Gold barely keeps up with the money printing.

And unless the Fed decides to let everything collapse, money printing is ahead.
4. Individual stocks / energy / commodities. This is a popular trade right now. Buy things that will definitely be needed. It makes sense, but you better be a great trader to do this successfully. Personally I don't want to have to try to time these notoriously volatile assets.
5. Bitcoin. Yes it's getting crushed in the short term. But if you have a strong balance sheet and a long time horizon, that shouldn't impact you.

This is an asset that's outside the monetary system like gold - but reacts much more favorably to the money printer.
If you have cold-stored Bitcoin, you have zero stress about your Bitcoin disappearing, or your balance being bailed in by an insolvent entity.

And if you believe the Fed will try to save the system, then the only way that can happen is via further destruction of the USD.
So you have to ask yourself what you value more:

Are you trying to be well positioned for the long-run?

Or do you prefer to avoid volatility over the next 6-12 months at the expense of getting crushed long-term?

I like thinking long-term. So holding #Bitcoin makes sense to me.
If you're holding #BTC too, your two most important goals should be:

1. Remain solvent. Keep enough cash to cover expenses even if you lose your job for a while. Job losses happen at times like these and you don't want to sell at the lows.

2. Keep your Sats in cold storage.
For transparency, here's what my portfolio has looked like since December 2021:

The cash allocation helps me sleep well at night, and allows me to buy massive dips.

Gold is disaster insurance.

I won't change these allocations until we get a clear reversal from the Fed.
Mindset is important.

Keep your eye on the big picture. Realize that everything is breaking down and that naturally the #Bitcoin price reflects market volatility.

It's all really happening. Fiat endgame. If you stacked, you're well positioned.

Stay solvent and hold your nerve.

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More from @stackhodler

Jun 11
ETH is bleeding out. Even with 10% of the supply held hostage in staking contracts.

Need a new scam narrative ASAP or this thing's a donut. Image
ETH has survived this long because of:

- ICOs
- Crypto Kitties
- NFTs
- DeFi 'yield'

Majority of this stuff no one gave a damn about besides the opportunity to get rich quick. Zero sum behavior.

Zero remorse watching ETH die a slow death.
ETH people: The world doesn't need apps or digital art right now. The real world is melting down.

The world needs decentralized sound money savings technology. #Bitcoin is the signal amidst the 'crypto' noise.
Read 4 tweets
May 20
The story of the year is playing out in foreign exchange markets right now.

🇺🇸 The dollar is crushing major fiat currencies

🇷🇺 But the Ruble is crushing the dollar. Ruble is up over 7% against the dollar today alone 🤯

The implications are much bigger than most realize.
Why this is happening:

- Russia has said they will only accept Rubles for payment for their energy.

- By only accepting Rubles, Russia is backing their currency with the demand for energy.

- Meanwhile USD continues to be backed by faith in the United States. Yikes.
Why it matters:

Russia is done trading scarce commodities for paper that can be printed out of thin air.

This could severely limit the ability of the Fed to pull a U-turn and turn the money printers on again.

A Fed put could be the path to hyperinflation.
Read 7 tweets
May 19
On the eve of #monkeypox it's worth re-reading this thread about why some people are convinced it's best to treat us like cattle.
If I could edit, I'd replace the term "élite" with something like "sociopathic bureaucrats"

And I wouldn't make the argument they aren't evil. Morality aside, they're probably trying to save their skin.
Nobody wants the world to turn into Venezuela / Sri Lanka. But it may be hard to avoid after decades of meddling and terrible decisions.
Read 5 tweets
May 19
US Economy 2009-2022: VC funded startups with no commercial viability overpaying our best and brightest to attract revenue from other VC funded startups with no commercial viability.

A waste of human energy on a massive scale, funded by ZIRP + money printer.
When capital is cheap, you can throw money at anything. 1 success makes up for 100 failures.

But those 100 failures suck a lot of human potential out of the market. The market got code monkeys tweaking ad tech when we needed proper engineers working on food and energy security.
This is not an attack on venture capital. We need smart capital allocators taking calculated risks.

But as we head into a food and energy crisis, it's hard to ignore all the wasted human energy that went into optimizing tracking cookies instead of nuclear fusion.
Read 5 tweets
May 17
It's easy to diss fiat clown world. And our culture is no doubt lacking in soul and substance. But a look at history shows how far a rising tide has lifted all boats.

As we head into chaos, let's highlight legitimate progress while still sharing a vision for a better world. Image
We made some massive gains fighting global poverty over the past centuries. Consider that living hand to mouth used to be an average existence.

New technologies, the hive mind of the Internet, and the incentives of capitalism, have helped us drastically reduce poverty since 1800 Image
Since the end of WW2, we've enjoyed global stability and growth in both life expectancy and living standards.

But we're at a crucial turning point. The debt-based monetary system is reaching its terminus while the least capable leaders in living memory are at the helm. ImageImage
Read 6 tweets
May 10
10 reasons I'm calmly buying and holding #Bitcoin while the world panic sells:

1. The Fed says they'll keep raising rates. I call BS. Rising rates will lead to mass defaults. The same way that variable rate mortgages fucked everyone in '08, now featuring nation states.
2. Remember how they tried to convince us that inflation was transitory? Now they're trying to convince us that they'll raise rates and sell down their balance sheet.

Do you believe them now, anon?

The math says they're lying.
3. I know the history of '08. One day Tim Geithner says subprimes are contained, and the next day the largest banks on Wall Street are begging for cash to stay afloat.

Bailouts prevented mass default of the banks that held everyone's retirement savings.
Read 11 tweets

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