We saw some euphoria in the markets. The crypto when on a rampage when many old narratives being brought up. But is this push upwards sustainable? Has the market really bottomed?
@CryptoHayes lays out some macro insight and his thoughts, summarised in the thread below: 👇🧵
1/n
@CryptoHayes lays out some macro insight and his thoughts, summarised in the thread below: 👇🧵
1/n
1) US CPI YoY Index
2) Gold (yellow), Bitcoin (green), USD Liquidity Index (white), Indexed at 100
3) US Hourly Earnings % Change MINUS Core PCE % Change, Both YoY
4) US Treasury Actives Curve
5) Fed Pivot Scenario Analysis
6) Conclusion
2/n
2) Gold (yellow), Bitcoin (green), USD Liquidity Index (white), Indexed at 100
3) US Hourly Earnings % Change MINUS Core PCE % Change, Both YoY
4) US Treasury Actives Curve
5) Fed Pivot Scenario Analysis
6) Conclusion
2/n
1) US CPI YoY Index
Inflation measured by the CPI peaked around 9% in mid-2022 and is heading towards the key 2% level. Many thinks that with this downtrend the money printer could be back on.
Assuming so, what would it mean for $BTC price?
3/n
Inflation measured by the CPI peaked around 9% in mid-2022 and is heading towards the key 2% level. Many thinks that with this downtrend the money printer could be back on.
Assuming so, what would it mean for $BTC price?
3/n
We understand 2 things about $BTC:
One, $BTC and broader crypto capital markets are truly free from manipulation by central bankers and financial institutions. Poorly ran businesses were purged, like 3AC, FTX, Genesis, Celsius, laying the groundwork for a healthy rebound.
4/n
One, $BTC and broader crypto capital markets are truly free from manipulation by central bankers and financial institutions. Poorly ran businesses were purged, like 3AC, FTX, Genesis, Celsius, laying the groundwork for a healthy rebound.
4/n
Two, $BTC price is heavily dependent on the future path of USD global liquidity. And over the last two months, $BTC has outperformed a flatlined USD Liquidity Index value. @CryptoHayes sees that the market believes the Fed pivot is coming.
5/n
5/n
2) Gold (yellow), Bitcoin (green), USD Liquidity Index (white), Indexed at 100
$BTC pumping off of a low base.
6/n
$BTC pumping off of a low base.
6/n
Possibly senarios:
#1 natural bounce off local lows of $16k, price plateau until USD liquidity conditions improve.
#2 market is frontrunning a resumption of Fed USD money printing
-> 2A: No pivot, $BTC price comes down
-> 2B: Pivot happens, start of bull market rally
7/n
#1 natural bounce off local lows of $16k, price plateau until USD liquidity conditions improve.
#2 market is frontrunning a resumption of Fed USD money printing
-> 2A: No pivot, $BTC price comes down
-> 2B: Pivot happens, start of bull market rally
7/n
We are likely in the situation #1 to #2A but Fed unlikely to pivot just because CPI is trending lower. Powell wants to look beyond CPI, to consider US hourly earnings and Core PCE.
@CryptoHayes thinks that neither CPI or Core CPE is good measure for inflation.
8/n
@CryptoHayes thinks that neither CPI or Core CPE is good measure for inflation.
8/n
3) US Hourly Earnings % Change MINUS Core PCE % Change, Both YoY
Wages in the US are rising at the same pace as inflation => Goods are getting more expensive while people’s ability to buy those goods is actually increasing at a similar rate due to their increased wages.
9/n
Wages in the US are rising at the same pace as inflation => Goods are getting more expensive while people’s ability to buy those goods is actually increasing at a similar rate due to their increased wages.
9/n
4) US Treasury Actives Curve
Only 6-month T-bills are currently yielding greater than 4.7%. Sir Powell has room to continue raising rates, to further tighten monetary conditions to where he’d like them to be.
10/n
Only 6-month T-bills are currently yielding greater than 4.7%. Sir Powell has room to continue raising rates, to further tighten monetary conditions to where he’d like them to be.
10/n
5) Fed Pivot Scenario Analysis
What could make fed pivot?
#1 Powell reads the falling CPI metric and pivots, stop hikes, stop QT, cut rates => Risky assets rise
#2 US credit market breaks, financial meltdown, stops QT, cut rates => Risky assets crater
11/n
What could make fed pivot?
#1 Powell reads the falling CPI metric and pivots, stop hikes, stop QT, cut rates => Risky assets rise
#2 US credit market breaks, financial meltdown, stops QT, cut rates => Risky assets crater
11/n
If you like this thread please help to retweet and follow! Would really appreciate it :)
For more details you can read on more here: cryptohayes.medium.com/bouncy-castle-…
13/n
For more details you can read on more here: cryptohayes.medium.com/bouncy-castle-…
13/n
Linking this thread back to the first tweet for convenience
14/n
14/n
https://twitter.com/arndxt_xo/status/1616325927910387712
Lastly, tagging some friends in this space for reads:
@crypto_linn
@rektdiomedes
@DegenCamp
@DegenSensei
@Slappjakke
@ViktorDefi
@crypthoem
@CJCJCJCJ_
@CryptoShiro_
@CryptoDragonite
@DAdvisoor
@Subli_Defi
@DeFiMinty
@TheDeFinvestor
@Dynamo_Patrick
@byChadManDan
@crypto_linn
@rektdiomedes
@DegenCamp
@DegenSensei
@Slappjakke
@ViktorDefi
@crypthoem
@CJCJCJCJ_
@CryptoShiro_
@CryptoDragonite
@DAdvisoor
@Subli_Defi
@DeFiMinty
@TheDeFinvestor
@Dynamo_Patrick
@byChadManDan
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