Bitcoin: BIS says 1% of Bank Reserves can be held in Bitcoin. Globally

Below is the source of this announcement.  This would be huge in future years.  2022, not so much.  This is why we stack Bitcoin like there is no tomorrow:

 

 

As the value of the dollar erodes away.  The amount it takes to be wealthy, or financially comfortable goes up and up!  When a family buys Bitcoin cheap like right now or 3/2020, or 12/2018.  They are set up to grow their savings long term.  That is wealth, savers who own hard assets that appreciate.  There is no other way to grow wealth.  Many do it through real estate, gold, or equities.  Bitcoin has surpassed all of those means to achieve savings, or wealth.  See this chart below:

 

 

Also notice New York, and California have the highest levels of savings and equity to attain “wealth”.  That is due to the higher inflation rates in those states.  Bitcoin may be in a bear market now, below we will explain why.  
 

First of all, this bear market in Bitcoin is a great opportunity.  Bitcoin rarely gets this cheap, this oversold.  What created this situation, is Fed policy.  Below is a chart from Pantera Capital.  Real FFR (Fed Funds Rate) using case-shiller (housing market index), and comparing that to Core CPI (using case-shiller).  The policy gap between FFR and CPI (when case-shiller housing market index is used) is actually 20.3%.  That is far worse than the 1970’s which only got to about 17% policy gap.  This means the stagflation and persistant inflation this economy will see could last far longer than economists are predicting.  The ability of the Fed to get FFR above their measurement for CPI (8.6%).  That ability does not exist.  Right now FFR is 1.5%.  To bring it to 9%, would collapse the economy and housing market to unheard of levels.  Therefore, the policy gap below is a good tool to view how the market got this bad, this fast:

 

 

Way too much stimulus in 2020 and 2021, followed by reckless government spending in Ukraine, more handouts in California this month, and just continued government spending in general.  Especially this last 2 years.  With CPI at 8.6% and real inflation close to, or over 20%, rate hike expectations should be high, yet they are falling.  Rate cut expectations were falling and now they are rising.  We still expect rate hikes.  So, to some extent, we disagree with investor sentiment.  Here is a chart showing this sentiment:
 

Now see the 10 year bond yields.  Dropping again!  JP Morgan is telling investors to leave LIBOR and move over to SOFR bonds as 90% of the bond market has already done that.  

 

“Forward-looking term rates will be based on SOFR futures and are dependent on the development of a large and robust derivatives market.” Pensford

 

More forward looking SOFR term rates will help keep bond yields down, while the Fed raises rates to keep the US Dollar strong.  Here is the 10 year bond yield chart:

 

 

Below is a DXY (US Dollar Index) chart with target prices in the circles:

 

 

This chart predicts at some point this summer the DXY could hit 120!  It has done this before during the 1999-2000 dot com recession and the high inflation of the early 80’s.  See this more historic DXY chart going back 50 years.  The red line is 120 DXY price.  That is the DXY target price, we believe this level will be reached!:

 

 

Finally, here is a more short term view of the DXY chart.  Breaking out!:

 

If the DXY does hit 120 this summer.  That could easily push Bitcoin to $14K or slightly below.  The real Bitcoin support level is $13,700!  The $19,500 level Bitcoin has held recently, is no longer holding!  We see $14K Bitcoin some time this summer.  The bloodbath will continue!  See this Bitcoin chart from Steve Courtney.  These are monthly candles and by midnight tonight June closes the month.  Very unlikely June closes above $19,500.  Therefore, Bitcoin holds that level as resistance and continues down!:

 

 

We bought a little at $19K this morning, but we are holding out for lower prices.  We have bought the $19K to $19.5K level a few times, but expect mid teens or lower at some point.  We don’t know when.  

 

This is not financial advise, and we are not financial advisors.  There is strong evidence forming (confirmed at midnight tonight), that the DXY is strengthening and BTC is weakening.  We already know they are 100% inversely related to each other.  We also know the dollar cannot remain this strong indeffinently.  Thus, we buy dips and wait it out!  Welcome to the Bear Market.  Opportunities are everywhere at these price levels!

 

Neutral ATM is here to get everyone off of zero Bitcoin.

 

Give Neutral ATM a try.  We have low rates, convenient locations and we are expanding. Contact Neutral ATM, we will answer all your questions about Bitcoin and using our ATM machines. Find a Neutral ATM Bitcoin machine location near you.