Bitcoin; FOMC was a Nothing Burger, Now What?
Fed Chairman Powell spoke after the FOMC meeting and did not say much. Just that the Fed could, might, may raise rates in March. What? They might? They may? Or they may not. A nothing burger! We predict the FOMC meeting announcement in March will be the same. They kick the can to May. In May, they kick it again! Here is a funny picture of the Monetary System in it’s current state:
The monetary system really is broken. The Fed should not have control over money supply for the entire planet!
Now look at money supply. Remember early this week our blog said; $52 trillion in unfunded debt on the books in 2008. Now that number is over $86 trillion in unfunded debt on the books! The credit system survives if base money growth exceeds the credit given out. Base money feeds on itself with the credit system. Case in point:
Here is another question for you. Why has WTI Oil been allowed to swing from -$37 to +$88 between April 2020 and January 2022? The petroleum strategic reserves were used to increase supply of oil. Therefore, prices will now skyrocket because the US strategic reserves are very dangerousely low. Here is a recent WTI Oil price chart:
Oil has the highest inflation this last year compared to any other goods inflation rate. It is one of the highest costs for goods to be transported. Therefore, Oil prices will lead inflation in other durable goods like all food products, steel, automobiles, lumber, construction goods. This is why CPI inflation is 7% and real inflation is 14% in Texas where Neutral ATM operates, and much higher on the East and West coasts! In previous blogs we have discussed how raising rates removes cash from the commercial banks, and the Fed looses their collateral (treasury bonds), whenever they are doing reverse repo activities to add liquidity to the credit system. Put simply, the Fed cannot afford to really raise rates at this point. Last year sometime was the best time for that. It’s too late now. The November mid term elections are simply one more reason not to raise rates!
So, we don’t believe rate increases will actually happen. This means inflation will keep running hot! How does the Fed control that? By controlling the velocity of money, in other words, spending! Central bank digital currency (CBDC) would allow spending controls and more surveillance of citizens for central banks. CBDC accounts could be cut off for over spending (hoarding) a good or service in high demand due to the inflation. Here is a chart on how CBDC actually works:
China has announced CBDC, the EU countries will announce in 2022 sometime, and the Biden Administration appears poised to do the same later in 2022, perhaps early 2023. We think it comes out this year. The timetable has been sped up!
This sets up a race between Bitcoin and CBDC’s globally. What is the better money? The lightening network allows Bitcoin to transact faster than ever before. Wallets, Exchanges, and ATM machines are going to the lightening network ASAP. This will spread. The Bitcoin difficulty adjustment will keep getting harder as we inch closer to quantum computing technology. The blockchain will keep blocks at ~10 minutes each, thanks to the difficulty adjustment. 40% of Bitcoin mining is renewable energy and the balance is offgrid. Ever since China banned Bitcoin mining, the balance of mining has rushed to renewables and off grid. Thus, Neutral ATM believes that longterm, Bitcoin survives and thrives. It will win. Our thesis has been right so far.
Incidently, Robinhood is beta testing it’s Bitcoin wallet, click here to view on twitter.
Valkyrie has a mining ETF applied for to the SEC, click here to view on twitter.
The reciprocal of that is the SEC, who just announced they will not approve the Spot ETF applied for years ago, even through 3 Future’s ETF’s were approved in 2021. This sets up manipulation through derivatives. Yet, 58.1% and climbing is the rate of wallets with less than 0.001 Bitcoin. So, 58% of the tradable circulation of Bitcoin is micro investors getting decentralized, out of reach from central banks. If all of these wallets store their keys offline, they are untouchable and cannot be hacked. This undercuts the ability of wall street to hurt Bitcoin with derivatives. As the adoption of Bitcoin grows in wallets of <0.001 BTC, wall street will have less and less control. The dilution effect. Also, keep in mind, these futures ETF’s rely on shorts in the open interest pool. Shorts (future’s bet that Bitcoin goes down) are few and far between in Bitcoin since it is so oversold right now. We have shown plenty of charts this week demonstrating Bitcoin is extremely oversold. See this chart:
The one aspect of Bitcoin missing since early November 2021, is whales have not gotten back in enough. Whales are those with over 1,000 BTC in their wallets. In the above chart, shorts are red, longs are green. If whales start buying at these levels, a Bitcoin reversal is eminent. Not many shorts are left. Seems pretty likely at this point! Last chart, Whale Bitcoin balances are trending up:
This consolidation period will lead into a great parabolic run up. Early last year, we thought the top would hit in December to February. Now, it appears much later, this summer perhaps. What difference does that make? None. Just keep accumulating, and buying every dip. Play the long game! Bitcoin’s supply is hard capped at 21 million coins, minus the first 1 million coins mined, minus ~3 million lost coins. That is only 17 million coins total supply in circulation. Almost, 15 million have already been produced. Hold Bitcoin for your future. Otherwise, CBDC will be your only choice! As we say in closing of most of our blogs. We are not financial advisors, and this is not financial advise. It’s simply a choice, leading to an outcome.
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.