Bitcoin; Revolution to get Unplugged from the Banking System
Bitcoin leading a revolution? This clip from 2016 in the UK Parlaiment explains why very well, click here to view on Twitter.
The banking system is crashing, slowly, very slowly. We have put out multiple blogs about how that is happening. We are assuming readers have read about QE (legalized counterfitting, money printing, at the central bank level). It stands for quantitative easing. So it starts there. Then, it leads to inflation. Which leads to wealth disparity. Asset inflation (Real Estate, Stocks) separates the elite from the middle and lower middle class. Economic inflation (Gasoline, Food, Rent) reduces the quality of life dramatically for the middle class and lower middle class. It IS a moral hazard! When will there be relief? As soon as the middle class and below learn about Bitcoin. That’s when. Bitcoin is a digital asset with adoption much like that of the internet in the mid and late 90’s. The more transactions in Bitcoin, the more adopters of Bitcoin, the more the price goes up. The more the price goes up, the more new adopters of Bitcoin come online. Metcalfe’s Law, also called the network effect. Bitcoin has created it's own self fulfilling feedback loop. The hard part, is that it goes in cycles. Every time the 210,000th block of Bitcoin is produced on the blockchain, the miner reward is cut in half. The halving, as it’s called. This starts the clock over again towards the next bull market cycle. So back in 2009 block rewards were 50 Bitcoin. In 2012, the block reward cut to 25 Bitcoin. In 2016, the block reward cut to 12.5 Bitcoin. Finally, on May 11, 2020 the latest halving, the block reward was cut to 6.25 Bitcoin. A block is mined every 10 minutes, and the difficulty adjustment keeps the algorithim solving equations in that time frame. This is done by adjusting the difficulty of the equations the mining computers (called ASICS), can mine the Bitcoin. Mining is profitable, but difficult to get into now. It was much easier in the early days. Below is a website that tracks how cheap Bitcoin used to be, even back to 2009. The first exchange transaction of Bitcoin was at a price of $.00099 per Bitcoin. Right now Bitcoin is $43,653 each. Click here to view.
We study the price action of Bitcoin and help with understanding and embracing Bitcoin’s volatility. On November 9, 2021 Bitcoin hit the all time high (ATH) of $69,000! Since then it’s been a bumpy ride. The rest of this blog is dedicated to why the future looks bright! Wednesday’s blog discussed all the States and Countries considering making Bitcoin legal tender. If Russia does this, it will kick off a worldwide scramble for other countries to follow suit. The USD is dying. The Fed cannot raise rates as previous blogs have stated. The last time the US had 4% unemployment and 7.5% CPI inflation (15% real inflation), was in the early 80’s. Back then, the 10 year bond yield was 11.5%. If the Fed went to those yields now, with $30 trillion in Federal debt. The debt service expense per year would eclipse $3.3 trillion. Therefore, regardless of politics, the Fed cannot afford to make that move. They may possibly attempt a 25 bps (basis point) rate hike. However, that would hurt asset prices, mainly stocks. Just announcing the possibility of a rate hike in early January caused markets to shed 22%.
An actual 25 bps rate hike in March would clamp down stock markets badly. Plus it would drastically increase debt service expense to the Fed. We doubt it will happen at all. Thus, the DXY (USD index) will likely keep dropping:
No global reserve currency has lasted much over 100 years. The average is 90 years. The USD is 88 years as the global reserve currency. 2%-3% of the global population owns Bitcoin. It is still early and these Bitcoin prices are crazy cheap. If you haven’t already, look at the Link we dropped above called, buybitcoinworldwide.com. Those lucky few who held Bitcoin since 2009 -2011. Well, look at the link and find out.
So, where does Bitcoin go next? In 2022. This chart below shows us red circles for resistance, green circles for support:
Bitcoin is getting bought up below $44K. As the DXY weakens, Bitcoin will get much stronger. The Fed is trapped and those in the know, understand that. Bitcoin is primed to explode! This next chart shows a more zoomed out focus than the chart above. Bitcoin had support at $37K and is now trying to maintain support at $44K. If that support is established and tested the next resistance is $54,500. See the chart below:
Bitcoin is forming a giant W pattern. A double bottom. This is a common chart pattern and Bitcoin usually reverses directions after printing a double bottom:
The target is $48K after the breakout beyond $45K. So far, Bitcoin has not been able to break above $45K easily. So, it needed to print a double bottom to consolidate and try again. Also a common chart pattern:
This next chart is great because it shows each halving to the left (vertical orange lines). Then each bull market is shown to the right. Every 4 year cycle the bull markets are becoming less and less violent. Just like the S curve adoption cycle of the internet in the 90’s. We have found it difficult to predict the cycle top timing of this bull market cycle. However, we still see Bitcoin reaching close to or over $190K in 2022, when Bitcoin hits the cycle top. We cannot predict when this top will happen. We think sooner than most Bitcoiners predict. This chart below shows September, who knows! Point is, the Bitcoin bull run is NOT over:
Below are all the public companies that own Bitcoin. This chart does not even mention the Billions invested in Bitcoin through hedge funds and institutional investors. Since only 21 million Bitcoin will ever be produced, thanks to the protocol that the block reward is cut every 4 years. The public corporations that own Bitcoin on their balance sheet is 1.16% of all Bitcoin that will ever be produced. What is going to happen when larger countries begin declaring Bitcoin as legal tender?
Someday, Bitcoin will be the global reserve currency. Also impossible to predict the timing of this, just like the date of the cycle top this year. All we know is, buy every dip, accumulate as much Bitcoin as you can. It is freedom, it is humanitarian! It could solve world poverty if the African continent and South American continent eventually deemed it legal tender. See this chart below:
We are not financial advisors and this is not financial advise. Do your own research! Bitcoin is the great equalizer. Use it! Learn about it! Embrace the volatility, and unplug from this corrupt banking system!
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