Bitcoin & the Financial War II

There are multiple layers to the financial war going on globally.  The EU and US against Russia.  Then there is the Fed against main street US.  Or the Fed against Bitcoin.  We will try to break this down.  The bottom line however, is that main street US investors are behind on retirement savings, on average:

 

 

This makes it hard to understand why there is not a Bitcoin Spot ETF, which would incentivize institutional investors, sovereign wealth funds, and pensions to allocate a % of their AUM(assets under management) into Bitcoin.  If Bitcoin got a spot ETF, it would open the multi trillion dollar floodgates of investment into Bitcoin.  Instead, we are seeing the DXY (USD index) strengthen on the back of the Fed’s hawkish talk about rate hikes.  If these rate hikes continue, as is being announced.  50 bps in May and again in July.  Will that shake lose some of the apprehension by the SEC to approve a Bitcoin Spot ETF?  It would be needed by then since stocks will be dipping with two 50 bps rate hikes in the books.  So, either a Bitcoin Spot ETF, or a stock market crash could act as catalysts for the DXY to drop.  When that does happen, historically, Bitcoin goes on a run.  See this next chart from Crypto Zombie:

 

The yellow line is the DXY index.  The inverse relation it has to Bitcoin prive action is perfect.  The dollar obviously is NOT strong.  It is devaluing by 15% to 20% per year.  That is as weak as it has been since the 70’s.  Therefore, only the hawkish talk from the Fed has contributed to the DXY going bullish.  It is not sustainable.  Eventually, the DXY will come down.  See the chart below with the double bottom very evident.  These kind of dollar strength runs cannot last, from a historical perspective.  Something will act as a catalyst and drop the DXY back down towards 90.  Whatever the catalyst is, watch for that event.  Here is the double bottom DXY chart below:

 

 

Quantitative Tightening instead of loosening as we saw in 2020 and early 2021, has also contributed to the M2 money supply droping, as we see in this chart below:

 

 

Before this drop, M2 had the following statistics from spring 2020 to spring 2021:

2 year treasury bonds are yielding an average return of 

-9.5% YTD in 2022.  This means pensions and sovereign wealth funds are losing big on their bond investments.  
 

This must be why Fidelity is announcing the allowance of investors to include Bitcoin into their 401K’s.  This is without a Bitcoin Spot ETF.  Click here to see article.

 

Grayscale Bitcoin Trust has even considered sueing the SEC over not having the approval for a Bitcoin Spot ETF yet.  

 

“We believe the Teucrium order confirms the fundamental point . . . [that] when it comes to approving [exchange traded products], there is no basis for treating spot bitcoin products differently from bitcoin futures products.” Click here to read more.

 

This all leads us to several bullet points:

Any of these catalyst events would help Bitcoin, and could spark the other two events to happen sooner.  We can still see a possible double bottom in the Bitcoin chart and this bull run may not be over.  On the other hand, it could be over, if none of these catalyst events happen soon enough for Bitcoin to get the bounce it needs!  Therefore, HODL long term and wait.  That is all we can do.  We are not financial advisors and this is not financial advise.  We see the Fed keeping the DXY as high as it can until something breaks.  That is what we are waiting for.  We cannot time it.  The dominoes have to fall first.  Remember, a stock market crash could see Bitcoin tumble to $20K!  We hope not, but it IS possible.  Remember the V bottom in March 2020 though!  Bitcoin pulled an 18X in 13 months after that bottom was found.  HODL!

 

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