Bitcoin Whipsaws against the Dollars Value

One good answer for why Bitcoin is volatile and trending down since November, is the US Dollar.  Below is the DXY Index chart:

As the USD strengthens, it puts sell pressure on Bitcoin.  Our contention for the past month or so, has been the Fed’s narrative since November of future rate hikes, has faned this flame.  Tomorrow, they announce said rate hike.  We predict 25 bps, but if its higher, expect a big Bitcoin dump.  If it is 25 bps, expect a smaller Bitcoin dump.  What happens after this will be really important.  See this picture and Christine Lagarde quote from a year ago:
 

The central banks want to get rid of Bitcoin because it IS the escape from their system!  Why are they hiking rates in an election year?  To attempt to control inflation and simultaneously, hurt Gold and Bitcoin.  Competitors to fiat currency.  Two birds with one stone.  
 

Now consider these numbers.  10 year treasury bonds are at 1.6% now.  CPI is at 7% now.  Thus, to get real rates you have to add those to together and make them negative.  So real rates are -8.6% right now.  A 25 or even a 50 bps rate hike won’t move the needle.  The Fed would need years of 50 bps or larger rate hikes to affect the real rate of treasury bonds, and stem the tide of inflation.  It is proven historically, that raising rates to over 8% on the 10 year treasury bond, will crash the markets.  Stocks dumped 20% in 20 days in late 2018, until QE infinity began between Christmas and New Years 2018.  2010 saw a reversal in operation twist, Fed tightening that year.  After the QE 2 begain in 2010, stocks went on a long run.  For the most part, wall street and central bankers have been bailing out stock markets for speculators ever since then.  This rate hike narrative will die in 2022!  Because history tells us rate hikes are politically toxic, they cannot be sustained.  The US Fed has to pay for government operations, through quantitative easing (QE).  Because for so many years Keynsian economic policies have been employed to pay for swelling government over reach.  There is no way around using QE to pay for government operations.  Also consider, raising rates reduces collateral for reverse repo operations.  The Fed loses it’s collateral (treasury bonds), and commercial banks lose access to capital, when reverse repo takes place as rates are going up.  Years of these policies will lead to a cash shortage!  Thus, raising rates is simply a finger in the dike.  It is a short term stop gap.  It cannot be held up for long.  The flood of money through QE, stimulus, or other, more nefarious means, is the ONLY way the US government can remain in operation, in it’s current state!   In 2008 there was $52 trillion in unfunded debt on the books, and $350 trillion  cash in all US banks.  The US was going bankrupt.  Which is why the great financial recession happened late that year.  Now unfunded debt in the US is over $86 trillion!
 

This diversion into rate hikes will die down over time.  We are thinking by May 2022.  Perhaps it will take longer but as it nears October, November.  It will hurt political asperations, and the Fed is connected politically to the Democrats.  We do not see rate hikes lasting too long.  When the inevitable reversal does happen, remember stocks and Bitcoin have taken a beating even before the announcement, Bitcoin will find a reversal.  Most likely, the Bitcoin reversal will happen gradually before the announced Fed reversal of rate hikes.  See this chart below:

A much longer than expected bull run cycle pushing to later in 2022.  We don’t see it getting into 2023, because the halving is early 2024.  This will all play out over the rest of 2022!  It’s early!  This chart below from Will Clemente should be useful in the future, we need to keep an eye on this metric.  Whale holdings is the green line.  They wag the dog, in the Bitcoin market.  Whales sold off last April and have not come back to that level ever since.  There are trillions on the sidelines waiting to see how all of this plays out.  Many self proclaimed whales have tweeted this is a bear market right now.  If that is true, imagine the bull market!  Here is the whale holdings chart compared to Bitcoin price:
 

Also, consider the stochastic rsi chart below.  In this chart, from crypto crew university and Steve Courtney. We see the stochastic rsi below the Bitcoin price, on the chart.  Every bull market before the top, stochastic rsi has a bullish cross.  The blue line on top of the red line on the two week chart.  We can see in this chart the cross could happen soon, but not yet:

Once more of the world wakes up to the fact that central banks do not have the common good of the people in mind.   They hike rates, lower rates, begin QE, or rig the CPI inflation calculations to make inflation look like 7% when it’s really 14%.  Once the masses begin to really wake up to this.  Higher gas prices, less daily necessities on store shelves, at much higher prices.  What Christine Lagarde fears about an escape will come true.  Bitcoin is that escape.  The supply is fixed at 21 million coins.  Bitcoin is the ONLY deflationary asset in an out of control inflationary world.  Bitcoin adoption will surpass internet adoption:

Eventually, there will come a day in the future, when you cannot get a whole Bitcoin.  Satoshis will be traded, not Bitcoins.  A Bitcoin is 100 million Satoshis.  I may be dead and gone by then, who knows.  Bitcoin will live on, decentralized, with a fixed supply.  It really is humanitarian!

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