Federal Funds Rate, how that will control the DXY index, which controls Bitcoin
Bitcoin has been accumulating in a range from $33k to $48K since January 2021. Frustrating as that has been, one has to look at the DXY chart to see where it has been during this time. We will do that below. However, the FFR (Federal Funds Rate) is what pushes the dollar index (DXY) up or down. Rates are raising now. 25 bps in March and 50 is expected in May. When the FFR gets high enough, what does that do to the economy (stocks and real estate)? See this next chart below:
Every stock market and real estate crash happens as the FFR gets too high at that time. Also notice how that same FFR top, keeps dropping. The fiat based monetary system has less and less room for higher FFR’s over the last 5 decades. We said last week and still see the FFR limit around 2.5%. It has a long way to go to get to that level. Currently, the FFR is .33%, CPI is 8.5% and Shadow Stats shows real inflation at 17.5% and up to 20%, in some areas in the US. The next chart is the DXY index. It shows a double bottom going back to late 2016:
As the FFR has been climbing here are the average mortgage rates, climbing in 2022:
Total public Federal debt is over $30 trillion and the FFR is at .33% and climbing. See that in this chart below:
Notice how the FFR was climbing fast to control inflation from 1971 when the US got off the Gold standard until 1982 when inflation peaked. Now inflation is at least that high, yet FFR is .33%. Can you see the difference in this chart above? Why can’t FFR get high enough to stop inflation. It is because of the blue line, total public federal debt. This is why we still believe that if FFR hits 2.5% this year or next, a stock market crash will ensue. Is the Fed pushing us into this crash sooner rather than later, and they really are this hawkish on rates, regardless? That very well could be. Why? Central Bank Digital Currency. They want to get the monetary system into the more censorship favorable CBDC’s as soon as possible. This has been discussed for over a year on our blog. Now the US is pushing the SOFR (Secured Overnight Funding Rate) over the LIBOR rate. SOFR is more of a free market rate, LIBOR is controlled by the European central banks. If by July we add another 100 bps in rate hikes or so, or even more. We will know by then, that this is the Feds plan! This would be a push into CBDC at any cost. For them, that is a good plan. For the citizens, not so much. This next chart shows home ownership % rates by birth years below:
For those born after 1989, home ownership is 25% and under. This is tragic since a mortgage is a tax deduction and rent is NOT! Now, we have mortgage rates, pushed by the FFR, skyrocketing up, inflation skyrocketing up, at the same time! Younger Americans cannot buy a median priced home ($400,000 in 2022). It is getting pretty bad. To top that off, BlackRock and Vangaurd are the two largest single family home buyers in the country. Nearly 40% of homes are purchased by these giant corporations in 2022. As rental investments. This removes the tax write off advantages from younger Americans. Bitcoin is the life raft for this! This is important. Follow this logic path!
Australia kicks off a spot ETF on April 27th. One week from now. Canada has had one for many months now. Van Ecke is one of the institutional investors in that ETF. Surely Van Ecke will get their ETF approved in the US in the not too distant future. Plus all the sovereign wealth funds in UAE, Qatar, and Suadi Arabia must get better returns in those wealth funds. Inflation is a subtraction from wealth fund yields, pensions as well. Real returns are dropping. As FFR approaches 2.5%. As home ownership percentages are dropping from generation to generation in the US. Bitcoin is the one scarce asset that stands to act as THE store of value for wealth funds, pensions, and those who need a store of value, since home ownership is out of reach! Bitcoin has already supplanted Gold as the store of value. When, not if, the sovereign wealth funds begin using either the Australian Spot ETF, or the future US Spot ETF, to acquire Bitcoin as a store of value. Bitcoin could over a six month period after this commences, rise over $400K per coin! As bad as rising inflation, rising FFR and mortgage rates is. As bad as a falling home ownership rates are amongst Millenials and younger. This pushes people to find a better store of value. If home ownership has to be delayed, Bitcoin can be the liferaft. If BlackRock and Vangaurd are buying up a lot of the homes now, rent and invest the difference in Bitcoin. This is a part of the reason why Bitcoin is flying off of exchanges right now! See below:
Once this predicted crash starts (Fall 2022?), by then there will be an Australian Spot ETF for Bitcoin. Perhaps a US Spot ETF as well. There will be better options. Not to mention better options than CBDC. Those invite government oversight and control at a level that has never been seen before. So, if the Fed is pushing for a crash as an excuse to move us into CBDC’s, which looks likely at this point. Then, expect continued inflation in addition to high borrowing rates, and economic contraction. Expect this to lead many to adopt Bitcoin. See this chart below at how Bitcoin reacts when the dollar inevitably falls again:
The Feds actions are leading to mass Bitcoin adoption whether they know and admit that or not. A US Bitcoin Spot ETF is coming. We don’t know when. Just that it is best to own a lot of Bitcoin before that goes online! We are not financial advisors and this is not financial advise. Canada and Australia are likely to be test cases for a Spot ETF for Bitcoin in the US. This impending stock market, real estate crash, US Spot Bitcoin ETF, Sovereign Wealth Fund adoption into Bitcoin. None of these events has happened yet. But they will. Give it time! Patience!
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.