Bitcoin Is Ready

Summary

In this video, the host expresses optimism for Bitcoin's future as the Federal Reserve prepares for a rate cut and easing cycle amid a backdrop of high government deficits and regulatory clarity with the introduction of Bitcoin ETFs. They argue that despite recession fears and market volatility, the increasing global liquidity and the government's interest expense are positive for Bitcoin. The host also discusses the correlation between US national debt, the money supply, and Bitcoin's performance, suggesting that the upcoming easing cycle could lead to significant Bitcoin growth.

Takeaways

• 🚀 The speaker is optimistic about Bitcoin's future due to the backdrop of a potential rate cut and easing cycle by the Federal Reserve.
• 💵 The US federal government is running a significant deficit, which is higher than the previous fiscal year, adding to the liquidity backdrop.
• 📈 Regulatory clarity has improved with two of the world's largest asset managers now offering Bitcoin ETFs to their clients.
• 🌊 The upcoming easing and debt issuance are expected to increase liquidity, which could positively affect Bitcoin's value.
• 📉 Despite initial enthusiasm, ETF inflows have slowed, leading to a more cautious market sentiment.
• 💹 The speaker believes the Fed's rate cuts are due to the government's interest expense rather than a recession.
• 🌐 Global liquidity and currency debasement are key drivers for Bitcoin's value, especially with a fixed supply.
• 📊 The speaker points out that historical data shows Bitcoin performs poorly during liquidity tightening but well during easing cycles.
• 📉 The current flat performance of Bitcoin is attributed to the Fed's tightening and hiking rates to combat inflation.
• 🔍 The speaker will be watching the Fed's upcoming meeting closely for signs of easing and an increase in the money supply.

Q & A

What is the main backdrop shaping up for Bitcoin according to the video?

The main backdrop shaping up for Bitcoin includes the Federal Reserve's potential rate cut and easing cycle, the US federal government running a 1.9 trillion deficit, increased regulatory clarity with Bitcoin ETFs, and the fixed supply of Bitcoin being a hedge against currency debasement.

Why is the speaker optimistic about Bitcoin's future despite the current market conditions?

The speaker is optimistic because of the potential increase in global liquidity through easing policies, the high deficit of the US federal government which could lead to monetization of debt, and the regulatory clarity provided by the launch of Bitcoin ETFs by large asset managers.

What is the significance of the Federal Reserve's rate cut and easing cycle for Bitcoin?

The significance lies in the potential increase in global liquidity, which historically has had a positive effect on Bitcoin's price, as more money in the economy can lead to currency devaluation, a key narrative for Bitcoin's value proposition.

How does the speaker view the current state of ETFs in relation to Bitcoin?

The speaker acknowledges the initial excitement around ETFs but notes a recent slowdown in inflows. Despite this, they remain optimistic about the long-term impact of ETFs, as they provide regulatory clarity and easier access to Bitcoin for investors.

What is the speaker's stance on the current recession fears and their impact on Bitcoin?

The speaker argues that the Federal Reserve is not cutting rates due to an impending recession but because of the ballooning interest expense of the federal government. They believe the labor market is stronger than perceived and that recession fears are overblown.

Why does the speaker believe the US dollar Index is expected to break through its current support?

The speaker expects the US dollar Index to break through its support because the Federal Reserve is likely to return to easing, devaluing the dollar against other currencies, which is bullish for Bitcoin.

What does the speaker suggest as a strategy for managing emotions during periods of market volatility?

The speaker suggests holding existing Bitcoin spot holdings and not making impulsive decisions during volatile periods, focusing instead on the long-term thesis and the fundamental reasons for holding Bitcoin.

What is the speaker's outlook for Bitcoin's price in the next 3 to 6 months?

The speaker is bullish on Bitcoin in the medium term, expecting an increase in liquidity and the monetization of the national debt, which could drive Bitcoin's price higher.

What key indicators is the speaker monitoring to assess the health of the US economy and its impact on Bitcoin?

The speaker is monitoring indicators such as the unemployment rate, jobless claims, inflation rates, and GDP growth to assess the US economy's health and its potential impact on Bitcoin.

How does the speaker view the role of the federal government's deficit in the context of Bitcoin's future?

The speaker views the increasing federal government deficit as a sign that the debt will need to be monetized, which could lead to currency devaluation and potentially boost Bitcoin's value as a hedge against such devaluation.

Outlines

00:00

🚀 Optimistic Outlook for Bitcoin Amid Economic Shifts

The speaker expresses excitement for the potential growth of Bitcoin, citing a backdrop of economic conditions that include a six-month consolidation period around Bitcoin's previous all-time high. They discuss the Federal Reserve's upcoming rate cut and easing cycle, the US federal government's significant deficit, and increased regulatory clarity with the introduction of Bitcoin ETFs by major asset managers. Despite initial enthusiasm for ETFs waning due to slowed inflows, the speaker remains optimistic about Bitcoin's future, arguing that the easing cycle and increased accessibility will positively impact Bitcoin's value. They also address common concerns such as recession fears and the impact of elections on Bitcoin, suggesting that the Federal Reserve's rate cuts are due to the government's interest expense rather than an impending recession.

05:02

📈 Bitcoin's Correlation with US Debt and Money Supply

This paragraph delves into the relationship between US government debt, the M2 money supply, and Bitcoin's value. The speaker notes the rapid increase in national debt due to rising interest expenses and how this has affected the M2 money supply. They explain the concepts of quantitative easing and tightening, which influence the money supply and, by extension, the value of risk assets like Bitcoin. The speaker anticipates that the debt will eventually be monetized, leading to a devaluation of the dollar and a subsequent increase in Bitcoin's price. They also discuss the correlation between the US national debt, the S&P 500, and Bitcoin, suggesting that the upcoming Federal Reserve meeting will be crucial in determining the direction of monetary policy and its impact on Bitcoin and other risk assets.

10:03

🌐 Global Liquidity and Bitcoin's Future Prospects

The final paragraph focuses on the impact of global liquidity on Bitcoin's price, with the speaker expressing a bullish stance on Bitcoin's medium to long-term prospects. They discuss the current state of the US dollar Index and its expected decline as the Federal Reserve moves towards easing monetary policy, which is typically positive for Bitcoin. The speaker also addresses the current market volatility, attributing it to the upcoming election and its uncertainty. They suggest that once the election is over and liquidity increases, Bitcoin's value is likely to rise significantly. The paragraph concludes with the speaker's anticipation for the Federal Open Market Committee meeting and the potential return to quantitative easing, which could lead to an increase in the money supply and further bolster Bitcoin's value.

Keywords

💡Bitcoin

Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries. In the video, the speaker is optimistic about Bitcoin's future due to various economic factors such as the Federal Reserve's easing cycle and increased liquidity in the market.

💡Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It implements monetary policy, including interest rate adjustments, to influence the economy. The video discusses the Fed's rate cut and easing cycle, which the speaker believes will positively impact Bitcoin's value.

💡Rate Cut

A rate cut refers to a central bank's decision to lower interest rates to stimulate economic growth. The speaker in the video anticipates that the Fed's rate cut will increase liquidity, which could boost Bitcoin's price.

💡Easing Cycle

An easing cycle is a period during which a central bank implements monetary policy to stimulate the economy, often by lowering interest rates and increasing the money supply. The video suggests that the Fed's easing cycle will lead to more favorable conditions for Bitcoin.

💡Liquidity

Liquidity in financial markets refers to the ease with which assets can be bought or sold without affecting their price. The video discusses how increased liquidity, due to the Fed's policies and government debt issuance, could positively affect Bitcoin.

💡ETFs (Exchange-Traded Funds)

ETFs are investment funds that are traded on stock exchanges, much like individual stocks. The video mentions Bitcoin ETFs offered by large asset managers, indicating that they provide easier access to Bitcoin for investors, which could contribute to its growth.

💡Debt Issuance

Debt issuance refers to the process by which a government or corporation raises funds by selling bonds or other debt instruments. The video highlights the US federal government's large debt issuance, which, when combined with the Fed's policies, could increase the money supply and benefit Bitcoin.

💡Quantitative Tightening

Quantitative tightening is a monetary policy tool where a central bank reduces the amount of money in the economy by selling assets. The video contrasts this with quantitative easing and suggests that the Fed's shift back to easing could be bullish for Bitcoin.

💡Monetization of Debt

Monetization of debt is the process by which a central bank prints money to pay off government debt. The video suggests that the monetization of the growing US national debt could lead to an increase in the money supply, which historically has been positive for Bitcoin.

💡Seasonality

Seasonality refers to the periodic fluctuations in market behavior due to certain times of the year. The video mentions 'summer chop' seasonality, indicating a period of market volatility that could affect Bitcoin's price.

💡Recession

A recession is a significant decline in economic activity that lasts more than a few months. The video discusses fears of a recession and argues that the current economic data, such as low unemployment and positive GDP growth, do not support the idea that a recession is imminent, which is relevant for Bitcoin's outlook.

Highlights

Bitcoin's backdrop is shaping up positively after six months of consolidation around the previous all-time high.

The Federal Reserve is preparing for its next rate cut and easing cycle, which could impact Bitcoin's value.

The US federal government is running a 1.9 trillion deficit, which is 24% higher than the fiscal year of 2023.

Regulatory clarity for Bitcoin has increased with two of the three largest asset managers offering Bitcoin ETFs to clients.

Despite initial enthusiasm, ETF inflows have slowed down, but the long-term potential remains.

The upcoming liquidity increase via easing and debt issuance could positively affect Bitcoin's price.

Many investors are focusing on short-term market movements and election outcomes, which may distract from long-term trends.

The Fed's rate cuts are not necessarily indicative of a recession but are a response to the government's interest expense.

Bitcoin's narrative as a currency debasement hedge is reinforced by the fixed supply and potential increase in global money supply.

Global liquidity's impact on Bitcoin was evident in 2018's tightening and 2020-2021's explosion of liquidity.

The federal government's deficit and interest expense are growing, which could influence Bitcoin's long-term value.

The correlation between US national debt, M2 money supply, and Bitcoin's price suggests a bullish outlook.

Quantitative easing and tightening by the Fed have direct effects on the money supply and Bitcoin's performance.

The US dollar Index's movement is tied to Bitcoin's value, with a weak dollar being bullish for Bitcoin.

The upcoming FOMC meeting will be crucial for determining the Fed's stance on easing and its impact on liquidity.

Despite short-term uncertainties, the long-term outlook for Bitcoin remains positive due to currency devaluation trends.

The Q4 seasonality and historic returns suggest potential for a positive end to the year for Bitcoin.

The election's outcome and its impact on market volatility are wildcards that could affect Bitcoin's short-term price.

The speaker remains bullish on Bitcoin and the S&P 500 in the long term, with a focus on currency devaluation and liquidity.

Transcripts

hello and welcome back to my 10 favorite

people hope you're doing well I'm

incredibly excited for today's video

because I truly can't believe the

backdrop that's shaping up for Bitcoin

now that we've Consolidated for 6 months

around our previous all-time high as the

Federal Reserve gets ready to embark on

its next rate cut and easing cycle and

while the US federal government is

running 1.9 trillion deficits which is

24% and almost 400 billion dollar higher

than what we saw in the fiscal year of

2023 by this point and as if the

liquidity back drop wasn't enough we now

have way more regulatory clarity now

that two of the three largest asset

managers in the world offer and Market

Bitcoin ETFs to their client and I know

everybody hates ETFs now because the

inflows were good in the beginning and

they've slowed down and now everybody

thinks Wall Street ruined everything but

we just have to keep in mind that these

things do take time but when we look at

the liquidity that's on its way VIA

easing and all this debt issuance

combined with the fact that everybody

has easier access to bitcoin than ever

it's really hard to not be incredibly

optimistic over the next few months and

unfortunately I'm seeing so many people

giving up and arguing over the short

term and exactly where we're going to

bottom and exactly what month we're

going to bottom or they're caught up in

the election and who's going to win and

what's that going to mean for Bitcoin or

perhaps the most painful of all the

recession fears and the constant

discussion about how the FED is only

cutting rates because we're entering

recession and look at 2001 and look at

2008 as soon as the FED started cutting

rates it meant that everything was all

over but in this video I'm going to talk

about why that is not the case and why

the FED is not cutting rates because of

recession but because the interest

expense of the federal government is

literally ballooning

out of control as they try to roll over

their debt at these higher interest

rates this is something I've never

really covered on the channel because I

didn't see the need to talk about it

while the Fed was keeping rates elevated

and tightening because that likely meant

that Global liquidity would keep going

down but with bitcoin's main narrative

being a currency debasement hedge and

Bitcoin having a fixed Supply if we see

the amount of money in the global

economy increase that's likely going to

have a very positive effect on bitcoin

and if we look at what happened in 2018

when Global liquidity got tightened

quite aggressively Bitcoin did terribly

and then 2019 going into 2020 was

relatively flat so Bitcoin was

relatively flat as well and then we saw

the explosion of liquidity in 2020 and

2021 and what do you know Bitcoin

exploded as well and then we saw the

cycle repeat in 2022 a lot of liquidity

pulled out of the system via the fed's

tightening and hiking and central banks

hiking rates are around the world to

fight inflation and liquidity has been

relatively flat and down over the past

year or so but Bitcoin was able to go a

lot higher than it should have because

of all of the excitement surrounding the

ETF launch but now that we're seeing

Global liquidity getting ready to bottom

out here and the fact that it's likely

going to increase over the next few

months as the FED goes back to cutting

rates and easing it's very hard for me

not to be bullish over the next few

months and now I'm not sure if the FED

is going to cut by 25 basis points or 50

but that doesn't matter to me as much

the direction is what's a lot more

important because they may wait until

after the election to start cutting

rates more aggressively so they don't

look as political but we're going to

find out Wednesday of this week but the

real elephant in the room that most

investors aren't focusing on is what's

happening with this federal government

deficit and how we're seeing an even

bigger deficit than last year even

though the economy isn't in recession

yet and we see the interest expense

absolutely Bel Bing because they're

having to roll over this US debt at

higher interest rates we're now well

above National Defense we're also above

health and were slowly creeping up on

Medicare and if we look at the history

of the interest expense owed by the

federal government you can see that it

absolutely skyrocketed since q1 of 2022

when they started issuing debt more

aggressively and having to do so at

higher interest rates thanks to the FED

having to fight inflation and keeping

their fed funds rate higher than the

market has been used to over the past 10

years or so and we've been talking about

this all year our forecast for 2024's

deficit was about 2 trillion and so far

it looks like we might even overshoot

that because there's two months too and

we're already at 1.9 but when you look

at the history of Federal deficits and

how usually they're used to pull the

economy out of recession the fact that

the federal government has been doing

larger and larger deficits to keep us

out of recession while the FED fights

inflation is why I've remained bullish

Bitcoin and other risk assets on larger

time frames because we know that the

debt has to get monetized eventually

this is the relationship between the US

government debt and the US M2 money

supply over the past 70 years or so and

I zoomed in a little bit on it here so

it's easier to see notice how the

national debt has been absolutely

skyrocketing thanks to those interest

expenses going up recently and how the

M2 money supp supply has been down and

is slowly starting to work its way back

up and the reason why the M2 money

supply has been lagging is because of

the quantitative tightening that the FED

has been doing since the beginning of

2022 by selling the assets on balance

sheet and just as a quick reminder

quantitative easing is when the FED buys

Financial assets usually government

bonds and adds them to their balance

sheet which increases the money supply

and quantitative tightening is the exact

opposite when the FED reduces its

balance sheet and sells its assets and

decreases the money supply in the

economy and this is why we see the

relationship we always talk about this

channel between the US national debt and

the S&P 500 because eventually that debt

gets monetized and increases the money

supply and because risk assets are

priced in the dollar as the dollar gets

devalued over time that sends the prices

of risk assets higher and that's why we

see this very clear correlation between

Bitcoin the S&P 500 and other risk

assets with global liquidity so the main

thing I'll be paying attention to in

this upcoming fed meeting is aside from

just how big the rate cut is we're going

to find out if the FED is officially

going to go back to easing after

quantitative tightening for the past 2

years now I know as soon as I bring up

rate cuts a lot of people start talking

about this chart and we always see this

chart all over Twitter and YouTube and

yes in 2008 and in 2009 one the FED

waited way too long to cut interest

rates but back then the FED did not do

quantitative easing or have any other

measures to keep the economy out of

recession and we did not have the

federal government running these huge

deficits to keep the economy out of

recession as well and we see this very

clearly in the data if we look at the

unemployment rate yes it's been going up

recently but it's still well below the

recession start average and if we look a

little bit closer at the continuing

jobless claims which tends to be a good

proxy for the number of unemployed

people we're still well below our

recession start average of 2.65 million

all the way down at 1.85 million and if

we look at our proxy for layoffs initial

jobless claims we are about 130,000 jobs

below the recession start average there

as well so I think the labor market is a

lot stronger than people think and I

think that unemployment rate number is a

bit misleading because maybe people are

joining the workforce or who knows what

else it could be I mean it is a

government data point after all and as

for inflation which is really the reason

all of this happened and why the FED had

to hike and do QT so aggressively yes

core pce still isn't back on their 2%

Target but we know that these government

metrics for inflation lag a ton and if

we look at our leading indicator that

updates daily true infation has the US

inflation rate at

1.1% year-over-year and finally if we

look at growth we know that two negative

quarters in a row of real GDP is a

recession we're well above 2% right now

and have been for the past few quarters

and if we look forward at the estimate

via that the Atlanta fed they're still

expecting us to stay at about 2.5% and

all of this ties nicely to what we've

been saying about the US dollar Index as

well we knew that it would hold support

at this range low for a while but we are

expecting it to break through eventually

because if the FED is going to go back

to easing and back to devaluing the

dollar against other currencies that's

what sends the US dollar Index lower

which we know is incredibly bullish for

Bitcoin because a weak dollar and a

devaluing dollar are the main narratives

for Bitcoin and that's what has sent us

into price Discovery in the past and

also caused our large alt Seasons as

well in 2017 and 2021 but this time we

have the backdrop of regulatory Clarity

for Bitcoin with the black rock ETF and

the Fidelity ETF as well so I think

altcoins are still a little bit

uncertain but now that we have these

spot ETFs from these big issuers and

they're making so much money off the AUM

they have of these ETFs it's really hard

for me to not be optimistic Bitcoin in

the medium term and I know many

investors hate the ETF now because the

inflows were really good at the

beginning and everybody was celebrating

and we made a new all-time high before

the having but ever since they slowed

down and have been quite sideways over

the past two months or so many people

are saying Wall Street ruined everything

and we should have never had the ETFs to

begin with but I don't believe that to

be the case whatsoever because once the

actual drivers for bitcoin's price like

currency devaluation and Global

liquidity start to pick up were

perfectly set up regulatory Clarity wise

and everybody will have access to

Bitcoin in their brokerages where they

have their other assets like stocks and

bonds and they'll be able to add that

Bitcoin allocation very easily without

having to worry about any kind of

regulatory uncertainty because it's

offered by these large issuers so for

those Reasons I'm so comfortable with my

Bitcoin spot Holdings there's always a

lot of uncertainty in the short term we

still haven't made it through September

so anything can happen but we're getting

very close to the Finish line and we're

almost done with this summer chop

seasonality and if we look at the

historic returns in Q4 they tend to be

pretty good which is in line with what

we tend to see from the S&P 500 in Q4

and the first thing we're going to look

for is a reclaim of that 61.5k range low

that we've been below for the past 2

weeks reclaiming that would be a nice

short-term bullish Catalyst but with the

election drama going on until November

even though I'm incredibly optimistic

starting at about mid November when all

of that hassle will be behind us because

of what I'm seeing with liquidity we

still know that anything can happen with

this election as we get close to the

November deadline because we tend to see

volatility in markets pick up especially

in election years where there's a very

close election and the market is not

sure who's going to win and so far we've

been seeing that volatility tick up

recently we've been seeing it in the S&P

500's price action first it was Japanese

Yen carry trade Panic then it was never

mind it was false alarm then we sold off

because of nvidia's earnings and now

we're bouncing again so we're seeing

that volatility we expected in the S&P

500 and it's also carrying over to

bitcoin and the best way I have found to

manage emotions during these periods is

to just not do anything sit on my

existing spot Holdings and just wait for

the dust to settle and focus on my

long-term thesis and the reason why I

hold Bitcoin to begin with so we'll see

what happens I don't know if we're to

break out immediately or if it is going

to take longer but when we zoom out and

look 6 to 9 months forward I'm

incredibly bullish as the FED enters

this easing cycle and all of this debt

that's been issued by the national

government gets monetized who knows how

low Bitcoin could go we already hit my

target that I wanted to see for a

minimum pullback but I'm still open to

the 40,000 being retested again maybe

because of something crazy happening

with the election before we finally

break out higher and I would love that

opportunity to buy Bitcoin in the

undervalued region because I do think

Bitcoin will do amazing in the long term

because currency devaluation by central

banks isn't going away anytime soon

regardless I think this is a

reaccumulation phase for Bitcoin before

we value higher and I remain bullish

Bitcoin in the long term just like I

remain bullish the S&P 500 in the long

term and of course all eyes will be on

that meeting that we have for the fomc

on Wednesday and seeing that interest

rate decision but more importantly

finding out if the FED is going to go

back to quantitative easing and back to

increasing their balance sheet and

increasing the money supply or if

they're going to keep their balance

sheet flat for a while and not go back

to easing so we'll definitely monitor

that as we go forward and I'll

definitely start covering liquidity more

on this channel now that we're getting

close to liquidity increasing as we

embark on this fed easing cycle and this

debt that's been issued has to get

monetized but anyway let me know what

you expect are you one of those

investors that's really concerned about

recession fears even though we have a

decent labor market low inflation and

positive growth thanks to all of the

debt issuant or are you someone that

thinks liquidity is going to go up and

our bullish risk assets over the next 3

to 6 months will definitely cover all of

it as it progresses and I can't wait for

all of this election uncertainty and bad

seasonality to be behind us so we can

really look forward and focus on

bitcoin's Main narrative as a fiat

currency debasement hedge and liquidity

sponge but anyway as always thank you so

much for the support on the recent

videos thank you so much for watching

and I'll talk to you soon