QE and Money Printing has Already Started (in Secret)! But will cryptos and stocks pump?!

Summary

The speaker discusses the current economic landscape, focusing on the relationship between Quantitative Easing (QE) and Quantitative Tightening (QT). Despite the Federal Reserve’s official QT stance, a form of stealth QE is occurring through the U.S. Treasury’s actions, injecting significant liquidity into the markets. This spending surge is expected to positively impact Bitcoin, Ethereum, and other assets, as seen in previous market trends. The speaker leans toward a bullish market outlook, predicting potential Bitcoin rallies and an altcoin season, while acknowledging some risk due to the approaching debt ceiling.

Takeaways

• 😀 QE (Quantitative Easing) has already started, but it is not the Federal Reserve, rather the U.S. Treasury engaging in it under special circumstances.
• 😀 While the Federal Reserve is still performing QT (Quantitative Tightening), the U.S. Treasury is providing liquidity to the market, equivalent to QE.
• 😀 Stealth QE is a behind-the-scenes, hidden version of traditional QE, involving significant funds being injected into the market, which could impact Bitcoin and other cryptos.
• 😀 There is a near $800 billion (possibly reaching $1 trillion) that will be hitting the market in the next few months due to Treasury actions, potentially leading to a market surge.
• 😀 The current Bitcoin market is in consolidation, with a chance of a major upward movement if the stealth QE leads to liquidity influx.
• 😀 Despite concerns about a possible downturn in Bitcoin (such as reaching $75K-$80K), there is a 60-70% chance that the market will move upward due to QE impacts.
• 😀 Ethereum shows weakness, with its price struggling to maintain above key support levels, but the stealth QE could still provide a positive influence on its price.
• 😀 The U.S. Treasury had borrowed a significant amount in previous years (around $1.8 trillion in one year), spending it into the economy, which typically boosts markets.
• 😀 The U.S. government's spending, primarily on defense and entitlement programs, leads to a cash injection into the economy, affecting the financial system and assets like Bitcoin.
• 😀 The debt ceiling imposed by Biden means the U.S. government can't issue more bonds unless an agreement is reached, which is unlikely due to political tensions between Trump and the Democrats.
• 😀 Historical charts show that when the U.S. government’s account draws down (money is spent), the stock market and Bitcoin tend to rise, as liquidity flows into the market.
• 😀 The U.S. Treasury is unable to borrow more money, which could result in another liquidity event in the coming months, potentially pushing the market higher despite short-term dips.

Q & A

What is Quantitative Easing (QE) and how does it affect the market?

Quantitative Easing (QE) is when a central bank, like the Federal Reserve, buys bonds from the market, injecting liquidity into the financial system. This often leads to an increase in stock prices and can have a positive effect on Bitcoin as both tend to rise together in such scenarios.

What is Stealth QE, and why is it important in the current market situation?

Stealth QE refers to a situation where the U.S. Treasury is effectively injecting liquidity into the economy without the Federal Reserve's direct involvement in QE. In the current scenario, the Treasury has been spending borrowed money from previous years, which acts like QE, boosting the market without the Fed officially announcing QE.

Why do people think the Federal Reserve is still in Quantitative Tightening (QT) mode?

People believe the Federal Reserve is in QT mode because it is selling bonds to reduce its balance sheet, a process known as tightening. Jerome Powell, the Fed Chair, also indicated that QT would continue for a few months, leading to confusion about whether QE is happening or not.

How does the U.S. Treasury’s actions in borrowing and spending affect the financial markets?

When the U.S. Treasury borrows money and spends it, it essentially injects cash into the economy, which often flows into financial markets. This can lead to a rise in stock prices and potentially Bitcoin, as people invest the newly injected liquidity in these assets.

What role does the debt ceiling play in the current economic situation?

The debt ceiling restricts the U.S. government's ability to borrow money. When it is hit, the Treasury cannot issue more bonds without an agreement. This is impacting the government's ability to inject more liquidity, leading to potential market challenges unless a deal is made to lift the debt ceiling.

What is the current situation with the U.S. government’s borrowing ability and its impact on the economy?

The U.S. government, under the current administration, has hit the debt ceiling, meaning it cannot borrow more money unless an agreement is reached. This has led to a drawdown of the Treasury's cash reserves, potentially causing a slowdown in liquidity and affecting the market.

Why is the U.S. government unable to issue more bonds, and how does this influence financial markets?

The U.S. government is unable to issue more bonds due to the binding debt ceiling, which prevents further borrowing. This restriction can limit liquidity in the market, which in turn can impact asset prices, including Bitcoin and stocks.

How does the U.S. government’s spending impact Bitcoin's price?

When the U.S. government spends money, it pumps liquidity into the economy, which often flows into financial markets. This can result in a rise in Bitcoin prices, as seen during previous periods when the government spent heavily after borrowing money.

What is the relationship between the S&P 500 and the U.S. government’s spending?

The S&P 500 often rises when the U.S. government spends money, as increased liquidity boosts the stock market. Historical data shows that when the Treasury spent heavily, the S&P 500 saw significant increases, creating a positive correlation between government spending and stock market performance.

How might the current situation with the U.S. Treasury and debt ceiling lead to another 'altcoin season'?

If the U.S. Treasury begins spending again despite the debt ceiling restrictions, this could act like stealth QE, injecting liquidity into the market. This increased liquidity could lead to a surge in altcoin prices, similar to previous market cycles when such spending occurred.