CRYPTO ALERT: I JUST FOUND SOMETHING...

Summary

This video provides a detailed market update focusing on Bitcoin's performance amidst upcoming rate cuts in the U.S. It explores how these cuts, often perceived as bearish, impact Bitcoin and other risk assets. The speaker emphasizes the distinction between the real economy and the financial system, arguing that currency debasement drives asset prices up. They highlight Bitcoin's long-term growth potential despite short-term volatility, stressing the importance of understanding what you own and why, especially in a highly leveraged financial system.

Takeaways

• 📉 The video discusses Bitcoin's current trend, suggesting it's in a downtrend due to profit-taking and uncertainty, particularly around the upcoming election.
• 💡 The speaker anticipates Bitcoin's trend to continue until the election results are clear, allowing the market to price in economic plans for the next four years.
• 🔗 The video links Bitcoin's price movements to macroeconomic factors, emphasizing the difference between the real economy and the financial system.
• 💸 The script explains that Bitcoin's value is relative to the debasement of fiat currency or inflows into BTC, rather than an inherent value increase.
• 📈 Historical data is presented to show that Bitcoin has outperformed other large-scale assets with a 50% compound annual growth rate over four years.
• 🤔 The video challenges the common narrative that rate cuts are bearish, arguing that central banks cut rates to stimulate inflation, which can benefit risk assets like Bitcoin.
• 🌟 The speaker suggests that understanding why you own a particular asset, such as Bitcoin, is crucial, as it's a hedge against currency debasement.
• 📊 The script highlights the US's high fiscal deficit and increasing national debt, implying that these factors contribute to the need for inflation to manage debt.
• 🏦 The video points out the contrast between the economy's disinflationary tendencies and the financial system's need for inflation to service debt.
• 🌍 The script concludes by advocating for Bitcoin as a reliable measure of value, contrasting it with fiat currencies that are seen as less stable and more prone to debasement.

Q & A

What is the main focus of the market update discussed in the video?

The main focus is on Bitcoin's performance over the rest of the cycle, particularly in relation to the rate cuts starting in the United States and the potential market reactions to such economic policies.

What is the presenter's opinion on when Bitcoin might move out of its current trend?

The presenter believes that Bitcoin will likely remain in its current trend until after the election, or at least when the election results are more certain, allowing the market to price in the expected economic plans of the parties.

What does the presenter suggest causes the downtrend and consolidation in Bitcoin's market?

The presenter suggests that the downtrend and consolidation are due to profit-taking, uncertainty, and a general reluctance for people to take positions until the economic future is clearer.

How does the presenter describe the relationship between Bitcoin's value and fiat currency?

The presenter explains that Bitcoin's value is relative to the fiat currency it is valued against. Bitcoin's value increases either when the fiat currency debases or when there are flows into BTC from that fiat currency.

What is the 'signal' that the presenter refers to in the context of Bitcoin's performance?

The 'signal' refers to Bitcoin's 4-year compound annual growth rate of 50%, indicating that it outperforms other large-scale assets and is a strong indicator of its fundamental growth.

What is the presenter's view on the impact of central bank rate cuts on the economy and financial system?

The presenter believes that while the real economy may be disinflationary, the financial system, which is debt-based and leveraged, requires inflation to make previous debt cheaper. Central banks cut rates to stimulate inflation, which is necessary for the financial system's stability.

How does the presenter analyze the historical performance of risk assets following the first rate cut by the central bank?

The presenter analyzes that, on average, risk assets like stocks, bonds, and Bitcoin have performed well 12 months after the first rate cut by the central bank, with the exception of major financial crises.

What is the significance of Bitcoin as a 'neutral currency' according to the presenter?

Bitcoin is considered a 'neutral currency' because it allows for the measurement of value independently of fiat currencies, which are liabilities of central banks and subject to debasement.

How does the presenter link the US's fiscal deficit and money supply to the potential debasement of the dollar?

The presenter links the US's high fiscal deficit and increasing money supply (M2) to the potential debasement of the dollar, arguing that the debt is unpayable and that inflation is necessary to manage it, which in turn devalues the currency.

What is the presenter's perspective on the volatility of Bitcoin compared to fiat currencies?

The presenter acknowledges Bitcoin's volatility but argues that fiat currencies are not safe havens and will debase over time, leading to increased expenses for essential goods. Bitcoin, despite its volatility, has reached an all-time high and serves as a more reliable measure of value.

Outlines

00:00

📈 Bitcoin's Performance and Market Trends

The video discusses Bitcoin's performance in the current cycle, focusing on the impact of interest rate cuts in the United States. The speaker believes that Bitcoin's trend will continue until the election results are clear, allowing the market to price in economic plans for the next four years. The video emphasizes the importance of on-chain data and the consolidation phase of Bitcoin, suggesting that profit-taking and uncertainty are causing a downtrend. The speaker also touches on the concept of realized profits and the relationship between Bitcoin's value and the debasement of fiat currency. The video argues that Bitcoin's cycles are more reflective of macroeconomic trends rather than just the cryptocurrency market itself.

05:02

💹 Historical Performance of Assets During Rate Cuts

This paragraph delves into the historical performance of various assets, including stocks, bonds, and cash, during periods of Federal Reserve rate cuts. The speaker points out that stocks have typically outperformed bonds, which in turn have outperformed cash. However, there have been exceptions, such as during the 2007 financial crisis. The video suggests that Bitcoin has the potential to outperform all these traditional assets, especially in the long term, due to its compound annual growth rate. The speaker also discusses the difference between the real economy and the financial system, arguing that while the former is disinflationary, the latter requires inflation to maintain solvency. The video concludes by emphasizing the importance of understanding why one invests in certain assets, particularly in times of economic uncertainty.

10:03

🏦 Inflation, Debt, and the Value of Money

The final paragraph addresses the issue of inflation, debt, and the value of money, particularly in the context of the United States' economic policies. The speaker highlights the increasing money supply and national debt, suggesting that these factors contribute to inflation and the devaluation of the dollar. The video contrasts the performance of various assets, such as housing and gold, with the performance of the same assets when measured in Bitcoin. It argues that while assets may appear to increase in value when measured in fiat currency, their value in Bitcoin, a more stable measure, may actually decrease. The speaker concludes by advocating for the use of Bitcoin as a more reliable measure of value and suggests that volatility in fiat currencies is not a safe haven but rather a sign of impending economic challenges.

Keywords

💡Rate Cuts

Rate cuts refer to the reduction of interest rates by central banks, often to stimulate economic growth. In the video, the speaker mentions rate cuts in the U.S. and explores how they affect Bitcoin and other risk assets. They argue that while rate cuts can signal economic slowdown, they also spark inflation, which may benefit assets like Bitcoin.

💡Bitcoin Cycle

The Bitcoin cycle is the pattern of price movements in the Bitcoin market, typically characterized by phases of accumulation, rise, peak, and correction. The video discusses how Bitcoin is currently in a 'downtrend consolidation' phase and suggests this trend will persist until after more certainty around political events, such as the U.S. election.

💡Currency Debasement

Currency debasement is the decrease in the value of a currency due to inflation or excessive printing of money. The speaker highlights that Bitcoin's value is often perceived as increasing when fiat currencies, like the USD, are debased. This debasement leads to more investors seeking refuge in assets that can protect against inflation, such as Bitcoin.

💡Onchain Data

Onchain data refers to the information available directly on a blockchain, such as transaction history and wallet balances. In the video, the speaker refers to onchain data to analyze Bitcoin's current market cycle, comparing it to previous cycles and noting similar 'profit-taking' behavior by long-term holders.

💡Financial System vs. Economy

The speaker distinguishes between the 'financial system' (a debt-based, leveraged system requiring inflation to sustain itself) and the 'real economy' (where competition and innovation drive down costs, leading to disinflation). This contrast is key to understanding the video’s argument that rate cuts and inflation are tools to support the financial system rather than the broader economy.

💡Risk Assets

Risk assets are investments that carry a high degree of risk, such as stocks, cryptocurrencies, and commodities. The video discusses how risk assets, like Bitcoin, tend to perform well after rate cuts unless there is a major financial crisis. The speaker uses historical data to show that most risk assets have positive returns 12 months after a rate cut.

💡Inflation

Inflation is the general increase in prices and fall in the purchasing value of money. In the context of the video, inflation is seen as necessary for the survival of the debt-based financial system, but it is also presented as a challenge for individuals looking to protect their purchasing power, hence the promotion of Bitcoin as a hedge.

💡Compound Annual Growth Rate (CAGR)

CAGR measures the mean annual growth rate of an investment over a specified period longer than one year. The speaker cites Bitcoin’s 50% CAGR over four years as evidence of its strong performance compared to other assets, suggesting it is the 'best performing large scale asset' despite market fluctuations.

💡Debt-Based System

A debt-based system is one in which economic growth and stability are heavily reliant on borrowing and credit. The video argues that this system requires continuous inflation to make existing debt cheaper to pay off, which contrasts with a disinflationary free market that naturally lowers costs and prices.

💡Volatility

Volatility refers to the degree of variation in the price of an asset over time. The video acknowledges Bitcoin’s high volatility but contrasts it with the volatility of fiat currencies, particularly during periods of significant currency debasement, arguing that holding Bitcoin may still be a safer choice in the long term.

Highlights

Bitcoin's performance is influenced by the macroeconomic cycle, with rate cuts signaling a potential bearish trend.

The market is in a downtrend and consolidation phase due to profit-taking and uncertainty.

Election outcomes and economic plans of political parties can significantly impact Bitcoin's market trend.

On-chain data suggests a supply overhang, indicating a period of consolidation similar to previous cycles.

Bitcoin's value is relative to the currency it's valued against, which can either debase or have capital flows into BTC.

The 4-year compound annual growth rate of Bitcoin is 50%, outperforming other large-scale assets.

Rate cuts by central banks are often misinterpreted as bearish, but they aim to combat sluggish economic growth.

The economy and financial system are distinct, with the latter being leveraged and requiring inflation to function.

Risk assets, including Bitcoin, have historically performed well after the first rate cut by the Fed.

Understanding why you own a particular asset is crucial, especially in times of economic uncertainty.

Bitcoin is presented as a neutral currency, a reliable measure of value against fiat currencies.

U.S. debt and fiscal deficits are at record highs, indicating a need for currency debasement to manage debt.

The money supply in the U.S. (M2) is significantly lower than the national debt, suggesting insolvency without inflation.

Inflation, as measured by CPI, does not decrease, which is a sign of currency debasement.

Asset prices, including housing and the stock market, rise not necessarily due to increased value but due to currency debasement.

Bitcoin's volatility is compared to the debasement of fiat currencies and inflation during the pandemic.

The video concludes with a call to action for viewers to consider the implications of currency debasement on their investments.

Transcripts

hey guys this is market update in this

video we're going to look at Bitcoin

performance over the rest of this cycle

because rate cuts are starting in the

States and what happens after that

there's a lot of information online

about rate Cuts being bearish but let's

just have a look at the data and see how

that plays out so for Bitcoin right now

still in this trend we're not moving out

of this until after the election in my

opinion or at least when uh the election

results are a little bit more certain

and so the market can actually price in

what they think will happen over the

next four years because the economic

plans of both parties are insanely

different right Bitcoin look it's just

in this trend downtrend consolidation

profit taking uncertainty means people

don't want to take positions that's it

and we're going to be in that for a few

more months in my opinion unless

something crazy happens right and

obviously that can break us out this

range if you do trade check out by a bit

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look at how rate Cuts affect markets

then but first do some onchain data

midcycle everything just shows this so

Supply overhangs this is what Checkmate

calls the chop solidation of 2024 very

similar onchain data to the previous

cycle before the really big high profit

taking yes why when prices get bid up

someone wants to buy BTC they have to

bid up the price and get it off you and

the more they bid it up the more people

are incentivized to sell and that comes

out as realized profit in green because

you have longer term investors

eventually being incentivized to

actually sell why do people bid the

price up they think essentially that the

fat currency that that we're valuing

Bitcoin against is going to debase

against it there's only two ways Bitcoin

goes up in value right the fat currency

that you're valuing it valuing it in

goes down in value because it gets

debased or there are flows into BTC from

that fat currency that push its price up

relative to that fear currency right

Bitcoin doesn't have any value as such

Doesn't go up or down it's what you

value it against that goes up or down

and it's relative strength versus that

so really these Cycles are people's

opinions on

you know not Bitcoin going up but the

things that we value against it going

down and I want to talk about that later

in this video as well so cycle bottom to

cycle top black line here which is this

current cycle midcycle this is not

really the Bitcoin cycle as much as it

is the macro economic cycle as well the

central banks are starting to cut that's

why Bitcoin has been pricing this in a

big consolidation mid cycle but actually

we're in line more or less with other

Cycles so I don't really see any

difference here this is the actual

signal though Bitcoin 4year kagar

compound annual growth rate 50% that's

the signal it outperforms every other

large scale asset and 50% every year for

four years if you just allocate four

years 8 years 12 years or more this

still has a ton of actual fundamental

growth and is pricing in currency de

basement from whichever currency that

you want to value in that's the signal

50% a year best performing large scale

asset I see a lot of fud online about

rate Cuts being bearish because of

course when the central bank Cuts rates

what are they actually saying they

saying that there's a a growth slowdown

right or a sluggish economy well we have

to separate the economy and the

financial system which aren't really the

same so I personally believe that the

the real economy the free market is

actually mostly disinflationary right we

every single day go to work to try and

produce more for Less we want to input

less and we want to get more out why

would that be inflationary for prices

competition and invention drives the

cost of things down which I would say is

actually disinflationary so when you're

looking at GDP which is supposed to be

positive how does that play well you go

ahead to the other side of it which is

the financial system which is a

debt-based leverage based system which

requires price inflation and positive

GDP to make the previous debt that was

taken out appear cheaper in today's

terms if that didn't happen debt would

actually get more expensive as the price

level of every fail that debt would get

more expensive and harder to pay off

that cannot happen right that would

create a huge crash and the financial

system will collapse so this is why

central banks get so scared when they

see disinflationary pressures the free

market doing that is because they don't

want a financial crash so the economy

and the financial system aren't the same

thing in any case let's have a look at

how risk assets perform when the Central

Bank thinks it needs to spark inflation

again remember they have been fighting

inflation but now they're cutting rates

well that means that they want inflation

right the central bank they tell us they

want inflation anyway 2% they say it is

but it's actually more than that right

under the surface so they want inflation

they need inflation because the

financial system is leveraged and it

requires that inflation so they're going

to do that so it's really important to

know what you own and why you own it

right it's not really investing in

anything you're just getting out of that

fat currency into things that actually

can protect you against that that is the

actual trade I think of our generation

certainly with Bitcoin stocks have

outperformed bonds which have

outperformed cash when the FED is

starting cutting rate cutting rates on

average so there's two outliers here

which is recent history 20 2007 abysmal

huge financial crisis right really not

good and if that happens again Bitcoin

is going to get trashed for a few years

but what happened after those absolutely

insane amounts of stimulus so no what

you own and why you own it if that

happens again you're going to have to

take some pain short term bitcoin's

going to crash stock market's going to

crash but we know what comes out of it

which is stimulus and we'll go to new

alltime highs again but I just want to

highlight this on

average stocks outperform bonds

outperform cash Bitcoin outperforms all

of those has done and will continue to

do um I believe S&P 500 returns 12

months after the First Rate cut most of

the time time positive again two

outliers here in 01 and 07 huge

worldwide financial crisis right but

most of the time we can see that risk

assets actually do decently 12 months

after the first cut if there isn't some

absolutely huge financial you know uh

apocalypse however what happened after

these more stimulus right so what do we

think is going to happen if that happens

again Fed rate cutting Cycles tend to

lead to above average returns again we

can see that here so there are scenarios

where 12 months after the first cut it's

a disaster but they're the outliers most

of the data show that most of the time

risk assets perform pretty well after

the First Rate cut again know what you

own and why you own it right you can't

invest and trade for a recession they

come around very a huge financial crisis

they actually come around very rarely

and even when they do come around

usually after that risk assets perform

well again why

currency debasement when crises happen

currency debasement happens know what

you own and why you own it talking about

what we own and why we own it why BTC

BTC is just a neutral currency that you

can measure value from and you can't do

that in US dollars or Pounds or Euros or

anything else because well firstly they

aren't money and they aren't assets

they're a liability of someone else fat

currency is someone else's liability is

credit you can't measure real value from

that right so let's have a look at this

and why all of the way that we even

think about measuring value is just kind

of backward and I think Bitcoin will

become the actual measuring the yard

stick the measuring stick that all value

eventually is valued against because

it's actually reliable so US debt up 65

billion today to a record 35 trillion

not just the US it's many other

countries but the us obviously is kind

of the uh the main economy that most of

the world um relies on and prices off

fiscal deficit in the states is is

absolutely insane huge huge fiscal

deficit some of the highest fiscal

deficits we've ever seen the US

government is

smashing uh you know credit they're

taking credit they're creating bonds and

treasuries smashing it into the economy

to keep GDP higher they need prices to

remain high and not go down right so

that's the difference between the

economy the free market potentially

disinf lating prices and then the

financial system which absolutely

requires inflation uh to remain somewhat

solvent it's not actually solvent

they're just kicking the can down the

road because you can't pay this stuff

off so you need that inflation so the

fiscal deficit or the uh Central Bank

side they will make sure that uh

inflation stays high unemployment

ticking a little bit higher if you look

back every time unemployment has ticked

higher that creates huge fiscal spend

well we're on a very very high fiscal

spend already and unemployment ticks a

bit higher this potentially is going to

go to insane levels the debt is

completely unpayable but we know that

already it's not supposed to be paid off

this is is government debt of the United

States to suggest that this chart will

somehow um change course or change

direction I mean just play the odds

right the debt is going at stratospheric

it's not slowing down it's not coming

down you can't pay it off it won't get

paid off the only thing you can do is

try to stop the rate at which it goes up

by creating inflation creating debt

dropping interest rates trying to pay

off previous debt but to suggest that

the dollar will continue to get stronger

or not de base right is obviously absurd

looking at this data this is the money

supply in the states uh M2 right so this

is GL this is United States M2 $21

trillion of M2 which is money supply uh

in Banks but the debt is 35 trillion so

it's you can't pay it off because

there's just not enough currency to

actually pay off the debt uh which

sounds insane

right where's the cash to come from So

This Is Us CPI again doesn't go down so

this is inflation again doesn't go down

so what why why would you bet against

this so money supply and debt and

inflation it's all just going up to the

stratosphere and that means that house

prices and other assets all go up up up

valued in this currency well yeah so

you're debating the currency you're

seeing more and more and more and more

money supply coming in right and so

prices go up but are prices going up or

is just more money coming into the

system and so you have to reprice the

actual assets because you've just got

more and more and more of these fat

currencies flying around so the average

sales price up that means housing up CPI

inflation up currency up debt up house

price index up over time this is gold

which goes up none of this is going up

it's the fat currency that is pouring in

and you have to reprice these actual

Assets in the fat currency this is the

Venezuelan stock market which is up like

20x in The Last 5 Years so why aren't we

all invested in this is because this is

valued in the Bolivar which is garbage

this is the US dollar versus Venezuelan

bolar going to invert the scale to show

you what the bolar has done versus the

dollar over those 5 years right it's

travesty it's an absolute travesty

that's why the stock market going up in

Venezuela isn't making anyone any real

money because in the World Market you

have to pay in dollars and these stocks

are only going up in bolard and not in

dollars so the denominator is important

this is Bitcoin this is the S&P and gold

valued in Bitcoin right so the S&P and

gold have done really well and they've

gone up up up in dollar terms but

versus the actual yard stick which I

believe is

BTC they're down down down right so it

really matters what the yard stick is

that you're using and what you're

measuring your value against cuz valuing

against fair currency is definitely not

the right way now the one downside of

Bitcoin is its volatility but I would

also suggest that during the pandemic

when the currency was debased by 50 to

60% and we got rampant price inflation I

would say that's volatile too and that's

obviously

poverty being inflicted upon people as

the things that they need to buy to

survive get very very expensive well

bitcoin's been volatile during that time

too but it's at an all-time high and

most other things valued against it are

lower after that time so volatility

exists you can't escape it the dollar

and other fat currencies are not safe

havens they will debase and things will

get more expensive versus them so you

have to price things in a real hard

desirable currency either the S&P or

gold or Bitcoin or the NASDAQ everyone's

got their own thing all of those can

work F currency definitely doesn't if

you do trade check out buy bit 30,000

deposit bonus down in the description

below I'm James this Mone GG cheers for

watching and I'll see you in the next

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