Bitcoin Is Ready
Summary
TLDRIn 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
- π The speaker is optimistic about Bitcoin's future due to the backdrop of a potential rate cut and easing cycle by the Federal Reserve.
- π΅ The US federal government is running a significant deficit, which is higher than the previous fiscal year, adding to the liquidity backdrop.
- π Regulatory clarity has improved with two of the world's largest asset managers now offering Bitcoin ETFs to their clients.
- π The upcoming easing and debt issuance are expected to increase liquidity, which could positively affect Bitcoin's value.
- π Despite initial enthusiasm, ETF inflows have slowed, leading to a more cautious market sentiment.
- πΉ The speaker believes the Fed's rate cuts are due to the government's interest expense rather than a recession.
- π Global liquidity and currency debasement are key drivers for Bitcoin's value, especially with a fixed supply.
- π The speaker points out that historical data shows Bitcoin performs poorly during liquidity tightening but well during easing cycles.
- π The current flat performance of Bitcoin is attributed to the Fed's tightening and hiking rates to combat inflation.
- π 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
π 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.
π 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.
π 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.
Mindmap
Keywords
π‘Bitcoin
π‘Federal Reserve
π‘Rate Cut
π‘Easing Cycle
π‘Liquidity
π‘ETFs (Exchange-Traded Funds)
π‘Debt Issuance
π‘Quantitative Tightening
π‘Monetization of Debt
π‘Seasonality
π‘Recession
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
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