Bitcoin Observations
This is NOT investment advice.
Download Bitcoin Stacking Browser Extension
_________________________________________________________________________________________________________________________________________________________
Pension Allocation Tracking Timeline
I've always argued that aside from sovereigns selling debt, it is insurance companies and pensions perhaps with the biggest incentive to ape into BTC and then set up an allocation. MassMutual took the plunge in 2020 - a move that still to this day can't be emphasized enough. Literally the oldest insurer in the country put Bitcoin on its balance sheet way before the herd in terms of corporate entities. Pensions and say life insurers as an example need to hedge over a very long timeline and remain solvent so they can pay out claims and pension benefits. What is a better hedge for them than Bitcoin?
Anyways - here are a few from 2024:
May 2024 - Wisconsin Pension Fund
July 2024 - Michigan Pension
November 2024 - UK pension fund
December 2024 - Australian pension fund
Maybe it's catching on.
10 Yr Term Premiums Waiving Arms Back and Forth
What is this "term premium" thing the extremists keep shining a light on anyways? You want me to buy your long term debt, well maybe I need to get paid more for taking this risk. Well, how much more exactly?
Let's take a look at the below chart. Upon the Fed actually executing its first (of many ultimately IMHO) rate cuts, we see the premium investors demanded on LT debt rise notably. After a period of consolidation this is on the move again. Let's see how this shakes out vis a vis those highs seen in October of 2023 and the setup we are seeing on the 10yr UST itself. Don't be shocked with a substantial move higher in long term rates (thus contributing to a new "crisis" that the Fed "needs to handle" with that ole "asset purchase program" teased by the Fed months ago).
Some analysts, such as Nic Carter, are highlighting the signal that a Bitcoin Reserve would send regarding the issuer of the "global reserve currency". I get that and agree that telling the world you need to stack Bitcoin relentlessly is also telling the world your existing "system" is off shall we say if you are speaking from the standpoint of a government. This is more of a somewhat superficial take though in my view. The cat is out of the bag. Total government debt (on the books in the public eye) is fast approaching $40T and the whole world knows the net interest payments on that debt relative to GDP are in nosebleed territory and rising.
Perhaps there is another way of spinning this: If you want to continue to sell more and more debt and use the entire curve as a nation state, then the best thing to do is prove to the world how much Bitcoin you possess as pristine collateral. The more you stack the more likely investors will loan you money for 5, 7, 10, 20, 30, and yes maybe even a 50 or 100 year bond.
Powell Pivot . . . . . . Again?
I have to admit, though confident in tracking the elephants in the room - JPow does seem to confuse me here and there, but is that just ultimately shining the light more so on what is really going on? The Fed does appear to be doing quite the flip flopping publicly, but is that all by design? With regards to BTC, global liquidity is still in a general uptrend but the rate of increase has turned down. The Fed changed to a more hawkish but not restrictive stance verbally and in terms of projections. These can weigh on Bitcoin in the short and intermediate term for sure. The narrative is already forming of hawkish Fed, long term rates rising leading to "risk off", BlackRock FUD about the supply cap . . . . . . and you can see where this is going potentially.
However, other nations are already easing, and we have some FX rates plunging and others that are pegged on the verge of major devals (CNY?). BTC is a globally energized price/reaction mechanism in some respects. As usual, complex times here.
So Powell is swinging expectations back in the hawkish direction apparently. They also seemed to basically say inflation looks to be higher and ummm deal with it. I recall how JPow swung all the sailors from one side of the boat to the other only to completely reverse it a handful of weeks later in the fall of 2023 and early 2024.
Here's what seems to be pretty solid:
- US debt approaching $40T with nothing standing in its way
- Debt servicing costs as a percentage of revenue reaching very historic levels . . . . . . so one can say "well $1.5T a year is fine we'll just grow through it" but when debt service is 15% of revenue collected that tune changes quite a bit. $1.5T/$4.92T = 30%, it's already over a 1T run rate and $4.92T is revenue collection for FY2024
- The Fed WILL opt to preserve bond market liquidity, integrity, and functioning over doing everything in its power to lower consumer price inflation for the average American. In other words, in my humble view if FX and Debt markets encounter extreme challenges and volatility, the Fed's loyalty is to the bond market over the US consumer's grocery bill if push comes to shove. In a nutshell, rising yields can signal "risk off" but also increase the odds of "something breaking" and the ensuing policy response. Cat and mouse.
So, though I can certainly see and understand the "how can they ever cut again with inflation ticking up" point of view, I must state there are other major factors. In addition to the aforementioned Net Interest Expense and runaway deficits and debt, we have other nations to consider. Just look at Brazil . . . . . . . . and Japan. In fact, the BOJ just opted to not raise rates and we see the Yen at a fresh new four month low. The Fed's job is not to restore other economies (or is it though, in order to preserve USD?) on the surface, but if Brazil, Japan, and China blow up that can create more new problems for the Fed.
The Fed plotted out higher inflation projections going forward, also above the 2% "mandate" or "goal", yet still cut rates again. Why?
Brazil Bankers Dive In Head First
Brazil apparently is intervening and selling FX reserves to attempt to shore up the plunging real. Might be time to at least know where the popcorn is so you can get it warmed up. Brazil has strong connections to Japan financially as well . . . . . . and the Yen has its share of issues as well.
AliPay in China Wants to Ape Back In
CoinTelegraph reports that ads to invest in a BTC ETF vehicle appeared inside China's largest payments app - AliPay. Why would they be doing this?
Chinese Bond Yields and CNY
Yields on government debt domestically are plunging. It looks like your government is about to manipulate lower again the currency they force you to use. So, the "money" itself is losing value and your options for earning yield off of it are dwindling. What do you do?
The below appeared at ZeroHedge.com and is a tool that Goldman likes to lean on to evaluate capital flight into and out of China:
November, according to what Goldman likes to use, saw a meaningful resumption in capital flight out of China. Looking back at the 2015-2017 time period we can see how massively the flows ballooned the last time the PBOC devalued the Yuan. So what is next?
Back to those plunging bond yields. Why? I don't have the official answer but perhaps the bond market is so unimpressed with prospects for credible growth in China that the market is reflecting a depression rather than an economic expansion.
Bitcoin back in 2015ish:
Selling*
As a miner, the bills gotta get paid somehow. I've used short term credit as aggressively as is reasonable and stayed long until a modest dump at 95Kish and now here again in this zone this week. It's nothing personal - literally.
A very, very rough projection (subject to modification whenever I please) is as follows:
Wave 1: 105Kish to 120Kish
Wave 2: 90Kish or below to get everyone a bit scared, not too long in duration maybe 2-6 weeks but a real correction that catches the attention of all
Wave 3: 425Kish to 550Kish
Wave 4: agonizing and annoying, as low as 375Kish, maybe 2-6 months in duration, frustrating, "it's all over", "Bitcoin is dead again", etc.
Wave 5: 1.2Mish to 1.5Mish
So . . . . . . . . . . . heavier cash and get long hash and new machines in Waves 2 and 4????? If only it were so easy . . . . . . . but maybe . . . . .
This could change very easily if the price/volume action on the weekly and monthly charts demonstrated clear breakdowns that send us back into recovery and consolidation mode. As of this point a new bull still seems well intact overall.
Yes, of course I will be "missing out" if BTC rockets straight past 120K in a straight line, and perhaps it will do just that. I am very well aware of, and respectful of as well, the "supply shock" possibilities. That said - a correction seems more than warranted and well overdue.
For the record - I don't worship at the altar of Elliot Wave Theory (EW). It's not about "who got the waves right" or "who has the best EW count". Things are flexible and they change. I do truly appreciate and respect the concepts within EW in terms of the ebb and flow of human emotions and decision making, particularly in terms of fear/greed, and how that manifests in the charts. I use some EW and all kinds of tools actually.
The most useful and concise to me is still the ole IBD way. BTC is different overall, especially with the firm supply cap. Different yet the same.
Stack More Bitcoin Shopping With Helpful Browser Extension
Download the sMiles Browser Extension and stack sats buying the stuff you are already buying.
Earn Free Bitcoin Playing Games
Get Free Bitcoin Automatically
