Bitcoin Observations
This is NOT investment advice.
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Bitcoin Crashes Again
Just a little ABC correction? I do not know.
4HR Chart, was that a 5 wave move off the most recent all time high, and is it all done yet? I do not know.
M2 correlation and bottoming out, RRP drain, PBOC CNY, weakening economy with tariffs pushing for QE, BTC fear/greed back at max fear, funding rates, onchain activity, MAs, EMAs, ribbons, bands, ICHI clouds, blah, blah, blah, blah. Bottom Line - a confluence of gibberish and gobbledygook (useless to most people) all kinda happens in this 81K-94K zone with weekly/monthly breaks below 74K on volume potentially resetting all.
On a 4HR chart, Bitcoin is less liked than the guy that poops in the punch bowl at a little kid's birthday party:
As the reality of Time Capitulation sets in, a couple of things are jumping out about what I think the market is starting to hold firm on:
- Trump is a net negative on growth in the short to intermediate term (tariffs and cutting government spending)
- market has not heard one thing about useful government spending on tangible stuff like infrastructure, military upgrades, and IT
- market has only heard about things that might possibly lessen the need for hedges against loss of purchasing power as if somehow the government debt issue "is solved now"
Market sees stagflation but the parents are staring at the cookie jar and holding the lid down while taunting the hungry kids. Trump = Stagflation but no QE.
Mar-A-Lago Accord
Apparently (I say apparently because this is 'chatter' but we are in no man's land in some ways so . . . . . . . .) - the Trump Administration may be looking at ways to force partners into zero coupon bonds they can't trade in exchange for past/present/future military protection plus other stuff. Essentially, swapping out certain types of debt for others that are more friendly to the bond market as "payment" for past military services provided and otherwise. "Swap out these coupon paying LT bonds for all of these 100 year zero coupon bonds. We're good for it and you owe us dearly."
Clearly something is afoot that is unorthodox and perhaps historic. Treasury Secretary Bessent, to his credit which I appreciate, has recently noted in interviews some cold truths. He stated he doesn't want to compete 10Y/30Y with the Fed in QT which is an admission to how precious buyers are and also maybe a wink/nod that he will sell more LT when the Fed stops selling . . . . . . and starts buying?
The Fed has essentially ignored the topic of the Inflation Target as of late, and Bessent has been like "whatever, we're doing our own thing". I've mentioned multiple times I think the Fed could certainly toss the inflation target or basically just let it creep up. Who's going to stop them? Another thing I mentioned is the appearance of 50Y or 100Y UST. A zero coupon 100Y - very bold. Now why would I want to hold the gubmint's debt for 100 years without collecting anything along the way? And I can't sell?
Bessent also clarified the monetizing the asset side of the balance sheet, noting that he did not specify or encourage speculating on gold. Fair enough. What will it be? Could see America display more of the natural resource assets it has to combine with the rare earth minerals in Ukraine along with the potential expansion of land mass. SWF adds Bitcoin, TikTok, and who knows what else to include the Gold Card. There are many, many Americans that want immigration, but a system that is functional and prevents child rapists, fentanyl dealers, MS-13 gang members, and other criminals from waltzing right in and getting their entire lives paid for by American taxpayers. Charge them for providing assistance to getting more businesses in America.
So a magic trick that solves everything or most issues is forthcoming? What's the catch? USD.
We're SKrEWed
Should we worry with the SKEW at all time highs? Or is this just indicative of the hyper-leveraged and bot driven equity markets we have? SKEW not so great at predicting perhaps, but like the VIX it can ignite rubber band snap-back effects.
SKEW - Essentially a measurement of tail risk collectively when analyzing options on the equities that make up the S&P 500. Translation: how much juice, leverage, MOMO, FOMO, and extra risk is built into stocks???
Near Term Forward Spread
Fed Chair Powell likes the Near Term Forward Spread. He's mentioned it a few times publicly. This tool shows you what the market is saying today about where it thinks the 3 month T-Bill rate will be in 18 months relative to today's 3 month T-Bill rate.
Many apparently feel this is the market both predicting a recession and Fed cuts to the FFR. Recession = Cuts. That last part I'm not so sure is that concise and clear but I like this tool. The bond market is very, very large and very, very powerful so I listen to what it's saying for sure. If this measurement is dropping that suggests the market is expecting cuts more and more.
From MacroMicro.me:
As depicted above Powell's indicator was indeed reflecting a projected weakening economy, and let's face it there was a very well publicized election approaching as well. So, Powell very well may have been following his pattern and perhaps trying to add some extra juice for the "home team" as some may view it inside DC.
And recently, market seems to be stuck and not so sure:
Historically? You can see it discount the Fed hiking cycle followed by discounting the ensuing economic weakness and dubious nature of the economy overly reliant on government spending and grift.
Here is the UST 10Y:
A slew of data is forthcoming on Feb 27/28 related to labor, wages, income, inflation, NVDA, and even GDP along with multiple Fed speaker slots. Let's see how it all blends in with bonds potentially absorbing lower growth related to tariffs (a presumption) and uncertainty about stagflation.
China/Taiwan
Another item to monitor which has been lurking. Brookings discusses the cards on the table, and this is relevant to us obviously given ASICs, CNY, PBOC, and ultimately BTC.
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Alex Grey
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