Bitcoin Observations
This is NOT investment advice.
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Bitcoin 4HR
Showing more action indicating it wants to shed that QQQ . . . . . . . . . but the beat goes on the battle moves forward.
Bitcoin Daily
Risk On/Off - Small Caps
Smallies could look a lot worse than this considering all the drama. Will update a lot more on weekend post.
Glassnode More Great Data on Risk On/Off and Market Dynamics
As shown below wonderfully by Glassnode again, we can see how the amount of capital flowing into or out of BTC aligns generally with the 'Risk On vs Risk Off' dynamic the markets overall wrestle with every day. Capital still flows into Bitcoin (unlike Ether currently) yet that Realized Cap is at an all time high. Capital flowing in growth rate down below 1% now which validates the 'Risk Off' general tone during this consolidation/correction.
Best move as an industry, in my humble view, is to be honest with ourselves and realistic. Yes, stablecoins are growing. Yes, USDT on Lightning Network will be a huge factor. But, in the here and now and at this stage of the BTC lifecycle, the Bitcoin price action absolutely impacts adoption.
Unrealized losses are at an all time high, but on a relative basis not as painful for investors as prior draw downs and corrections. The daily price action on the exchanges and the hard data beautifully captured by Glassnode validate that feeling of "on edge" the market and most if not all participants currently have.
Bitcoin Liquidation Heatmap
Bessent Flexes Buyback to Counter CCP Stimmies, Carney Folds, JPow Out?
During Trump's first term members of the Fed community such as Mr. Dudley openly championed the premise of countering the economic objectives of the sitting POTUS. I mentioned a few times previously how it seems/feels like the Fed is sliding a bit into the background, and the Treasury has been vocal about doing its own thing and not waiting on the Fed. To wit, even chatter about running a shadow Fed head while waiting out JPow's term.
That said - in a Bloomberg interview Bessent was clear that the Treasury could easily amp up its own buybacks to counter China in this trade war that manifests in debt and FX markets primarily with equities serving as a 'scorecard' easily digested by the general public.
To clarify:
- Upon assuming command, Bessent consistently emphasized "doing our own thing" and distancing himself and the Treasury from the Fed
- handful of weeks before the Naz really plunged, he told you (my interpretation) to step out of the way
- Consistently backs BTC and of course the SBR
- Consistently emphasizes the US position vis a vis China in this war
- Suggests the Treasury can get active with buybacks if the Fed 'can't move' for whatever reason
Hmmmmmmmm.
Carney just folded and waived the retaliation on the auto tariffs. Yes, Canada borders America and is much smaller overall than China. Yet - he talked a tough game for weeks and then threw in the towel.
Powell's talk on Wednesday highlighted more of the same in my view, though the market and media constantly presume that every time Powell speaks it is to make some type of dovish announcement. I'm standing by what I published at the last Fed Meeting and have emphasized since. To wit - check the quote below where JPow specifically denounces a Fed cut for the purpose of "saving stocks".
To me - The current 'Fed Put' is there for the bond market. By extension, this goes to BTC as well given the current scenario we are facing. The Fed winding down QT and being prepared to step in to counter bond market and/or banking plumbing challenges is also a potential dovish move that benefits BTC more specifically though equities would also respond.
And yet, given all the obsession with tariff mania, nobody seems to be looking at the refi wall, ongoing budget deficits, and how this will all add up. Well - I say 'nobody' - but the bond market has not forgotten in my view.
SLR and BanQE
SLR - Supplementary Leverage Ratio. This is a 'line in the sand' banks can't cross from a regulatory standpoint and accounting framework. Will write more about this moving forward. Basically - the claim is that banks could or would buy more UST if the suspension of this by the Fed in 2020 would morph into a new version of SLR that is more lenient.
Doesn't mean banks will all rush out and buy UST hand over fist. However - modification could lead to what my instincts are suggesting is forthcoming - BanQE. The Fed/Treasury could force the Primary Dealers to inhale UST. These are shareholders of the Fed (oh, you didn't know the Fed was a foreign, privately held entity?) that receive dividends that come from the Fed draining you via inflation your entire life. Certainly Bessent could convince them to help out the team in times of need. More on this in future posts.
China M2
China is not slowing down with the stimulus, at least according to recent reporting by Reuters on M2, loan growth, and options to increase the stimulus. With all due respect to the folks living in China and their lives and families - China has some serious economic and financial challenges. Though they like to lecture the rest of the world on economics and such, they continue to maintain a regime controlled exchange rate. Debt/GDP exceeds 350%, very few trust the numbers and data, fraud is rampant, nobody knows the true extent of their shadow banking and real risk profile, perhaps over-counting their population by tens of millions, ghost cities and re-hypothecation of collateral/assets . . . . . . . just to name a few issues.
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Really cool work being done by the Bitcoin Breakdown - take a look at their stuff and daily newsletter. They have a cool feature as well where you can submit your project/app/tool/thing to them for review. If you are building on Bitcoin consider sending what you have to them.
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Matthew Wong
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