The "manipulation" by the central banks and the scenarios of the next day. The role of freshly printed dollars and the presidential election. The "calm" in the price of bitcoin and why it will follow a sharp move.

What a year this year. Concentrated events in a short time have already changed our daily lives and it seems that they will affect it for a long time. The course seems chaotically inexplicable . We never know what "butterfly flight" is, what imperceptible cause and what can cause sudden turbulence.

In some cases, scientists have at their disposal several data that provide reliable conclusions. In others, it's more a matter of art than data analysis. However, we know that in stock market values, after a large accumulation, the strong reaction usually follows. So it is expected to happen in bitcoin that we see not only moving for a long time between a small range of prices, but also now being at the critical limit, as we see in the 4-hour chart. 

Will it go up or down? If we take historical data as a guide, the chances are tilting upwards. Something similar happened after the halving of 2016 (blue arrow). But not immediately. It preceded several days in a subdued variation (green background), followed by a decline from $ 650 to $ 500 in a few days (red background). This was followed by an epic $ 20,000 march . As much as he mixed the normality soup with the pandemic and lockdown, the scenario of a sharp drop before the next upward wave seems quite likely.

We can be sure of a few things, but one of them is that if people lose interest in Bitcoin, its value will fall . Many opportunistic speculators, without much knowledge of the field, bought bitcoin hoping for a quick profit because of what they had heard about halving. They now realize that they did not appreciate the data. They hesitate, they are afraid of instability. They are affected by news headlines and price fluctuations and are ready to sell en masse.

That's one reason, but another might be stronger. The impact of bitcoin price on S&P. There are times when stocks, bonds, real estate, gold, but also bitcoin move in unison like synchronized swimmers. The main cause of the phenomenon is none other than the trillions that the Central Bankers "print", which all flow in. So let's take a look at the master of all markets, Wall Street.

Economy VS stock

To the surprise of many, banks in many countries, especially the United States, are overflowing with cash. The stock market and asset prices continue to rise, having been completely disconnected from the reality of financial data. One would say that we live in good times, except that everyone continues to be cautious.

Nearly 1/3 of the 155 million people in the US workforce have been unemployed for the past four months. The additional $ 600 in weekly assistance added to the unemployment benefit is due to expire at the end of July. Financial incentives are likely to change, as in some cases some unemployed people receive more money than employees. Of course, given the cost of living, the United States is not the ideal place to be unemployed.

Finally, there are restrictions on special types of favorable loans that encourage companies to keep jobs until the third quarter of this year. Once we reach the end of this period, it is expected that some companies will lay off employees in an effort to stay alive, given the reduction in demand on the part of their customers.

Governments and central banks have used tax and monetary incentives to mitigate the damage. The key word, however, is "mitigate." They are not going to eliminate it. Many claim that they are simply shifting the problem by kicking the dandelion further so that the bomb does not explode during their term. The result will be that the next ones will be called upon to face it with magnification.

The FED and the presidential election

The big bet, with a prize pool of trillions of dollars, is about what will happen when the manipulation by the Central Banks stops. The adverse effects of closing the economy, the real financial pain, has not yet come. The rich Wall Street, as paradoxical as it may seem, is the disproportionately favorable state protection and intervention. They ruffle the freshly printed dollars like the Germans do with beer.

The truth is that it is not an unprecedented situation. The main feature of capitalism is flexibility . When he finds them dark, he does not hesitate to lift the state intervention from the bench and take his main player, liberalism, out of the game. As we can see in the diagram below, the previous S&P peak coincided with the exact moment when the Fed's balance sheet stopped expanding. It is difficult to interpret it as a coincidence.

Some economists say it is impossible to print trillions of dollars without high levels of inflation at some point in the future. Others believe that the risk is overpriced due to the low speed of money, such as parking in deposits. Maybe one view is right and the other is wrong, although there is probably some truth in both estimates.

The economic damage was worse than the governments believed by applying the lockdown and the road to recovery seems to be slow. Each prediction requires a strong dose of luck in order to be confirmed. Economic activity will depend on factors that cannot yet be assessed, such as the duration of the pandemic, voluntary social distance, changes in global supply chains, changes in consumer habits.

As if these variables weren't enough, we're going through a pre-election period in the United States. Studying the performance of the S&P 500 since 1928, we find that the index closed the years that coincided with the presidential election, with a positive sign in 19 of the 23 years, ie 83%. Which president does not want the stock market over the election year?

However, the above statistical data is weakened in the current situation, if we analyze it based on its quality characteristics. In all four years since the presidential election, there have been serious reasons. In 1932, the country was in the middle of the Great Depression. By 1940, World War II had begun. In 2000, "dot.com" collapsed and in 2008 the even bigger bubble of mortgage loans exploded. We don't need to say much this year. We live them…

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