This is the market update. The market is flipping right now from an inflation narrative to a recession narrative. Inflation’s not going to be a problem over the next few months. We’re seeing commodities, everything come off, so we’re going to look at that. We’re going to see how that affects bitcoin as well, and remember that you can earn up to 2000% APY by automatically copy trading great traders on the Jet-Bot, crypto trading bot. The platform is an official broker for the Binance exchange. Copy trading is the most efficient way to make money from your cryptocurrencies in the long run.
Bitcoin trades like the NASDAQ, which is long-term, so small profits or no profits in comparison to your valuation and so very receptive to changes in interest rates. So it’s absolutely vital to know what’s happening to interest rates and the rate of change of those interest rates and how that’s going to affect bitcoin. We’re going into a different market right now.
So, over the last six to nine months, when you’ve seen this huge move down, we’ve been in an environment where real interest rates have been rising significantly in percentage terms, going from zero to 3.5% for the ten-year period in the United States. Okay, so a very hawkish tightening environment is not happening anymore.
The market is showing us that they actually think the Fed should come back and real interest rates should come off because inflation is coming down because there’s a recession. This is right in the middle of that flip. This is why it’s important that bitcoin has been trading just like the Nasdaq, which is very sensitive to rises and falls in interest rates. The rises in interest rates make borrowing more expensive and that long-term cash, that long-term cash, those income streams get taken down a lot. You know, Bitcoin has come off. Bitcoin has come off because of that, and then you’ve had factors like the fact that the Celsius, Voyager. Voyager just blew up today. They’ve gone bankrupt and filing for bankruptcy today didn’t move the market, so what I want to know is how much of this is priced in and are we flipping into an easier rate environment. That would actually be fairly much. I wouldn’t say bullish but definitely not as bearish as previous times, so come off the price.
Then we’ve had these specific blow ups, which is Terra Luna, Celsius, because of that 3AC and these other ones, forcing the price lower, as you can see. Is there anything left? One thing that may be left is the Celsius network officially filing for bankruptcy, which they haven’t done yet. On that note, this is their wrapped bitcoin vault. This was a hundred million outstanding. This was something that I think was in the 20s in terms of a liquidation price. They’ve sold down the debt, you know, paid off the debt again and again and again, and now the liquidation price after today’s payoff is $2,700. For all intents and purposes, they are not getting liquidated unless something outrageous happens. They do still have 41 million dollars. You can see down here 41 million dollars of debt compared to what that was. This is nothing. You can see the history right here.
They did pay. They’ve been paying off. You can see it right here. July 5th, July 4th, and July 3rd, paying off debt over and over again. 50 million to 64 million paid off, so they’re paying off debt from obviously, parts of their business that borrowers may have been repaying or whatever. They’ve been paying down this debt. This calms the bitcoin market, but will there be another bankruptcy announcement that could potentially sell us off again?
We’re in a bear market, so these bits of news are not positive. Let’s be fair, how much of this is priced in already? Um, obviously we don’t know, but you can see we are trying to consolidate here around this $20,000 level, which is obviously just a human trading level and around a round number. We have to look at what’s happening in the next six months with rates because this is going to affect the price of bitcoin.
What I want to look at, though, is rates. Is bitcoin going to trade with rates or with the NASDAQ, which is also selling off, because the NASDAQ index contains a lot of companies that are going to earn a lot less money and start lowering their profit expectations? Bitcoin isn’t a company, and so it shouldn’t trade with those, except of best crypto trading bot. It is because of correlations with trading and everything like that.
The important thing for bitcoin is that if it’s trading along with rates, you can see that after a period, you know, from the end of last year when the fed flipped and got hawkish, the rate environment has been outrageous. This rise in interest rates has completely killed the stock market and risk assets, but you can just see it looks like we’ve topped. The reason why is that other commodity prices are coming down. We’re in a recession right now. It’s an official technical recession. Uh, it feels like a recession, but you can see that over the past few weeks, rates have come down by almost 15%, so that is a hugely volatile move for bonds. This is insane. What’s going on right now?
You can’t trade these markets because they’re so volatile. So a 15% move in the US in 30 years and we’re actually getting down to the US 30 at 3% right now. Therefore, this is extremely important for the economy and the easing, tightening, or loosening of economic conditions.
We’ll look at the U.S. 10 years as well, just to give us a better idea. It’s the exact same picture but actually even worse now that the US tenure is shorter, meaning it’s going to reflect the recession and the fall-in rates from that recession that the Fed’s going to have to do even more. You can see that clearly, with the US 10-year down 22 points in a month from its peak. This is hugely volatile, and obviously, we’re seeing it now for the past six months. We’ve seen bitcoin come down from those highs. You’ve had one of the most hawkish environments ever, going from basically zero interest rates over six months to 3%. You might think, well, 3% isn’t a lot, but if you just do the relative change right, the relative change in rates has been 200%. This is unreal. This is what has fallen, you know, made markets fall off, but now we’re coming down again because of all of these real figures that are showing a huge deflationary environment because of the recession.
Just to prove that, I have some commodity prices, and this tells you the recession is here right now. We have copper fallen off a cliff. This move here brings us back to pre-invasion highs. We are not in an inflationary environment in copper. Let’s go over to wheat futures again from the highs just absolutely falling off a cliff.
Okay, there is no inflation in these prices. This over the next few months is going to feed into prices and inflation, and inflation is not going to be an issue anymore. The corn is just the same. We have the euro, which is just an absolute basket case.
The problem here for the world is that commodities are traded in dollars. The dollar is super strong right now, and so the euro is going to face high inflation, which is going to make the recession much worse for other countries that have to exchange for dollars and then buy those commodities. Is that positive for bitcoin or not?
The DOW, S&P 500 and Nasdaq were all pointing higher this morning; could it be that they’re simply looking around and concluding that we’re in a recession? We actually has been here and then potentially look forward. As crazy as it sounds, we’re looking at an easing of policy. As crazy as it sounds, because we’ve been talking about tightening of policy for what six, seven months and it worked, but it’s not just interest rates that tighten the economy and demand and crash demand; it’s oil prices that crush demand in the rest of the economy, because everything’s so expensive, people just give up. They’re fed up with paying for anything, and so the recession comes.
What happens now is that central banks have to step in now and start actually easing or at least trying to lower rates and be a little bit more loose in their policy now. If they do that, you can see that even though a recession is here, the stock market can possibly find a bottom or even just get some relief here. Why, one of them is short covering people who were short when the Fed flipped and now believe that things are changing, that things are flipping. I might want to get out of the market here, so they might just be covering their shorts on the great trade that was. We’re going into a new regime.
Are people going along with the market here? I don’t think so because there’s still a lot of downgrades for income and earnings from these stocks to come out. It’s going to be a really tough picture for stocks, but when looking at bitcoin, what you’re really looking at is our rate expectations and what we’re seeing here is yes rates are coming up, but you can see they start coming off again in 2023 towards the end of this year. We’re only, you know, six months away from that. When traders are looking out, they’re thinking that this is a relatively more hawkish, a relatively more dubbish, and easier environment because this recession has to be dealt with then, so yeah, a really interesting environment right here for BTC.
What you’re seeing for BTC potentially is two things. First and foremost, this is a local bottom to the absolute carnage that has occurred in the lending sector. The second thing is that you know lower rates are good for Bitcoin, which is why lower rates plus the debasement of debt sours move up in the first place, making it very interesting for Bitcoin, but I believe we are flipping right now.
[This article is a transcription of a video made by MoneyZG]
[Original video: https://youtu.be/dyqapi7v9BE]