It is possible that BTC will go to 20 000 and maybe even below that, but chasing the bottom is not the smartest idea.
This is the opportunity that we've been waiting for. Everyone wanted to buy BTC if only it was a little cheaper. Well, now it is, but everyone is scared :)
The wise words of Peter Lynch are that NOBODY can predict the bottom, and nobody can predict anything within a year or two. What we can see is that Bitcoin demonstrated more than 2x higher demand than this.
Even though the Crypto market wasn't positively affected by inflation, you have to remember that in macroeconomics some trends require even years to settle even though the signs were obvious.
Everyone with some common sense could tell that inflation was going to be massive if we just looked at the money supply increase of 2020 and 2021, let alone 2022.
But what everyone forgot is that, according to Milton Friedman, real-world effects of inflation go in phases. In the first 6 months, there is some "positive" effect on the economy, due to the massive inflow of currency in the system.
Also, keep in mind that inflation is felt IMMEDIATELY in the stocks and bonds. The very second money printing starts.
But 18 months after that, the effects of inflation are first felt. Keep in mind that this statistic puts just the start of 2020 inflation at the beggining of 2022. So the inflation will keep at this pace for at least the next 2 years with yearly
inflation of 15-30%.
The fact that federal reserve is increasing interest rate will NOT get the inflation under control. Restraining inflation that way never worked long term. It can only create short term FUD and selling.
What happens with the money that people withdraw from their overinflated accounts after 2 years of 20+% gains on S&P500? They start to spend it, because inflation is not under control. What happens then? Inflation becomes even worse.
It takes some money fot the money to come back, usually a couple months to a year. The money in the system will just switch places from fictional (stocks, index and funds) into real life (food, housing, services).
90% of the money that FED has been "printing" for the past 2 years didn't even enter the real life. It was fictional. It was conserved in the markets. Real life effects therefore weren't noticable until recently, when people started cashing in.
Interest rates on bonds will NOT be enough for any average investor. Bonds are only used as a small percentage of portfolios for hedging some risks in the markets.
This text is also the reason why the FED should NEVER interfere with monetary policy, and shouldn't exist at all. All of these money printing and recession cycles are exploiting the human need to gamble. They will crash the system at random
intervals. They will overinflate it when nobody expects it. You will enter the trades even after it's been going up for too long. You probably got burned 5 times before that by trying to short it because it was rational. You can be 100% correct
and still lose money.
And you will lose money both ways.
This is the opportunity that we've been waiting for. Everyone wanted to buy BTC if only it was a little cheaper. Well, now it is, but everyone is scared :)
The wise words of Peter Lynch are that NOBODY can predict the bottom, and nobody can predict anything within a year or two. What we can see is that Bitcoin demonstrated more than 2x higher demand than this.
Even though the Crypto market wasn't positively affected by inflation, you have to remember that in macroeconomics some trends require even years to settle even though the signs were obvious.
Everyone with some common sense could tell that inflation was going to be massive if we just looked at the money supply increase of 2020 and 2021, let alone 2022.
But what everyone forgot is that, according to Milton Friedman, real-world effects of inflation go in phases. In the first 6 months, there is some "positive" effect on the economy, due to the massive inflow of currency in the system.
Also, keep in mind that inflation is felt IMMEDIATELY in the stocks and bonds. The very second money printing starts.
But 18 months after that, the effects of inflation are first felt. Keep in mind that this statistic puts just the start of 2020 inflation at the beggining of 2022. So the inflation will keep at this pace for at least the next 2 years with yearly
inflation of 15-30%.
The fact that federal reserve is increasing interest rate will NOT get the inflation under control. Restraining inflation that way never worked long term. It can only create short term FUD and selling.
What happens with the money that people withdraw from their overinflated accounts after 2 years of 20+% gains on S&P500? They start to spend it, because inflation is not under control. What happens then? Inflation becomes even worse.
It takes some money fot the money to come back, usually a couple months to a year. The money in the system will just switch places from fictional (stocks, index and funds) into real life (food, housing, services).
90% of the money that FED has been "printing" for the past 2 years didn't even enter the real life. It was fictional. It was conserved in the markets. Real life effects therefore weren't noticable until recently, when people started cashing in.
Interest rates on bonds will NOT be enough for any average investor. Bonds are only used as a small percentage of portfolios for hedging some risks in the markets.
This text is also the reason why the FED should NEVER interfere with monetary policy, and shouldn't exist at all. All of these money printing and recession cycles are exploiting the human need to gamble. They will crash the system at random
intervals. They will overinflate it when nobody expects it. You will enter the trades even after it's been going up for too long. You probably got burned 5 times before that by trying to short it because it was rational. You can be 100% correct
and still lose money.
And you will lose money both ways.
Comment:
I'm moving 100% of all my assets and savings into Bitcoin.
By the end of 2023. I will close all my bank accounts forever.
Also migrating all my business to the Bitcoin standard.
The race is over, Bitcoin won.
By the end of 2023. I will close all my bank accounts forever.
Also migrating all my business to the Bitcoin standard.
The race is over, Bitcoin won.
Comment:
I'm just commenting again to say: "I told you so XD".
The complete thesis turned out to be correct.
The complete thesis turned out to be correct.
Even though the current inflation didn't drive BTC (and crypto in general) up, the main reason for this short term termoil has been precisely timend and is indeed caused by the federal reserve increasing interest rates.
The main catalyst for the crypto market will be painful realization of the public that, not only did they lose money in the market, but the inflation only got worse and worse.
In fact, it will be biblical. Precisely because only now that the markets are selling off the actual printed money is entering the real economy and will drive prices up and up and up and up and up.
Timing this market will be extremely difficult so DO NOT USE LEVERAGE. I often get away with leverage, but I'm using 0 leverage at the moment. Find as much liquidity as you can, and keep buying while people are fearful. You will start losing money immediately short term, but you will lose even more money if you don't do this.
This IS financial advice.