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Is this the end of the bull run? No, for one very simple reason: interest rates are still at 0%

The stock market has been throwing a bit of a wobbly at the moment, the catalyst being inflation fears, but really the fear being interest rate rises.

_What’s this got to do with crypto?_, I hear you ask. Check out this chart: https://imgur.com/7M2gsis

It shows BTC’s historical price on a log scale on the top, and on the bottom is BTC’s correlation coefficient with the S&P500.

What you can clearly see is that in March 2020, we entered a period of the highest correlation in the history of Bitcoin. We like to think that this bull market is driven by the halving, but it’s not. It’s driven by the same thing that the stock market has been driven by, which is cheap debt. Billions have been pumped into the market due to historically easy money.

The sell-off affected Bitcoin quite severely, we’re down around 35% from the peak at the moment, and it was clearly exacerbated by Elon Musk’s Twitter antics. But, there is no reason to assume that this bull market has ended, because the conditions that were in place during the bull run – and that caused the bull run of the stock market too – are still in place. Nothing has changed. There will be no immediate interest rate rises, as the Fed and Treasury have signalled (in fact, there’s too much debt to raise rates, so it’s likely they’ll put it off until it’s impossible to do so, but that’s another story).

This bull market will continue.



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15 Comments

  1. 10 yr bonds have been steadily rising, but every on chain analytic and the price action of bitcoin is showing that we’re only halfway thru the cycle. Idrc about all the fud going on, I’ve done my research and I’m still hodling because there are still a lot of gains to be made this cycle IMO.

  2. This is the time to ready your money and look into adding some stablecoins. This is to prep for a small drop upcoming. If you arent, you’re not ready. This next weekend will be a slight change, as many bitcoin futures for price increases for the May cycle have the affirmative that they wont end in the money. It’s not as big of a change, as people were aware last week they would have a loss. The futures for price decreases for May are in the money, and will gain. You’ll probably see a drop over the holiday weekend, followed by an increase, as there will be fewer kids exiting school for the summer.

    It remains to be seen how the CDC guidelines will affect upcoming prices. At first, I expect a drop. Later, I expect a sharp increase as more people are exposing themselves to covid and the strains mutate to adjust to the vaccine.

    For those of you who dont understand, vaccines DONT PREVENT infection, just help to reduce the body counts. It isnt immunity. We arent out of the woods yet, and anyone who tells you we are, is either lying or doesnt understand. Flu shot doesnt prevent the flu, it reduces risks, which has been proven over decades. Covid isnt small pox. Covid has a full mutation every 10-12 weeks. Stay vigilant and safe

  3. Let me tell you. Crypto is not the only asset class in existence. The crypto market itself can be considered as one big sector meaning if you just buy crypto you lack diversification in general.

    I think this dip is reminiscent to latest spacs mania. Valuation went nuts and then a certain “rug pull” just triggers a chain reaction.

  4. If the fed raises interests rates, it too has to adhere to the increase of borrowing.
    Which means our $3trillion + yearly budget becomes 4T+ to cover the interest.

    I don’t think they can raise rates responsibly.

    More Quantitative Easing is expected. This was used during Mr. Obama’s term(s).

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