Bitcoin Nears $23,000

Bitcoin Nears $23,000

Source Node: 1985066

Wow bitcoin stood. The crypto crisis as the media calls it is clearly being seen by cryptonians as more the crypto can play too with bitcoin now recovering and pretty much fully. Why?

First, let’s start with TA or herd analysis. Bitcoin broke through the 200-day moving average last month for the first time in a year.

Last year it was to the downside however. This year it was to the upside. This is a long-ish term indicator, so in the short term we get games.

As markets don’t like to be predictable, bitcoin went down, giving us some crypto headlines of an ominous ‘death’ cross.

It’s what usually bitcoin does in regards to this 200 day moving average. It dips to claim it isn’t true, but that’s in the short term. In the long-ish term?

Bitcoin is more up than stocks which are slightly red. Retail data showed healthy spending continues, and mainstream media journalists are blaming this for the stock’s very slight ‘dip.’

We think they might be wrong, or at least that might be what bitcoin is saying. First of all a paper has found:

“The empirical findings provide compelling evidence of cross-market shock and volatility transmission between stock returns and Bitcoin returns in both directions.

Therefore, the dynamics of Bitcoin returns significantly influence the volatility of stock returns, and the relationship also holds in reverse.”

This is sort of academically confirming what has been commented, but it’s a good reminder that it is not always stocks that lead, sometime bitcoin leads.

If retail sales are strong and the economy is holding well, then this is actually good news. What’s Fed gone do, increase interest rates by proportionally another 1/20th of what they are?

This was a big deal when a hike was a doubling of interest rates, or a 50% increase. Now, no one cares except to see the hike to maybe 4% clear out in the few months to come.

And if during that period we get an indication the economy is holding well, then maybe it’s even time to party.

In some places however the crunch is very real. Some countries are at the edge of a full blown currency crisis, while Nigeria has intentionally created one of its own by deciding to effectively get rid of cash through forcing such funds to bank deposits.

In some ways that’s just modernizing. In many other ways, it gives fragile banks so much power over fragile economies.

Sure the Bank of England or FDIC in US can with some credibility guarantee bank deposits. Can the Nigerian equivalent however?

Some places are also being hit with an energy crisis that is a lot more real than in the west. South Africa for example has declared a “national state of disaster” due to ongoing power outages that have disrupted the country.

This doesn’t have much to do with bitcoin directly but South Africa is a somewhat rich country and if such crisis develops into unrest, well the smarter ones presumably will want bitcoin.

The bigger picture is a re-adjustment of the global economic system to place the West once again at the very heart of it, certainly financially.

That hasn’t been the case for more than a decade due to the banking collapse which effectively bankrupted the West, but during that time monetarily where the public is concerned it may be their deep indebtedness in say 2006 has basically been washed away.

The public therefore, both in Europe and US, is not deep in debt as it stands. Which may well be these interest rates won’t cause as big of a problem as their hikes in 2006.

If that turns out to indeed be the case, then we might be in for a boom because if the economy can handle long term interest rates at say 3%, the current monetary contraction may be temporary and may be followed by a commercial banks based monetary expansion.

In addition the rise of defi may have forced central banks to provide yield to savers to compete. Text books say that yield should come from borrowers, but in modern finance we do not know that and we can say that in theory it might perhaps even come from printing.

Regardless, higher – though reasonable – interest rates make lending more attractive and though initially that re-adjustment might dampen demand, in the more medium term it may increase demand because banks make it more available.

For the government, it’s a different story. They are deep in debt. That can not continue. Do they cut spending?

Easy to say, but generally speaking the better approach might be smart spending or a differentiation between spending and investment.

‘Spending’ on clean energy for example, including potentially subsidizing roof solar panels, is an investment with wholistic returns from health to sovereignty. That, and other things like it, should perhaps even be increased and categorized differently.

In other areas, spending cuts don’t quite work so, what one has to hope is that if the economy grows, that itself re-adjusts the balance between public and private, and strengthens public finance.

One thing governments should do however is experiment with crypto bonds, crypto native bonds where the token itself is the bond and that’s that.

In some ways that’s government printing, but it is not printing, it’s borrowing. They have to pay it back to the public, just without banks acting as decision makers. It’s straight to the market instead, and the market decides.

This can make their debt more dynamic, and crucially it can give the new generation a stake, plus it’s all cool, new, digital and modern.

Overall therefore maybe there’s reason for optimism to be back. We’re still in a transition however, but at worst, on the other half of the side and with the initial shock or surprise now starting to move more towards the past.

Looking forward, and especially where bitcoin is concerned, well we see a train coming back to the station. How long it stays here and whether it leaves for good for another station, is anyone’s guess, but the anti-fragility of crypto means that something like bUSD not minting anymore is good news as some of those bUSD holders might go to crypto, especially at what are -70% prices.

We did warn them that stablecoins are their (fiat’s) business and in their interest, though the public’s too, so if they want to shoot themselves in the foot, crypto not only won’t care but it might benefit.

More generally however it appears that the crypto industry has come up with an organic answer to these attempted regulatory attacks, or regulation through enforcement.

That’s by differentiating each action as very specific to the entity involved and the specific service involved.

A token being a security therefore is legally referring to just that specific token. The rest can keep on as if nothing.

Not least because this is not criminal law. The boys seem to like us and we have no criticism of them in regards to any abuse of power.

This is civil law, where a fine is the worst not prison, and so we can play and arguably considering what is at stake, it’s a duty to do so.

Because there can not be one law for the rich, another for the rest. Not in our time. Either all private investments are prohibited, or none.

All equal before the law. That’s not just a principle, it’s a modus operandi, and one that we in this space have the privilege of being able to apply.

The silver lining therefore is that SEC, through its actions, has alienated the public, because in a democracy there are no rules, but the rule of law and the chief principle of such rule of law is all equal before it.

Hence crypto seems to have completely ignored the ‘crisis.’ Even ‘existential’ some old media headlines said.

Crypto thrives in crisis. It came from it. It relishes it. For it shakes things up, in a rational way. It adds new dynamics. It modernizes our world both in a basic form through the tech itself and more socially in a generation so finding out there is this one law for the rich, while seeing the old generation pretend well so what.

So what. The books said it’s wrong, that’s what, and we don’t have to put up with it since this is crypto.

It may be therefore this train is leaving. Bitcoin has shown significant strength and crypto may have withstood an attempted regulatory attack since 2018.

They said CME futures would tame it, or ETF paper bitcoin futures, or SEC, now the Indian Finance Minister says maybe G20.

But crypto is not done, no where near it. Arguably it has only began. So enjoy Babylon, the awful, crazy, colorful and disgusting movie that fundamentally speaks of a transition of a generation through tech. How the powerful and famous, just like that, can become of the past.

Because the future is being written, with crypto playing its part, and we do hope in the future they see this chaining of the public on investments like we see the discrimination against women, blacks, or indeed in times before them, the general disempowerment of the ‘peasants.’

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