BTC rebounded to 50k, and the market seems to be ready to welcome the Fed’s FOMC meeting on interest rates. This FOMC is the last meeting held from the 14th to the 15th.
At such a delicate time, the Fed’s meeting on interest rates has attracted much attention. On the one hand, he is worried about the new high inflation rate, which may accelerate the tightening of the Fed’s macro-monetary policy; on the other hand, the president has come forward to reassure everyone that the inflation growth rate is slowing down and will fall after peaking.
There are two currencies in the entire currency market, one is Bitcoin, and the other is other currencies. One of the ways to obtain coins is to mining by miners. While, the nature of other currencies is more like the “stock” of a so-called blockchain project, which has the nature of securities. Therefore, how they dance with the Fed’s currency baton is similar to the U.S. stock market. But for BTC, it is a bit different. BTC is electronic gold, a counterproductive of dollar inflation. So then, we will have two contradictory reasonings: First, inflation is high, the Fed closed water to raise interest rates, U.S. stocks plummeted, and BTC plummeted; second, inflation is high, and people have avoided risk and bought anti-inflation Bitcoin. BTC rose. So which kind of reasoning is correct?
The faucet of the Federal Reserve affects the USD price of BTC. The Fed’s faucet also affects the price of US stocks. But the price of BTC and the price of US stocks are not causal. In a local time and space, there will be a specific correlation. Sometimes it is a positive correlation, and sometimes it is a negative correlation. Generally speaking, there is no considerable correlation.
The problem here is that the Fed cannot directly print money to buy BTC. Therefore, the water released by the Fed can only flow to the BTC market obliquely through other channels.
For example, the Federal Reserve prints money to the U.S. government and supports President Biden’s bill to distribute money to all people. Through the Treasury Department, the U.S. dollar is issued directly to the American people. Some people who have gotten U.S. dollars have spent some of them, some have bought assets such as houses and U.S. stocks, and some have bought BTC. After such a transmission path, the water released by the Fed enters the BTC market. Our analysis and thinking must be specific to this level to find their relationship.
Will Bitcoin eventually become a reservoir for the Federal Reserve? When the flood floods, it accumulates, and the water rises. When the water is collected, and the interest rate is raised, the water level is reduced. This breathing movement in line with the US dollar operating cycle is a bit like the non-US economies that have assumed this function in the past few decades.
Excess U.S. dollars flow into these non-U.S. economies, causing overheated investment and economic prosperity. When the U.S. dollar contracted, the capital was suddenly withdrawn, causing the economy to collapse. Wall Street financiers will take advantage of this transition between breaths, holding massive amounts of U.S. dollars to buy the low-priced assets of non-U.S. economies after the economic collapse when turning into an expansion cycle, and cashing out at high positions before turning into a contraction cycle. To promote economic collapse and asset price collapse. This process is vividly called “shearing wool.” This breathing cycle of the dollar cycle is about 16-18 years.
After the 2008 financial crisis, it was also when Bitcoin was born. As a result, we may be just at the beginning of a new round of dollar expansion. DXY’s dollar index cycle believes that 2001-2009 is a round of contraction cycle, and after 2009, it will enter a new round of expansion cycle.
2009+16 is 2025, and +18 is 2027. Judging from the BTC halving cycle, 2025-2026 will happen to be the top of the next bull market. Everything is so close. The end of the next bull market is probably the dollar’s turn.
