In the short-term, the Bitcoin price looks like it's going to decrease or at least not go any higher. It'll probably go to $30K, and worst-case $20K before it retests the $69K highs. This is all dependent on what Central Banks do with interest rates, like the European Central Bank, the US Federal Reserve, the Bank of Japan and the People's Bank of China.

The Power of Credit.

The global financial system is governed by how much credit is in the system. Out of all the money that's in the system, about 85% of it is credit, and 15% is cash. Since most money is credit, most of the things people buy are with credit…including cars, houses and financial assets like stocks and crypto.

Another point, one person's spending is another person's income and wealth....so people's income and wealth are generated mostly by credit.

For a few years, large institutions (banks, corporations and governments) have been buying crypto with credit, because credit is so inexpensive. When people buy things, like financial assets, the price goes up. That is why you have seen cryptocurrencies go up in price, and stock markets…and cars, houses, income...and food. Credit is responsible for the rise in all of these things.

Central Banks control credit.

Central Banks control interest rates. When interest rates are low, people buy more things on credit…like cars, houses, stocks and cryptocurrencies. When interest rates are high, people buy less of those things, because the debt service payments are higher. We all know, buying a $10,000 car at 1% is better than buying it at 5%...because it’s less money per month.

And since one person's spending is another person's income, you buying that car puts income into the pockets of the car manufacturer employee, and increases the stock price of the car company because they made more money.

And since that car worker feels more wealthy, higher income and increased prices in his investments, he spends more credit because he feels he can pay it back, because he has more wealth...and the credit feedback loop persists.

Inflation.

When interest rates are low, and people buy more, it pushes prices up...inflation...and an economic expansion happens (the good times). But when inflation gets too high, people get upset, so Central Banks raise the interest rate so people buy less, which pushes prices down (decreasing inflation).

But when people buy less, incomes and wealth decrease, because people are not buying as many cars, houses, stocks, cryptocurrencies...which sometimes leads to economic recessions (the bad times).

This is why business cycles happen, they are controlled by credit, and credit is controlled by Central Banks.

Raising Interest Rates.

Central Banks are talking a lot about raising interest rates in 2022 to 2024 so prices and inflation decrease. That is not good for investments like Bitcoin. Because the Bitcoin price will go down with everything else...like cars, houses, stocks, food, etc...

Usually after inflationary periods, like now (when prices go up significantly), they are followed by deflationary periods, recessions…and in those periods it's important to have a lot of cash and no debt, until crypto prices become so inexpensive, it's prudent to buy again.

Stay frosty people.