FIAT DOOM LOOP
Before we get into it = last two days action**… Spurred on by the BOE going back to Quantitative Easing. This is the mechanics driven rally we were looking for based on oversold conditions and bearish sentiment – The news from the BOE has people thinking we’ve reached breaking point and the fed might pivot as a result.
**Is the rally sustainable – Absolutely not. Is it healthy? Fuck no. Let’s dive into what this means and why it excites me more than ever.
THE BOE
So yesterday the BOE buckled under the pressure, no mas, no mas!** I’m hearing a record number of mortgages were pulled yesterday along with pension providers getting margin called. They are getting margin called because they hold X number of Gilts (UK Bonds) – The value of these Gilts has fallen considerably and went into free fall this week. The value of the bonds fell so much they were running out of money to cover deposits. So basically on the brink of insolvency… Awesome.
So the BOE stepped in to buy bonds. At a wild rate and its going to cost the UK a cool 65Bn – Another bail out.
And this kicks off the fiat doom loop cycle for central banks around the world - **AND this also kicks off the BTC is a disaster / fiat / inflation hedge narrative.
N OTHER WORDS GUYS… IF BTC IS GOING TO WORK, NOW IS THE TIME… NOW IS THE MOMENT, WE TRULY SEE IF THIS WORKS. If it does you hold the most sought-after asset on the planet… If not then I’ll see you at 3k and I’ve lost all faith in
humanity.
DOOM LOOP EXPLAINED
BOE goes back to QE = UK inflation goes up
UK inflation up = BOE must raise rates
BOE raises rates = GBP goes up
GBP goes up = USD goes down
USD goes down = Commodities go up
Commodities up and USD down = U.S inflation goes higher
FED has to raise rates further = USD goes up + GBP goes down
GBP goes down = UK inflation goes up
UK inflation up = BOE must raise rates = GBP goes up
GBP goes up = USD down
USD down = commodities go up
Commodities up + USD down = US inflation goes up
FED has to raise rates
Etc etc etc etc – blah blah blah – The cycle goes on and on and on…. Its basically currency wars and a race to the bottom and the biggest casualties are me and you.
And yeah this is where things really start to break and I’m really interested to see what the FED / IMF do here. Lets say pow pow steps in and puts on the breaks… Then everything surges and we get sky high inflation again. Lol.
No way out guys… The writing is on the wall.
For the first time in a long time I’m getting excited about BTC and the value it offers. For a long time I’ve often though the value it actually brings has been misunderstood by the masses and its been solely treated like a risk asset – For good reason but imo the next 3/6/12 months is its time to shine and for this narrative to come to life in a real way. **
Everything else can get fucked here… I wanna see BTC DOM really take over and much of my analytical focus will be based on BTC flows to see if we’re actually seeing BTC being accumulated by smart money for this narrative OR not…