Is the crypto winter over?

[schizo]

Endless chops in progress. At least it's making higher lows, thank god. Once we clear above 27,000, we should be heading higher this time IMO.

 

[schizo]

I've seen so many of these dump and pump, it doesn't even come as a surprise anymore.

Once we clear above 27,000, we should be heading higher this time IMO.

This should be it.

 

[NoahA]

You get the direction of causality backwards. Many countries, especially in East Asia and including giants like Japan, Germany and China, have oriented their economies around exports and see a trade surplus as necessary to support strong domestic employment and stable financial conditions. The US accepts the role of world's biggest debtor because widespread use of the USD is a geopolitical power lever. Plus, there's the old saying "if a man owes you a thousand then he's got a problem, if a man owes you a million then the problem is yours".

Stated simply, global USD credit & monetary expansion is a source of demand for goods, and foreigners are required to accept the USD if they want to tap into this demand. It's certainly possible that we could make the tradeoff too painful or risky for them via e.g. persistently high rates of inflation, but there's no sign of that happening at the moment - real USD interest rates are at their highest level in years.

You and schizo both make excellent points. The buyers and sellers both need eachother. But I think when we extrapolate out, one side is providing a product that requires lots of input costs, while the other side supplies the ever expanding money supply that is easy to multiply, unlike the real inputs costs of materials and labor. But I did completely forget the fact that the US, while exporting just paper bills, is supplying the customers.

So it seems like its a well balanced machine, but one that can easily tip to one side, which could result in catastrophic consequences. I guess its kind of like a virus and a host. If the virus is too good at killing the host, then it too will die since a dead host is probably not a good environment for the virus. But when we are sick, one side always wins out. We either get better and fight off the virus, or the virus kills us and we end up in the ground or cremated. It doesn't even matter if the US is the virus or the host.... I think a resolution is very much in the works already.

Since this is a crypto thread, I think anyone not adopting crypto will be casualty.

 

[schizo]

I'm flipping back to long here at 26.1K.

Reversing back to short here at 27.4K.

 

[jbusse]

You and schizo both make excellent points. The buyers and sellers both need eachother. But I think when we extrapolate out, one side is providing a product that requires lots of input costs, while the other side supplies the ever expanding money supply that is easy to multiply, unlike the real inputs costs of materials and labor. But I did completely forget the fact that the US, while exporting just paper bills, is supplying the customers.

So it seems like its a well balanced machine, but one that can easily tip to one side, which could result in catastrophic consequences. I guess its kind of like a virus and a host. If the virus is too good at killing the host, then it too will die since a dead host is probably not a good environment for the virus. But when we are sick, one side always wins out. We either get better and fight off the virus, or the virus kills us and we end up in the ground or cremated. It doesn't even matter if the US is the virus or the host.... I think a resolution is very much in the works already.

Since this is a crypto thread, I think anyone not adopting crypto will be casualty.

The weak link in the system is the U.S. federal government's ability to service the ever-increasing level of U.S. national debt. Interest expense currently represents 13% of the federal budget ($460 billion). That percentage goes up by 9% (about $315 billion) for each additional 1% higher interest rate associated with the portfolio of government treasuries. Now think about how far interest rates have moved up in the past year and how much higher interest rates must be on each newly issued U.S. treasury security. If the average interest rate on the portfolio of U.S. treasuries were to increase by 3%, interest expense on treasuries would approach a whopping 40% of the federal budget. This is one of the more important reasons why the Fed has to get inflation under control quickly -- substantially higher interest expense for the U.S. federal government is not sustainable.

 

[johnarb]

Long btc perp futures @ $27,544

 

[schizo]

I think we will run into a brick wall at around 27.6K. I'll likely be unloading my position then and contemplate on the meaning of life.

Reversing back to short here at 27.4K.

Ggrrr, I shoulda followed my own advice. It ran up to 27.55K and reversed last night and I felt that was close enough. Hopefully, it wont run me over.

 

[NoahA]

This is one of the more important reasons why the Fed has to get inflation under control quickly -- substantially higher interest expense for the U.S. federal government is not sustainable.

Its actually interesting because I watched a podcast that argued for the exact opposite strategy. You are of course not wrong on the interest expense calculation, but in the podcast, they said the only option is to let inflation run really hot for a few years at double digits. If we can manage to double prices in a few years, GDP doubles, and now the debt to GDP ratio becomes more manageable. I myself didn't really think through this too closely, but it was the conclusion. There will be pain, but it won't crash the system, and then we can go back to the grind as before.

 

[The_Krakenite]

I spent all my breaks today looking at MSTR... damn crypto bull-market is messing with my plans. Again, shares shot up at opening bell.

How come all the bears are so quit here again? Hmmm...

 

[schizo]

I spent all my breaks today looking at MSTR... damn crypto bull-market is messing with my plans. Again, shares shot up at opening bell.

That's because BTC shot up over the weekend. LOL

Anyway, it's too premature to think we've turned the corner IMO. Not saying that we can't go back up from here, but the danger of sliding further down into the hole is still possible.