“Fed Watch” is a macroeconomic podcast, true to bitcoin’s insurgent nature. In every episode, we query mainstream and Bitcoin narratives by inspecting present occasions in macroeconomics from throughout the globe, with an emphasis on central banks and currencies.
On this episode of “Fed Watch,” CK and I went by means of a number of charts, giving market updates on bitcoin, the greenback (DXY) and the Hong Kong greenback. Subsequent, we examined the deteriorating scenario in Pakistan, and requested the query, is it the following Sri Lanka? Lastly, we mentioned the Taiwan/China scenario and I learn a number of vital snippets, one from Chinese language foriegn minister Wang Yi and the opposite from assume tank skilled Wang Wen.
Audio listeners can comply with together with the slides right here.
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Bitcoin And Different Currencies
We opened by a weekly chart of bitcoin. We’ve finished this for the previous couple of exhibits, as a result of it’s a good strategy to anchor our dialog in bitcoin. As you’ll be able to see under, the value has been very steady, sitting on the fence regarding the volume-by-price indicator on the suitable.
The bitcoin value has been very steady
If we zoom out, the final interval with weekly candles much like at the moment was again in September/October 2020, proper earlier than the monster rally from $10,000 to $40,000. In fact, we aren’t saying that it’ll occur once more precisely like that, however it’s attainable.
The bitcoin value at the moment appears much like when it skilled a monster rally in 2020.
The Greenback Index (DXY) is the opposite main foreign money we took a take a look at. I imagine you will need to examine the greenback virtually each episode, as a result of it’s the essential competitors for bitcoin.
It does appear as if it has peaked in the interim, however there is no such thing as a signal that it’ll crash. As an alternative, the greenback is most certainly to kind a brand new elevated vary above 100 for the following few years. That is much like the way it fashioned a brand new greater vary from 2015 to 2021.
Supply for above photos: bitcoinandmarkets.com
I’ll add {that a} robust greenback just isn’t bearish for bitcoin. Maybe, initially, a robust greenback is correlated to decrease bitcoin, however after the greenback has stabilized in the next vary, that’s when bitcoin has historically rallied.
Beneath is a screenshot from the Hong Kong Financial Authority’s web site. Every month, it releases statistics on its international foreign money reserves, which it makes use of to stabilize its peg. Final week, I speculated that sustaining the Hong Kong greenback (HKD) peg was quickly draining its reserves. Nevertheless, based on this press launch, it solely used barely greater than 1% of its reserves in July to keep up the peg. Meaning the HKD is probably going capable of preserve the peg (if it desires to) for a number of years.
Supply: HKMA
Pakistan On The Brink
The creating scenario in Pakistan has a variety of issues in frequent with the current collapse in Sri Lanka. Within the podcast, I pointed to i5w involvement with the World Financial Discussion board (WEF). Pakistan has acquired a whole bunch of hundreds of thousands of {dollars} in funding to revamp its agricultural sector and add nationwide parks.
Supply: Twitter
One other similarity between Pakistan and Sri Lanka is the vital function that Chinese language funding has performed within the final decade. Sri Lanka misplaced management of its main port as a result of it couldn’t pay again Chinese language loans, and now Pakistan is saddled with roughly $20 billion in high-interest loans to China and Chinese language firms.
Pakistan has solely two months left within the price range, and is desperately courting new lenders. The Chinese language have turned it down, the Arab States are pondering twice, the one place to show is again to the IMF. And meaning harsh austerity.
Maybe, not shocking, that each Sri Lanka and Pakistan are vital nodes within the Belt and Street Initiative (BRI).
Supply: Asia Inexperienced
As I’ve stated on many events, the BRI is doomed to failure. China is trying to make locations and routes economically viable, the place the lengthy span of historical past hasn’t finished so. No amount of cash can overturn millenia of tradition and eons of geography.
Properly, as soon as once more, one of many vital hyperlinks within the BRI has been bankrupted by the Chinese language central planners.
Taiwan/China Scenario
Supply: AZ Quotes
I’ve been discussing the Pelosi scenario and the Chinese language response for days on my Telegram reside streams.
On this episode of “Fed Watch,” I learn some excerpts from a famous Chinese language minister and a Chinese language assume tank skilled. You may learn Wang Yi’s full feedback right here. Suffice it to say for this text, he repeated “One China” many instances, and known as the U.S. the aspect attempting to alter the established order. He additionally had very harsh phrases for Tsai Ing-wen, the sitting president of Taiwan. He stated she “betrayed the ancestors.” In one other translation, I heard Yi’s authentic feedback additionally point out that she betrayed her ancestors (and her race).
The following feedback I learn had been from Wang Wen, govt dean of the Chongyang Institute for Monetary Research at Renmin College of China (RDCY) and the chief director of the China-U.S. Folks-To-Folks Change Analysis Middle. You may learn his feedback and several other others right here. He tries to elucidate why China’s response was so weak, and that China mustn’t provoke an armed battle with the U.S. till it could actually “outperform the U.S. by way of financial energy, attain monetary and navy energy akin to that of the U.S., and develop an amazing capability to counter worldwide sanctions.”
Sounds a great distance off. I’ll merely advise the reader to not get caught up in fear-baiting rhetoric about Taiwan and China. They’re disciples of Solar Tzu, who stated, “seem robust if you find yourself weak.” Wen additionally quoted Solar Tzu:
“A serious navy conflict with the U.S. just isn’t the aim of China’s international coverage, neither is it the trail to a greater life for the frequent folks. Recall what Solar Tzu wrote in ‘The Artwork Of Conflict’: ‘Don’t act except there’s something to realize 非利不动; don’t use navy drive with out the knowledge of victory 非得不用; don’t go to struggle except the scenario is crucial 非危不战.’”
We wrapped up the podcast speaking concerning the upcoming CPI information launch and different issues pertinent to bitcoin.
This can be a visitor put up by Ansel Lindner. Opinions expressed are completely their very own and don’t essentially replicate these of BTC Inc or Bitcoin Journal.
