0:00

Hello everyone, and welcome to the latest episode

0:02

from the midweek edition of the Coin bureau

0:04

podcast. Every week, I pick out two

0:06

of my favorite videos from coin bureaus

0:09

YouTube channel to present to you in podcast

0:11

form. The audio you're about to hear

0:13

is from those videos I've chosen this week,

0:16

and I hope you enjoy listening. You'll

0:18

no doubt be pleased to hear that ft X

0:20

doesn't feature prominently in either

0:22

of the sections you'll hear today. It still

0:25

hangs like a black cloud over the crypto industry,

0:27

but there are other things we need to focus

0:30

on, such as what Jerome Powell and his

0:32

crew at the Federal Reserve are thinking about the economy

0:35

and why the crypto market could

0:37

still go lower from here. It's

0:39

been a few weeks since the folks that the Fed

0:42

last hiked interest rates, and many

0:44

have been speculating or praying

0:47

that they may ease off on raising them

0:49

any further. As always, investors

0:51

have been hanging on every scrap of

0:53

information to emerge from Fed HQ,

0:56

and we've got a whole dollarp of it recently,

0:58

when the minutes of the last FED meeting

1:00

were published a couple of weeks ago, so

1:03

In the first part of today's video, you'll hear

1:05

our analysis of those minutes and

1:07

what they could signal for the US and

1:10

other economies in the coming months.

1:12

There's still lots to be concerned about.

1:16

Speaking of things to be concerned about, the

1:18

crypto bear market we're in could still

1:20

get more well bearish

1:22

before things start to look up. There

1:25

are a number of macro and crypto

1:27

specific factors that could yet push

1:29

prices lower, and they're the topic for

1:31

the second part of today's episode from

1:34

yet more f t X Contagion. I

1:36

knew we'd touch on it at some point too. Bitcoin

1:38

miners struggling to the stock market and

1:40

beyond. Crypto has a minefield

1:43

to walk through before things can get better,

1:45

and some of those minds contain a

1:47

lot of explosives. Have a listen

1:50

and watch your step. Thanks for

1:52

listening to today's episode, and there'll be more

1:55

coming your way soon. And if you want

1:57

even more content from coin Bureau, be sure

1:59

to subscribe to our YouTube channel and

2:01

visit us on social media too. Last

2:24

week, the Federal Reserve published the

2:26

Minutes, that is summary of its

2:28

most recent meeting. The minutes

2:30

revealed that most Fed officials

2:33

want to slow the pace of interest

2:35

rate hikes going forward. The news

2:37

caused markets to rally on the possibility

2:40

that the FED will pivot. The problem

2:42

is that slowing the pace of rate hikes

2:45

is not the same thing as lowering

2:47

rates themselves, and the headlines

2:50

don't tell the full story. That's

2:52

why today I'm going to take a closer look

2:54

at the Fed's most recent minutes, summarize

2:56

what they say in simple terms, and tell

2:59

you exactly what it could mean for the markets

3:01

in the coming months. Okay,

3:04

let's start with a bit of background. As

3:07

most of you will know, the Federal Reserve

3:09

is the central bank of the United States.

3:12

What most of you may not know is that

3:14

the FED itself consists of twelve

3:16

regional banks that are scattered across

3:18

the United States, each of which has

3:21

its own president. As

3:23

most of you will know, the FED is governed by

3:25

seven governors, which include FED

3:27

Chairman Jerome Powell. What some

3:30

of you may not also know is

3:32

that the central banks monetary policy

3:34

is decided by the Federal Open

3:36

Markets Committee, or f o m C. The

3:39

f o m C consists of

3:42

the feds seven governors, the president

3:44

of the New York Fed, and four

3:46

of the other presidents of the fed's

3:49

other regional banks. The

3:51

regional FED presidents who sit on the

3:53

f o m C change every year,

3:55

save of course, for the President of the

3:57

New York Fed, who has a permanent seat.

4:01

In theory, each member of the f

4:03

o m C casts a vote supporting

4:05

or opposing the committee's decision on

4:07

whether or not to raise or lower interest

4:09

rates, and the final vote determines

4:12

the rate hike. In practice,

4:14

however, the FED Chairman in this case,

4:16

Jerome, apparently has the final

4:18

say. In addition

4:20

to Jerome, the f o m C currently

4:23

consists of the following personnel.

4:25

Fed Governor's Lele Brainard, Michael

4:28

Barr, Michelle Bowman, Lisa

4:30

Cook, Philip Jefferson, and Christopher

4:33

Waller, New York FED President

4:35

John Williams, Boston Fed President

4:37

Susan Collins, St. Louis Fed

4:39

President James Bullard, Kansas

4:42

City President Esther George and

4:44

Cleveland FED President Loretta J.

4:47

Mester. I'll quickly note that

4:49

Michael Barr actually wrote the law

4:51

that created the position of Vice chair

4:53

for supervision, which he now holds.

4:56

Michael seems to be intent on using the

4:58

laws he wrote in the aftermath of two

5:01

thousand and eight to crack down on crypto.

5:03

More about that using the link in the

5:05

description. Now,

5:08

all twelve f O m C officials

5:10

were present at the FEDS last meeting. This

5:13

is in addition to around fifty

5:15

other academics and economists who

5:17

work for the FED, including members

5:20

of the fed's other regional banks.

5:22

The f O m c's last meeting took

5:24

place on the first and second of November.

5:28

To clarify, the minutes of these meetings

5:30

are not released until around three weeks

5:32

after the meeting in question takes

5:34

place. This is presumably to

5:36

give the markets guidance about interest

5:38

rates between FED meetings, which

5:40

occur around every six weeks. Obviously,

5:44

what investors look for in the FEDS minutes

5:46

is evidence of the central bank's plans

5:48

regarding interest rates. Every

5:51

single word is scrutinized

5:53

to see if the f O m C is being hawkish

5:55

i e. Planning on raising interest rates or

5:58

dovish i e. Planning on lowering

6:00

them. As almost all of you

6:02

will know, raising interest rates tends

6:04

to cause markets to crash, whereas lowering

6:07

them tends to cause markets to rally.

6:09

Because markets are forward looking, assets

6:12

tend to react immediately to the FEDS

6:14

minutes even though the rate hike or rate

6:17

cut hasn't actually happened yet.

6:20

So with that background under your belt,

6:23

let's see what the f o m C had

6:25

to say. The first part

6:27

of the fed's meeting was a quote ethics

6:29

discussion, wherein FED Chairman Jerome Powell

6:32

reminded everyone present to be

6:34

on their best behavior. In other words,

6:36

no sharing of insider information, no

6:39

insider trading, and make sure

6:41

to report all your investments.

6:44

Nudge nudge, wink wink. With

6:46

that bit of business done, the second part

6:48

of the meeting was about rate hikes.

6:51

F O m C officials discussed how

6:53

they're planning to raise interest rates higher

6:56

than they had planned in September, something

6:58

that Jerome had told the public in the

7:00

fed's subsequent press conference. We

7:03

actually summarized Jerome's press conference

7:05

too, that will also be in the description

7:08

now. One thing that Jerome didn't

7:10

tell the public during his press conference was

7:12

that most f o MC officials see

7:14

a fifty basis point hike as

7:17

being appropriate at the fed's next meeting.

7:19

For context, the FED has been aggressively

7:22

raising rates at seventy five basis points

7:24

a pop for the last few months. This

7:27

basically confirms what Jerome denied,

7:29

which is that the FED is planning on

7:31

slowing the pace of rate hikes. As

7:34

I mentioned in the introduction, this caused

7:37

markets to rally across the board, except

7:39

for crypto because it was busy getting wrecked

7:41

by the ft X Alameda situation.

7:44

The f o m C also mentioned the blow

7:46

up in UK government bonds in September

7:49

and cautioned that the early warning

7:51

signs of a similar event are starting

7:53

to emerge in the US, namely

7:56

low liquidity. The

7:58

f o m C also touched on how other

8:00

currencies are collapsing against the

8:03

US dollar, but didn't have much to

8:05

say on the matter. What's

8:07

interesting is that the f o m C reveals

8:09

that the Federal Reserve and other central

8:12

banks are actively losing money

8:14

due to higher interest rates. Fortunately

8:17

for the central banks, they don't technically

8:19

need to be profitable, even though the FED

8:22

is technically a private company. The

8:24

more you know, now. The

8:26

third part of the Fed's meeting was

8:29

about the economy. The f

8:31

O m C officials discussed the surprisingly

8:33

positive GDP print for Q three

8:36

in the United States, the continually

8:38

tight labor market, and the increase

8:40

in the Personal Consumption Expenditures

8:43

Index or PCE, the feds

8:45

favorite inflation gauge. Oddly

8:48

enough, the FED went on to discuss

8:50

how labor market conditions are looking

8:52

for different minority groups, and seem

8:55

to blame most of the economic issues

8:57

we're facing on the war in Ukraine,

9:00

China's zero COVID policy, and

9:02

tighter financial conditions as a

9:04

result of higher interest rates. The

9:07

f O m C also touched on the

9:10

rising inflation in other countries,

9:12

caused primarily by disruptions

9:14

to energy supplies. They noted

9:16

that foreign central banks have raised

9:18

interest rates to try and fight this inflation,

9:21

but have slowed their rate hikes as

9:23

they realize there's only so much

9:25

demand they can destroy.

9:28

The fourth part of the fed's meeting was

9:30

about financial conditions. There's

9:32

a lot to cover here, so i'll just give you the highlights.

9:36

First, the f O m C seemingly took

9:38

issue with the recovery in the stock market

9:40

that started in mid October. This

9:43

would make sense as it's essentially

9:45

the markets challenging the Fed. Second,

9:48

investors have been selling off foreign

9:51

assets and deploying that dry powder

9:53

into US s sts, mainly US

9:55

government debt. This makes sense

9:57

given that US government debt is provided

10:00

increasingly higher interest rates and

10:02

is also considered to be the safest

10:04

asset in the eyes of institutional

10:07

investors. This phenomenon

10:09

of money flowing into the United States

10:12

is actually part of the so called dollar

10:14

milkshake theory proposed by an

10:16

increasingly popular macro analyst named

10:18

Brent Johnson. The t l d

10:21

R is that most of the world's

10:23

money will flow into the US

10:25

as foreign countries and currencies

10:27

collapse. You'd think that

10:30

this would be incredibly bullish for the

10:32

U. S Dollar and US assets, and it

10:34

will be for a while. The thing

10:36

is that the dollar milkshake theory ends

10:38

with the US dollar and US assets

10:41

collapsing. To note that

10:43

this process will take many years

10:45

and possibly decades to play

10:48

out, assuming Brent's theory is

10:50

true. Now. The third

10:52

thing that caught my eye in the f O m

10:54

c S Financial overview was the rapidly

10:56

rising interest rates on credit card

10:59

debt in the United States. This

11:02

is concerning because credit card debt

11:04

in the United States recently hit an all

11:06

time high of over nine thirty

11:09

billion dollars I reckon

11:11

one trillion is just weeks away.

11:15

This relates to the fourth takeaway, and that's

11:17

that the housing market continues to

11:19

slide on the back of rising interest

11:21

rates and that banks are becoming

11:23

less eager to lend to consumers.

11:26

This is essentially true of auto loans

11:29

and credit card related loans, which

11:31

is understandable given the statistics I

11:33

just mentioned regarding

11:35

financial stability. Stress tests

11:37

conducted in conjunction with the largest

11:40

US banks suggest that they would

11:42

be resilient in the event of a severe

11:44

economic downturn. However,

11:47

the f o m C couldn't say the same

11:49

for hedge funds and other entities in

11:51

the financial sector due to their

11:53

high levels of leverage. This

11:56

ties into the fifth part of the fed's

11:58

meeting, which was about its economic

12:01

outlook. If I understand correctly, the

12:03

f o m C is projecting that output

12:05

of the U S economy will be quote below

12:08

potential until five

12:10

and that unemployment will simultaneously

12:13

stay above four until

12:15

that time. This

12:18

might have something to do with the fact that the f o

12:20

m C raised its inflation projections

12:22

for the coming quarters. Logically,

12:25

this means that the FED will have to continue

12:28

raising interest rates, or at least

12:30

keep them higher for longer to fight this

12:32

inflation, resulting in the aforementioned

12:35

economic conditions. For

12:37

what it's worth, the f O m C expects

12:39

inflation to come back down to two

12:42

percent as measured by the core PC

12:45

in This

12:47

is expected given that what the f O m C

12:50

is effectively forecasting is a long recession

12:52

that will last at least two years, and

12:55

recessions tend to reduce inflation.

12:58

As a cherry on top, the fo MC cautioned

13:00

that their baseline projections are quote

13:03

skewed to the down side. Put

13:05

simply, they know that their economic

13:07

projections are likely to get worse,

13:10

not better, as more economic data

13:12

comes in. This makes sense given

13:14

that an energy crisis could happen

13:16

over the winter. More about that in

13:18

the description. Anyways, The sixth

13:21

part of the Fed's meeting was again about

13:23

current economic conditions. The

13:26

f O m C again blames Russia's

13:28

invasion of Ukraine as being a primary

13:30

driver of inflation. I'll just remind

13:32

you that central banks printed trillions

13:35

upon trillions of dollars in response

13:37

to the pandemic in early Most

13:40

of the inflation related to Russia's

13:43

invasion of Ukraine also has

13:45

to do with sanctions that don't

13:47

seem to be working. But let's not

13:49

go there. Funnily enough,

13:51

the f O m C says that another decline

13:54

in real GDP would be helpful

13:56

in bringing inflation back down. As

13:59

a fun fact, Bank for America seems

14:01

to have predicted the sudden g d P

14:03

spike in Q three this year. The

14:06

rest of its projection says that real g

14:08

d P will again go negative

14:10

starting next year. Take note.

14:13

The f O m C also discussed the status

14:16

of household balance sheets. Believe

14:18

it or not, but the still record

14:20

levels of savings in the U S economy

14:23

thanks to all the pandemic stimulus.

14:25

The catch is that most of these savings

14:28

are concentrated with wealthier individuals

14:30

and institutions. There's

14:33

a surprise. On the lower

14:35

end, individuals and institutions

14:37

are starting to report financial

14:39

stress. I reckon the record

14:42

levels of credit card debt say it all.

14:44

Even so. Jerome mentioned at the

14:47

fed's most recent press conference that the

14:49

higher overall savings should cushion

14:51

the U. S economy from a severe

14:54

recession. Makes you wonder whether

14:56

it was all planned. More about that

14:58

in the description. Now,

15:01

after discussing the collective effects

15:03

the rising interest rates of central banks are having

15:06

on the global economy, the f o m C focused

15:08

on the supposedly tight labor market

15:11

in the United States. I say supposedly

15:14

because there's lots of debate about how

15:16

accurate the unemployment statistics

15:18

are. Case and point tech

15:21

companies have literally laid off over

15:23

one hundred thousand people over

15:25

the last few months and are planning

15:28

to lay off hundreds of thousands more

15:30

going forward. This might

15:33

just be a case of media bias, but

15:35

it really looks like people are starting

15:37

to lose their jobs across the board. This

15:40

is implied by the f O m C in the Minutes,

15:42

as they note the supply of labor

15:45

coming in line with the demand for

15:47

labor. They also note that

15:49

most of the demand for labor is coming

15:51

from low skilled, low paying jobs

15:54

that recently fired six figure salaried

15:56

software developers probably won't

15:58

be doing any time and soon. What

16:01

sucks is that the people working these low

16:04

skilled, low paying jobs are being squeezed

16:06

the most by inflation. The

16:09

element that's been hitting most people the

16:11

hardest is the cost of accommodation

16:13

i e. Rents. What

16:16

really sucks is the f O m C projects

16:18

rents will be one of the last inflation

16:21

dominoes to fall now

16:23

when it comes to inflation expectations,

16:26

the f O m C observed that long term

16:28

inflation expectations remain quote well

16:31

anchored, as Jerome loves to say.

16:33

However, they cautioned that if long

16:36

term inflation expectations start to rise

16:38

again, then it could make their fight

16:40

against inflation that much

16:43

fiercer. What's fascinating

16:45

is that the f O m C seems to have gotten

16:47

into a small argument over how long

16:49

it takes for the Fed's rate hikes

16:51

to affect the economy. The section

16:53

of the minutes breaking down this exchange

16:55

is one of the lengthiest by far, which

16:58

is why I suspect there was a lot of

17:00

back and forth there. For those who don't know,

17:02

Jerome seems to believe that the FEDS

17:04

rate hikes have a near immediate impact

17:07

on the economy. His reasoning

17:09

is that the economy has become so

17:11

financialized that it doesn't take

17:13

more than a few months for the effects

17:16

of rate hikes to be felt. By

17:18

contrast, the academics on the

17:20

f O m C argue that it takes much

17:22

longer for rate hikes to impact the economy.

17:25

This is because history suggests

17:27

that it takes up to eighteen months for

17:29

the effects of rate hikes to be felt. Jerome

17:32

seems to have pushed back by pointing out

17:34

that this historical data is shaky

17:37

at best. The f O m C quote

17:39

generally noted that their economic

17:42

projections are uncertain and they

17:44

believe that inflation is more likely to increase

17:46

than decrease in the short to medium

17:48

term. Some members once again

17:50

repeated that this is all Russia

17:52

and China's fault. Good thing, Jerome

17:55

knows what's up. In terms

17:57

of U S. Treasuries, the f O m C one

18:00

again acknowledged that markets for US

18:02

government debt are lacking liquidity,

18:04

but remain quote orderly. If

18:07

you're wondering why liquidity is important,

18:09

that's because high liquidity means

18:12

that you can sell a large amount of an

18:14

asset without moving its price.

18:16

Now I couldn't help but notice that some

18:18

members of the f O m C quote noted

18:21

the risks posed by non bank financial

18:24

institutions amid the rapid global

18:26

tightening of monetary policy and the

18:28

potential for hidden leverage in these institutions

18:31

to amplify shocks. I see

18:33

you, Michael Barr. The

18:36

f O m C went on to agree

18:38

on raising interest rates by another seventy

18:40

five basis points and patted themselves

18:42

on the back for raising rates so aggressively.

18:45

They agreed that the labor market is tight,

18:47

at least on paper, and that means

18:49

they can continue raising interest rates

18:52

while claiming the economy is fine.

18:55

After repeating the mantra that the Fed is

18:57

committed to bringing inflation back down

18:59

to its two pc target, the f O m

19:01

C reiterated that they want to slow

19:03

the pace of rate hikes. This

19:06

is because they want to see how much

19:08

the already high interest rates will affect

19:10

the economy and don't want to risk breaking

19:13

something. Now. The last part

19:15

of the Fed's meeting was about the f O m

19:17

c s monetary policy decisions. This

19:20

part of the minute mostly repeats

19:22

everything from the previous sections. I

19:25

couldn't help but notice that the wording

19:27

is almost identical to what Jerome

19:29

said during his press conferences.

19:32

Copy paste is a powerful tool.

19:34

Indeed, in all seriousness,

19:36

the f O m C agreed that it must

19:38

make it clear to the public that it will continue

19:41

to monitor incoming data when it

19:43

comes to future rate hikes. It

19:45

seems that this is not being

19:47

underscored enough because what's

19:49

currently being priced in by investors

19:51

is that the FED will pause and then

19:54

pivot in any case, The f

19:56

O m C also agreed to continue

19:58

selling assets the central Bank's

20:00

balance sheet. If you watched our video about

20:03

Jerome Pal's testa means to politicians, you'll

20:05

know he tacitly admitted that

20:07

this balance sheet run off will eventually

20:10

lead to higher interest rates.

20:13

Also something nobody is noticing.

20:16

Surprisingly, all members of the f

20:18

O m C voted in favor of

20:20

the seventy five basis point great hike and

20:23

the other ongoing actions being taken

20:25

by the FED, such as the balance

20:27

sheet run off. This is surprising

20:30

because it suggests that even the more dovish

20:32

members of the f O m C realize

20:34

that inflation will stick around

20:37

for a while. This brings

20:39

me to the big question, and that's what all this

20:41

means for the markets in the coming months.

20:44

In short, it could really go either

20:46

way. From where I'm standing, the

20:48

Fed has made it clear that it will adjust

20:51

interest rates in response to inflation

20:53

and employment statistics. In case

20:55

you haven't noticed, things aren't looking

20:58

too good on the inflation front. Large

21:00

amounts of stimulus, supply chain issues caused

21:03

by pandemic restrictions and yes, the war

21:05

in Ukraine and China, zero COVID

21:07

policies all look like they're going

21:09

to keep inflation high. The

21:12

most inflationary factor, however, seems

21:14

to be the reassuring of supply

21:16

chains. The disruptions to supply

21:19

chains caused by all the above has

21:21

pushed many countries to start bringing

21:23

manufacturing back within their borders,

21:26

especially the manufacturing of microchips.

21:29

If you watched our recent video about Goldman

21:31

Saxes analysis of the fed's two percent

21:34

target, you'll know it's possible

21:36

that we will be entering a prolonged period

21:39

of higher inflation as a result. This

21:41

begs the question of whether the FED would

21:44

accept a three or four percent inflation

21:46

rate, and the answer currently isn't

21:48

clear. On the employment

21:50

side, things are looking kind of sketchy.

21:53

I am, by no means an expert in employment

21:55

statistics, but I've been hearing in many

21:58

macro podcasts that these stats

22:00

are calculated in questionable

22:02

ways. The same is true of

22:04

inflation statistics, but we all

22:06

knew that already. This begs

22:09

the question of just how much the books

22:11

can be cooked to convince the American public

22:13

that the job market is doing just fine, or

22:16

rather how hard. The f o MC

22:18

can squint at the numbers until they

22:20

see what they want. I reckon

22:22

it'll be hard to keep up the illusion when

22:24

the average person's own lying eyes start

22:26

to notice that everyone around them

22:29

is losing their job. I'm sure

22:31

the fact checkers will come in with full force

22:33

on that one, But so long as free speech

22:35

on Twitter exists, the truth will find

22:38

its way out. Thanks Ellen. In

22:41

some then, it's going to be a very

22:43

uncertain few months for both the FED

22:45

and therefore the markets. Assuming

22:48

the FED follows through on slowing the pace

22:50

of rate hikes and pausing sometime

22:53

early next year, we could finally

22:55

see some recovery rallies in stocks,

22:57

cryptocurrencies, and other assets.

23:00

That said, I have a bad

23:02

feeling that we're going to see a bearish catalyst

23:05

that takes all assets much lower

23:07

than they currently are, a catalyst

23:10

that will shake retail investors to

23:12

the corps and cause institutional

23:14

investors to run screaming into the arms

23:16

of the FED. Let's hope I'm

23:19

wrong about that one. Earlier

23:26

this year, we made two very important

23:29

videos about crypto. One was

23:31

about when the crypto bear market could

23:33

end, and the other was about how

23:36

low cryptocurrencies could go during

23:38

the bear market. Over the last

23:40

few months, we've been keeping a close

23:42

eye on the indicators we identified

23:44

in those two videos. Now, the

23:46

good news is that they seem to be accurate.

23:49

The bad news is that the bottom

23:51

isn't in yet. Today,

23:53

I'm going to explain why the crypto bear

23:56

market will likely continue, when

23:58

it's likely to end, and estimate

24:00

how low cryptocurrencies could go

24:03

before it's over. This is a

24:05

video you don't want to miss. I

24:08

want to start by saying that nobody

24:10

knows the future, not even me. Everything

24:13

in this video is based on the best information

24:15

my research team and I could find. Note

24:18

that this is information that could change

24:20

at a moment's notice. It should

24:22

also go without saying that nothing in this

24:25

video is financial advice. That

24:28

said, the first reason why the crypto

24:30

bear market is likely to continue is

24:33

because retail investors haven't

24:35

capitulated yet. In other words,

24:38

lots of regular crypto investors

24:40

are still holding on to their coins

24:42

and tokens despite some massive

24:44

losses. This is also

24:46

true for stocks and other assets

24:49

with retail exposure. Now, that second

24:51

point is significant because the prices

24:53

of tech stocks and cryptocurrencies

24:56

are highly correlated. This

24:58

correlation has been as apparent

25:00

in recent weeks as crypto specific

25:02

factors such as the ft X Alameda

25:05

situation have caused a slight decoupling.

25:07

I'll come back to that in a moment now.

25:10

There was some retail capitulation

25:13

in mid October when inflation

25:15

in the United States came in hotter than

25:17

expected. This crash the stock

25:19

market and caused a small flash

25:22

crash in crypto. However,

25:24

some sources suggest that most

25:26

retail investors were still buying

25:29

those dips. Not only that, but

25:31

the stock market has been rallying

25:33

since its recent October lows.

25:36

This seems to be because the minutes of

25:38

the Federal Reserves most recent meetings

25:40

suggest that the central Bank will start

25:43

slowing the pace of rate hikes in

25:45

mid December. It's also believed

25:47

that stocks will see a Santa Claus

25:50

rally at the same time. It's

25:52

possible that the stock market will crash

25:54

in December when pension funds

25:56

are forced to sell assets and regular

25:59

people sell assets to finance their holiday

26:02

shopping. It's also possible

26:04

that the Fed will raise rates higher

26:06

than investors are currently pricing

26:09

in. This would also crash

26:11

the stock market. Given

26:13

the brutal macro backdrop of energy

26:15

shortages, inflation, rising interest

26:17

rates, pandemic restrictions, and the war

26:19

in Ukraine, the likelihood of a dump

26:22

seems higher than that of a pump.

26:25

The technicals for stock indices like the SMP

26:28

also suggests that stocks will soon

26:30

resume their long term down trends.

26:33

Regardless, the stock market will

26:35

continue it's longer term down trend

26:37

at some point. While

26:39

the reversal could happen as soon as

26:41

December, it's possible that it won't come

26:44

until early next year when

26:46

consumers realized they took on a bit too

26:48

much debt during the holiday season and

26:50

start selling. When the

26:52

stock market correction inevitably comes,

26:55

it will likely take the crypto market lower

26:57

as well. The technicals for the now

27:00

stacks suggest it could fall by

27:02

around twenty from

27:04

its current price in the next correction.

27:07

This would bring the NASTAC back down

27:09

to its pre pandemic levels, which

27:12

would make sense. As I mentioned

27:14

a few moments ago, the prices of tech

27:16

stocks and cryptocurrencies tend

27:18

to move in parallel. The only difference

27:21

is that cryptocurrencies are more volatile.

27:23

I have a high beta with

27:25

the market. In practical terms,

27:28

a twenty to drop in

27:30

the NASTAC would translate to a forty

27:32

to fift drop in large cap cryptos,

27:35

and much more for those with

27:37

smaller market caps. The

27:40

second reason why the crypto bear market

27:42

is likely to continue relates to the

27:44

first, and that's all the speculation

27:46

and leverage that we continue to see

27:49

in the crypto market. As some

27:51

of you will know, an easy way to measure

27:53

speculation in the crypto market is to look

27:55

at bitcoin dominance. For those

27:58

unfamiliar, bitcoin dominance is a

28:00

measure of how much of the total crypto

28:02

market cap is just BTC.

28:05

Because BTC is seen as the safest

28:08

cryptocurrency, Bitcoin dominance tends

28:10

to rise when the entire crypto

28:12

market is falling, and bitcoin

28:14

dominance tends to fall when the entire

28:17

crypto market is rising. As

28:19

you can see, bitcoin dominance has been

28:21

stuck at around for more

28:24

than a year, and though it did rise to almost

28:26

fifty percent in June after terror

28:28

collapsed, it has since fallen

28:30

back down to around What

28:33

this means is that money has resumed

28:36

moving into all coins, and that means

28:38

there's still lots of speculation.

28:41

The caveat is that it's possible that

28:44

E has also become a safe haven

28:46

in the eyes of crypto holders. This

28:48

means that part of Bitcoin's dominance

28:50

is essentially being shared with ethereum.

28:54

Unfortunately, the dominance for both

28:56

has been on the decline, and this arguably

28:59

proves that lots of speculation

29:01

is indeed present. If you need

29:03

more proof, consider that meme coins

29:05

like doge coin were pumping as recently

29:08

as last week. There have also

29:10

been a few headlines about small and

29:12

medium cable coins that have more than doubled

29:15

in price over the course of just

29:17

a couple of days. That is

29:19

pure speculation or price

29:21

manipulation. Until we

29:23

stop seeing dog coin pump by double

29:25

digits every time Elon Musk teases Twitter's

29:28

upcoming features, then it's safe

29:30

to assume that the crypto bear market

29:32

bottom isn't in yet. Now,

29:35

speculation is mostly the retail

29:38

side of the equation. Leverage

29:41

is where the institutions come in. Some

29:43

of you may recall that there was a record

29:46

level of eath liquidations at the end

29:48

of October when leverage traders

29:50

got wrecked to the tune of half a billion

29:53

dollars over two days. The

29:55

collapse of ft X and Alameda

29:58

also led to around a billion dollar of

30:00

liquidations for BTC and E in

30:02

the days that followed. Funnily

30:04

enough, recent research by coin shares

30:07

suggests that institutional investors

30:09

have been shorten the crypto market at

30:11

record levels. This logically

30:14

means that they will get liquidated

30:16

at record levels if the crypto

30:18

market somehow rallies in December,

30:20

which is possible given what I mentioned

30:22

earlier. It's important to remember

30:25

that leverage doesn't just mean trading

30:27

either. Many institutions

30:29

in cryptocurrency have given each other

30:31

massive loans over the last couple of years.

30:34

Some of these loans involved cryptocurrencies

30:37

which have since fallen significantly.

30:40

The elephant in the room in this regard is

30:42

f t X and Alameda Research, whose

30:44

ft T back loans eventually led

30:47

to their bankruptcies. If the headlines

30:49

didn't make it clear enough, the contagion

30:52

of leverage between these and other

30:54

crypto companies continues, and

30:56

it looks like Genesis Global will

30:59

be the next two collapse. More

31:01

about that in the description anyways.

31:04

The third reason why the cryptobar market

31:06

is likely to continue is because Bitcoin's

31:09

hash rate hasn't crashed yet. For

31:11

context, bitcoined hash rate has

31:13

historically fallen by between forty

31:15

and fifty around the time

31:17

that BTC hit its bottom, and of course

31:20

BTC leads the rest of the

31:22

crypto market. Bitcoin's

31:24

hash rate collapsing around btc's

31:26

bottom makes sense on both sides

31:29

of the cause and effect relationship. If

31:31

BTCS price falls, then it

31:33

becomes unprofitable to mine BTC.

31:36

This forces the least profitable

31:39

bitcoin miners to shut up shop, which causes

31:41

Bitcoin's hash rate to fall. As

31:44

some of you may have heard, lots of bitcoin

31:46

mining companies are starting to struggle,

31:48

particularly the publicly traded ones.

31:51

To give two examples, in late September,

31:54

Compute North filed for bankruptcy,

31:56

and in late October Core Scientific

31:59

warned it was on the brink of doing the same.

32:02

This is because the average

32:04

cost of mining a BTC is

32:06

currently around eighteen k and

32:08

the BTC price is below that

32:10

at the time of shooting. This means

32:13

that most bitcoin miners are losing

32:15

lots of money and have likely been

32:18

selling lots of their existing BTC

32:20

to stay afloat. This is

32:22

evidenced by glass nodes Minor

32:25

net position change indicator, which

32:27

suggests bitcoin miners have been aggressively

32:29

selling BTC since it's price

32:32

dropped below twenty k. It's

32:34

possible that this selling has suppressed

32:36

BTCS price, but it's probable

32:38

that most of this BTC is being

32:40

sold over the counter or OTC.

32:43

If you watched our video about bitcoin miners

32:45

selling BTC, you'll know that the

32:47

lowest price BTC can go before

32:50

the Bitcoin blockchain is at risk is

32:52

eight k. The thing

32:54

is that this was back in August, when

32:56

Bitcoin's difficulty was twenty lower,

32:59

and it therefore required much less

33:02

energy to mine one BTC.

33:05

What this means is that the lowest

33:07

price BTC could go before Bitcoin

33:09

itself is in trouble is now just

33:11

under ten k. However,

33:13

this assumes that the Bitcoin difficulty

33:16

will stay the same or increase. This

33:19

is unlikely, as Bitcoin's hash rate

33:21

has finally started to decline. As

33:24

miners go bust, difficulty

33:26

will decline. Accordingly, this

33:28

brings me to the other side of the cause

33:31

and effect relationship of Bitcoin's hash

33:33

rate and BTCS price. As

33:35

I just explained, a decline in

33:37

BTCS price can cause a decline

33:39

in Bitcoin's hash rate. However,

33:42

a decline in Bitcoin's hash rate can

33:44

also cause a decline in BTCS

33:46

price. China's crackdown

33:48

on crypto mining. Last May is a great

33:50

example. Bitcoin's hash rate

33:52

fell first as miners were forced offline

33:55

and BTCS price followed. This

33:58

is because the news of a crypto mining

34:00

ban in China was very bearish,

34:02

especially since other countries started raising

34:05

concerns about Bitcoin's energy use.

34:07

You can find out why those concerns are unfounded

34:10

using the link in the description. I digress

34:13

now believe it or not, but Bitcoin could

34:15

be about to see the same cause and effect

34:18

relationship play out. That's

34:20

because winter is coming and countries

34:22

are trying to conserve energy. The

34:25

European Union recently warned that it

34:27

would put a pause on crypto mining

34:29

in the event of an energy shortage. In

34:32

Canada, the province of Quebec is trying

34:34

to get approval from the federal government to

34:36

end its contracts with crypto minors,

34:38

citing energy use concerns. The

34:41

U S state of New York recently passed

34:43

a two year crypto mining ban for

34:45

environmental reasons, and we could see

34:47

similar degrees from other states. I

34:50

suspect that a crash in BTCS

34:53

price, combined with crypto mining

34:55

bands in certain countries, will be enough

34:57

to bring bitcoin's hash rate down by

35:00

the forty to it has fallen

35:02

in previous cryptobear markets. Again,

35:05

chances are that BTCS price

35:07

will bottom around the time this happens,

35:10

along with other cryptos. The

35:13

fourth reason why the cryptobear market is

35:15

likely to continue is the upcoming global

35:17

energy crisis that's already being felt

35:19

acutely in many countries. The

35:22

one that comes to mind the most for me is

35:24

Ukraine, with eighty percent of the country

35:26

reportedly being without power due

35:29

to Russian attacks. Although Ukraine

35:31

will likely be able to repair most

35:34

of its energy infrastructure, it probably

35:36

won't be enough to prevent another wave

35:38

of refugees from fleeing to neighboring

35:41

European countries. In case you missed

35:43

the memo, other European countries

35:45

aren't doing so well on the energy side

35:47

either. As such, the influx

35:50

of refugees alone could lead to blackouts

35:52

in some countries. This is

35:54

because many European countries

35:56

have said they can avoid blackouts

35:59

if citizens can't serve enough energy.

36:02

Something tells me they didn't factor in

36:04

the demand coming from millions of new

36:06

refugees. European politicians

36:09

also don't seem to be factoring in the

36:11

practical effects their proposed price

36:13

cap on natural gas will have. Setting

36:16

a price cap means that the demand

36:18

for gas won't come down to match supply.

36:21

This means that gas shortages

36:23

are almost guaranteed, and history

36:25

as shown this to be the case. If

36:33

that wasn't bad enough, the United States

36:35

and its allies will be imposing a price

36:37

cap on Russian oil starting

36:39

on the fifth of December. Naturally,

36:42

the U s Department of the Treasury has threatened

36:44

to sanction any country that violates

36:47

this price cap. Meanwhile, the

36:49

Russian government recently announced that it

36:51

will stop exporting oil to any

36:53

country that goes along with the price cap.

36:56

This means that the countries that comply

36:58

with the price cap could soon be short

37:00

on oil, and this comes at a time

37:02

when OPEC has cut global oil

37:05

production already on

37:07

the demand side of the equation. Meanwhile,

37:09

we have the United States, which will soon be

37:11

looking to refill its Strategic Petroleum

37:14

Reserve, which has been emptied by the current

37:16

administration in a bid to keep inflation

37:19

low. Many investors are also

37:21

expecting China's economy to open up

37:23

again sometime early next year. The

37:26

recent protest against the CCPs

37:28

pandemic policies suggest China's

37:30

reopening could happen much sooner

37:32

than initially expected. If it does,

37:35

it will create a massive surge in

37:37

manufacturing related energy demand.

37:40

These and other factors will

37:42

cause energy prices around the world

37:44

to skyrocket over the winter. This

37:47

will do direct damage to the economy

37:49

in the form of higher prices, and it

37:51

will do indirect damage to the economy in

37:53

the form of higher interest rates from central

37:56

banks trying to fight inflation.

37:59

Obviously, it's difficult to see how

38:01

the crypto market could go in any other

38:03

direction, but down in these kinds

38:05

of conditions. Never mind the crypto

38:08

mining bands, there will be millions

38:10

of people selling everything they can

38:12

to keep the lights on in their homes

38:14

and businesses. That includes

38:17

cryptocurrencies. The fifth

38:19

reason why the crypto bear market is likely

38:21

to continue ties into the fourth, and

38:23

that's the uncertainty around how high

38:26

interest rates will go and how

38:28

high they will stay. This

38:30

ultimately depends on how high inflation

38:33

goes and how high it will stay,

38:35

something will only know in a

38:37

few months time. This is probably

38:40

why investors currently expect the

38:42

Fed to stop raising interest

38:44

rates sometime early next year.

38:46

To be clear, stopping rate hikes

38:49

isn't the same as bringing interest rates

38:51

back down. Rate cuts

38:54

aren't expected to occur until later

38:56

next year at the earliest, and could come

38:58

as late as early to four.

39:01

Then again, rate cuts could come

39:03

much sooner if something in the economy

39:06

starts to break because of high interest

39:08

rates. This is basically why

39:10

there is a correlation between the FED dropping

39:12

interest rates and the bottom of a

39:14

stock market cycle. Something broke,

39:17

so the FED dropped interest rates in response.

39:21

More often than not, the thing that would

39:23

break was the stock market. This

39:26

is why investors have become so

39:28

conditioned to buy the dip. They

39:30

expect the FED to step in to save

39:32

the stock market every time it crashes

39:35

to record lows, because this is what the FED

39:37

has been doing for years. This

39:40

time it's different, however, and I

39:42

know it's a cliche to say that, but it

39:44

really is. Inflation is

39:47

the highest it's been in almost half

39:49

a century. Central banks

39:51

must bring this inflation down at

39:54

all costs, or else it will do even

39:56

more damage to the economy and could

39:58

even lead to hyper inflation of some

40:00

fear currencies. However,

40:02

this doesn't mean the FED won't

40:05

blink when something breaks. It's

40:07

just that the threshold for what needs

40:09

to break is much higher than the

40:11

stock market dropping by double digits.

40:14

As it so happens, some Fed

40:16

officials are starting to get concerned

40:18

that something big will break if

40:20

they keep hiking rates. This

40:23

is why the Federal Open Markets Committee

40:25

or f o m C, agreed it would

40:27

be appropriate to start slowing the pace

40:30

of rate hikes. If you watched

40:32

our video summarizing the minutes of

40:34

the feds aforementioned meeting, you'll

40:36

know the Central Bank may stop

40:38

raising rates as soon as January.

40:42

Now, this is all well and good,

40:44

but I'll reiterate that pausing is

40:46

not the same as pivoting. Depending

40:49

on the inflation situation, we could

40:52

see lots of capital flow to traditionally

40:54

safe haven assets like government bonds

40:57

and precious metals. It's possible

41:00

that cryptocurrencies like BTC

41:02

will be a part of this basket, but

41:04

the fact of the matter is that investors

41:07

see bitcoin and other large

41:09

cap cryptocurrencies as being

41:11

akin to tech stocks. These

41:14

kinds of assets will continue

41:16

to struggle in a high interest rate

41:18

environment, which again could

41:20

last until the

41:23

final reason why the crypto bear market is

41:25

likely to continue has to do with

41:28

technical analysis. If you're subscribed

41:30

to my weekly newsletter, or have been keeping up

41:32

to date with our weekly crypto reviews, you'll

41:34

know that I've been watching a massive bare

41:36

flag form on Bitcoin's monthly chart

41:39

for months now. This

41:41

massive bare flag seemed to have finally

41:44

broken last month. I had

41:46

initially expected it to break back in July,

41:48

but BTC managed to hold on for three

41:51

more months before breaking down.

41:54

This begs the question of just how

41:56

low this bare flag will go, and the answer

41:59

really depends on how you measure it.

42:01

If you measure from the initial bare flag from

42:03

three months ago, then BTC is

42:05

headed for the ten k range, and in

42:08

my opinion, this is the last

42:10

stop. However, if

42:12

you measure from the more recent breakdown,

42:14

then it's possible that we've already seen

42:16

the bear market bottom at around fifteen

42:19

K. What's interesting is that we

42:21

saw the same double bare flag pattern

42:23

on btc's monthly chart during the

42:25

previous crypto bear market in back

42:28

then. The second breakdown initially

42:31

looked like the bear market bottom, but in the

42:33

months that followed, BTC hit

42:35

the target of the initial break down

42:37

to four K. As the saying

42:39

goes, history doesn't repeat, but

42:42

it does rhyme. Considering

42:44

all the factors I've mentioned in this video

42:46

and others. It's quite possible

42:48

that we will see something similar happen

42:50

again. After all, there's no

42:53

shortage of bullish crypto catalysts

42:55

coming in early to mid twenty

42:57

three that could cause a recovery.

43:00

More about that in the description. Now,

43:03

before I go, I want to bring your attention to one

43:05

last indicator, and that's the balance

43:08

of BTC on cryptocurrency exchanges.

43:11

As you may have heard, the balance of BTC

43:13

on exchanges is the lowest it's been in

43:15

almost five years. This

43:17

means that btc s price is

43:19

going to be very volatile in the coming

43:21

months, and that means that the kind of technical

43:24

analysis we just did maybe

43:26

way off the target. For instance,

43:29

BTC could temporarily for much

43:31

lower than ten k due to a lack

43:33

of liquidity and liquidations

43:35

by any leverage traders who are left.

43:38

This means that you need to be extremely

43:41

careful if you're planning on trading cryptocurrencies

43:44

in the coming months. I will

43:46

be dollar cost averaging into promising

43:48

crypto projects, and you can find out

43:50

which ones are be accumulating by signing

43:52

up to my weekly newsletter. The link

43:54

for that will be in the description. Anyways,

43:57

Thank you so much for watching guys, and I

43:59

will see you next time. Thank

44:02

you so much for listening to the coin Bureau

44:05

podcast. If you'd like to learn more about

44:07

cryptocurrency, you can visit our YouTube

44:09

channel at YouTube dot com forward slash

44:12

coin Bureau. You can also go to coin

44:14

bureau dot com for loads more information

44:16

about all things crypto. You can follow me

44:18

on Twitter at at coin bureau or one

44:20

word, and I'm also active on

44:22

TikTok and Instagram too,