Bitcoin And Crypto Poised To Skyrocket As Endgame Of US Policy Nears: Analyst
10 October 2023 - 9:30PM
NEWSBTC
The intricacies of US monetary policy have been placed under the
microscope by Jordi Alexander, CIO of Selini Capital, who today
offered an incisive analysis of the potential ripple effects these
policies may have on the Bitcoin and crypto market. Drawing
correlations between traditional financial mechanisms and the
nascent digital asset landscape, his commentary elucidates a series
of complex market dynamics that every investor should be aware of.
At the crux of Alexander’s argument is his observation that the
Federal Reserve’s approach to handling current economic conditions
might be nearing an inflection point. As reported by NewsBTC, there
are growing concerns in the bond market. Bonds with maturities
exceeding 10 years have seen a decline of 46% from their highest
value in March 2020. Moreover, the 30-year bonds have fared even
more poorly, with a drop of 53%. Alexander remarked, “Haven’t
expressed macro views in a while – but as things are about to
really start moving – its time. I spent months analyzing the
endgame of US policy. The outcome I saw is now coming into view.
Gradually at first.. then all at once, the Fed will poo-poo in
their pampers. ” Why QE Might Be Back Sooner Than Later The analyst
perceives the recent shifts in the bond market, especially
concerning long-term bonds, as a precursor to potential policy
changes. To back this up, Alexander is referencing Nick Timiraos of
the Wall Street Journal who recently highlighted a specific
sentiment from the Dallas Fed President Lorie Logan that is
indicative of this shift. Related Reading: Bitcoin Trader Shares
The “Only Chart” You Need To Profit From BTC In 2024 Logan has
begun to express reservations about the earlier hawkish stance of
the Federal Open Market Committee (FOMC), largely due to the recent
surges in Treasury yields and term premiums. Her concerns
emphasize the tug-of-war between the need for restrictive financial
conditions to bring inflation down and the current strength of the
labor market and overall economic output. Remarkably, Logan
believes that the reasons for the tightening of financial
conditions, especially those connected with the recent surges in
Treasury yields and term premiums, might reduce the necessity to
raise the fed funds rate. Commenting on this U-turn by the Fed’s
Logan, Alexander argues, “This is the Bat-Signal I have been
waiting for. What does it mean? Why is the Dallas Fed president in
the top tweet doing a big baby U-turn? Because they are starting to
realize they are losing control of the bond market!” Expanding on
the nuances of the bond market, Alexander emphasized the
distinction between the front and back ends of the curve. He
stated, “The front of the curve, such as T-bills & 2-year
bonds, are generally very responsive to rate guidance by the Fed…
But the Fed never has as good control over the back end- especially
30-year bonds.” Alexander’s analysis points towards a decelerating
demand for these long-term bonds, suggesting a potential loss of
market control by the Federal Reserve. This evolving bond market
scenario places the Federal Reserve in a precarious situation.
Alexander, elaborating on this potential dilemma, posits, “What if
they agree to stop raising rates or even initiate cuts, but bond
buyers still don’t show up?” He further speculated on a possible
shift – the endgame – in the Federal Reserve’s approach: “Placed
between a rock and a hard place, the Fed might be pushed towards
Yield Curve Control,” hinting at a reversion to Quantitative Easing
(QE) policies. Related Reading: Binance CEO Foresees Monumental
Bitcoin Price Shift Following Halving Drawing a parallel to the
Japanese financial scenario, Alexander prophesied, “The USD could
very well be the casualty of this policy direction, much like the
Yen’s predicament in Japan.” He then connected these macroeconomic
shifts to the digital asset space, forecasting, “Goodbye
Quantitative Tightening, hello my old friend Mr. QE. The timeline
is uncertain, but it is time to start paying attention to term
premium, like the Dallas Fed!” Bitcoin And Crypto Could Profit
Massively Ultimately, QE is something that Bitcoin and
cryptocurrencies have benefited tremendously from in the last bull
market. Alexander therefore also predicts “yes your internet coins
[aka Bitcoin and crypto] could then benefit”. Remarkably, this view
is shared by several analysts. BitMEX founder Arthur Hayes recently
expressed a similar view, according to which the Fed will sooner
than later find itself in a bind to reintroduce QE. Hayes predicts
a Bitcoin price of $750,000 in 2026. But this perspective isn’t
universally accepted. Yuga.eth from Coinbase drew on Austan
Goolsbee’s confidence in the FOMC’s commitment to tackling
inflation. To this, Alexander sharply responded, “Nothing about
increasing the debt is helping the inflation anyway. As I wrote at
the very beginning, the only way to do it properly would be to
increase taxes, especially corporate.” At press time, Bitcoin
traded at $26,677. Featured image from Shutterstock, chart from
TradingView.com
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