Bitcoin Is Inevitable | The ₿itcoin Report #01 🟠

The first edition of my collaboration with James LAvish and Joe Consorti is here!

If you have been an investor for a while, you understand that markets, like nature, move in cycles of expansion and contraction.

Capital ebbs and flows from asset class to asset class and industry to industry, like the tide rolling out and back into the shore of one island versus another.

But the natural flow of production and economies has been severely disrupted by an outside force for the past century.

Where there should naturally be steady upward growth with minor retraces along the way, there is now a mighty swell of economic expansion and a devastating tidal wave of economic recession.

The outside force?

You got it.

The Federal Reserve.

Charged with maintaining confidence in the US dollar, The Fed has tools they utilize to manipulate cost of capital and, hence, demand in the markets.

By raising and lowering interest rates and expanding and contracting the money supply, they have distorted the value of assets and the currency. This distortion has forced everyone to become an investor and everyone to play their game in order to keep the value of the savings they have created with their own productivity.

Call it evil, call it Modern Monetary Theory.

But whatever you call it, you have to play.

Because, time and time again, cycle after cycle, nothing changes.

One cycle ends, and the next one begins:

Fed floods system with money → Fed removes money from system and raises cost of borrowing, too rapidly → with the danger of total market collapse, The Fed reverts right back to Step 1 → The cycle begins again

The money becomes worth less, creating the illusion that your assets are worth more, and if you have left your money in the bank, it melts away.

Hour after hour, day after day, year after year.

A relentless devaluation of your hard work.

Stolen right from under you.

Until now.

Until Bitcoin.

​

Bitcoin Price Analysis

One thing that has been on everyone’s minds for months now is the possibility (read: extremely high probability) that a Spot ETF will be approved for trading soon.

In fact, just over a week ago, a rumor quickly spread that the Blackrock ETF had been approved. Bitcoin’s price immediately reacted that day, spiking from $27,200 to over $30,000 in just a few hours.

Then, over the course of the next week, as the reality of an eventual approval took hold, and investors recognized this, the price continued to gravitate upwards.

The Follow Through.

And just last night, as we write this, news of Blackrock securing a ticker symbol (IBTC) and a spot on the Depository Trust and Clearing Corporation (DTCC), the BTC price rocketed from $29,700 straight through $30,000 this time, and touched $35,000.

A roughly 18% one-day move.

While this may surprise a great many people who are new to the digital asset space, it was absolutely no surprise to us and other Bitcoiners.

A few things of note here:

• First, Bitcoin is yet a young asset, and it is growing in adoption rapidly. For this, and other reasons, BTC is a volatile asset. It moves in large swings at times. And while some investors became complacent, and others ever dared to short BTC, in the last number of months, we are reminded of this. This volatility is ultimately a good thing, though, as we will revisit later.​

• Secondly, it is just a matter of time before the SEC must concede that their position on refusing to approve a Spot ETF is thinly defended, at best. Sooner or later, they will have no choice but to concede to the will of the markets and allow for the asset to be bought and sold on the major stock exchanges.​

• Finally, we are informed of the tremendous pent-up demand for this type of security from the investing public. There are over $700 trillion of investible assets in the world, and a significant portion of this is seeking not just new assets to profit from, but also safe and reliable assets to hide in.

Let’s talk about that.

As you may have heard us (Joe and James) talk about recently, there are major storms brewing in the macro landscape.

These storms are born from a combination of tremendous leverage in the system (think: debt, everything from credit cards to student to mortgage to government Treasury Debt) and a screaming rise of interest rates (think: Fed funds and US Treasuries) over the last 18 months.

This monumental level of debt is like a giant tinderbox, filled with gunpowder, soaked in gasoline, set on a bed of dried brush, in the desert.

The rate raises are like little matches, lit and laid, here and there and there, and there.

Creating little fires everywhere you look.

A big fire was extinguished last spring: Silicon Valley Bank.

The fix? Instant liquidity for the bank to avoid total collapse. I.e., stealth QE.

But there are more fires brewing, some big, some small, and the markets know this. We can tell when we look at certain indicators. One of these indicators is called the Yield Curve.

And the yield curve has been signaling trouble for over a year now.

The Yield Curve Signals Trouble Up Ahead

The yield curve is basically a chart plotting all the current nominal (not including inflation) rates of each government-issued bond. Maturity is the term for a bond, and yield is the annual interest rate that a bond will pay the buyer.

A normal yield curve (this one from 2018) chart will typically look like this:

As you can see, in a normal economic environment, the shorter the maturity of the bond, the lower the yield. This makes perfect sense in that, the shorter the time committed to lending money to someone, the less interest you would charge them for that agreed lockup period (term).

When shorter-term bonds, like the 3 mo or 2yr, start to reflect a higher yield than longer-term bonds, 10 yr or even 30 yr, then we know there is expected trouble on the horizon. Basically, the market is telling you that investors are expecting rates to be lower in the future because of an economic slowdown or recession.

Like this:

When measuring inversions, we look at the yield of the 10-year US Treasury (the benchmark security for US Treasuries) versus the yield of the 2yr US Treasury.

The benchmark yield curve spread.

And this is how this spread has looked over the years. Note where it has been in the last year and where it is today.

What we see is that the curve inverted back in July of 2022, and it has been severely inverted since this past June, having touched over 1.08% negative spread, or inversion.

However, you can also see that the spread is un-inverting now.

Rapidly.

An un-inversion is the result of front-end rates dropping back down below long-end rates, as the market signals it expects front-end rates, including the Fed's own policy rate, to decrease.

Remember, the Fed is reactionary. They will only lower rates when they are faced with certain recession or we are already in one.

This is why the un-inversion is the ultimate signal of imminent trouble.

Because recessions occur within mere months of un-inversion

Every. Single. Time.

But we are here to tell you that this time is, in fact, different.

And by different, we mean worse.

Here’s why…

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