Bitcoin, FOMC, and CPI

Hey everyone and thanks for jumping back Into the cryptoverse today we're going To talk about Bitcoin under the context Of fomc and CPI releases if you guys Like the content make sure you subscribe To the channel give the video a thumbs Up and also check out intothe Cryptoverse premium at intothe Cryptoverse decom let's go and jump in So we've seen a lot of volatility around Some of these different macro events Whether it be in inflation releases you Know headline inflation core inflation Or the Fomc um and and obviously we know that At at 2 p.m. Eastern we'll get the Interest rate decision we'll see more Insight into we'll get more insight into What they're doing in terms of you know Quantitative tightening tapering we know That they said they're going to be Tapering at the June meeting so we Should expect to see that but but They're still going to continue QT Theoretically they're just going to slow Down the pace of QT quantitative Tightening And so there's this one idea of you know And and when pal speaks of course we'll See a lot of volatility so on one hand We get a lot of volatility around CPI Releases right if it if if inflation Comes in hot then often times not always But oftentimes the market will sell off

Because it's theoretically delaying the Reaction function by the Federal Reserve Even longer to cut interest rates and if It comes in cold then often times the Market will do pretty well because it Means that the FED could theoretically Cut sooner now theoretically the Reaction function of the market could Change at some point if you know if bad News actually is bad news and not good News but so far that's more or less what We've seen over long periods of time now What's interesting about tomorrow or Wednesday June 12th is that we're Actually getting fomc and CPI on the Same day and so I thought why Not leave our bias at the door whether You're bullish or bearish and let's just Say you know what what happened Previously when we had fomc and and CPI Releases and so that's what I want to do In this video bias at the door check it At the door let's just see what happened So the red lines are Fomc the green Lines are CPI releases and so it might Be interesting to just kind of see What's been going on especially since Bitcoin has been up in this range up Here okay so we'll look at fomc first so We'll note that the last fomc was May 1st and it ended up marking a local low For Bitcoin note though that Bitcoin did Sell off the day of fomc and it actually

Sold off sort of the day before it and Then that day as well right the day Before it sold off 5% % or so and then The day of fomc it sold off 4% but then That ended up marking a a local bottom Okay and then if you go back to the Prior fomc you can see that the prior Day before fomc Bitcoin sold off about 8% and then the day of fomc it actually Closed up almost 10% but it did put in a new low on the Actual day or a local a new local low on The day of fomc And so the low from yesterday from Tuesday June 11th because technically I'm making this video uh UTC time and It's already Wednesday but the low was 66,000 or so right around 66,000 right now we're at 67,500 um so in the same way as as Literally the last two Fomc's we sold off the day before fomc And then on the day of fomc one of the Prior times it closed red the other time It went lower but then closed green at The end of the day the prior time before That was you know in a completely Different range and so I mean we could Go back further and further but again You have to remember that when you go From sort of one area to another the Market the sort of the reactions of the Market can change okay so you know if You look at it over here what you'll

Notice is that after fomc we we did sell Off but it wasn't as big of a drop and And even over here when we had fomc you Can see that we kind of sold off going Into it and then it popped up right After what I think is is sort of Interesting though is that what we've Seen up in this range we've seen much Stronger reactions both to the downside And the upside going into and following Fomc But in this range over here the Reactions were more muted right they They they weren't as strong still Similar reactions if you look I mean you Know this red line right here fomc more Or less marked that local bottom here Got pretty close but we did Wick lower The next day so that's one end of of Sort of the spectrum on on Fomc but we also have CPI coming in Right and so then what I wanted to do is Take a look at what did Bitcoin do you Know on on prior CPI releases and again Remember a lot of times on a CPI release If the data comes in really hot Suggesting that the FED has to stay Higher for even longer then the market Will will often sell off again there's No such thing as a sure thing right Sometimes you can get something where Bad data comes in and the market still Goes down rather than going up uh Because whether it means bad news is

Good news or or bad news is bad news I Know might be kind of confusing but I Promise it theoretically makes sense Um so then let's just go look at at what Happened previously on CPI releases and So you know if you look at May 15th Bitcoin went up about 7even and a half% 7.6% now why don't we go take a look at What inflation did on that day of May 15th now I don't think I actually have Um I maybe we can find the expectations Let's see if it's over here so if you Look right here the last date May 15th Consensus was 3.4 it came in at 3.4 so When it came in at Consensus Bitcoin rallied about 7.6% now does that hold a lot of weight I don't know let's go look at the prior Time again I'm I'm looking at this for The first time okay I didn't look at This ahead of time and think like oh This I'm just like let's just see what Happened April 11th right so what Happened April 11th what was consensus Then so April 11th consensus was 3.4 right or April I guess it was April 10th not April 11th um it was 3.4 and we came in at 3.5 so it came in A little hot and so if we go look at What happened on that Day right here April 10th I think I put This on the wrong line so here's April 10th you can see it only went up about 2% okay so when it came in at

Consensus Bitcoin moved up a lot when it Came in slightly above consensus it only Moved up a little bit and then it sold Off going into the end of the week and The weekend right you see that and you Could argue that there reason it it went Up here was maybe just because of you Know we were meeting sort of Expectations and so people were not as Worried over here perhaps people are Worried because inflation was still Coming in hotter than expected at the End of the day you can come up with a Narrative to explain anything right the Market's going to do what the Market's Going to do we've also spoken at length About you know ignore all that stuff and Just simply look at what happened in 2019 right before the bed cut rates and We saw a very similar pattern right um So again we can always find a narrative To explain anything in hindsight so Let's look again let's go further back I Don't know what consensus was for March 11th I'm not sure if it shows it right Here um yeah I'm not I'm not seeing it Right here but I mean you you can at Least see that in uh you know when we Got the data in March for February it Was only at 3.2% okay and in that case you can see That Bitcoin actually went down slightly Then the next day it went up about 2% And then ultimately it came back down so

What's interesting is that both fomc's That have occurred while Bitcoin has Been in this range you know Approximately that 60 to 70k range plus Or minus a few K on either side it Marked local bottoms for Bitcoin right You see that pretty clear clear as mud Right CPI Releases the green Lines in two of them It was around the local Top not exactly but pretty close right Pretty Close and then the third one right here The most recent One it was kind of in the middle of the Trend right it wasn't really a top you Know it wasn't really a bottom it was Just sort of in the middle of the trend We had already moved off these lows but We were not yet at these highs and so That's what makes Wednesday June 12th Really interesting is you kind of have These competing views of like well you Know what's going to be more you know What's going to Prevail more you know is It going to be CPI is it going to be the Fomc and again I think a lot of it just Simply depends on what comes out of all This stuff you know on one hand what Happens if you have inflation come in Hot if you look at at Expectations consensus is 3.4 consensus Has been

3.4% every month for these last three Months right I mean it just seems like That's where consensus is is that There's really not any progress being Made um but on the other hand right and We know what happened when we hit it Bitcoin went up but when we came in Above it Bitcoin went Down over the following several Days at Fomc when it was pretty clear that the Fed was just going to stay higher for Longer it ended up marking look Now the only thing that I think the Market is is certainly expecting to Happen is that I I I believe the market Is expecting rates to stay the same so If you go look at at at sort of Probabilities rate expectations the Market is essentially saying you know What there's only about a 6% chance the FED cuts and I mean at this point There's not that many instances in History if any I believe where the Market was wrong only a day out right so I think it's probably safe to say that That is the most likely expectation now Coming into this year I thought there Was a decent chance they might cut by June but you know seeing where inflation Is right now seeing where you know um Where everything else is I I I think It's safe to say that the most likely Expectation right is that they just hold

Rates steady remember last cycle if you Go back if you think back to to last Cycle The FED Cut one month after all Bitcoin Pairs had a weekly close below the range Low right we remember that remember that One month after the first weekly close Below the range low because this range Low close occurred in June of 2019 and Then as we know the FED cut the Following month now again I'm not Suggesting the FED cares about your Altcoins we know they don't but I do Think it gives you a glimpse into the Health of the average consumer okay so At this point we cannot possibly have a Weekly close on all Bitcoin pairs below The range low even though it is at 39 Right that is breaking support but it's Still not a weekly close okay and So you can't have a weekly close below Support before the end of the week and So again it would sort of stand a reason That that something you know similar Could happen again now remember in June Of 2019 when all Bitcoin pairs broke Down the FED in June of 2019 they came Out and said they're not going to cut Rates since all 2020 I've showed that Article before they came out and said They're not going to cut rates until 2020 it was when they said that all

Bitcoin pairs immediately broke down you See it was right when the FED said that They're not going to cut rates until 2020 and then The following month the FED cut rates so You know that's why it's so interesting Is because the FED cut rates literally The following month after they said They're not going to cut rates until the Following year so it shows you how Quickly the FED can can reverse course Now the Bank of Canada and the ECB have Already cut rates and my guess is that The FED is going to try to hold out Longer than all the other central banks That have not yet cut rates like you Know like the bank of England and and And and a few other ones but that's my Guess and it makes sense because the US Economy is theoretically stronger than a Lot of these other economies therefore Interest rates theoretically should be Able to stay higher for longer than These other Economies and So that's I think you I think that's Where we are and so I really am curious What is the Fed going to say we also Know that last cycle and this is this is The sort of the most puzzling thing last Cycle we know that all Bitcoin pairs Bottomed when the FED pivoted not from Higher rates to lower rates but when the FED started to expand the size of their

Balance sheet right if you look at the Balance sheet you line it up with alt Bitcoin pairs alt Bitcoin pairs bottomed Precisely when the FED went from Reducing the size of the balance sheet To increasing the size of the balance Sheet now the Fed ad continues to Decrease the size of their balance sheet And so to all Bitcoin pairs continue to Bleed however while QT is likely going To continue unless the FED unless the FED throws us a curve ball tomorrow While it it's likely to continue they Have said that they anticipate reducing The rate of of quantitative tying and so You know you might see it shift from you Know sort of this slope to something Like this and I don't know right I don't Know how that's going to affect things Exactly I mean the idea is that it it Takes longer for you know for things to Play out and by reducing the pace of it They could theoretically continue QT Longer than they otherwise would have Just simply by not you know continuing At the same Pace but going until they Were going to stop anyways just making It last longer and so you know that's Something that could change tomorrow so You have a lot of things right I mean You have interest rates which are likely Staying the same you have quantitative Tightening which is likely going to Continue albeit at a slower a slower

Pace and then you have inflation which We don't know if it's going to come in Hot or cold and then of course you have The Wild Card of what is po going to say Are they going to come out with a doish Undertone or a hawkish Undertone and I mean I have to say if You just simply go Look at Inflation year-over-year It would make sense for them to like Express some concern right because this Hasn't gone down now there are some Indicators suggesting it eventually will As long as they hold rates high enough For long enough but again if they act Too prematurely then you run the risk of Repeating the 1970s right where it went Down to about 3% right around the same Spot that it is today and then you get a Second round of inflation and it's Interesting because you know we always Look at this like well surely that can't Happen again and honestly my base case Is not to have three rounds of inflation Like the 1970s I think you could also make the case That it's similar to say you know other Times like maybe the 1940s uh but even That case I think I think you had a Couple of Peaks as well Um but it ended in a deflationary a Deflationary crash 20 or 1970s did not Really end in a deflationary crash um as

You can see right I mean it it just we Kept getting these rounds of inflation Then eventually it came back down and Settled at at at you know lower levels That they were they were hoping for Right around 2% or so maybe a little bit Higher and then ultimately down here Below 2% down to 1% but it took a long Time to get there and so you know the FED does not want to go through the 1970s again but there's also this level Of of you know I think people getting Tired really wanting rates to be cut Politicians putting a lot of pressure on The FED to cut rates and so who knows You know are they how can they hold off Long enough one thing to remember is That central banks do not control the Long end of the yo curve and I've said This many many times before I think There's this thought process that says That if the FED Cuts rates then then Mortgage rates will will you know They'll have to go down right but one Thing to remember is that the FED Controls the short end of the yog curve Not the long end and there's no Better recognition of that than just Simply look Looking at what just Happened with the ECB because if you Were to go look if you were to go look At the Euro area interest rates you will See in fact that they've cut rates right

You'll see that they've cut Rates but what you'll also see if you Overlay the 10-year yield in the Euro Area you will see that and let me just Switch this over to um let me just go to Its Own Page if you look at the 10year yield While the while the ECB cut rates last Week the 10year yield isn't necessarily Falling off a Cliff right I mean it's still hanging Out up here and so you have to remember I mean it's going to be based on why are They cutting rates right so If the Fed Cuts prematurely before Inflation is Tamed then you run the Risk of the 10e still going up right you run the Risk of the 10e still going up and by The way right now it's still above the Bull market support Band and the reason why the 10e could Still go up even if the FED Cuts rates Is if they cut rates too soon and then Inflation expectations ramp back up and Then the yield curve is like well no you Know if the bond Market's like well fed If you're not going to do the job we'll Do the job for you okay something like That could theoretically happen if the FED cuts too soon because then rather Than pricing in a Slowdown in the

Economy the market starts to price in The economy really starting to re Accelerate igniting inflation once again Therefore leading to Long of theal curve Going up if on the other hand the FED is Panic cutting then the long of the yeld Curve could go down if it actually is Because of a of a Slowdown in the Economy and we just simply don't have The answer yet to sort of whatever Landing we're going to have because the FED hasn't cut rates yet and so you know There's a lot of sort of discourse Around you know have we achieved a soft Landing has it been a no Landing will it Be a hard Landing you can't really talk About it being a landing at all until You start to see rate cuts right because Again that's where the issue is is is do They wait too long to cut rates or do They not and if they wait too long and They have to panic cut obviously that Wouldn't be good and if they don't wait Long enough and they cut too soon then The yield curve could still go back up The long yield curve could go back up Now imagine what that would do to Sentiment If the Fed Cuts rates and Yields go higher you know longing goes Higher um which might not be on many People's Bingo cards but it is it is a Potential outcome So that's kind of where we stand right Now going into tomorrow and so there's

Going to be a lot of volatility is my Guess so maybe that's where the Narrative narrator says and then there Wasn't but um I'm guessing there's going To be some volatility tomorrow and and You can see that whether you're a a bull Or a bear you can find a reason to Support your view right because the last Two Fomc's marked local lows and it was Actually on the day of fom see where the Local low was set on that day so it Would be on June 12th Right but then on the other hand CPI Releases two of the last three were Pretty close to marking local tops right Pretty close the the one in April the The top had just occurred a couple days Before and then the one in March the top Occurred you know a couple days later And then the one over here in May you Can see that the top the local top Anyways occurred just a few days later Before coming back down so there's Definitely a lot of conflicting Information and that's why this this Last line over here is a different color It's because it's showing you green on Top of red right because we're getting Both fomc and CPI in the same day and so That's where we are that's where the Market stands you know you certainly do Have I was looking at sort of the same Chart but with with alt Bitcoin pairs

There's a lot of mixed results um but That might be interesting to see what The reaction of of alt Bitcoin pairs is Tomorrow you know this chart right here And and here if you're Overlaying um if you're just looking at At say Fomc there's not really a a really Compelling case to look at right so you Know if you were to to Simply look at Say these red lines fomc you will see in Fact that you know the last time all Bitcoin pairs rallied about 5% when we Had Fomc in March they were basically flat Right there wasn't a whole lot of Movement and then they went up a little Bit for about a week or two and then They fell off a cliff the time before That they were just sort of in the Middle of a downtrend got a little bit Of a move up after but the downtrend Just continued right the following week And so there's not really a clear Picture for for all B Bitcoin pairs you Know guys you guys know my general view On on all Bitcoin pairs but um and it is Notable that we are at 39 right now but Again it's still not a weekly close and And we know with with all this macro Data coming in on June 12th um Market Can move pretty quickly so we'll see What the reaction is hopefully this Video has been useful to you guys thank

You guys for tuning in uh make sure you Subscribe give the video a thumbs up and I'll see you guys next time bye


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