The economic fundamentals you need to know to preserve your wealth.

Image for post
Image for post

Take-aways

  • Money is simply trust. It is not backed by anything.
  • The purchasing power of the US dollar reduces by 3% a year.
  • Inflation happens when the supply of money and credit in the economy grows faster than economic output. This is happening today.
  • The government is incentivised to inflate the money supply to reduce debt burdens (make it easier for them to pay loans back).
  • In the long-run the Federal Reserve is powerless. Real economic growth is necessary to maintain an economy. Printing is a short-term solution only.
  • Watch your interest rates: if you have cash sitting in the bank in 2020, it is wealth destroying. …


Trading Bitcoin in Fear, Greed and Recession

Image for post
Image for post

Take-aways

  • Recessionary risk adds additional stress to low-profitability Bitcoin Miners in 2020
  • If the percentage of Bitcoin Miners that are zombies is similar to the that of US listed companies, Hash Rates and Bitcoin’s fair value could fall an additional ~20% during a recession
  • The “Amygdala Overdrive Relationship” suggests a high correlation of Bitcoin to equities in times of extreme fear and greed
  • Early stages of a recession would likely see Bitcoin fall with global markets, later stages may see a Crisis Adoption event
  • $100,000+ Bitcoin target within 5 years
  • 2020 worst case scenario: $6,400 Bitcoin at Christmas

Trading Bitcoin in Fear, Greed and Recession

This week has seen a significant Bitcoin retracement, preceding Monday’s biggest daily collapse in the stock market since 2008. …


Part 1 — The Current Macroeconomic State

Image for post
Image for post

Global markets are dancing a fragile line.

The S&P500 has collapsed -19% in just over two weeks, entering correction territory and possibly the start of a bear market. Based on the Recession Watch indicator, there is approximately a 50% chance of a recession within the next year.

Before the Coronavirus even hit, we were already in the late stages of a Bull market.

So where are we at now?

Image for post
Image for post
The CNN Fear & Greed Index suggests widespread panic (9 March 2020)

All the pieces are in place for a potential recession

Global economies today have all the ingredients necessary to spawn a recession, all that is required is the trigger.

The key economic factors present today, which precede recessions, include:

  • The yield curve…

About

Charles Edwards

Digital asset management | Deep Value investing & autonomous algo-trading. Follow me on Twitter: @caprioleio

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store