Unblocking Blockchain, Part II
Old news is good news
As I write on the afternoon of March 15, 2022, Bitcoin is in the range of $39,500, which only sounds bad if you happen to be reading this in November 2021, in which case: short BTC/USD, take the Bengals +4 and the under in the Super Bowl.
But instead pretend you’re reading this on January 21 of this year, when BTC sculpted a 10% red candle and first slipped under $39K from its November high. Imagine I told you the following:
— Federal Reserve chairman Jerome Powell will not just renounce the “inflation is transitory” stupidity (which he did in December), but publicly muse about raising interest rates by 50 basis points in March and as many as six or seven times this year
— Russia invades Ukraine, sending oil to over a hundred bucks, wheat to nearly double, gold to all-time highs and nickel to . . . good Lord . . .
— China is locking down again due to COVID, and the Delta and Omicron variants have joined forces for a reunion tour
. . . and BTC would be higher on March 15 than it closed today. If you’re like me, your first thought would be “Wait, the Bengals make the Super Bowl?”
But then your second thought would be “ . . . how is that possible?”
Bitcoin was supposed to be a risk-on asset. Yet the S&P is down almost 5%, the NASDAQ south an even 6%, and while the king crypto’s ride hasn’t been the smoothest, it’s broken even, easily outperforming volatile tech stocks like Paypal (-39%), Meta (-37%) and Netflix (-13%, but that was after plummeting 21% on Jan. 21 after missing its subscriber numbers). It’s even soundly beating Coinbase (-19%).
Everybody who’s come to crypto post-COVID, including me, might equate “strength” with parabolic upswings and 🚀🚀🚀 astronomical emoji 🌙🌙🌙.
But there is a lot of strength in being able to hold the line while the world goes to hell.
Bears are sharpening their knives for Bitcoin, with many still clinging to the thought that it could bottom around $20,000. But after all this, why would it crumble now?
On Wednesday afternoon, Powell and the Fed will decide whether — or, really, how much — to raise interest rates. They’ll also give forward guidance that will frame their future decisions in light of macroeconomic data.
But the markets have already priced in a 25-point hike and the bad news that’s coming with it. It’s likely that the Fed won’t rock the boat too much, given the precarious economic zeitgeist. If we are living in a “superbubble,” the Fed would be wise to let the air out of it slowly.
After that . . . what is out there to drive crypto lower? Friday is an options expiration day, which tends to produce major swings of liquidation as Bitcoin’s equilibrium settles on the point of maximum pain.
And sure, China might invade Taiwan or some government might pass a stupid law banning Bitcoin mining or this salacious bombshell might finally drop (CONTENT WARNING).
But this camel seems pretty strong, and the macro world is running out of straws.
EDIT: And sure enough, as I was posting this last night, BTC/USD ticked a 5% nearly vertical gain, then erased it about an hour later to resume its normal chop.
If you ask me, it looks like a middle finger.
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