Why Crypto is NO LONGER a Hedge Against Inflation.

everyone me kevin here in this video i'm

going to talk about my 2022 predictions

for cryptocurrencies and we're going to

start with bitcoin this video is brought

to you by moomoo but more on them in a

moment okay folks we've got to

understand this

first

bitcoin has been bobbing around this

channel of forty seven thousand two

hundred and forty six thousand eight

hundred for quite a while it breaks

above falls back to it breaks below

comes back into the channel why is this

happening well first it's worth noting

that all of this began right around the

beginning of december because at the end

of november on november 30th jerome

powell mentioned they were going to the

federal reserve was going to accelerate

the pace of the taper which means less

liquidity for financial markets this was

immediately followed by selloff and

certain higher risk assets in the stock

market especially software evaluation or

software companies with higher

valuations we immediately saw a software

valuation compression but we also

noticed that cryptocurrencies took

somewhat of a turn to a lower direction

we're not seeing those new highs for a

lot of alt coins as well and we're kind

of

almost stuck in the mud and so the

question is how long is this going to

last well folks i have a thesis

and it's important to break down what

moves cryptocurrency markets now in

order to understand this i think it's

really useful to revisit something that

i thought

was a very opposite catalyst but still a

a catalyst that would hold

back in 2021 and that is for the first

six months of 2021 well actually

probably closer to the first 10 months

of 2021 really until the bitcoin etf got

a lot of excitement uh and uh we talked

about the bitcoin futures etf

this what i'm about to show you held

true i predicted the peak of bitcoin and

talked about trading bitcoin by selling

it and then rebuying it and what i'm

going to tell you the lesson from this

is really key because it's the opposite

of what you would expect

the peak that you're going to notice

here is very critical so watch the dates

that i mentioned and there's a

particular reason why i mentioned them

watch these dates here and we'll take a

quick listen to this and then i'll

explain

april 13th to 15th this is when i want

to sell bitcoin here's why there's going

to be a ton of click bait stuff going oh

my god look what inflation's doing so

i've got april 13th this is when i want

to sell bitcoin in case i don't sell

bitcoin there i'll make it for the 12th

of may and so the point is we noticed a

peak of bitcoin prices on cpi or

inflation release dates both in april

and may which i recorded that in a

course member live stream on january 6th

which was the day of the insurrection in

fact i was wearing the same thing during

my uh capital riot video where i live

streamed the entire thing for 10 hours

but that's beside the point you just

line those up if you wanted to what's

important here is that even though we

had high inflation readings in april and

may cryptocurrencies actually rotated

down now most of us in the retail

community believe that cryptocurrency is

a hedge against inflation in fact any

time i run surveys of my retail audience

somewhere between 35 to 50 of you say

that the reason the primary reason that

you invest in bitcoin or any kind of

cryptocurrencies is to hedge against

inflation but that's not actually how

pricing works for cryptocurrencies and

that's really interesting because see if

individuals invest in crypto for a hedge

against inflation then kryptos should be

at its highest levels not its low

relatively lowest levels when we get

high inflationary readings now we most

of us don't believe the cpi readings and

that's not really what's important

what's important and what's important is

that when we get peak inflation data

like april may or even what we just

recently had at 6.8 in december bitcoin

rotated down why is that it's because

sure the retail community might be using

cryptocurrencies as a hedge against

inflation but folks guess who trades

more than the retail community when it

comes to cryptocurrencies folks it's

institutions and where do institutions

get their money from well from the

financial markets which enjoy the

liquidity and that juicy tap of the

federal reserve this means in my opinion

the more inflation we have the less

money wall street actually has to invest

in cryptocurrency and to trade

cryptocurrency let that sink in for a

moment this means that something that

was supposed to be a retail asset got

corrupted by mainstream financial

markets this means that cryptocurrency's

price action is much more likely to

correlate and correspond to what the

federal reserve does

rather than what inflation does and if

we look back over the past two years

this makes sense the easier monetary

policies we had the more cryptocurrency

prices went up look at 2020 and early

2021 when we had substantial moves in

cryptocurrency as soon as we started

talking about tightening the tap or

closing the water faucet of easy money

cryptocurrency started rotating down

more broadly bitcoin ethereum rotating

down having a harder time going to new

highs now what does that mean going

forward and how does this turn into a

potential bitcoin price prediction but

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to five free stocks so let's understand

this

if it is true

that

the price of bitcoin is related to

the federal reserve's price action then

we would expect bitcoin to go up when

the federal reserve

becomes more dovish or stops tightening

this is a mind twist here okay but get

this for a moment

the more inflation we have

the tighter the fed has to be and the

more the fed has to act so inflation

goes up

fed has to raise rates more aggressively

which takes money out of the financial

markets

and that would likely reduce the price

of cryptocurrencies so you have this

weird issue where inflation's going up

but cryptocurrencies could actually be

going down

if

inflation starts inflecting

down which

we expect will happen in 2022 in fact

wall street expects uh inflation to be

2.8 by the end of the year the federal

reserve expects it to be 2.5 percent by

the end of the year and jp morgan just

released an update that by the end of q1

of 2022 which is the most optimistic

forecast we have by the end of q1 2022

we will be under 4

inflation that's their prediction that's

pretty big

if this ends up being true and inflation

does end up falling to their three and a

half percent inflation target by the end

of march

then we could see less pressure on the

federal reserve to act hawkishly

less pressure on the fed to act

hawkishly to reign in inflation means

the fed can maintain easy monetary

policy for longer that means inflation

starts inflecting down cryptocurrencies

could actually start going up

as

we maintain accommodative monetary

policy that is keep money flowing

inflation's rotating down let's keep

rates maybe up at a half percent or one

percent at the fed funds rate but let's

not go ridiculous here

this in my opinion could be the moment

that the cryptocurrency markets are

waiting for to finally broach new highs

now i believe that this will happen

between q2 and q3 of 2022 that means i'm

somewhat expecting a late spring to

early summer rally for btc or

cryptocurrencies in general now it's

worth noting that june 21st is the

beginning of summer so i can't really

call this a purely summer rally but i

would say that even if the rally doesn't

happen in late spring i'm optimistic for

a summer rally because it could take a

little bit longer to get to that

inflection point so if i kind of had to

bottom line this i would say late late

spring

or a summer rally for cryptocurrencies

is where i'm optimistic why because i

believe that inflation is going to

inflict down and when it inflicts down

there'll be less pressure on the federal

reserve to constrain monetary policy

which means

more

less pressure on the fed to constrain

means more free-flowing money means more

money for institutions they trade more

than we do they have much more money

invested than we do into cryptocurrency

assets and so what happens we might see

new highs on cryptocurrencies this is

just my belief it could be entirely

wrong but it is an investment decision

that i am going to be pursuing this

means i believe we have a lot of time

ahead of us to be patient when it comes

to investing in cryptocurrencies i don't

think we need to go into margin i don't

recommend going into margin i think it's

a bad idea to go into margin even though

i'm slightly in marginal i certainly

wouldn't borrow against my

cryptocurrency assets because they can

be a lot more volatile so i highly

don't encourage that

but personally i think we can be patient

with buying the dip here no guarantees i

hope we go to the moon tomorrow but i

don't think we're going to at least not

for another probably

four five

six plus months but the second half of

2022 i'm pretty excited about because i

think the federal reserve go right back

to being dovish and accommodative and

that's going to be great for

cryptocurrency so ironically

as inflation goes down even though

people are using crypto's inflation

hedge as inflation goes down cryptos

might actually end up doing better and

it makes sense when you look at how

cryptocurrencies have acted in the past

they act much more like tech stocks

which follow a similar path in fact

we're seeing the beta or the measure to

which

a certain asset

responds to price action in another

asset we're seeing that vastly converge

between cryptocurrencies and tech stocks

the nasdaq and bitcoin continue to

become more and more similar in the way

they trade and so therefore folks i'm

very optimistic for the second half if

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next one thanks so much bye