#882 Bitcoin & Ethereum Are Going To Break Out Of Bear Market w/ Darius Dale
3/25/2022 · 42 min · transcript via mlx
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Key topics
— Macro economy and geopolitical risk: Putin's demand for non-dollar payment (rubles, gold, possibly Bitcoin) signals long-term commitment to breaking Western sanctions and accelerating movement away from the US dollar reserve system.
— European inflation shock: Europe is experiencing inflation surprise of historic magnitude—multiples larger than US inflation surprise—driving a massive repricing in sovereign debt markets.
— Fed liquidity and asset prices: Net liquidity (Fed balance sheet minus Treasury general account) shows 0.9 correlation to S&P 500; absence of negative catalysts suggests risk assets could naturally reprice higher toward ~4,700 on the S&P.
— Bitcoin and Ethereum technical signals: Volatility-adjusted momentum shows both assets have been bearish but are now hugging probable range boundaries, typically a leading indicator of bullish transition.
— Cryptocurrency adoption paradox: Institutional adoption has made crypto more correlated to equities and NASDAQ, burying the inflation-hedge narrative under higher volatility and risk-on/risk-off dynamics.
— Regulatory clarity and innovation: Development is outpacing regulation globally; successful markets will balance cautious optimism with timely clarity, mirroring historical precedent (oil pipelines, railroads).
Market & price signals
— S&P 500 could gravitate back toward the net liquidity line at ~4,700 in absence of adverse geopolitical shocks. Bitcoin potentially positioned to test $45,000–$50,000 based on liquidity metrics. European sovereign debt repricing continues as inflation surprise index shows steep upward momentum; model expects European inflation peak in Q2. Growth data expected to deteriorate in Q2, acting as eventual floor for risk assets; for now, economy remains stable enough to support floor under equities. Positioning has been heavily reduced through multiple OPEX lows in January, February, and March, suggesting light positioning ready to test higher prices.
Actionable insights
— Monitor net liquidity as the primary driver: Absent geopolitical shock, risk assets should trade toward the blue line (net liquidity); S&P at 4,700+ and Bitcoin at $45k–$50k represent natural repricing targets if conditions hold.
— Diversify payment system exposure: As global reserves diversify away from the dollar, exposure to Bitcoin and digital assets acts as a hedge to reserve currency transition, though this process will likely span years to decades.
— Watch for volatility regime shift: Bitcoin and Ethereum hugging the lower boundary of their probable ranges is a leading indicator for bullish transition; alongside reduced positioning, this sets up potential multi-week to multi-month relief rally before Q2 growth deterioration.
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