Dear readers,
If you’re like me, you check the bitcoin price before your eyes are fully open in the morning. Or, if you’re not like me, you check it as soon as your coffee is poured?
Either way, we are all price watchers. And this morning might have come as a surprise, seeing bitcoin’s price fall well below $40,000. But if you’ve been reading The Bitcoin Layer over the past few months, hopefully you weren’t caught off guard. Here’s some weekend reading to catch you up, just in case you’re a new subscriber or were too busy during the holidays to digest some of my research and analysis.
Last week, I posted some analysis on BitMEX founder Arthur Hayes’ recent bearish warning. In short, Hayes believes the Fed’s tightening cycle puts bitcoin’s price in a precarious position. I somewhat agree with his points but offer some additional thoughts as well:
Just before Christmas, I posted some charts of US Treasury yields, the yield curve, stocks, and bitcoin. Both stocks and bitcoin have been flashing bearish signals, and the yield curve flattening over the course of many months should have told us that an economic slowdown and cheaper valuations are heading our way:
Finally, I suggest everybody read my post on the Fed from November titled “The Fed is a slave to rates traders” to understand changes in monetary policy and how the markets are in the driver’s seat when it comes to the Federal Reserve’s decision makers:
I’ll end with this thought: even though bitcoin has shown strong correlation with traditional markets since the pandemic began, it is still, in my opinion, an uncorrelated asset class when looking at the big picture. For now, however, we are stuck with the rates market for signal. If only you were subscribed to a publication written by both a rates AND bitcoin analyst…
Sincerely,
Nik