Bitcoin rose again above $22,000 for the first time in nearly a month while eth fell slightly as its ratio drops to just below 0.079 from a recent peak of 0.085 BTC.
The ping pong thus is perhaps back, and potentially due to macro giving bitcoin a new narrative amid some bullishness for ethereum ahead of its merge this Wednesday.
China, the Asian titan is in a bit of a panic amid a strengthening dollar that has their local media set off some alarm bells of sort.
A currency deprecated 45% and a country went bankrupt, their headline claims, with the text body pointing to Sri Lanka, which apparently is the dollar’s fault not China’s debt trap.
The Yen and the South Korean Won has dropped 20% against the dollar, and the euro has dropped 10%, while China’s Yuan is the strongest, falling 8%, they say.
Shifting the page, their semi-panicky tone continues to say freight prices have fallen to their lowest since August 2020. A video has gone viral showing a port full of containers. Is the foreign trade situation grim? – they ask.
Another page says that it is the European Union apparently complaining about US trade protectionism in regards to not providing subsidies to European manufactured electric cars in the Inflation Reduction Act – which is better called the Renewables Support Act.
Clever, that one, because it is probably true but it is aimed more towards bringing back some high tech manufacturing that has gone to China.
Apparently US now plans to bring back biotech too. The Biden administration is going to make trouble again, a rough translation says of it.
That’s while China’s president Xi Jinping, on the verge of officially being declared a dictator next month as he stands on the brink of unilaterally removing term limits, gets to meet Russia’s president Vladimir ‘I shoot at civilian infrastructure because soldiers are scary’ Putin.
This comes on the back of one of the greatest defeat of the Russian army, certainly since Libya, as Ukraine liberates an area twice the size of Greater London.
Ukraine is huge, however, and there’s still a lot of occupied red, before you even get to Crimea or Donbas, but the surprise blitzkrieg may well make some atheists believe in some sort of god.
Because it does come across as a miracle of sorts, although the Russians are not too wrong when they say Ukraine is being supported by the whole West.
By that presumably they imply that the West is obviously way too strong and losing to them is fine and maybe even that Russia can’t win.
That’s a decent way out, but with a month to go until the Great ‘Congress,’ this meeting is one to watch as mistakes from dictators – although officially neither of them is one yet – can not be ruled out, and thus this meeting can potentially determine things like whether those freight rates completely collapse.
We have no further speculation on this sensitive matter. Let them make their decisions first.
But there’s plenty of speculation on inflation, and it’s in only one direction: down. Gone, actually, as far as markets are concerned. Even if the data ends up saying otherwise, who cares about reality, right.
Not without cause though. Energy prices are now gov’s problem. In UK at least, but Germany announced a €65 billion package as well. So, everywhere.
If gov is covering the cost, then it’s through borrowing, not printing. So money shuffling around, rather than new money, in theory.
The money of the City of London, as well as New York. And so America, UK, Europe, are fine because their governments are not poor, it’s just accounting right.
The rest? Well, occasional country bankruptcies are kind of becoming the norm nowadays. These countries also tend to have strict capital controls, so the bitcoin hedge may well keep rumbling, but just don’t call it a hedge anymore.
There’s little difference between bitcoin and eth, however, so why are all these shifts in macro making bitcoin specifically jump, and more than eth.
The answer can simply be that if bitcoin can satisfy these needs, why should they bother with eth?
There are reasons, including the whole financial system on eth, but from remote villages to sophisticated trading houses, bitcoin comes first because it was first.
And so it is benefiting first from the macro change, but why did it not benefit positively from the huge volatility in forex markets?
One answer may well be that you can temporarily suppress bitcoin, but not in the medium to long term, and after such attempts last year, maybe some systems have come back online.
Another reason might well be that bitcoin is actually not correlated, it might just look like it in the short term. A way to put it is to ask: did the dollar strengthening crash bitcoin, or did bitcoin crashing strengthen the dollar?
The euros didn’t buy bitcoin to potentially hedge against dollar volatility because they perhaps thought bitcoin was too high at $70,000.
Likewise this recent bitcoin jump might also have nothing to do with macro, just the usual ping pong between bitcoin and eth that we see almost every time one of them gets bullish, with the other keeping up to then also lead.
However, if the dollar weakened too much while bitcoin rose, maybe it has now strengthened too much while bitcoin fell.
Both may also be due to causes unrelated to each other. The US is still a majorly importing economy. While the economy boomed, the dollar weakened because it had to be converted to other currencies to buy other nations’ goods.
That massive growth obviously can’t go on at 20% a quarter, or even 5%, but hopefully maybe at 3%.
So there was some adjustment and that adjustment may now be over, with that money reshuffling maybe pointing to a trend as the west seemingly comes out much stronger out of some big tests that at least so far it appears to have quite successfully passed.