And if the problem is part of the solution…
It is true that investment products in digital assets have been severely punished, unleashing a domino effect of significant exits, exits in some cases due to lack of trust and in others due to mismanagement, where it was necessary to stop strong economic losses.
It is also true that bitcoin registered entries for a total of 28 million dollars last week, motivated in large part by the low price reached by each unit of bitcoin.
Ethereum, for its part, is being the great loser in this bear market, since not only do downward prices converge due to the dragging effect of bitcoin, but in the case of Ethereum we must add the uncertainty that is breathed every time with more strength among investors, in reference to the success or failure that the long-awaited Merge (ETH2.0) may have. With accumulated capital outflows over the last 11 weeks of 459 million dollars, its direct competitors such as Solana or Polygon are behaving much better, attracting money and confidence from abroad.
Although it is not my style and I do not usually do it very often, I think it is necessary to put on, on this occasion, the apron, stand behind the stove and roll up my sleeves to cook an excellent dish with my own hands. The style and touch of the dish will be oriental, since its main ingredient is JPY, an ingredient that is quite a challenge to be able to cook well due to the efforts of the Bank of Japan to keep it afloat against the USD, adulterating it with interest rates unsustainable on the palate.
The feared, but expected inflation is setting in in Japan, the Bank of Japan knows it and for that reason it should not make sudden movements that reveal an increasingly serious situation. In order to be able to cook it, it must quickly release a toxin in the form of 1 trillion dollars in US Treasury bonds, without being contaminated during the process by the summation effect exerted by the Federal Reserve raising interest rates, other foods in the container .
What happens if the plate is contaminated, no liquidity for credit operations, zero interest on existing debt and bond prices falling, therefore, the cooking is cut.
(U.S. 2-year bond yields)
As the big buyer of last resort (the FED) is getting some air and hedge funds do not know what to do (although in this context they should prefer cash to limit their exposure), everything continues to spin in a deflationary spiral , which will undoubtedly cause interest rates to explode upwards, putting the entire kitchen and even the restaurant at risk.
And when everything seems that it can’t get worse, the real estate market appears to remind us all that they are also part of this menu, they are the spice that can kill the dish, since their work thesis has always been to buy cheap debt to boost the rising prices, without taking into account that the debt can become more expensive and therefore knock down the prices of the sector and stop that part of the economy (it is not unreasonable to see housing prices in the US fall by -50%).
With half a dish ready, I’m going to go with the chef’s touch; Stocks and equities, tools that have historically worked very well to hedge against inflation, but when this inflation is so supercharged it will eat up any hint of positive behavior or behavior that is different from the dynamics of the market in general. Therefore, be very careful with betting on a winning NASDAQ or S&P 500, I fear that the purge will be important and only those that deserve to be will remain (especially technology companies).
Projet Sakhalin-2, seriously affected japan’s participation
A little salt to finish, since I am inclined to think that the crazy equilibrium theory may be brewing, where stocks and cryptocurrencies tend to walk hand in hand, either in falls, rises or sustained correlations over time. If the strongest stocks fall, cryptocurrencies will continue to be heavily attacked, to the point where buyers and sellers feel comfortable. No one can give a figure for prices, but we will see bitcoin and Ethereum at points where our eyes bleed and our hearts ache.
Therefore, and with everything ready, I am encouraged to discover my creation, “ECONOMY A LA CARTE”, a unique dish due to its consistency, with clear honeyed and acid flashes.
1, Deconstruction of Global Recession, accompanied by inflation, debt and fiat.
2, Dessert, a new world currency based on blockchain technology (CBDC), based on a world economy forced to enter this new monetary system.
2, Coffee, a house classic with raw materials collapsed due to weak trade.
3, Liquor, undoubtedly the pleasant and elegant note will be able to gold, silver and bitcoin.
Tips and thanks to the service……….