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 moimoi, 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 elf got a lot of excitement, uh and uh. We talked about the bitcoin futures elf, 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 first a quick message from our sponsor. I’M really excited to tell you about today’s sponsor moomoo moomoo is an app that helps you trade, like a pro it does this by offering powerful analytic tools, commission, free trades and reliable order, execution, mumu’s, technical analysis tools are really easy to use and super helpful, especially To retail investors, like you and me, many sites charge for the information that moomoo offers totally for free. They offer things like daily short selling volume, financial statements conveniently available in the app cost distribution data and a community that talks about everything about finances and stocks.
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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.
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