A podcast about the macroeconomy, “Fed Watch” embodies the anarchic spirit of bitcoin. In each episode, we put into question the narratives of both the mainstream and Bitcoin by analyzing recent developments in macroeconomics from around the world, with a particular focus on central banks and currencies.
CK and I walked through numerous charts in this episode of “Fed Watch,” including market updates on bitcoin, the dollar (DXY), and the Hong Kong dollar among other currencies. The following topic that we discussed was the deteriorating situation in Pakistan, and we posed the question, “Is Pakistan the Next Sri Lanka?” Last but not least, we talked about the situation between Taiwan and China, and I read a few crucial excerpts from two different sources: the first was from Chinese Foreign Minister Wang Yi, and the second was from think tank specialist Wang Wen.
Bitcoin in Addition to Other Currencies
In the beginning, we had a look at a weekly chart of bitcoin. This is something that we’ve done for the past few podcasts since it’s an effective method to ground our discussion in bitcoin. The volume-by-price indicator on the right shows that the price has remained rather consistent, putting it in a neutral position. This can be seen in the table below.
When we take a step back and look at the bigger picture, we see that the last time we saw weekly candles like this was in September/October 2020, just before the massive uptick from $10,000 to $40,000. No, we’re not predicting an exact repeat performance, but we’re also not ruling out the possibility.
If we zoom out, we can see that the last time there was a period with weekly candles identical to today was back in September/October of 2020, just before the massive rally that took the price from $10,000 to $40,000. There is no guarantee that it will take again again in precisely the same manner as before, but it is probable that it will.
The massive increase that the price of bitcoin witnessed in 2020 is starting to look a lot like today’s price action.
The other significant currency that we analyzed was the Dollar Index (DXY), which can be abbreviated as DXY. Due to the fact that the dollar is the most significant form of competition for bitcoin, I believe it is vital to check on it on virtually every episode.
It appears as though it has reached its zenith for the time being, but there are no indications to suggest that it will fall further. Instead, it is anticipated that the value of the dollar would remain within a new high range above 100 for the next few years. This is analogous to how it developed a new upper range between the years of 2015 and 2021.
BitcoinandMarkets.com was the original source for the photographs that were used.
In addition, I’d like to point out that a strong dollar does not portend poorly for bitcoin. Perhaps a strong dollar is initially connected with lower bitcoin prices; however, once the currency has stabilized in a higher range, this has historically been the time when bitcoin prices have increased.
The following is a screenshot taken from the website of the Hong Kong Monetary Authority. It publishes monthly figures on its foreign currency reserves, which it utilizes to maintain its peg, and those statistics may be found here. My hypothesis from last week was that the continued use of the Hong Kong dollar (HKD) peg was fast depleting Hong Kong’s reserves. On the other hand, this news statement claims that in order to keep the peg during the month of July, it only used slightly more than 1% of its reserves. This indicates that the Hong Kong dollar is likely capable of maintaining the peg (if it wants to) for a number of years.
Pakistan is on the verge of collapse.
The rapidly deteriorating situation in Pakistan is strikingly similar to the recent political upheaval in Sri Lanka in many respects. I mentioned i5w’s participation at the World Economic Forum in the podcast that you sent (WEF). Pakistan’s national parks and agricultural industry are both set to benefit from the hundreds of millions of dollars in foreign aid that the country has received.
In both Pakistan and Sri Lanka, Chinese finance has played a significant role during the past ten years, which is another resemblance between the two countries. Pakistan is currently stuck with around $20 billion in high-interest loans to China and Chinese corporations. This is a direct result of Sri Lanka’s inability to repay Chinese loans, which caused the country to lose control of its important port.
Pakistan’s current budget only covers expenses for another two months, thus the country is making every effort to find new investors. The Chinese have rejected it, and the Arab states are giving it some thought. The only place left to go is the International Monetary Fund. And that calls for severe frugality measures.
It should perhaps not come as much of a surprise that both Sri Lanka and Pakistan are significant nodes in the Belt and Road Initiative (BRI).
The BRI is doomed to fail, which is something that I have stated on numerous occasions. China is attempting to build economically viable areas and routes in parts of the world where this has not been the case for a very long time. There is no sum of money that will reverse the effects that millennia of culture and eons of geography have had.
The Chinese central planners have, once again, been successful in their mission to destroy a vital part of the Belt and Road Initiative (BRI).
live streams, I’ve been talking about the Pelosi situation and the response from the Chinese government for days now.
During this segment of “Fed Watch,” I read some passages from a well-known minister in China as well as an expert from a Chinese think group. The entirety of Wang Yi’s statements can be seen here. For the sake of this piece, suffice it to mention that he stated “One China” numerous times and identified the United States as the one attempting to alter the current situation. Additionally, he was quite critical of Tsai Ing-wen, who is currently serving as the President of Taiwan. He claimed that she had “sold out the forefathers.” According to a different translation, I heard the original statements made by Yi, and they suggest that she lied to her ancestors (and her race).
The next set of remarks that I perused were written by Wang Wen, who serves as both the executive dean of the Chongyang Institute for Financial Studies at Renmin University of China (RDCY) and the executive director of the China-U.S. People-To-People Exchange Research Center. You may read his comments as well as a number of other people’s comments here. He makes an attempt to explain why China’s reaction was so subdued and suggests that China shouldn’t provoke an armed conflict with the United States until it can “outperform the United States in terms of economic power, attain financial and military strength comparable to that of the United States, and develop an overwhelming capacity to counter international sanctions.”
It seems like a very long way off. I will merely provide the reader the piece of advice to avoid being caught up in the fear-mongering rhetoric between Taiwan and China. They adhere to the teachings of Sun Tzu, who advised his followers to “look strong when you are weak.” Additionally, Wen cited Sun Tzu as saying:
“A major military battle with the United States is not the goal of China’s foreign policy, nor is it the way to a better living for the common people. Both of these statements are false. It is important to keep in mind what Sun Tzu stated in ‘The Art of War,’ which is as follows: “Do not act until there is something to gain; do not use military force without the certainty of victory; and do not go to war unless the situation is severe.”
The episode came to a close with a discussion on the impending publication of CPI data as well as other topics related to bitcoin.
This is a post that Ansel Lindner has contributed as a guest. Opinions expressed are exclusively those of the author(s), and do not necessarily reflect those of Bitcoin Magazine or BTC Inc.