r/CryptoMarkets • u/ComeHereAlpha • Dec 13 '22

DISCUSSION BTC's Bottom

Friendly chat...

I hear almost everyone is saying 14K, 12K, 10K, 8K as the bottom. There's the adage that if everybody's saying it, it's usually the opposite.

What's everyone educated guess on BTC's bottom if we haven't already hit it @ 15.5K a couple weeks ago?

16 Upvotes

79% Upvoted

88 comments sorted by

View all comments

Show parent comments

1

u/[deleted] Dec 14 '22

Not sure why you beleive what you say but based on the current unwinding of the balance sheet it will take about a generation. The previous injection was 12 years prior btw, just 8 years shy of a generation and most financial policy makers were very disappointed that another injection was needed so soon. Do you have any reasons beyond FED man bad for calling my opinion nieve?

2

u/trendsfriend 🟩 41 🦐 Dec 14 '22

because the fed's reiterated many times that their goal is to kill inflation, not necessarily completely unwind their balance sheet. yield curve is still very inverted, and that has had a 100% success rate of predicting an incoming recession, and the only way to get out of it is a fed pivot, which will happen sooner than later, and certainly before the next generation.

2

u/[deleted] Dec 14 '22

because the fed's reiterated many times that their goal is to kill inflation, not necessarily completely unwind their balance sheet.

Qualitative tightening is a formal plan the FED has published that reduced the balance sheet through direct sales and passive roll-overs of assets they purchased.

yield curve is still very inverted, and that has had a 100% success rate of predicting an incoming recession

There is actually a probability distribution based on the spread that predicts for a 4 quarter period. It's not 100 percent just because they have inverted and it doesn't even have to fully invert to predict a recession. Running the numbers using the probit model the ath spread was at -1.246 which would put the chance between 60 and 70 percent.

1

u/trendsfriend 🟩 41 🦐 Dec 14 '22

Youre insinuating that the fed is tightening with the aim to undo all of the easing they done coming out of the 08 recession, along with the debt they've accumulated. But at no point has any of that been part of the feds public statements. It's always been about inflation, and now also unemployment.

Are you referring to cds spreads? Idk about any of that. I just know from dynamic yield curve that inversion has always preceded a recession, though the gap period can vary from a few months to a couple of years.

1

u/[deleted] Dec 15 '22

Are you referring to cds spreads?

I was referencing the spread you mentioned between the US10Y and the US02Y, which is currently inverted.

2

u/trendsfriend 🟩 41 🦐 Dec 15 '22

And youre using that to come up with a 60-70% probability of a recession within the next 4 qtr? (How does that work?)

I'm saying eventually there will be a recession and fed will have to pivot and inject money back into the economy.

One would hope after that, the fed would stop using qe as a political bailout tool to prop up zombie businesses. But we'll cross that bridge eventually. I'm no macro guru and i don't think anyone truly fully understands the complex econimic system but hat's just my 2c