What is Bitcoin’s place in Macro? -Bitcoin Magazine

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“Fed Watch” is a macro podcast, true to the rebellious nature of bitcoin. In each episode, we challenge traditional and bitcoin narratives by examining current macro events across the globe, with a focus on central banks and currencies.

In this episode, Christian Keroles and I walk through several charts, giving market updates on bitcoin, the dollar index (DXY), and the Hong Kong dollar. Then we look at the deteriorating situation in Pakistan and ask the question, “Is this the next Sri Lanka?” Finally, we discuss the Taiwan/China situation and I read several important excerpts, one from Chinese Foreign Minister Wang Yi and the other from think tank expert Wang Wen.

Bitcoin and other currencies

We open by looking at a weekly chart of bitcoin. We’ve done this for the last few shows because it’s a good way to ground our conversation. As you can see below, the price has been very stable, sitting on the close as far as the volume-by-price indicator to the right is concerned.

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If we zoom out, the last period with similar weekly candles at the time of recording was back in September-October 2020, just before the monster rally from $10,000 to $40,000. Of course, we’re not saying it will happen exactly like that, but it is possible.

Pakistan is experiencing a similar fate to that of Sri Lanka and the situation in Taiwan is heating up.  Geopolitics can give us insight into bitcoin's role in the macroeconomy.

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The Dollar Index (DXY) is the other major currency we are looking at today. I think it’s important to check the dollar almost every episode because it’s bitcoin’s main competitor.

It looks like it’s peaked at the moment, but there’s no indication it’s going to crash. Instead, the dollar is more likely to form a new high range above 100 over the next few years. This is similar to how it formed a new higher range from 2015 to 2021.

Pakistan is experiencing a similar fate to that of Sri Lanka and the situation in Taiwan is heating up.  Geopolitics can give us insight into bitcoin's role in the macroeconomy.

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I will add that a strong dollar is not bearish for bitcoin. Maybe in the beginning, a strong dollar correlates with a decline in bitcoin, but after the dollar stabilizes in an upper range, that’s when bitcoin has traditionally rallied.

Below is a screenshot from the Hong Kong Monetary Authority website. Every month they publish statistics on their foreign currency reserves, which they use to stabilize their parity. On August 3, 2022, I speculated that the continued peg of the Hong Kong dollar (HKD) was rapidly depleting their reserves. However, according to this statement, they used just over 1% of their reserves in July to maintain the peg. This means that the HKD is likely able to hold the peg (if it wants to) for several years.

Pakistan is experiencing a similar fate to that of Sri Lanka and the situation in Taiwan is heating up.  Geopolitics can give us insight into bitcoin's role in the macroeconomy.

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Pakistan on the brink

The developments in Pakistan have much in common with the recent collapse in Sri Lanka. In the podcast, I highlight their involvement with the World Economic Forum (WEF). Pakistan has received hundreds of millions of dollars in funding to revamp its agricultural sector and add national parks.

Pakistan is experiencing a similar fate to that of Sri Lanka and the situation in Taiwan is heating up.  Geopolitics can give us insight into bitcoin's role in the macroeconomy.

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Another similarity between Pakistan and Sri Lanka is the significant role Chinese funding has played over the past decade. Sri Lanka lost control of its main port because it could not repay Chinese loans and now Pakistan is saddled with around $20 billion in high interest loans to China and Chinese companies .

Pakistan has just two months left in the budget and is desperate for new lenders. The Chinese refused them, the Arab states are thinking twice. The only place to turn is back to the IMF – and that means harsh austerity.

It is perhaps unsurprising that Sri Lanka and Pakistan are important nodes in China’s Belt and Road Initiative (BRI).

Pakistan is experiencing a similar fate to that of Sri Lanka and the situation in Taiwan is heating up.  Geopolitics can give us insight into bitcoin's role in the macroeconomy.

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As I have said many times, the BRI is doomed. They attempt to make places and routes economically viable where the long span of history has not already done so on its own. No amount of money can reverse millennia of culture and eons of geography.

Once again, one of the important links in the BRI has been bankrupted by Chinese central planners.

Situation Taiwan/China

Pakistan is experiencing a similar fate to that of Sri Lanka and the situation in Taiwan is heating up.  Geopolitics can give us insight into bitcoin's role in the macroeconomy.

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I’ve been discussing the Nancy Pelosi situation and the Chinese response for days on my Telegram live streams.

In this episode of the podcast, I read excerpts from a famous Chinese minister and a Chinese expert from a think tank. You can read Wang Yi’s full comments here. Suffice it to say for this article that he repeated “One China” many times and said that the US is the party trying to change the status quo. He also had very harsh words for Tsai Ing-wen, the incumbent president of Taiwan. He said she “betrayed the ancestors”. In another translation, I heard Yi’s original comments also saying that she betrayed her ancestors [and her race].

The following comments I read were from Wang Wen, executive dean of the Chongyang Institute of Financial Studies at Renmin University of China (RDCY) and executive director of the China-US People-to-people Exchange Research Center. He tries to explain why China’s response has been so weak and that China should not provoke armed conflict with the United States until it can “outclass the United States in terms of economic power. , achieve financial and military power comparable to that of the United States and develop overwhelming power”. ability to counter international sanctions.

It seems far to me. I would simply advise the reader not to get caught up in scaremongering rhetoric about Taiwan and China. They are disciples of Sun Tzu, who said “appear strong when you are weak”. Wen also quoted Sun Tzu.

“A major military confrontation with the United States is not China’s foreign policy goal, nor the path to a better life for the people. Remember what Sun Tzu wrote in The Art of War: “Act only if there is something to be gained 非利不动; do not use military force without certainty of victory 非得不用; don’t go to war unless the situation is critical 非危不战.’ »

We ended the podcast by talking about the upcoming Consumer Price Index data release and other bitcoin-relevant items. In short, an episode to listen to absolutely!

That’s it for this week. Thank you to the spectators and listeners. If you like this content, subscribe, review and share! Be sure to check out the Fed Watch clips on YouTube. Liking and sharing videos is the best way for us to reach new people.

This is a guest post by Ansel Lindner. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.