Global markets are going through a difficult period, including the cryptocurrency market. But judging by the conversations in the peanut gallery, it looks like some observers didn’t get the note.
“Feels like we are relatively safe in the interim,” tweeted “CryptoKaleo,” also known as “Kaleo,” in a Sept. 12 tweet to its 535,000 followers, referring to the November US midterm elections. The forecast was accompanied by a chart indicating his confidence that the price of Bitcoin (BTC) will rise to $34,000 — a 50 percent gain from the roughly $20,000 level last week — by the end of the year.
“Of course, we can spill even less,” wrote a mega-influencer on Twitter under the pseudonym Pentoshi in a September 9 letter to his 611,000 followers. “But the market at this price has become much more attractive than it was last year. […] Yesterday I got some BTC for $ / no Alts, but I’ll nibble.”
These assessments come from “solid” observers – those who have been right from time to time in the past. One gentleman in my inbox today — Charlie Shrem, looking to sell his “investment calendar” — assured readers that “major crypto growth could start tomorrow.” Look further and it’s not hard to find even more optimistic predictions, such as the prediction that Bitcoin is on the cusp of a 400 percent spike that will lead to its all-time high price of $80,000 and a $1.5 trillion market cap of $500. . billion more than the value of all the silver on earth.
It’s great to see runaway optimism, even if it’s mostly among influencers looking for engagement and paying clients. Unfortunately, macroeconomic headwinds indicate that the reality is a bit bleaker – perhaps a lot darker.
FedEx highlighted the possibility that economic conditions could worsen last week by announcing that it was $500 million short of its first-quarter revenue target. “These numbers – they don’t bode well,” CEO Raj Subramaniam quipped in an interview with CNBC. His comments, which included a prediction that the numbers represented the start of a global recession, triggered a 21 percent drop in his company’s stock price at the end of the week, sweeping the market with it.
Related: What Will Drive Bullish Cryptocurrency in 2024?
In response to the economic downturn, FedEx said it plans to take action, including closing 90 locations by the end of the year. The good news is that Americans are so heavily indebted that it’s unlikely they planned to visit any of these places anyway. Consumer debt reached $16.15 trillion in the second quarter of 2022, a new record, the Federal Reserve Bank of New York said in an August report. That figure is just over $48,000 for every man, woman, and child in the United States—$330 million in all.
The total consumer debt of Americans. Source: FRBNY Consumer Credit Panel / Equifax.
With an average national income of $31,000, this equates to an average debt-to-income ratio of 154%. If you want to factor in just over $30 trillion of federal government debt, you can add another $93,000 per person for a total of $141,000 and a debt-to-income ratio of 454%. (The numbers obviously get worse when you consider the fact that, as of August, only 133 million Americans were working full-time.)
While politicians may be indifferent to government debt, they are more concerned about consumer debt. “I’m telling the American people we’re going to get inflation under control,” President Joe Biden said in an interview with CBS on Sunday, prompting observers to wonder if he was trying to get ahead of the Federal Reserve’s announcement this week of a potentially huge, interest rate hike. rates per 100 basis points of the federal interest rate. Such a move is likely to send the markets into a tailspin from which they will not recover for some time.
Ironically, even this move may not be enough to curb inflation in the short term. Given the rapid increase in debt, it is perhaps not surprising that inflation, which rose by just over 8% in August compared to the same period last year, shows little sign of reduction. Americans may not have much money left, but – by and large – this reality has not reduced demand. If the New York Fed report was any indicator, then the monetary support for this demand comes from credit. The bank noted that credit card debt in the second quarter experienced the biggest percentage increase year-over-year in more than 20 years.
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Therein lies the rub. No matter how quickly the feds try to de-stimulate debt, it’s unclear when asset prices will rise. The high level of debt that already exists means less money to buy things. Increasing the cost of servicing debt, as the Federal Reserve is trying to do, means less money to buy things. Forcing Americans into a state of economic ruin in order to reduce costs means less money to buy things. Failing to control inflation and allowing the cost of basic goods and services to rise further – exacerbated, of course, by Europe’s energy crisis, which financial managers have little control over – means less money to buy anything else.
Perhaps this forecast is the same as Elon Musk came up with when he said in June that he had a “very bad feeling” about the economy. Other observers have come up with even bleaker assessments, including famed Rich Dad Poor Dad author Robert Kiyosaki, who doesn’t like debt. “The biggest bubble crash is coming,” Kiyosaki tweeted in April. “Baby boomer pensions will be stolen. An end to spending $10 trillion in fake money. The government, Wall Street and the Fed are thieves. Hyperinflation Depression is here. Buy gold, silver, bitcoin before the coyote wakes up.”
Admittedly, Kiyosaki’s assessment partly diverges from the results that pessimists might expect. The economic calamity should lead to lower asset prices across the board, including the prices of gold, silver and bitcoin. A more optimistic forecaster might hope that Americans learn from their mistakes, use next year to pay off their debts, and resume heavy spending in 2024, while avoiding a hyperinflationary depression.
In any case, one thing seems relatively certain: neither cryptocurrency nor any other asset class is on the verge of a record rally. If you want to succeed in investing in the coming year, you’d better start learning how to buy short options from less marketable optimists.
Rudy Takala is the opinion editor of . He previously worked as an editor or reporter for newsrooms including Fox News, The Hill, and the Washington Examiner. He holds a master’s degree in political communications from American University in Washington, DC.
This article is for general informational purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are those of the author only and do not necessarily reflect or represent the views and opinions of .