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Bitcoin and USD Hegemony!

Regardless of how anyone may feel about Vladimir Putin.  The act of freezing all Russian assets held in the US and not allowing Americans to transact with the Russian central bank, national wealth fund, or finance ministry has led Putin to say this, click here to view on twitter.


Now we see Saudi Arabia negociating the petroyuan with China.  This means Saudi Arabia and China transacting Oil in Yuan.  We see Russia selling Oil to friendly countries in Rubles or Bitcoin.  Not USD.  The days of the USD hegemony are ending soon.  The US could quite possibly lose its global reserve status far sooner than anyone predicted.  However, this does not have to be bad for you.  Hide or store your wealth in a scarce asset like Vladimir Putin is saying above.  The moves the US made could ultimately turn out in a positive way when coupled with the friendly EO on Bitcoin and Cryptocurrency.  By regulating Bitcoin and not trying to ban it the US is now embracing it as an alternative currency.  Russia is also embracing it as an alternative currency to the Ruble.  Bitcoin scarcity, decentralization and seizure resistance will keep it pumping as the after effect of Russia ending dollar hegemony and going after NATO.  Those were two reasons for the Ukraine invasion.  There are others we would rather not discuss.  USD Hegemony however, is a game changer for global macro. 


CBDC will come along much faster because of this, in 2022.  Bitcoin will be re-priced much higher because of this, also in 2022.  There is no need to make predictions, this situation is fluid.  We do know that the BRIC nations are onboard with ending USD Hegemony, and more details will be coming out to prove this in the future.  For now, lets focus on the US going forward.  The 5 year bond yield and 30 year bond yield have now inverted for the first time since 2006.  Everytime this has happened the US economy has slipped into recession within 2 years.  See this chart below:


Neutral ATM - Bitcoin and USD Hegemony!


Each recession is the greyed out vertical line.  So between now and eoy 2024, we expect a major US recession.  This asset bubble in stock and real estate is so big, this recession could dwarf 2008-2009.  If the Fed contains rate hikes to 25 bps and keeps them quarterly it may kick the can down the road into 2023 before the onslaught really starts.  Will this effect Bitcoin and how?  Yes, we think it will eventually hit Bitcoin and hurt it.  However, Bitcoin will find a V bottom and recover much faster than stocks and real estate just like it did in March 2020!  When this crash does begin, we see 10 year yields dropping and QE starting up again in earnest.  These are the moves that really sparked the 2020 bull run into November 2021.  Below is a predictive chart about future 10 year bond yields:


Neutral ATM - Bitcoin and USD Hegemony!


Below are some charts from Lyn Alden.  The first one shows the non federal debt compared to federal debt and illustrates how fiscal policy is catching up to non federal debt.  The second chart illustrates how inflation is running so hot.  The monetary base in the US is growing out of control since the pandemic began, yet even after the lastest rate hike, interest rates have a long, long way to go to catch up with inflation.  Real yields are extremely negative and pension funds are feeling this now.  See the charts below: