Market On Open, Wednesday 1 October
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All Quiet On The Federal Front
by Alex King, CEO, Cestrian Capital Research, Inc
With the Federal Govt. shutdown in full force and little or no change in bond or equity markets so far, I think we can conclude that the majority of market participants are now either (i) blithely bullish and/or (ii) of the view that one way or the other, the shutdown is resolved, because in the end some of the important people stop getting paid and that clearly can’t be allowed to happen and/or (iii) laboring under the opinion that nothing in DC matters much to securities prices anyway.
The more dislocations in politics and economics that occur, the more that gold just keeps rising, it seems. Here’s IAU (a spot gold ETF) vs. SPY over the last 20 years.
The test is coming, I think, for crypto. We can ignore all the fluff in crypto, yes even Solana, and consider just Bitcoin and Ether. The claims of crypto maxis are simple in this regard, which are:
- Bitcoin is supply-constrained and it is in great demand as a way to store and transfer value outside of the traditional financial system, ergo the price must keep going up in the long term (albeit with of high volatility).
- Ether is required in order to participate in the tokenization - the digitization - of assets onto a blockchain environment - which is to say the moving of assets of off the traditional financial system, ergo the price must keep going up in the long term (again in exchange for high volatility).
Crypto people will seize on price movements today and declare the win. “Aha!” - they will cry. “The government has shut down, but Bitcoin and Ether are up!”. The thesis being that digital currencies are truly a savior from the various crises currently found in the real world (inflation that won’t quit, continuing monetary debasement from oversupply of the stuff, a widening gulf between the economy as experienced by rich people and that faced by poor people, oh and rising geopolitical tensions most everywhere you look).
I’m not sure that the maxis are right. Certainly in 2022 when the rate hike cycle hit, Bitcoin and Ether dived for cover and stayed in a foxhole until inflation subsided from the highs and it looked like the Fed would stop hiking. But they might be right, and that’s what stock charts are for. All the same logic that one can use to trade the Dow Jones can also be used to trade Bitcoin and Ether. If you read that and shudder and think it’s all a scam and best avoided, I would say you are wrong, and that you are costing yourself money. Not because I’m a crypto- or indeed anything-maxi (I pride myself on believing in nothing), but because there is real institutional liquidity in these systems now, and that means you can use Big Money methods to make money from Bitcoin and from Ether. Up, down, sideways, doesn’t matter, you can make money from them.
This is the basis of our Big Money Crypto service. If you’re already an Inner Circle member, you already get all our crypto stuff. If not, can I suggest you take a look at our crypto work here. It’s nothing at all like other people’s crypto work. It has institutional methods - oh and total nihilism - at its core. Which is why it is so good.
Alex King
If you have any questions at all about our crypto coverage, you can drop us a line at minerva@cestriancapital.com or fill in the contact form below.
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