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Fed Watch is the macro podcast for bitcoiners. In each episode we discuss current macro events from around the world, with a focus on central banks and currency matters.
On this episode of the Fed Watch podcast, I sit down with you Ton Vays, a true Bitcoiner and longtime Bitcoin price and macro analyst. Our discussion ranges from current conditions on bitcoin cycles to broader macro issues including the state of US politics, Europe and the Euro.
The charts for this episode can be found here.
Current Bitcoin Market Conditions
In the first part of the podcast, Vays talks about the psychological state of the Bitcoin market.
“I was in the last two bear markets. 2013 was the classic bubble chart, you were mentally prepared for what was to come. 2017, the ICOs again, it was an unreasonable exponential increase, so you were mentally prepared. I wasn’t mentally prepared for that. Because when the peak came in April 2021, we had an incredible amount of good news. Michael Saylor, Elon Musk and Jack Dorsey leave Twitter to go all-in on Bitcoin with Square [now Block]ElSalvador [legal tender law]then El Salvador buys bitcoin.
“It turned into a sell-the-news event. 50% correction, no big deal. Mentally, everyone was fine. Then this is all about your mental state. When we went back and broke the top in November that was the breaking out. Everyone thought we were going higher; I thought we were going higher. This November fake was mentally brutal. We tumbled back to the $30,000 low, collapsed to $20,000, and for the last three to six months, people have been very, very worried.
“This lengthy move has made people tighten their belts. Mentally they feel cheated and don’t think Bitcoin should be at these lows. Bitcoin was built for this world that we are currently seeing with all the uncertainty. They steal bank accounts not only from individuals, like in Canada, but from sovereign countries. Bitcoin was built for this, but the price keeps going down. People are starting to throw in the towel. Everyone says lower, lower, lower. I have to believe that the majority is always wrong.”
I asked Vays about Bitcoin valuation models and four-year cycles. My question is if they are all broken and if we need to find a new model.
He said he thinks models always fail. Stock-to-flow is theoretically correct, Vays believes, but it cannot be successfully used as a technical indicator. As for the four-year halving cycle, Vays believes this is partly due to hype and partly due to actual supply shocks.
That is also my position here at Fed Watch. The four-year halving cycle has its own hype cycle that is completely separate from the overall bitcoin hype. Similar to how altcoins try to hype their hard fork upgrades, Bitcoin of course achieves this through the halving.
However, I think the hype is diminishing with each cycle, along with the supply shock aspect. So now I think we have a kind of two-year cycle. A smaller effect of the halving but still echoing a few years later.
Vays is sensitive to point out that there is a much less clear distinction between bull and bear markets. Price action in 2020 and 2021 does not lend itself to a clear dividing line. In the future it will be more difficult to delimit these cycles.
European crisis and global macro
We started hitting our hard time limit before we got down to the juicy stuff, so hopefully we can have Vays back in a few months to continue this discussion. But we heard his opinion on Europe and the euro.
“I will say that I have a very low opinion of Western Europe. It’s nice; You go there and it’s safe. You can walk around the street; you feel pretty safe It has remnants of a collapsing capitalist society that is handing over all power to the World Economic Forum (WEF). I believe that the WEF is a liberal, socialist organization. You have too much control over politics. To quote Klaus Schwab: “We broke into the cupboards.” And they did.
“I think the path of the WEF is a very, very dangerous path and I’m shortening the future of western countries that believe in its power. That’s why I’m very pessimistic about Europe. I think the common currency will break up.”
We talk about so much more, from bitcoin’s correlation to stocks and altcoins to monetary policy. This is one of my favorite episodes we’ve ever done on Fed Watch, so it’s definitely a must watch.
That’s enough for this week. Thanks to the readers and listeners. If you like this content, please subscribe, rate and share!
This is a guest post by Ansel Lindner. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.