'Bitcoin can get to $1,000,000 per coin' | Alex Saunders' macro view

The conflict and uncertainty surrounding US elections has pushed Bitcoin up by over 33% in the past two weeks. Bitcoin has even broken the 18K resistance level following the news of Pfizer and Moderna's vaccine development. The question everyone's now asking is, how long will the bull run continue?

Hello, everyone. This is Michael van Proppe from Cointelegraph Markets. Welcome to a new Cointelegraph Markets weekly update. It's going to be one of my friends, Alex Saunders, from Nuggets News from Australia. Welcome, Alex.

So let me start off with the DXY that you've been talking about a lot. We're just right on this level that I'm sure you've touched on plenty of times, and if that breaks down, then we're expecting all our favorites to perform pretty strongly.

Alex Saunders is the founder and CEO of Nuggets News. He has been researching, trading and investing in cryptocurrencies since 2012. He has also served as a board member of Blockchain Australia, Australia's leading community association dedicated to blockchain education and innovation. He joined our markets analyst Michael Van de Poppe to discuss the bullish factors that are pushing bitcoin towards its next parabolic move.

As we've just had the elections, I think it's one of the topics we should be addressing. And the first question I have is, how did you experience past week with the whole discussion between the two and the tweets from Trump and everything, how did you experience it?

I think it was pretty much to be expected in the end, wasn't it? Like, you knew Trump was going to make a lot of noise and probably, if he got beaten, probably say it's not fair. But just lately he's kind of taken it on the chin and it seems like even his party around him is saying, look, let's just move on and get on with it. So I'm kind of glad it's behind us. I think the markets are really going to like it. I think there's a lot of money that's just sort of waiting to know where to go and it's not that attractive to going to bonds. So I think there's going to be a lot of movements and a lot of volatility, but in good ways. There's going to be a lot of bullish conditions and sectors to play, I think. Are they going to get the 3 trillion stimulus across the line? That's probably the big question now. And if they can't, are the Fed going to step up the Us in particular, they need some money. People that are losing their homes, commercial mortgage backed security failures, all those things that have just been put on the back burner and they didn't get it for the election. I think the question just becomes what does it look like in terms of the stimulus and that money that gets handed out now?

Is there any difference between any president? I mean Trump was also shouting that they would be doing tremendous stimulus packages if he got elected. Well, he's not, but Biden is going to do almost the same as they literally don't have any other option.

Right? Well, like we're saying, the markets love a narrative and it was a 2 trillion versus a 3 trillion stimulus, but that was like up or down as far as the traders were concerned. It's just so funny how they pick things like that. And when Trump got elected it was, oh, it's going to be chaos. But then he cut taxes so that ended up with higher profits. On paper, Biden's talking about raising taxes, but then he's talking about doing a bigger spend and changing other things. I think it all sort of comes out in the wash these days with passive investors and the Fed increasing liquidity. You just look at the relationship of the M2 money supply. It's those other things that ultimately dictate the market. It's not what one politician does says.

Yeah, I mean that was one of the questions that I wrote down is like, we all know in what type of financial system we are living and now we're taking it the broader perspective. We are living in this inflated financial system since the 1980s, 1970s when the golden standard got released. Right. Is the new president a Muppet in our financial system? What I mean is we all know that they have a tremendous amount of debt in the markets right now that has to be paid off at some point and that's why they are driving to get that inflated economy just continuing. Is he a Muppet or can he change anything to the financial system? What I mean is, if there is going to be a crisis, can he change anything?

I don't believe so, no. And I probably would have said Biden more so because he's so old as well and a lot of people are going to be able to tell him what to do more. I think he's going to be way more malleable and just not out of control in left field and that's going to be good for the vix. And again in the markets they're not going to be worried about a Biden tweet for example. But I think what exemplifies the global market conditions is what happened in Australia in the past couple of weeks. And you guys might not have been following it, but basically the head of our central bank has always been about, we will never go to zero, we will never go negative and we won't start QE here. And he's literally done a bigger backflip than Jerome Powell did when he got into office, remember? And he's saying that he's going to raise rates and they're not going to be at the mercy of the market. And then he backflipped. Well, our RBA head just did the exact same thing. So he's cut to zero. They're doing 100 billion of QE in six months. That is massive for Australia. It's on par with what the Fed were doing at their most aggressive. Our markets have started to take off. I think property is going to go up. But you stop and think about, well, what's actually happening when people are losing their jobs and we're about to go through what happened in America for the past 10 years, it's going to drive wealth inequality, it's going to push out property prices, stocks are going to go up. And the thing is that our central bank chief said all this. He's been writing articles about how it creates wealth inequality, low interest rates, money printing, qe. It pushes up asset prices and causes speculative behavior. And he even said this in his speech the other day. The board recognises that low interest rates can encourage some additional risk taking as investors search for yield. It also recognizes that low deposit rates can create difficulties for some people, particularly those relying on interest income. And these issues will need to be closely watched over the months ahead. So to me, that just shows you the world we're in, that the guys at the top, they actually know that it's bad, but they're just going to do it anyway because we're all doing it. And having a bubble is better than having a crash. I think that's all they've got to fall back on now.

Yeah, but you know, every bubble ends up in a huge crash. We have experienced it with 2017. Bitcoin was inside a large bubble, it crashed. 1929, it was a big bubble. Actually, surrounded by tech back in the day as well as radio was coming up, it crashed.com bubble, it crashed. So what we see right now with every, well, the bank saying negative interest rates are going to zero is, is that they're just extending as long as they can. They know that once they are going to raise the interest rates, it's going to be bad for the markets.

Right.

It's just extending and they extended already since 2008. That's how far I can see right now. So. And we've also seen that Jerome Powell is actually going to loosen their inflation target. They have the fixed target of 2% per year. And what he stated a month ago is that they're going to loosen it in which going to be a variable 2%. So one year they can just have one and a half. One year they can have two and a half. For me is that he's saying we don't know anymore, we're just doing whatever we can right now and go ahead with it. Are we going to continue with this inflated market or is there a point of return in which we're going into deflated markets as they can't keep up anymore?

Yeah, so I've got this analogy that I joke about. I say the picture the economy as a sausage machine and we're just putting in all the loose ends and the sausages come out and the Fed and the government are just pushing in all this money and these changes and they're pushing on a string and they keep looking at the other end and saying why isn't it good? Why aren't economic conditions good? There's no wage growth, there's all this inequality. We can't figure out why this is happening because our textbooks tell us that it shouldn't be the case. And that is exactly the point where we're at. So you can actually stop every bubble from crashing. If they want to print 10 trillion in two years time when it crashes, and then two years after that they might have to print 100 trillion just to stop the huge deflation, which is the natural forces, which is the way that things want to go because of debt, demographics, deflation, technology, technology, decentralization, moving out of cities because of COVID Everything you look at is basically deflationary. But all the money printing, it's causing inflation of the assets and it's not getting into the real economy. So that's where they're looking to bypass the banking system and do these retail central bank, digital currencies. And that is what can cause inflation. If they start putting heaps of money or universal basic income into people's pockets. So that's kind of where the system is at the moment. You're always going to be able to stop the bubble crashing, but there's going to be ridiculous side effects and the straining of the System comes out as civil unrest or inequality or food prices go up, but wages won't go up because it's going to the owner of the big corporation. So they're all the things that it kind of shows you that the system's broken. But my sausage machine analogy, they're not changing the machine at all. They keep doing the same thing and wondering why nothing different comes out the other side.

Yeah. It's also, if you have the numbers here in the Netherlands, the income levels have almost not increased in the past 25 years. I guess that's only around 50%. The incomes have increased. The overall housing prices here in Amsterdam raised by 600%. So that's the whole point you're describing and what they are trying to do.

In Australia, house prices have doubled in the past decade and wages haven't moved up at all. Not 1%.

No. And that's the old variable that can actually push the economy down because these people will lose their job and have no ability to pay their mortgage anymore. So that's the variable that they have no power of unless they're going to do UBI or anything to.

That's exactly right. But just the other day we had more rate cuts and the big banks didn't pass on any of the cut to the mortgage holders. And then the banks came out and said, we're not allowed to kick anyone out. So this is moratorium where they're not allowed to kick people out of their homes for a year. And so that way there's no homes hitting the property market for sale. And if no one's allowed to sell their house, then prices can't go down. So we're just sort of pushing on all these holes as the boat's filling up with water, trying to check these things as they happen.

The overall question I also have is, I know you have been discussing this with Raoul Paul and Raoul Paul has also been debating that if we get deflation with these debt levels, that's going to be very bad for the markets. But my question is hyperinflation and the US dollar, I just don't see it occurring. Do you see that as a potential option that occurs? The world reserve currency going into hyperinflation, what effect would that have for bitcoin?

It'd be great for bitcoin, but it can't happen in America because America. And again, the central bankers don't even realize this, I don't think, or a lot of the other bankers around the world. There's actually two economies. There's two US Dollar economies, there's the United States and then there's this world market where it's the euro dollar system or the shadow banking system, all these US dollar denominated loans and debts and activity that's happening all around the world where it's the reserve currency. And so the fed, they print 3 trillion and there's actually like a $10 trillion gaping hole that needs to be paid back out here as well as whatever it is, 100 trillion whole in America so they can keep doing this money. And it's just this battle about is it going to go out of America to these emerging markets that are just being crushed because they so desperately need dollars to pay back the debts, but they can't get any, as well as their own economy which is experiencing deflation. So they would have to print so much money and they'd have to point it at the rest of the world and point it at their own economy before they'd risk getting inflation, let alone hyperinflation. So I just don't see that happening.

And then that brings me to one company that's recently announced that they'll be accepting bitcoin, which is PayPal. Are they, are they jumping in on the hype because they know they are losing or how do we, should we see it? Because if you buy Bitcoin through PayPal, it's not your Bitcoin as you can't hold your keys.

Right. I think they watched the documentary about Blockbuster when they got pitched by Netflix and laughed him out of the room. And they don't want to be those guys. But at the other end of the spectrum there's all these motor companies that are making the switch to electric vehicles. So I think it's that sort of thing where they basically know they can't compete and it ends past ignoring them and laughing them off and now you've got to join them, as the saying goes. So they're trying to stay relevant. That's why Visa, MasterCard, all the big banks, FinTech was already coming for payments and banking. But now you've got the crypto world that's removing more intermediaries and overheads again. So that's better. So it's going to be an unbelievable experience for the end user. Just like you and I can have a video chat like this. Money will basically become free in value to send anywhere over the Internet. So I'm really looking forward to that. And yeah, they can't compete. I mean, it's like saying, oh, what are the video companies going to do? Well, they went bust because technology made a better product and PayPal and that are going to basically go bust. So it's not a bad thing. There's just other jobs and technology comes along and disrupts industries.

Yeah, I mean it's also if you send money through PayPal you've got the insurance which is like 4% fee on every transaction you make. But there's also projects building insurances on Ethereum and stuff. So all in all, PayPal is just an ending story in that regard. But it's funny that they are jumping into the markets the moment that they know that they are losing. Probably they knew it already, but now the moment is kicking in where they accept that they are losing and try to make a buck out of it. All right, let's round off this show with expectations of the markets and I would like to know where do you see bitcoin and crypto going the next months and when do we see a new all time high? Is it going to be this year beginning next year? Let's share some bull bear thoughts on the markets.

I think, I honestly think that bitcoin will hit $100,000 in the next five years and then it is going to become about well do they actually try and shut it down or how do they regulate it and treat it? And if it's allowed to just continue on its mission and absorb all the money from around the world and become a global reserve currency and gold, I think that it can get to a million dollars per coin in the next whatever that is. 15 years. Ethereum, I think that that is going to pass its all time high by the end of next year as well. I think bitcoin could pass 20,000. It's either going to keep going like right now, the next few weeks and get to 20,000 very quickly or it's going to have its bit of a range now and then hopefully positive into next year. But you just look at the forces around you and it's not stopping, it's just accelerating. More and more countries, more and more money. There's no way out. So yeah, it's a perfect backdrop and it very much feels like 2016 heading into 2017.

Yeah, I agree on that point. I mean I don't believe we are in such a parabolic move yet as in 2016. Euphoria under retail investors is just not there yet. I kind of believe that we're currently still in that range bound construction period as we have seen in 2016, in which we just flip levels, go sideways for months, build further and break out after a few months. So in that perspective, I do agree that it's, I guess it's more likely that we're just having a little bit of correction, but that's still very healthy for the markets. I mean, bitcoin is doing really well. I think it's one of the best assets to have for the next years theory. I'm next, especially as what Ethereum can achieve what bitcoin can't. So I agree on that point. And it's just a matter of time before more bullish news comes out of listed companies buying bitcoin for their cash allocations or it's just coming. It's the wave has started and the wave is only accelerating from here. That's, that's what I expect to occur. Right.

Yeah. People are going to be really surprised by how much money's out there and how small bitcoin's market cap is once wealthy investors start to try and get on board.

Yes, I agree on that. That's a nice conclusion of this show. Well, everyone, thanks for watching. Thanks, Alex, for being here. Thanks for sharing your thoughts. Don't forget to subscribe beneath here to this channel and I'll see you. We see you back again next week for the new show Cointelegraph. Like subscribe and Hodl.