How do the Fed’s decisions impact crypto?

Sam foreign. Hello friends and thanks for hanging out with us today here on the market report on cointelegraph. I'm your host Benton, and we are joined again by our resin experts, Jordan Finis, Marcel Peckman and and Sam Borgi. Jordan uses his background in psychology and human behavior to spot those emerging trends in the crypto market. Sam Borgi is a business editor at Cointelegraph where he brings a decade of experience in economic analysis and financial market writing. Marcel Peckman applies his 17 years of derivatives trading options and futures to the crypto derivatives markets. Fellows, we're going to be taking a high level macro look at what's going on in the markets this week, but how are we thinking feeling? Marcel, why don't you kick us off for today?

Happy, happy, happy. Well, I think $32,000 is an important mark for bitcoin because we've been under that level for the past 30 days. So yeah, it's a 5%, 10% increase from what we've seen in the past week or so, but it's still an improvement. So I think that the coupling from traditional markets won't happen in a single day, but in across multiple weeks. So the higher the better. So looking good.

It's nice to see us holding around this thirty thousand dollar level but again, bear markets kind of suck and they're going to be just long, drawn out, boring, sideways trading. So try and enjoy the market, get out and enjoy the sun if you can and just hang in there because we might be in for a bumpy ride.

Yeah, I mean bear market bounces are really nothing new and in fact, I was expecting one several weeks ago. I wasn't expecting nine red, red candles in a row. I don't think anyone was. So it's nice to see a little bit of a bounce. But overall market structure, I don't think anything has changed.

And we're going to be diving into why bitcoin is at the level it is right now. We're going to have Marcel take us through some of his expert takes on what the professional traders are going to be doing. We're going to be diving into some headlines today as Action Pack show. And I want to thank everyone, all the fans from around the globe for tuning in. Tell us where you're tuning in from. We're going to be watching that chat. So if you have those burning questions, make sure you pop them in there because our experts here on the show today will be watching live and making sure that we get all those questions that you have answered. If you haven't liked and subscribed. Go ahead and do so now. We're going to be giving away $50 for the merch. The merch store, store, coin, telegraph. If you haven't been there, make sure you go check it out. We got all the swag. You want the CT swag, we got it. We're going to be giving away $50 50 USD today. So first things first, though, we got the Twitterverse weekly roundup here. We got to catch what's going on. What is everyone talking about out there? We got to see it. So, Danilo, let's go ahead and jump into our weekly roundup for this week. Luna just can't, just cannot get out of the headlines right now. A lot of stuff to get into here this week. First, I think we have some memes, but I want to welcome everyone that's just tuning in from around the globe. I see folks from India, Montreal, got a few from the States. Tell us where you're tuning in from. You have questions for us? You want to know what's going on with bitcoin? You want to know what's going on with Luna? Ask in the chat. We will respond and we will get your questions answered. Look at that, we got Vikram back. What's up? Thank you all for tuning in. First things first up, we got memes to look at. So, Danil, let's go ahead, pull up memes. Let's get some. Some hot live reactions here for the memes we got this week. What do we got? All right. Central banks, Bitcoin isn't money. Central banks, Bitcoin isn't money. This is a piece of paper. Okay, that's a good one. All right, Darth Maul. Love to see it. Star Wars. All right, what else do we got today? Crypto is up a lot today. So you're up a lot of money, right? So you're up a lot of money, right? I think we're all feeling that one. That's a good meme. Everyone can relate to that. Everyone can relate to any more memes here to know the rest. For women her age. Boom, boom. All right, Very relevant. That was a good find. Good find there, I think. I think we like that one. All right. When it's career day and your dad walk in with his NFT collection, NFT owners are feeling the pain. Board ape owners as well. Everyone is. Even the. Even the blue chip NFTs. Very good. Good finds. Yeah, one day. One day, Ethereum will. Will, will. Yeah, one day. One day those low fees will come like we'll all be dead and gone. All right, good memes this week. Good finds from Danilo, one of our producers here. All right, we got some news to jump into, though, so first things first.

Besides losing money on cryptos, you guys are losing money on NFTs as well. Is that what's happening here? Just me, to be clear.

Hey, not me.

Open your hearts.

Not me. Marcel. No, I don't need NFTs enough money as it is, so.

Well, if you want to. If you want to compound those losses, NFTs are a great way to do that.

Yeah.

All right, let's get into those headlines this week. Like I said, Luna just keeps finding itself in the headlines. Luna 2.0 tanks 70% in two days. Let's pull up this article written by Ars. Brian Corby here, writer at Cointelegraph. Let's dive into this real quick. I just want to touch on some of your thoughts. Like, what is going on with Luna 2.0? Is this thing have a chance of any success? I'm curious to hear your thoughts. Jordan, why don't you jump in here first. Luna 2.0. You bearish or bullish?

I'm kind of bull. Bearish long term. I mentioned before, like, trust is a really important thing in cryptocurrencies, and Luna kind of blew up all the trust it had, and I don't know if it's ever going to come back. And I don't. I don't think people should necessarily trust it. Like, we already know that Do Kwon has had another failed stable coin, and now they're talking about doing another one. It's like, fool me once, man.

Yeah, go ahead, Marcel.

I think there.

There are many competitors out there, like Avalanche, Avalanche Phantom is even Solana with their own stablecoin, or their ecosystems of stablecoins. So I don't think investors will give them a second or third chance because there are already other options viable and working right now, like make or die from Ethereum. So why take the risk? I don't think it will sustain itself.

I mean, if you're a wild speculator and you want to take advantage of 70% pumps and then 90% crashes, maybe there's an opportunity. But I can good faith, say to myself, I want to really participate. Anything Doe Kwon is doing, especially with this whole talk about them wanting to launch a new stable coin, like, what the hell is that all about? And what would that stable coin look like? Is it another algorithmic stablecoin? Can't be right. Can't be Another algo based stablecoin. So I wouldn't touch it, but I guess we'll see. It does have a vibrant community, a very large community. So maybe something can be salvaged out of that. We'll see.

Yeah. So did Connect.

The only reason that they're doing the stable coin is because Tara is nothing without a stable coin. Why would anybody use it if they didn't have a stable coin?

Absolutely.

Yeah. It's going to be uphill battle for. For Luna. I just don't see it. The airdrop that they sent out was pathetic. I think you saw. I, I saw one user on Twitter say they, they had 50k of Luna and got airdropped like $150 worth of the new Luna. It's just like putting a band aid on a gunshot wound. Not making. I think it's salt said he had.

1.9 million and then he got airdropped like $52 and he's like I, I prefer a proper rug pull. Just, just do the rug. This is exact injury. This is like adding salt to the wound. Right.

Y going with you now.

And you're gonna have to pay taxes for this on IRS because it's an airdrop or something. So it's not really worth it.

Exactly.

Like I say, maybe a lot of people can at least like book some permanent impermanent losses or something like for their taxes. I don't know.

And I mean I feel bad for the projects that we're building on in the Terra ecosystem. And you have rich design here with a question. Are there any dapps left on Lo Luna to add real value or is it simply existing for trading profit purposes? We'll answer this question real quick and then we'll move into to Bitcoin. Sam, are there any really dapps left on. On the Luna right now or Terra ecosystem? What are your thoughts?

I don't believe there are. I mean I haven't really followed aside from the implosion and from the. The whole pegging situation because at one point I was also considering the Terra ecosystem very closely. Beyond that, I'm not really quite sure about their DAP ecosystem and quite frankly I don't think it's that relevant anymore.

Jordan.

I think from what I saw they're trying to get some pro some platforms to migrate over to Polygon maybe or even saw some mention of BNB chain. But some of them could possibly go over to other chains inside the Cosmos ecosystem as well. But I don't think that there's any. Like again, if they don't have the stable coin, what's the point of Terra? I don't know.

Exactly. And Marcel, if you're a builder right now, are you building on Terra?

I think most of those chains are EVM compatible, so you can migrate. Maybe the language code programming is a little bit different, but yes, you could theoretically move it to Phantom or to Avalanche or to Ethereum, but I don't think there was anything worth considering. There's not the stablecoin, the UST anymore.

Well, enough said. I think about Luna how what our thoughts are for the very grim future. If you're a lunatic, good luck, you know, Godspeed to you. But now let's get into the real stuff this week because bitcoin, I think, is where all of our eyes are set right now, considering it is the Stalworth of all crypto. So I want to dive into what this uphill battle looks like for bitcoin. Right now we've been ranging around 30k. Now we're finally above 30k and we've finally seen some green. So I want to bring up this article, Danilo, written by William Seuberg, where he kind of talks about this bitcoin price gaining 35% from the 23.8k bottom. I know Jordan and Sam, you guys have been writing a lot of articles about this particular topic. What are you all doing right now when it comes to this, this price range? Are you accumulating? Are you waiting for maybe a potential go lower or higher? What are your kind of thoughts here, Jordan?

Man, I don't even know what to do now. I just kind of watch the market I have. I can't remember last time I put any fresh fiat in because I'm just like, this is bunk. I just, I'm having flashbacks of 2018 and like dollar cost averaging all the way down. It's like, that's not fun at all. So I'm just kind of surveying the field right now. If I. If I get a few extra hundred dollars, I might put it in. But I'm not really trying to buy a bunch of cryptos. I got a decent sized portfolio as it is, so I'm just trying to hold on for dear life.

Aren't we all?

I'm. I'm fully allocated, baby, and I've been for a long time now. I still have a DCA program in place for bitcoin that's on a monthly basis, so I'm still participating in that. But in terms of altcoin hunting, in terms of, you know, repositioning, in terms of all that stuff I'm still waiting for the dust to settle because the only cycle that we have to really tip our hat to to be confident about is the four year cycle. So unless something changes with those mechanics and with the upcoming having, it's not so upcoming. But you know what I mean. Right now I'm kind of standing pat on my broader crypto strategy and I guess we'll, we'll find out in the next few months whether we're in a bottom or whether we have more down. I still think we have more downside action, but we'll see.

Yeah. On chain analytics resource material indicators wrote in one of the several tweets of the past 24 hours. You can mitigate risk by waiting to confirm breakout or fake out fire charge shows where liquidity rests in order book monthly close and so I guess when you're looking at this binance order book is, is what it's showing as There's a solid 61 million cell wall appearing right around the 33k price. I'll pull this up. This looks to appear to be the cell wall that everyone's kind of waiting for. Is it like in my opinion, when I look at this chart, I'm going to pull up the bitcoin chart real quick. This to me is, is what I find fascinating is that from October 5th to the 20th or all the way to April 21st, here is you had 27 weeks of green candles with the one exception being here in January. And so when we look at this, this is kind of everything kind of regressing back to this mean. So where is that mean? Is it 25k? Is it 30k? Is it lower? Marcel, what are your thoughts here? I know you're going to be telling us a little bit more in depth about some of this stuff, but what are your kind of general thoughts?

Benton? Generally speaking, I'm not confident that the broader traditional finance market has bottomed. So I do think that S and P, especially the tech stocks, which bitcoin and crypto stand correlate more, are still going to have some issues over the next six months due to, I don't know, economic macro uncertainties. So having said that, I would rather not try to pick a single point. Yeah, it's $30,000, but spread out across the next eight or nine months should be a better strategy.

Sells with dips. Ask is 250k possible this year? Yes or no?

Anything is possible.

I think he's referring to that new forecast. Was it, was it from Tim Draper or someone?

Yeah, Tim Draper.

Yeah, I mean look, I guess any, anything can happen but on, on what universe do you see the current mechanics of the market leading to $250,000? I don't understand where that would come from. I think eventually but I don't see any evidence whatsoever that's going to happen this year.

We're a day away from June and they had a whole like a year and a half of people calling for 100k bitcoin and we didn't even get close. So like making that leap up to 250 is going to be a big stretch man. Big stretch.

Could be a beast. Jordan, I know you wrote an article about on chain analytics and data showing how bitcoin long term holders continuing to soak up supply around this 30k mark. I actually want to dive into that because I find that pretty interesting. Is this coming from like the retail side where people are just dcaing in right now and this 30k level is kind of most appealing for them. Take it away. I'm curious to hear since you wrote this, this article about this particular topic. I know Sam is, is loves the on chain data.

Yeah. If you want to share my screen. Daniel. So basically a lot of the accumulation that's been going on has been going on by entities. We can see here that the number of addresses with a non zero balance has started to plateau. Last time it was seen as a plateau was happened in the 20 earlier in March 21. But we're again into entering this place. So a lot of people are either selling their bitcoin or not accumulating. But what we are seeing is there's heavy signs of accumulation here. You can see on this chart whenever it's purple that means there's heavy accumulation. You see a lot of people like the FOMO part where people accumulate when it's at the top and they have to write all the way down smart money accumulated at the bottom. And we're seeing right here so after the, the price peak in November, weakness, weakness. But then we starting to see heavy accumulation here. What it actually amounts to be is entities holding less than 100 bitcoin are, are some of the most active ones out of the. They've they. They accumulated 80724 Bitcoin recently. We're also seeing it happen with entities that hold over 10000 Bitcoin. So we're seeing some of the lower end entities that hold less start to try and accumulate more to catch up. And then the ones that are really big are just accumulating because that's what they know what to do. And yeah, long term holders are still active but they are starting to capitulate. We're seeing some long term holders book realized losses of negative 2027. So even for the more savvy crypto investors, they're still taking book and losses here. So we are seeing some accumulation. To pause this sign, how it's going to continue going forward, I'm not too sure. I don't know what. What do you guys think about that? The accumulation statistics. Thank you to Neil.

Jeff, Mar I'll.

Let Sam express his opinion first because he hates on chain as much as I do.

Well, I mean look, when it comes to onchain, if you want to take a look at what's happening on chain, okay, go for it. If you want to do a postmortem of why a market crashed where the coins moved, fine. But don't use on chain data to give me price forecasts because on chain data provides no price forecast whatsoever. So for me, in terms of the accumulation level, I think that the long term hodlers are continuing to accumulate. In general, I think that's probably going to continue. It's going to depend on how many new people come into the market realizing the long term value proposition of bitcoin. But beyond that, I don't really look much at the the on chain data.

You heard it first.

With that said, Benton, I'm going to say is if somebody has been selling Bitcoin at 32, 31, $30,000 for the past month and it traded huge volume, it was not a guy or a couple of person with 0.10 or 0.05 each. There were some large holders selling at a loss. But someday, eventually they stop selling because they have no more coins and the market will recover. Would that take six months? Would that take another couple of months? We never know for sure. But when the market stabilizes at a certain level, it means there's a large seller going on and on but eventually it will end.

Very true.

One of my takeaways from this is that oh, I just lost my train of thought. Oh crap.

Is that we're all losing money together.

Okay.

All right.

Well we're gonna check the chat here to see what kind of questions we have. I see sell dips had the last question, Vikram saying what is the average BTC holding of retail investors, say those on centralized exchanges. Does anyone know that stat off the top of their head?

No, I don't know it off the top of my head. But the one takeaway was that we aren't seeing any new wallet, new people come into the ecosystem. So it's kind of just people inside the ecosystem putting more money into it and stuff like that. But that's not really where the big gains come. We need a whole influx of new retail investors especially, and maybe even new into institutional investors to really help get this market rally going. So until that happens, we are going to stay pretty flat, in my opinion.

Where can I get that sun towel behind the cowboy dude? Jordan, do we have one of those? Store Amazon. Good deal. All right, I want to move into our quick crypto tips. Do your own research. Dyor. This is a term that you hear. Danilo, let's go ahead and jump into this section real quick. It's going to be a quick hitter today. Dyor. You probably heard it. Do your own research. What does this mean? Well, it's a common phrase used in cryptocurrency, used by cryptocurrency enthusiasts, and this acronym is meant for you to actually do your own research. So what is the best way to do your own research? Well, read project white papers, go to their gitbook, read through their documents, go to their telegram and discord and interact with the community. Is it a toxic community? Is it a very vibrant and lively and passionate community? Check their social platforms for the engagement. If they have 500,000 followers, but their retweets are only getting 10 retweets, why is that? Dig into that. This is talking about do your own research. Understand the utility of the project and how it fits into the greater ecosystem. And lastly, read articles about the project. If it's a great article, they're going to be getting a lot of press coverage and they're going to have their marketing machine going learn about what they're trying to emphasize and what their agenda is through the press. Those are my nuggets for how to do your own research and what D Y O r means for you as a crypto investor. Crypto, Crypto quick tips. All right, let's go ahead, Marcel. I want to get into your segment next. We're going to check the chat and see no burning questions. So if you have those, pop them in there. Don't forget we're giving away $50 for the Cointelegraph store at the end of the show. Drop your Twitter handle in the chat so that we can pick you to win that gift card. But Marcel is going to be talking to us about the professional traders and what they're doing with Bitcoin and Ethereum and where things could head next. So let's go ahead. Danilo, if you could let Marcel take this away.

Okay, so I assume there's only one question from you guys. Is the bottom in? Let me be fair and square before we go to the detailed analysis. We cannot set a bottom considering the 85% correlation from Bitcoin and cryptos to traditional markets. Meaning if the SP 500 plunges over the next couple of weeks, bitcoin and cryptos will likely follow the trend. So assuming there won't be any major hiccups due to global tensions or worsening macroeconomic conditions, let's dig in Bitcoin and Ethereum futures and options metrics to understand how professional and retail traders are positioned. I'll start by measuring the future markets premium. So the quarterly contracts, the one offered on cme, which there's also the monthly contracts, they usually trade at a higher price when compared to regular spot markets at Coinbase, bitstamp and Kraken. Why is that? Because those traders need to wait 30 days or 60 days until the contract expires to get their money back. So they are overcharged to compensate for this lockup. Danilo, can you share my screen, please? So the chart I'm showing you tells how much those traders are demanding additional for the price to hold on until the sentiment annualized terms. So Bitcoin right now is at a 3% annualized premium, which is typically deemed bearish. So premiums between 0 and 5% or sub 0 negative are deemed bearish where premiums between 5 and 10% are neutral. So right now those professional Bitcoin traders are kind of bearish. And the same thing is happening to Ethereum. So despite the price improvement to approximately $2,000, those futures markets of Ethereum, those traders are demanding only 3% additional per year. So there's not much demand for buying leverage going on right now. Thank you, Danilo. So what about retail investors? Could they be the ones driving up the price upwards? As Jordan showed us, the investors with less than 100 bitcoins, the on chain activity which showed us the buying. So for this metric, I usually rely on the Asian tether premium, which compares the USD tether price in Asian markets versus the official CNY currency. So if there's excessive demand from retail traders, the tether there in Asian markets will trade above the official FX currency rate. On the other hand, if those investors are dumping cryptos, they will try to sell their tether, causing the Stablecoin to trade below its fair price in CNY terms. So, Danilo, I Want to share another screen?

Please.

So there you guys have it. When the tether premium is traded at 100%, it means that in Asian markets it's trading at a fair price to the CNY, the local currency. So readings between 100 and 101% are deemed neutral because a 1% premium is acceptable to cover the cost of the market makers. However, anything below 100% means a discount. So a bearish market. So excessive demand from retail traders trying to dump their tethers means that they are bearish. So whenever this happens is not a good situation. And since May 20, so like 11 days ago, the tether indicator has been negative. So a discount on Asian markets right now, a 3% discount. So it tells me that retail traders are not buying the dip. Thank you, Danilo. So there you have it. While professional traders are unwilling to add leverage to buy using futures, retail markets is likely dumping their position according to the tetra premium. That doesn't necessarily mean those investors are betting on a further price decrease, but definitely indicates a lack of conviction as the market overtakes the $1.3 trillion market. That's it.

So Marcel, I have a question for you. Why in your opinion do you think we held this 30k mark? Is this, does this have any significance to professional traders?

Yeah, Benton, if you remember that Both Tesla and MicroStrategy average price from their holdings is approximately $30,000. And we've seen that it was not the retail investors and it was not the leverage the professional traders buying. So defending the $30,000, it means likely that there are enough institutional buyers or large accounts buying below $30,000. It doesn't mean that they'll continue buying at 34, 35, $40,000, but at least there's a level they're willing to defend well below $30,000. It's cheap for me. I'm going to keep buying. If it goes above, I'm going to wait. So at least there's a positive sentiment because it's not the retail trader frenzy or it's not the leverage guys going crazy and buying at a discount that could be liquidated and causes further trouble. So it means that large institutional traders are buying below $30,000.

And we had a question from the audience here. I want to get into is do you think we need to rally or did the recent drops. Katherine Rhodes.

I don't think there will be the necessary will be a pump and the price will break from $30,000 to $40,000 in a single day or a single week. That's not even healthy. I'll be happier if we decouple from traditional markets. Meaning if SP goes down, bitcoin remains sideways, or if SP goes up 10% over the next month, Bitcoin and cryptos rally 20, 25%. But a rally happening on a single day, that will be a sign of distrust that will be not well seen by the market. They will shout manipulation like they always do.

Marcel, do you think that a lack of people really wanting to sell below $30,000 might be helping keep the price up here? Just because I know you can get into the futures, but people that actually hold bitcoin that are like, man, I'm gonna dump it now and buy it back at 20,000, doesn't seem like there's a whole lot of people wanting to do that. Most. Most people that are still holding are like dedicated Hodlers. You think that that's playing a part?

Yeah, Benton, partially. Especially the day that it dumped suit. I don't know, $25,000 or $24,000 on Coinbase, but other exchanges held at $27,000. So it tells us that there are really no sellers below that level. It could have been a liquidation or a single player like the terra Foundation. The LFG guard selling those 80,000 bitcoins caused the crash, but the remaining market participants did not sell below $28,000. So, yes, Hodlers are definitely setting the bottom price.

Sam, do you have any questions?

I don't. Not on that, no.

Well, one observation I want to make is, like, I am. I noticed, like, Jamie Dimon came out this past week and said, like, oh, bitcoin is undervalued by, like, 28%. So whenever I see these big headlines with JP Morgan, Chase, bank of America, like, I always tend to question, what are the motives behind that? Could this potentially be the dead cat bounce before we go lower? So they're looking to get a little pump in before potential markets are going to be going lower. So I do kind of question when I see those kind of headlines floating around. Go ahead, Marcel.

So, Ben, that JP Morgan report came out in February with a $38,000 target price for bitcoin. And at that time, bitcoin was trading at 42 to $43,000. So what happens is that last week they reiterated the target price. They just said, we're not changing. There was nothing had happened that's going to make us mind reduce or increase the target price. So we're sticking with $38,000. That's what happened.

Interesting. Very fascinating stuff. Well, thank You, Marcel, for providing your expert insights as to what's going on behind the scenes. Appreciate to hear from the expert himself. All right, folks, we have a lot of macro stuff we're going to be getting into next, but if you haven't liked and subscribed to Cointelegraph, go ahead and do so now. Don't forget to drop your Twitter handle in the chat. We're going to be giving away $50 to the CT store where you can get a swag shirt, a hat, some socks, whatever you want. We're going to be giving away $50 worth of that at the end of the show. But I want to get into our next segment which is we're going to be talk what is the Fed's decisions and how it will impact crypto. And so I do want to hand this over to Sam who's going to who wrote an actual article about what the Fed's doing. He's going to break it down for us and give you some of the insights of what's happening behind the scenes. So Sam, feel free to take it away here.

Great. So I spent a lot of years covering the traditional financial markets and covering the Fed was really important coming into crypto, you know, I didn't think that I'd have to be tracking the Fed so closely, but. But here we are. So I'm sure many of you listening have been hearing a lot about the Federal Reserve and what the Fed does and interest rates. The Federal Reserve's primary role is to control the size and the growth rate of the money supply. And they have a few underlying objectives. You know, they want to maintain price stability in the economy while also fulfilling full employment and other economic indicators. What we saw after massive money printing since COVID is a massive spike in inflation.

Right?

The cpi. You heard about the cpi. You've heard about other inflation metrics. Inflation surged after the COVID pandemic, stimulus ramped up spending, asset bubbles, etc. In response to that, the Federal Reserve has had to do a U turn on its monetary policy by raising interest rates. And Danilo, if you can share my screen, this article here from a few weeks ago is our crypto biz article. We really explained to readers why they need to care about the Federal Reserve. And at that time we were talking about the Fed hiking rates by 50 basis points, which was actually the highest single rate hike in over 20 years. Usually the Fed, what they do is they have a federal open market committee and they meet eight times a year to set monetary policy. So in that meeting they raised interest rates by 50 basis points. Now having said that, if you go back to their March meeting and this chart here showcases that every quarter the Fed has a policy meeting. But they also release economic projections as well as the infamous dot plot chart. And this here shows you the dot plot chart. Basically what this chart is is it tracks FOMC members expectations for interest rates over the next few years. They always get this wrong sort of one. I've been monitoring the dot product chart now for several years. They always overestimate how many rate hikes they're going to be doing in the next year. Two years, three years. The consensus forecast seems to be six rate hikes in 2022. Will that happen? I guess we'll find out now if we go to this chart here. This is the Fed fund futures prices and you can see that investors are pricing in another 25 to 50 basis point increase. Point increase the Fed funds rate in June. And they're also expecting another rate hike in July. September. September is where things can get interesting because it remains to be seen how badly the economy is going to be doing after all these multiple rate hikes. Because what the Fed has in its arsenal is it could really, it could thwart demand, okay, by raising interest rates, you affect demand. You could lower inflation. However, the challenge with that is going to be that you're raising interest rates in a declining economy. There's already signs that the economy's in decline. The GDP numbers, the employment numbers, also the PMI indicators. Will the Fed pivot away from that? Will they pivot back to accommodation? We'll find out in September. Thank you, Danilo. But that's an overall view of the Fed, why you should care about it. And obviously what the Fed does impacts additional financial markets and that's also impacting crypto because crypto and stocks have been highly correlated since, since the crypto, since the COVID 19 crash. So all that said the Fed is something that you really, you're going to, really going to want to monitor moving forward.

I have so many questions for you, Tim. So wait, I going back to the, the dot plot, what does each dot mean? And like why are some of them stacked six wide, others of them are five rows high? Like what, what is all that stuff?

Yeah, so those represent the fomc. So the FOMC members, those are the Federal Open Market Committee. These are the folks that decide monetary policy. You literally, you have like a cabal of people who sit around a table eight times a year. They decide interest rates. Each dot represents what their expectations are for interest rates that year. So it kind of allows you to visualize where interest rates can go based on the FOMC's projections.

Very interesting. But like, my thing is this is like, how can we not do 75 basis point hikes? Why is 50 the number? Like, is that going to be enough to curb inflation?

Well, even seeing 50 for me, like, I've been monitoring these guys really since 2012, you know, I've been seeing a 50 basis point increase is, is pretty dramatic. It's the highest in over 20 years. I don't know what makes 50 so special, more than 75, but I think Powell has ruled out 75 basis point increases. I guess the whole idea is you don't want to hike too quickly because they always consider it to be like this delicate balance. You want to try to facilitate a smooth landing for everything. Will that happen? I'm very skeptical, but I guess we'll find out by September how the Fed feels about the crumbling economy.

Sam, I've got a question for you. So imagining that some reason the federalists have come out after next meeting and said, okay, we're rising 25 or 50 basis points, but we're done for the year. We think that inflation is coming down, so we are not doing any more rate hikes. What will happen to traditional markets and crypto markets if that's the case?

I think the markets would look at that as a positive sign because that's a significant reduction in what they expect, the number of rate hikes. So if they do raise rates, but they signal it's all about the language, that future hikes are going to be tapered off or we're not going to hike anymore for the foreseeable future, I think you'll see more of the money on the sidelines. Go back into risk assets. Stocks are considered risk assets and crypto is tied to stocks in the risk asset bucket. So unfortunately, if you know, if you're a bitcoin bull and you think that bitcoin is an inflation hedge, it has been over the past decade, but in this particular period, it's considered still to be a risk asset. So if stocks rise because of the Fed pivot, I expect the same to happen for crypto.

And Sam, is there a level of interest rates? You think that, like, what level do you think where it would just call it cause the economy to break? Like, like you can't pay debt on $30 trillion worth of debt, you know?

Yeah, yeah, I, I think anything above 3% and you're going to start to see a Lot of really negative backlash happening because we're an economy that relies heavily on debt. And if you, you know, the interest rates are the cost of money. It's basically the cost of borrowing money. When that increases, you're going to start to see. Conventional wisdom says you raise interest rates when the economy is growing and improving. The whole idea is that you cut interest rates to simulate growth. Then when the economy is growing and recovering, you then take away the punch bowl and it should be okay. But we have an economy since 2008 that relies heavily on interest rates. So you manipulate their interest rates. It has a impact on mortgages. Look what's happening in the housing market. We saw demand essentially crater last month in housing. So, and we're only just, we just raised twice already. The Fed has, they introduced rates, I think raise every hike in March and then again last in May. So there hasn't really been that much in terms of rate hikes so far. But look at the impact that it's had.

But my thing is this, if they don't raise the interest rates enough, it's never going to be like it won't get it down to the 2 or 3% target of inflation that they're looking for. Is it still going to go higher before it goes lower, the inflation rate? Yeah.

I mean, look in terms of the official inflation rate, I think there's a good chance that it peaked. If you take a look at what the Fed measures, we all talk about cpi, but the Fed uses a measure called the core PCE index, which is a more restrictive measure of inflation. That one has also showed signs of peaking and it's kind of coming down now. So. However, as Marcel and I were talking, you know, before the show, if inflation goes down in the next year, it doesn't mean that prices are going down, it just means that future growth is going to be smaller. So that 8 or 9% increase that you saw year over year, that's already been the, it's been a new baseline now for prices. So future prices might increase 2, 3, 4% according to the CPI or the PCE. But that's on top of the inflation that we saw for the past year. So in that respect, there's a possibility that inflation has peaked already. I guess we'll find out. I think you're probably going to start to see in the next few months when they compare the year over year metrics, you might see a decline or a, a slower rate of growth for the cpe, CPI and the core PCE index.

So that be considered like compounding inflation?

Basically. Yeah, basically.

So we're. Is what you're saying.

The Federal Reserve targeting a specific inflation number, is that it? They're not targeting really for 2 or 3% because they know they can make up those number, Is that it?

I mean, I think they're, They're. It's an interesting question because they still target 2%. That's their official target. I've heard some rumblings about them maybe increasing the target range, which would actually be a huge move by them. But no, overall, they are targeting 2%. I think they think they could achieve that. And, and they probably could if they continue to raise rates. But right now the focus seems to be solely on, you know, making sure inflation comes down and they're prepared to sacrifice the stock market in the short term for that. Now, if we go back to September and October of this. If we come to September, October, November, and the CP, the PCE is down to maybe 3, and the economy is in recession or signs of recession, you might see a pivot in language, and that's where it begins to begin a recovery in asset prices.

I want to take a second to go to the chat here. We got Zimborska with a question. Isn't the point of Bitcoin that the traditional metrics for inflation were destroyed like gold with rehypothecation? All the inflation hedges are broken, which is why the printing spree continues. Do you have any thoughts here?

I think in the short term, I think the inflation met. I mean, bitcoin hasn't behaved like an inflation hedge the last last year. That's just the reality of the matter. Bitcoin had its opportunity to really shine and it didn't. In that respect, that probably demonstrates the fact that adoption is still quite low. And the Hodlers, those of us who have been in the market for a long time and believe in the. In the value proposition of Bitcoin are still a very small minority. However, bitcoin has vastly outpaced the S&P 500, the CPI, the PCE, whatever metric you want since inception. So in that respect, it has served as an inflation hedge. But in an acute inflationary environment like we've seen, it hasn't performed. And there are many reasons for that.

All right, you heard it first, folks. Sam Porsche giving you the latest insights. And from the macro perspective, I want to go ahead and get into our next segment for this week. These are the two coins you should have been watching through our markets pro platform. Don't forget, we're gonna be giving away 50 bucks at the end of the show. Drop your Twitter handle into the chat for your chance to get that $50 for our CT swag store. Drop it in the chat right now. All right, folks, we had Tezos on the radar, so let's go ahead and get into our Markets Pro. That's right, Tezos. You heard it May 23rd. Well, what happened? You got a Newsquake alert from the Markets Pro platform. If you're not familiar with the Newsquake Alert, it's an automated alert that instantly notifies you when market moving events happen. So on the 23rd, the popular online marketplace ebay announced it was launching a sports NFT collection through its product partnership with Tezos. And this Newsquake alert alerted the Markets Pro users. And trading started at 1.88 before the news quick. And after shot up to $2.24. $2.24, that's a 19% gain. Huge gainers in these kind of environments. 20%. You take those home and you write everyone about it, because that's how big they are. All right, the next token that we were watching this week was Phantom. Did you guys think Phantom was dead? Well, not according to our Vortex Score. That Vortex score is a comparison between its current market and social conditions of those in the past. 80 or higher indicates confidently bullish. 30 or lower is historically bearish. Well, Phantom this week saw that Vortex score of 90, and it flashed green. And the Markets Pro subscribers got that alert when that happened. And it briefly touched the 90 and the vortex score on the 20th at 35 cents and climbed over the course of the week all the way up to $0.49, 33% gains in only a couple days. When you get alerted with that Vortex score, you should immediately start putting some of these tokens on your radar. And that's what you could have done here with Phantom. That 33% gain, we will take those. That's where you live to fight another day. Those 30% gains, the 20% gains, and these kind of market conditions. That's why you have Markets Pro in your back pocket. All right, folks, I want to get to some of our closing thoughts, but we got to pick our winner. So literally, if I think if you drop your Twitter handle in the chat, you're going to win. I don't see any Twitter handles in there yet. So if you want to win $50 to the swag Store, go ahead and do it now. I want to give everyone the chance for their closing thoughts today. Jordan, why don't we start with you first.

Bear markets are not fun. Don't expect them to be fun and they usually last longer than you want them to because the market can remain irrational a lot longer than you can remain solvent. So like don't overextend yourself. Don't ever put more money into the crypto than you are willing to like convince yourself before that you're going to lose it. So you kind of accept that fate and then whatever happens and afterwards is like positive, right? Yeah. If anybody has been around since 2017, we could. We're in for a rough ride potentially. Even if we get another little up and down, we're still a couple years away from the bitcoin having. So it's going to be a bumpy ride. Just brace yourselves.

Sam, closing thoughts for today.

Yeah, you should know why you're in the market. You know, have an investment thesis and stick to it. And if you have a good outlook on crypto and you have a longer term horizon, you should be fine. It's people who want to dabble in and out that get into trouble. But just be mindful of risk.

Very great advice. And Marcel, any closing thoughts for today?

Well, I'll tell the viewers to interpret bitcoin and cryptos as those tech stocks were like 20 years ago. Yes, there were some failures. There were some 200% hikes followed by 70, 80% crashes. But those companies that survived are the Amazons, are the Googles and Facebooks of our time. So the leading companies of the world with trillion dollar value. So what witnessing right now, we are 20 years in advance. So just wait for that. So you got to keep up the momentum. You cannot just say, Well I lost 70% so I'm out forever. Whoever did that back in 2018 missed the gains from $20,000 to $6,000. So just stick to the game.

That's right. Everything begins and ends with conviction. You got to know why you're here folks. You're not here for the get rich quick. We're in it for the long haul. Just realize you are early. You're very early. I want to go ahead and give away the $50 to the winner today. We got rich new design. Congratulations. Big win today for Rich. Thank you for participating and dropping in your Twitter handle. We will be sending you a DM on Twitter to redeem that $50 to the swag store. Hopefully you can treat yourself to a nice shirt, maybe a hat, maybe some socks, who knows. We got lots of stuff in there folks. That's going to do it for today. We appreciate everyone for tuning in around the we'll be here next Tuesday. Go ahead and like and subscribe. Turn on the notification bell so you know when we go live. Until next Tuesday, 12pm Eastern. Over and out. Thanks for joining us today.

Sa.

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