Why does the FOMC meeting matter for crypto?

Sam foreign.

Hello, friends, and thanks for hanging out with us today here on the Market Report. I'm your host, Benton, and we are joined again by resin experts Marcel Peckman and Sam Borgi. Sam Borgi is a business editor at Cointelera, where he brings a decade of experience in economic analysis and financial market writing. Marcel Peckman applies his 17 years of experience trading derivatives options and futures to the crypto market's derivatives. Folks, we're back. We're live. It's Tuesday and there is some blood in the streets today. Surprise, surprise. Did you guys expect this? We saw about six days of green. Now we're coming back down to earth. Marcel, what's your take? How are we feeling about the markets this week?

Well, first of all, it's good to be back and thank you for all the fans that have been listening to us week by week seeking for indefinite analysis and that's what we do over here. But as for the bear market feelings, $21,000 or $20,000 is way better than what we saw two or three years ago. Well, we stood for $10,000 for over 12 months, so I don't really consider that a bear market compared to the others. But it's good, it's good to be back.

Awesome to have you back here on the show, Marcel. And Sam, what's your sentiment this week? Man, I know you have not changed your stance here over the last couple months. Has anything changed for you?

No, I mean, my level of depression and anxiety hasn't changed. So I guess that means we're still in the bear market. No, I mean last week's rally was nothing burger for me. I know there were some people who were kind of excited about it. You know, Bitcoin breaching 24,000. As we saw that momentum has been sapped from the market. So for me, nothing has really changed. I guess we'll see how the next few weeks and months play out. But my base case is that we still bottom sometime in the fall. We'll see.

Yeah. And I know, Sam, you've been saying that and banging that drum for a while now and I myself, I, I did not know what was behind this reason rally. Ob See, Ethereum kind of led that rally with a partnership with Disney and a little bit of hype around the upcoming merge. We're going to dive into a lot of the specific technicals today around bitcoin and Ethereum and Marcel is going to give you some on chain data as well. So it's going to be a very interesting show. So make sure you Stay tuned in if you want the latest greatest insights into Bitcoin, Ethereum, what's happening in the general markets? Folks, we want to big give sh. Give a big shout out to all of our community members that are tuning in here today. Tell us where you are tuning in from. I see Vikram is back. I see Adrian. Big shout out to Ghost Dog who's helping us do some live tweeting today. Appreciate everyone for tuning in from around the globe. Super action packed show today, but before we get things started, I want to give you the weekly roundup of some of the latest Twitter highlights out there. So, Danilo, let's go ahead and jump into our weekly roundup for this week.

Foreign.

Almost 1 billion users by 2030. Do you think that will happen? Guys, if you're watching today, I want to hear your thoughts. Do you think we'll have a billion Crypto users by 2030? Drop your comments in the chat. Also reminder, we're gonna be giving away a month subscription to Markets Pro, so make sure you drop your Twitter handle in the chat. We're gonna be selecting the winners here at the end of the show. So if you haven't liked and subscribed, go ahead and do so now. Smash the like buttons and notifications so you know when we go live. But folks, I think we got something fun for you. Let's jump into some memes this week. What do you say, guys? Oh, meme time, me time, me time. Deno, let's go. Let's do it. All right, what do we got? Global recession, 3ac insolvency and then a Cheeto holding together work.

It's good.

That's really good.

I want to know what's holding the 15k or the 14k. That's what matters most.

That's a. A potato chip. Let me check Twitter of the NFT I minted yesterday. Account doesn't exist. Classic. Yeah, rpo, definitely. New trader, experienced trader. Yep, sounds about right.

Yeah, we all get wrecked.

Even classic memes. I'm a Doge dev now. You can't even code. Elon hired me anyway. There's nothing to develop. That's why I'm elite. These are good memes, folks. If you got memes to send into the team, make sure you send it to us on Twitter. These are great memes. Our team always does a great job scouring the Internet for some of those best memes. So appreciate shout out Adrian and Danilo for scouring the globe for some of those today. But folks, if you're tuning in, tell us where you're tuning in from. I love having you all tune in. Let's see, I see Kaltoro's here. Crypto, Sigma, gz, Marcus and Ghost Dog, love having you here today. I think it's time folks. Let's, let's dive into some of the analytics, some of the data. What is it all saying to us? We have a couple articles we're going to jump into about Bitcoin and Ethereum. So Danilo, if you wouldn't mind pulling up one article written by William Suber here at Cointelegraph. The headline for this week is Bitcoin drops below 21.8k realized price as FOMC Spooks Markets blows up here for you guys so you can read it a little bit. So the anticipated volatility comes right on schedule for crypto as the weekly close already looks like a distant memory. What happened this week, guys? Like I want to know your take, Marcel here. We saw this rally over last week for bitcoin. Was there anything behind this? And are we seeing. Why was this, why did this happen before the FOMC meeting this week?

Benson, I didn't see any relevant news for the rally, but for the past 40 days we haven't seen a sustainable rally. Nothing that lasted over two or three days and we weren't able to break the 22K. Now we're not able to break the $24,000 resistance. So yes, the tops are getting a little bit higher and that's a good thing. But we're still on the area of contagion, meaning we don't know how many centralized finance Inc. Intermediaries or exchanges will blow up showing signs of insolvency. Recently saw like zip max exchange blowing up or at least blocking withdrawals. So I don't think anything changed in investors expectations over the past three or four days to cause a trend reverse. So going back to the mean, which is the average price of the last 30, 40 days, which is around 2020, $21,000. Makes sense. So in the absence of news, the market tends to return to its 30 or 40 days price average, which is pretty much right between $2021,000.

And Sam, this FOMC meeting's happened this week. What are you kind of expecting out of this? I know we're going to dive into some of the details later about what is the fomc, why these meetings are important, but what are you expecting this week and the potential impacts it will have on the crypto markets?

So the Fed fund futures prices, this is what pro Traders use to bet on the direction of FOMC policy suggests that we're probably going to get a rate hike this week of 75 basis points. Now there are some expectations being built in that we could get a rate hike of 100 basis points or 1%. But those expectations were higher last month, believe it or not. Actually the expectations of 100 point rate hike have actually declined slightly over the past few weeks. So now we're looking at about nearly a quarter of traders expect there to be 100 basis point rate hike. Obviously the FOMC is raising rates because it wants to fight inflation. It's behind the curve on that. So for me I think a rate hike is a, is a strong given. The only question is how much do they rate hike? Do they? But the more important question is what do they do about the Fed balance sheet and what's the language going to be like in the actual FOMC statement? Because investors are going to be looking at the language to suggest whether the Fed might eventually put on the brakes, whether it's still full steam ahead. So they're going to be parsing through that language and it's probably going to have a pretty significant impact in the latter half of the week. We'll see if we get a sell on the news type of thing or a buy on the news which might actually run contrary to what the actual FOMC decision is. But overall FOMC plays a significant role in the markets. It's expectations around monetary policy and how that impacts risk on assets.

I want to just pull up a quick excerpt here from the article. So Danielle, if you wouldn't mind just pulling on my screen again, the quote says tons of big names reporting earnings alongside with FOMC starting Tuesday followed by the announcement on Wednesday. Big week doesn't always mean market must see action. It could be a time period for the market to digest info for the next move. So what is, what is the potential of just us not reacting whatsoever and then if it doesn't react, does that kind of tell you maybe this is close to a bottom? If there's no major sell off from this point and all assets to Sam and then Marcel next.

That would be one indicator that would at least maybe imply that bitcoin and stocks are decoupling. I know you asked earlier, why did bitcoin and cryptos rally last week? I mean we saw the Ethereum news which was positive apparently, but also stocks performed well over a short period and bitcoin and stocks are still fairly highly correlated. So that could if you start to see a decoupling of that, it could imply that the bottom has been formed or is forming. I, however, don't expect that to be the case. I still think we're in a larger macroeconomic trend, and in my opinion, we see bottom probably in the fall from a timing perspective. But again, I don't have a crystal ball. That's just my expectation, given what I see in the market over the past year or so.

And Marcel, you're kind of shaking your head there. What's your take on this situation?

I think people are giving too much importance to the Fed. The funk meeting decision. Remember, those guys created a huge monster $9 trillion balance sheet, buying junk bonds like, like MBS and even Treasures themselves. So the market rallied for the past, I don't know, couple of decades, and now this magic stopped. The Federal Reserve simply stopped, halted buying assets because it was creating too much inflation. So the big question we have ahead of ourselves is, is Fed gonna really combat inflation and start. Start selling some of their balance sheets, or are they going to simply say, well, we tried, we tried reducing our balance sheet or we tried raising the interest rates from 0 to 2%, but inflation is running at 9%. So even if it goes down to 7 or 6%, it's still a continuous price increase. So for the average person, everything is getting more expensive. And as things get more expensive, it is only natural for scarce assets, which includes bitcoin, which includes stocks, which includes housing, to get more costlier so the prices go up because there's simply more money in circulation. So I think we're giving too much importance for the FUNC meeting.

And I want to pivot to the chat real quick, says Rich New Design. Anybody thinking we've seen the bottom? He says, personally, I don't. Sam and Marcel. Marcel, why don't you jump in here and let us know your thoughts about a potential market. Bottom.

Well, we're gonna have to answer some questions first. Is the S and P or the tech stocks bottom in? Because the correlation between traditional markets and bitcoin is really high right now. Sure, it went down over the past 30 days, but historically speaking, over the past 12 months, the correlation between traditional and bitcoin has been really high. So if the S and P and tech stocks drop another 30%, if there's really a recession coming to the traditional markets, meaning GDP goes down by 4% or inflation stays above 6% for the next 12 months and the tech stocks go down, I do believe that bitcoin can still drop to 14, $15,000. This can still happen. It's still on the cards that could be dealt.

Tim, we heard you earlier kind of say that you think there, there could be a bottom out, maybe in the fall. Why is that that kind of the timeline for you? And why is that kind of maybe your opinion?

It's going to be a fall brawl, baby. That's what it's going to be. It's not going to be a good fall, let me tell you. You know, Marcel mentioned the correlation. I mean that's pretty obvious. September and October are usually pretty, pretty nasty times for stocks, especially with this cocktail of nasty macroeconomic factors in play. I think if we see a brisk sell off in September and October, once those Wall street guys come back from vacation, they got their tans on, they want to sell, you're probably going to see the contagion effect spread into the crypto market, you know, because bitcoin hasn't been a hedge at all. I mean, who hedged 9% inflation with an asset that declined 70%, right? So we haven't seen that yet. My expectation is that once it comes to a head in the fall, we will see crypto reach the four year bottom. Bitcoin hit the four year bottom, creating a very, very attractive buy opportunity as we head into the next cycle. That's still my expectation. I could be wrong, who the hell knows. But that's kind of how I see the picture rolling over the next 60 to 90 days.

Excellent insights and we appreciate our panel of experts diving in. Marcel, you got something to add here?

I just want to highlight that if you live in Argentina, Turkey, Nigeria or any country with hyperinflation, bitcoin has been a good hedge. Yes, you could have better opportunities elsewhere, but at least you saved yourself from the fiat debasement. So it's working for some of the people, like 200 million people living in hyperinflationary countries, it's working.

It's very true. That's a solid point. Now I want to kind of pivot us here into Ethereum. We were touching on this earlier how kind of led the rally last week where we kind of saw a little bit of green in the market. This article by Yashu Gola, guest of the show here for the market report headline reads Ethereum's Bearish U turn eth Price momentum fades after a rejection at 1600 folks. Why is this 1600 mark significant? And where will we continue to range with Ethereum in your opinion? I'll kick this over to Marcel first.

Well, I think my opinion Ethereum went up because of the merge. So the developers, the Ethereum team, said that by September the merge, which we used to call it Ethereum 2.0 would be approved or would be live. So it created a lot of expectation on the news. So it rallied. But after the investors and traders understood what exactly was going to happen, that yes, there will be no more mining, so proof of work work on Ethereum, so it's going to shift to proof of stake but at this point it's not going to solve the scalability issues. It's not going to work like Solana being able to transact 40,000 transactions per second or whatever. It's still far from that. So as investors understood what the merge is, so this exuberant pump dissolved its itself. So there was no news, nothing really changed. This merge was already planned and it's not going to really change anything for the final user. So the Ethereum 2.0 or the new Ethereum until it gets the sharding so the 64 channels or how many parallel processing channels they're going to have, so it's still expected for 2023 or 2024. So nothing is changing for the average user. That's why it went down.

Yeah, and I mean you heard vital kind of touch on this a little bit at EthCC, a conference last week in Paris where he said, you know, that that's kind of, there's 45% more to go even after the merge. And so Sam, let's say this merge is successful, everything's great. Is there any kind of catalyst for Ethereum to kind of continue, continue, you know, up higher or do you think it'll kind of still range of, of like where we're at right now, between 1500 and a thousand dollars?

I mean we could get a pump given the successful launch of of Eth 2.0 on the merge and everything like that. But I'm still looking at it from a broader market and cycle perspective. I still see a large accumulation phase happening into next year. So I don't see any sustained rally. I mean even during bear markets we saw certain assets rally pretty sharply. The conditions that we've seen over the past six months have been really surprising even to me. How it's literally been like the meme down, only maybe at some point we get a reprieve from that when we range higher. But I do expect some kind of range to happen after we bottom in the fall. I don't know what the range is going to be. It could be higher from the current levels. It could be lower, but I don't really have a grasp on the technical factors of Ethereum because I don't really care about that, to be honest. Like it doesn't interest me at all. So that's my perspective on, on ETH and, and what the merge might mean.

So you can see, I can, I can feel all the ETH maxis in the chat just about to, to blow their gasket here, but I want to pull up a quick chart here. So Danil, if you wouldn't mind pulling up a chart. So what we have here is a daily chart for Ethereum. This is kind of the big macro trend line that I've been following here as we kind of have had this down only price action, this lower VWAP level that I've kind of been monitoring. You see there was some rejection there here at right around 1600, but we have kind of formed this support line here right around $11,000. So will this 1000 support hold for Ethereum? We've seen it bounce off of that three times. Typically that's a good indicator, but that doesn't mean we can't go below that mark. So time will tell us, I think where this will head even as the merge rolls out in September. So I thought that was kind of interesting to take a look at that, to see where the support has actually formed for Ethereum. But any other thoughts that you guys want to add here while we're on the Ethereum topic and then we'll pivot into our crypto tips for this week. Go ahead, Marcel.

Rich new design is asking. The first question I would ask is will the Ethereum merge wall work? So eager to see if it will occur. So I don't think we should doubt that the merge will happen. It will eventually happen, the migration out of the mining to the proof of stake. But as I said before, it's not going to change anything for the final user. The price for minting NFTs is going to continue to be high. The price of doing transactions on DEFI on other competing blockchains remain smaller and you can still use second layer solutions as Polygon matic. So I don't think we should give so much importance for the merge itself.

We will see, we will see the execution here. We've been talking about the merge for a while, so that was our biggest headlines for this week and we appreciate all your questions during that. We're going to have a segment a little bit later diving into the FOMC and answering a lot of your questions about that. So if you have questions about the fomc, Sam and Marcel are going to be able to answer those, so make sure you pop them in the chat. If you haven't dropped your Twitter handle in the chat, go ahead and do so now. We're giving away that one month subscription of Markets Pro. So folks, I want to give you some crypto tips for this week. So Danil, let's go ahead and jump right into this. Have you had trouble keeping your emotions in check? Well, the primary emotions like fear and greed can change the results upside down. Even with a good trading strategy, such emotions tend to escalate when a trader experience large swings in his profit and loss account, which is quite common with crypto holdings amidst their erratic movements. Working on trading psychology while containing greed and fear seems instrumental for traders to make more money in the cryptocurrency market. Moreover, it's imperative for traders to have the discipline to stick with with their respective trading plans and understand when to book profits and losses. You've heard our our previous panelist Jordan Finiseth talk about the importance of maintaining your emotions. So that is my big crypto tip for this week is keep your emotions in check and have a plan when you are trading or investing. Have your plan and stick to it. Keep your emotions on the sidelines. That's when you get wrecked, is when you're chasing the pumps. Those are the crypto tips for this week. All right folks, I know Marcel's got a lot to dive into here. He's going to pull up the latest data for you so that you have that information for you to make the best decisions you can while navigating these bear markets. So Marcel, why don't you give us the goods for this week?

Okay Bentham, so $21,000 has been acting like a magnet for Bitcoin for the past six weeks. But what is so special about that number? Firstly, we're 70% below the November 2021 all time high tech stocks as measured by the Kikiki ETF are down 26% from their peak. And this seems fair considering our annualized volatility is 78% and theirs the tech stocks 31, so roughly 2.5 times larger. So if they drop 20, 25% it is only natural for us to drop 70 75%. But how exactly is Bitcoin market capitalization priced right now versus the competing tradable assets? Danilo, I want to share my screen please. Here we have infinite market cap or 8 market cap where you can check the valuation of every global tradable asset, including gold, Apple, Microsoft, Google and Bitcoin. Right now, Bitcoin is priced at $400 billion, which makes it the world's 17th biggest tradable asset, curiously right behind Nvidia and Tencent. So the tech stocks, which I just mentioned, but there's some questions on whether, for instance, palladium, which is a precious metal just like gold and Silver, is down 41% from its peak and it's priced below Bitcoin at $350 billion. So Bitcoin is doing fine in the grand scheme of things. So the big question is, is adoption fading? After Tesla sold 75% of its Bitcoin and smart contracts TVL, the deposits went down by $100 billion in two months. So the question here is much more about adoption instead of is Bitcoin failing as a global asset, which I just proved, it is not failing. So my suggestion is to focus on the number of daily active users instead of those big numbers of tvl, which is highly dependent on investment funds, venture capitalists and whales. So, Danilo, I want to share my screen again, please. So here guys have defi llama. You can check the tvl, which is the total deposits on smart contracts networks such as Ethereum, Solana, etc. It stood at $160 billion back in April and it's now down to $63 billion. So down $100 billion in just two months. So to evaluate if the users, if the number of active users is going down drastically, we should check, for example, CoinMetrics. So on chain data, where you can check the number of active addresses on Bitcoin and Ethereum, it's not the same thing as the number of active users because most of the users just leave their coins at exchanges or simply don't move their addresses at all. They're just holders for the past four years. But it's a good proxy to see if the adoption is going up, down or if it's near zero. So the number of active addresses combining Bitcoin and ethereum peaked at 2 million users back in May 2021. And right now there's 1.3 million addresses moving Bitcoin and Ethereum every day. So it's a good data. Yes, the number is down from the peak, but it's nowhere near zero or somewhere. It's much higher than we saw in 2019, 2020 when we went sub 1 million active addresses. So on, chain metrics are looking good. Another data that I like to track is the number of wallets holding at least A hundred dollar worth of deposits on Bitcoin and Ethereum. Again the number peaked in November at 30 million wallets combining Bitcoin and Ethereum and it currently sits at 23 million addresses. So yes, we're down from the peak, but we're much higher than what we saw early 2020 when we only had seven and a half million addresses containing at least $100 deposit. Thank you, Danilo. So my message here, stop worrying about contagion risk or the fomc, the Federal Reserve meeting and focus on how crypto is being used right now. Is there a solid user base? Are there new applications being developed? Is there a significant be better competitors, something outside of crypto? And I don't think so. And those are the questions that one should be asking right now instead of are we down from $35,000? We're back to $20,000. We're still one of the top 20 tradable global assets. So Bitcoin is doing fine.

Thank you Marcel for the those great insights. And I thought it was a couple interesting things from what you were talking about is that Bitcoin is bigger than Proctor Gamble, one of like the biggest conglomerates on the globe that has, you know, anything inside of many different industries. That was pretty interesting to me. And then I thought it was interesting that there was actually more Ethereum wallets than actually Bitcoin wallets. Did I read that chart correctly?

Let me check right now. Number of active addresses, Bitcoin 870 and Ethereum.

Okay, so Bitcoin had more wallet.

Bitcoin has no wallets.

Yeah, I was about to say I was like that. That was kind of shocking to me. If there were more Ethereum wallet holders than than Bitcoin. But that makes sense.

But the difference, the difference is not that big. But there's more active bit bitcoin addresses.

Yeah, that makes a lot more sense folks, if you're just jumping in, make sure you go ahead and like subscribe cointelegraph here on YouTube. We're here Tuesdays 12pm coming to you with the market report. We're giving away that one month subscription to Markets Pro, so make sure you drop your Twitter handle in the chat. I see some folks doing that now. Always glad to have our community here chatting it up with us. If you have questions for Marcel or Sam, our panel of experts here, we with years of experience in both the traditional and crypto markets, they're here for you to answer your question. So I know what we got next folks. We're going to give you the crash course on what the FOMC is, why these meetings matter and why we're always talking about them because of the impact that it has or potential crypto market. So let's go ahead and dive into our FOMC crash course for today. So the first question I have to ask is what is the FOMC for those that are watching at home and just have no idea. Sam, why don't you, why don't you break this down for us?

Absolutely. So the FOMC stands for the Federal Open Market Committee. It's comprised of 12 members of the Fed. And these guys and gals meet eight times a year to determine the size and the growth rate of the money supply. Basically you have 12 people that coalesce in Washington to set interest rates, blab about monetary policy, and then to determine the path forward on the Fed's balance sheet as well as on the actual interest rates that affect all of our lives in many different ways. Because when we talk about interest rates, we talk about the cost of money, the cost of borrowing money. And that affects all different types of assets and all different types of financial products. Even mortgages, for example. FOMC interest rates have an indirect impact on mortgages as banks and lenders pass on the higher costs or the savings to consumers, depending on what the central bank does. So why is it so important? In a bull market? The FOMC probably plays a less prominent role. If things are considered what they call stable. It has a less direct impact on the market because they're primarily concerned with economic growth, employment, and what they call price stability or price control via inflation. Now, of course, we're seeing inflation ramp out of control. We're at the CPI of around 9.1% in the US the highest level in over 40 years. Obviously, they got that call very, very wrong. They spent months telling us inflation isn't going to happen. Then they told us, well, it's going to be transitory. And they changed the definition of what transitory actually means. And now they said, oh yeah, oh, we're in inflation now. We have to actually do something about it. They're behind the curve. They're behind the inflation curve. They have to hike aggressively to get inflation back in line. And the only thing they can really do is demand destruction. They can limit demand and hence have a impact on inflation. So the FOMC meeting, the next one is coming on. It's coming very soon. The next decision is coming very soon. Investors are expecting the Fed to hike rates by at least 75 basis points according to the Fed fund futures prices, traders are pricing in a decent probability of there being a 100 basis point increase in the Fed rate. So the consensus view right now is we'll get a 75 basis point increase. It could be as high as 100 basis points. Now, why does this mean, why does this have an impact on crypto? I spent years in traditional financial sector tracking the FOMC meeting, the decision, the minutes, all that stuff. I came into bitcoin and crypto thinking I'd not to worry about that anymore. But the reality of the matter is we've seen a very strong correlation between traditional equities and crypto, really since the Corona crash of early 2000, 20, 2020, I should say. Since then, investors have been looking to the Fed for cues about when it could keep monetary policy highly accommodative. So right now what traders are looking for is for the Fed to pivot. We want daddy to bail us out because they're raising interest rates and we're all getting wrecked, including crypto. So investors are now looking to the Fed to provide those cues. The important thing about the next FOMC statement is going to be what will the Fed say about their future rate hikes? Will there be any changes in language? Even a subtle change in language can have an impact on market expectations. So that in a nutshell, is the FOMC why it matters and why recently, over the past couple years, crypto people and Bitcoin people have been focusing more on the FOMC because of the strong correlation between monetary policy, risk assets and crypto.

Thank you Sam for that thorough explanation. I just have a couple follow up questions to that. So what is the current interest rate? And then for those who don't know what like basis points are, why Is this like 25, 50, 75, 100 basis points? Why is this significant? If you wouldn't mind just kind of breaking those two down for us.

Sure. So the current target for the Fed interest rate is between 1.5 and 1.75%. If you recall, after Covid began and the lockdowns happen, the Fed cut it back down to 0 to 0.25. So from 0 to 0.25 all the way up to 1.5 to 1.75, which is the current range is a big jump for an economy that's highly reliant on cheap credit, which is what this economy is. Every Western economy is the same in that respect, some to a greater extent, but they're all relying on cheap credit to grow money. Is created in these economies by lending. So what the Fed is doing by raising interest rates is increasing the cost of lending. So if I want to borrow money now, I have to spend more in terms of interest rates. Right. That lowers demand for mortgages, for credit cards, for any kind of financing. It has an impact on demand. So investors are now placing a large bet that the Fed will raise interest rates by 75 points or 0.05% during the next FOMC meeting tomorrow. That's going to be the decision. Some are expecting there to be a hundred basis point increase, which also means 1%. If the Fed hiked up to. If the Fed hiked one full percentage, their benchmark interest rate will go to 2.5 to 2.75%. Right. So that's what investors are watching and that's what I mean when I say 100 basis points and where the current Fed rates are.

Excellent. Breakdown of that. And I do want to get Marcel's thoughts here. So go ahead and jump in. Marcel.

What number do you think that they should hike? Maybe not next, maybe not this week, but over the next three or four months? What is the number considering 88 or 90% inflation that the Fed should raise the funk rates if they're really willing to fight inflation?

Yeah, that's a really good question, Marcel, and that's subject to a lot of debate. You'd have to go Paul Volcker in that respect. And you have to raise the actual effect Fed rate above the current rate of inflation. That's how you can zap inflation right away. But there's not a chance in hell that's going to happen. Imagine the Fed rate going to 10%. What would that do to the house of cards economy that we've built over the past few decades? There's not a chance. Right. People sometimes forget that the Fed tried to hike rates before COVID Right. The Fed hiked rates and it created a crisis in the repo market. This happened actually in September of 2019, I believe, where the Fed was injecting liquidity into essentially the piping of the financial system because overnight rates were skyrocketing due to liquidity issues. So any kind of increase in interest rate is going to have a adverse effect on GDP growth, unemployment and on the overall state of the economy because our economy has been highly financialized and the asset bubble that all of us rely on unfortunately is going to keep inflating. So are you going to pop it by raising interest rates to 10%? I don't think so. The general consensus seems to Be that the Fed will continue hiking rates until something really breaks. Right now the stock market has, has broken in a lot of sense, but how bad can the Fed tolerate it before it pivots? A lot of investors are expecting the Fed to pivot later this year. And when I say pivot, I just mean they're gonna announce we're gonna stop raising rates and we might actually lower interest rates. I actually think they have more leeway than that. I think they can continue hiking for the rest of the year and probably shift course sometime in 2023. But that's just my, my gut instinct right now. Given where CPI is and given where everything else is with respect to the economy.

It feels like we are getting like our arm tied behind our back and it's just like slowly getting twisted until like you said, there's that breaking point and then you start to scream like ow, ow, ow, my arms breaking right now. It's just kind of like the first.

You're breaking my arm.

Yeah. Jay Powell, bring that, Bring the printing press back out. We need more money. No, I, I hope there's a control and inflation that, that we can start to see and hopefully. Sam, I know your thesis was that CPI will peak in June, so hopefully that is the case. Marcel?

Yeah, My question is, we all seen that the GDP numbers have been weak, but nothing exuberant, not minus 5 or minus 10%. So that's not really an issue right now. But the unemployment in the United states, it's near zero. It's sub 4%, which people consider optimal, more than optimal. So at what point do you think that unemployment, if it goes up to 4 or 5 or 6%, what is the number that will cause economists and the general market to panic?

Well, I believe there was a certain FOMC member or he could have been a Fed policymaker, I don't recall. But he said we're probably have to tolerate unemployment above 5% for a few years to get this whole thing under control. I don't know the exact threshold. It seems like if you guys recall right now the White House is already cooking the books on gdp. So they're basically saying that we're not. If I can. Actually, I'm going to try to share my screen here. Hold up for a sec. I want you guys to take a look at this.

That was incredible.

If you can share my screen, please. This isn't it. This is the statement. There's a statement here where Secretary Yellen is basically front running the next GDP report the US will release its second quarter GDP report this week. And if you took a look at the Atlanta Fed estimates, it shows another contraction in second in gdp. That would mark the second consecutive quarter of GDP declines for the US and, and by all conventional metrics, that's what a recession is. It's back to back quarters of economic or negative economic growth. But you have Janet Yellen here basically saying, well, hey, listen, if we get two consecutive quarters of negative GDP growth, that doesn't mean it's a recession because we have to look at a broader scale of what a recession actually is. So do they know something that we don't know? Are they trying to front run the GDP report because they know it's going to be bad? If you take a look at this, what it says is that hey guys, if we get back to back quarters of declines and we're in a technical recession, don't worry, it's not a real recession. Basically that gives the Fed even more time to continue hiking rates without having to worry about actual recession. Because, you know, Ms. Yellen here is cooking the books. So something to keep in mind. Thanks, Denal.

I saw a Twitter post saying it's not a recession if it doesn't come from the recession region in France. Otherwise it's not recession.

Yeah, that's pretty good. I mean we even saw speaking of front running, you know, I'm sure on Twitter this week you all saw how Nancy Pelosi was getting questioned if her husband was potentially front running the chip stocks companies. I know we had brought up Nvidia earlier. So I thought very interesting time for, for politicians here in the States and, and how they are calculating and doing certain math stuff. So always fun to talk about that stuff. All right folks, we got the two coins you should have been watching this week. So let's go ahead and move into that folks, it's Markets Pro time and we have two coins that went absolutely berserker this week and we want to talk to you about them. So Denel, let's go ahead and roll into Markets Pro.

Foreign.

Well, did you see sand? Well, you should have because newsquakes are the automated alerts that instantly notify users through market moving events. And that's what happened here with SAND this week. SAND made the headlines after partnering with skateboarding legend Tony Hawk to create the world's largest skate park. In the Metaverse, a newsquake first informed Markets Pro subscribers of the partnership when Sans price was 1.33. A few more news alerts followed and the price eventually peaked at 1.48. That's an 11 increase on one of the biggest gaming metaverse tokens. Love to see Tony Hawk getting integrated in there with sand as well. So, folks, the next token we have is Dig trading on the ticker digit. This one lit up on the Vortex score, which is a comparison between its current market and social conditions of those in the past. Well, what happened? Well, at the start of this week, Digg was seeing a gradual increase in price when strong Vortex scores started flashing. This score alerted Markets Pro subscribers that trading and social conditions around the asset looked similar to the ones in the past that preceded bullish price movement. Shortly after, the price skyrocketed, jumping from $5,697 to. To 14,158. That's a 148% increase on this particular asset. I did a little digging here because I was completely shocked. There is a low token supply for Dig. So this one was a huge gainer this week based off of that Vortex score. But if you would have had that in your pocket with the Markets Pro app, you would have seen that and potentially gotten in on that trade. That's why we're giving away one month subscription of Markets Pro. So make sure you drop your Twitter handle in the chat. We're going to be picking those winners here at the end of today's show. Thank you, Danilo. All right, guys, we're going to start wrapping this thing up today, so I want to hear some closing thoughts. But before we hand it over to you guys, don't forget, if you guys want the Swag, go to store Cointelegraph.com. that's where you can purchase all of your crypto gear, from coffee mugs to shirts that Sam has on to the Coin telegraph gear. We got hoodies, shirts, hats, coffee cups, socks, you name it. You need a bikini for the summer, we got you. All right, guys, I want to hear closing thoughts for today. Marcel, let's start with you first. Give me some closing thoughts. What do we got?

Okay, so my message is stop trying to bottom fish. Meaning yes, I'm gonna wait for nineteen and a half thousand dollars or $1,100 on Ethereum until I make a buy. So if you have money, if you're sitting sideways, you gotta ask yourself, what is the best position for me to stay for the next three months. If you really do think there's gonna be a global crisis, global housing bubble crash, just like we had in 2720, 2007, 2008, sit on the sideways. Just stay with your money. Cash at hands so then you can decide after the crash if it happens to buy if you're gonna buy gold, if you're gonna buy bitcoin or gonna buy Ethereum. So stop trying to pick the bottoms and every mini cycle you're not gonna make it. If you do like that, just wait. If you're not, if you don't think that the current price point is worth, then sit away, go visit your family, your friends, go do other stuff, go earn money and come back in two or three months when you have decided yes, now it's a good time to buy bitcoin. Now it's a good time to buy a house and just do it. So stop trying to wasting your time and your energy on your brain. Oh, is that $100 difference gonna make me rich? No, no, it's not. Just revisit every two or three months, you're gonna do fine.

Love that long term view, Marcel giving you the goods. Appreciate your insights, Marcel. Sam, closing thoughts for today.

So Marcel, you're telling me my buy target of 15,999 isn't good? I should just not, not worry so much. So if it hits 16,000 I should actually buy? That's okay. Yeah, I mean I agree bottom fishing is kind of ridiculous. If you do it, you're gonna get wrecked. I mean if you're a really good trader, a pro trader, guys, you're gonna be, you're gonna be wrong between 50 and 70% of the time and that's professional traders. You know, most of us aren't professional traders. I know, I'm not. You know, so it's all about the investment thesis. Do you believe that Bitcoin has a viable future? The future, or do you not believe it doesn't have. If you believe it does, allocate accordingly dollar cost average and determine when you're comfortable entering the market. I think anything at these levels is going to be a good buy. I don't think we've bottomed per se, but ultimately in the long run, whether you get in at 21 or 16, it's not going to make much of a difference. But have that long term horizon with any investment. Otherwise you're simply speculating which there is a place for speculation in the market. I'm not gonna lie. If you're in a bull market and you want to pick altcoins and you bought a bag of altcoins in the cheap, that's there's, there's a reasonable speculation. But to try to pick the bottom in this very volatile macro backdrop does not make sense at all.

Great advice. And just a reminder folks is none of this is financial advice and these are expressed personal opinions of each panelist here today. What I will leave you with is I think Sam and Marcel put this so wonderfully. You gotta have that long term vision. I think I read a statistic the other day said only 20% of traders actually make profit. So this is not the time to be trading. When I tell, when I show you these charts, I'm not trading these charts. I am monitoring what's going on. So again folks have that long term view, have the conviction behind what this actually is. This is a complete movement and this is going to be your grandkids future 1015 years from now. So again folks we appreciate everyone from tuning in around the globe. I am going to give away our Market Source subscription. I actually saw Sigma gz. Thanks for tuning in today. You were very active in the chat today and I saw the twitter handle@0x_vivek vi. Hopefully that is not the other VC tuning in as a as a secondary account there. But thank you all for tuning in today for the market report. We are happy to have you here and until next Tuesday make sure you like and subscribe and set those notifications on so you know when we are live until next week.