원문 보기
We just kind of went through this geopolitical turmoil. It's still is still ongoing. Stocks are at all-time highs as of yesterday. Bitcoin's kind of lagging around 75k. A friend, Raoul Pal, tweeted total global liquidity is is rising, global M2 is rising, US total liquidity is rising, US M2 is rising, ISM is rising, China total liquidity is rising.
Don't overthink it. And so I think for people thinking about the markets right now, you also mentioned a lot of this fear. You know, what is your kind of read on on this lagging from the crypto side as it as relates to stocks and commodities and just generally what's your what's your more macro view of the liquidity dynamics at play now because I think there's a lot of the AI driven attention and IPOs are coming that are driving a lot of this narrative and and thought away from the crypto investing world, but I'm just curious kind of how you're seeing this macro picture.
Yeah. So, I wrote a letter at the beginning of the year and in it you'll find a matrix of the correlations among asset classes and specifically trying to understand Bitcoin. Many people because we call Bitcoin digital gold, they think, "Oh, well, surely it's highly correlated to gold." It is not. In fact, and we did the analysis from 2019, which is when real institutional interest started evolving a little more intensely.
The correlation between gold and Bitcoin over that time has been 0.14. But if you look at the last two cycles, you'll see that gold rallied before Bitcoin did. And we think the same thing is happening now and we we monitor we monitor Bitcoin to gold and I feature it regularly in something called In the Know, which I do once a month.
[clears throat] And on that chart, you'll see yes, Bitcoin relative to gold has had a significant drop. But if you look at the longer term, you'll see higher lows in terms of the very long-term trend line. And so we think that that the Bitcoin bull market is still intact. I realize we've been through what many would call a bear market and yet down 50% is a victory compared to down 85 or 95%.
for ants, Cathie. Yes, exactly. Exactly. So, you know, that is still intact and we do believe that Bitcoin will will get to you know, new all-time highs in this next cycle. Many people don't, but we do and you know that we're on record saying that our base case for 2030 is 730,000. Our bull case is 1.5 million.
We took a lot a lot of flak for or I did for for saying that stablecoins had usurped some of the role of Bitcoin, which is true, certainly in emerging markets. But what what people missed when I was making that statement was that gold was rallying. So, the store value role Bitcoin is also moving up.
And in fact, the two cancel each other out. Actually, the the stronger the stronger move has been gold relative to Bitcoins in terms of the impact on the Bitcoin price. So, we're we think that we've Yeah, sure. We're in the bottoming out process. You know, David Puell, who does our on-chain analytics, says the absolute capitulation would occur, meaning it we may get there.
I doubt it the way Bitcoin and other assets are acting, but that drop dead price range is in the 50 to 55,000 range. As I said and and you also are alluding to, we're seeing liquidity moves around the world. And many people because the headlines are always talking about the Fed being hawkish, not wanting to ease.
Well, guess what? The Fed funds rate is down 175 basis points. Yeah. And yet the the narrative out there is, "Oh, they're too hawkish. They're too hawkish." They have started easing and I think we're going to have um I think because inflation is going to surprise dramatically on the low side of expectations.
And I'll give you an anecdote. Pepsi. Now, what the heck does Pepsi have to do with this story? Well, we noticed that Frito-Lay about I'm going to say about 3 months ago cut its pricing 15% and today it announced that its volume surprised relative to expectations significantly. That's what should happen in a low inflation world.
You cut prices, you get more unit growth. And that's certainly the case in the technology world and we're seeing massive deflation with AI training costs dropping 75% per year, AI inference costs, so how much does it cost ChatGPT to answer your questions. Those costs are dropping 85 to 95% per year.
So, I think we're going to see a massive wave of good deflation out there and that is you cut prices, you get big unit growth and that's why we expect real GDP growth to accelerate as well. When the Fed sees inflation dropping and I don't know if you pay attention to Trueflation, Trueflation's inflation rate, even with gasoline prices doing what they have done, Trueflation is up to 1.8%.
It got below 1%. This is a measure of consumer price inflation. It's blockchain based. It's based on tens of thousands of items measured real time. And the core inflation measure is up to only 1.3%. So, there was a tug-of-war in inflation by all measures, including Trueflation, that was in the 2 to 3% range for about 2 and 1/2 to 3 years.
Trueflation says all of those are going to resolve to the downside. And if that happens, we believe the Fed will ease and one of the reasons they'll ease more is because the unemployment rate, while it is low, if you break it apart, you'll see entry-level jobs are being hit here. So, companies are not firing, but they're not hiring either.
So, youth unemployment or 16 to 24-year-old, that is at 8 and 1/2%. And now it did get to 11%. It's at 8 and 1/2%. But that that tells you that there is slack in the system on the in the employment side, which is pulling wage growth down, which is very interesting. If you look at any wage measures, you'll see they're decelerating as productivity is accelerating.
So, why would the Fed ease? The Fed would ease because the demand for money is increasing relative to the supply and that's a function of unit growth. And its role is to equilib- or to accommodate real economic growth.
Comments 0