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at the beginning of the year I said the breakout asset was going to be Bitcoin I think it looks like it's going to be the resounding inflation hedge asset for the next 50 or 100 years so that die has been cast I think you're seeing the last vestages of people using gold as a rational economic insurance policy but I think the future is specifically Bitcoin on that dimension so I guess you could trade that you could speculate on that at the start of the year just before the approval of several spot Bitcoin exchange traded funds by the US Securities and Exchange Commission billionaire venture capitalist chath palahia named Bitcoin and Bitcoin ETFs as his most anticipated trend for 2024 palahia made significant predictions about the cryptocurrency forecasting that 2024 would be bitcoin's most transformative year since its Inception he believes Bitcoin will achieve Main stream adoption this year and anticipates it will become part of the traditional Financial lexicon by the end of 2024 one of palapa's key predictions is a massive Bull Run ahead for Bitcoin during an early episode of the all-in podcast he noted that historically bitcoin's price tends to stay within a similar range for 3 to 6 months following a having event but sees substantial gains after that initial period he expects a similar trajectory in 2024 and 2025 with Bitcoin prices and adoption levels both surging palahia estimates that Bitcoin could reach over $500,000 per coin by October 2025 approximately 18 months post having in a recent podcast episode with co-hosts David Friedberg and David saaks palahia Revisited his predictions discussing how the current challenging economic climate in the US and globally is prompting investors to seek Safe Haven assets like Bitcoin and gold this shift in investor sentiment He suggests could further fuel Bitcoins rise as a significant asset in both the crypto market and broader Financial landscape before we continue with the rest of the video do check out daily 5minute crypto newsletter with all the latest crypto and bitcoin news it's a fantastic analysis of onchain crypto data and breakdowns and the best part is it's absolutely free they'll cover expert predictions breakdowns of onchain crypto data and any breaking news you need to know all in a nutshell click the first link in the description and enter your email to join over 50,000 others and becoming a better crypto investor right now there's a there's another couple of nuances here that I think are important the US dollar complex is thriving which means like the US dollar is strong backend yields are rising and then another thing that I look at is this thing called put call skew so basically like on balance how are people hedging in the shortterm and in the bond market they own a lot more puts than they do calls I think that this is the entire Financial infrastructure of the world repositioning itself from what was a tossup election to a trump win and when you look at why it's because when you forget the candidates themselves for a second but if you think about the actual policies and where the spending will occur I think that there has been a very clear decision that the Trump economic plan will drive better growth than the Harris plan and if you think that there is more growth coming typically what will come with that is a little bit more inflation the risk premium that you're going to need in a high growth environment is higher what is risk premium that is how much do I want to invest for a risky asset versus a safe asset and so all of these things are coalescing so I think that the shortterm takeaway that I have just looking at all of this data is that in the economic distribution of outcomes this is now tilted overwhelmingly to a trump win and this is not an emotional statement or what I want to happen but this is just an observation how how tens of trillions of dollars of self-interested financial actors have now repositioned their risk and if Trump wins which it looks like he's increasingly going to do and if he wins by the margins that it looks like it's going going to do you're going to see a lot of these things exacerbate Gold's going to go up more probably Bitcoin will probably go up the short-term economic upside for the economy will probably get reflected in higher Equity prices but it'll also push out long-term rates the inflation picture becomes a little bit murkier but I think that that's what's happening I think that the the financial markets are pricing in a trump win sorry just to understand better why is gold go up in a trump win I think in the short term what happens is that you see more economic growth but in the medium-term inflation goes up and so you want to hedge right so it's it's more about a durational balance of assets so in the short term you'll be long the things that will generate earnings but in the medium to long term you want to head yourself so Bitcoin and gold I think will trade that way as you heard right there the key line that Paul tutor Jones said was all Rose lead to inflation I mean that that's what's basically happening right now is that the market is afraid that inflation is not whipped and is going to resurface and the FED may have to Pivot from the pivot and raise interest rates that's why he doesn't want to own any treasuries separately another Financial Legend Stan druckenmiller gave an interview where he has something like a 20% short position meaning 20% of his Holdings are short us treasuries right now so he's betting that there are long-term inflation pressures and that rates are going to have to rise and and you're seeing again that since the FED cut rates on September 18th by 50 basis points that the 10e T bills yield has risen by 60 basis points so I I think my interpretation is that this is less about the election and more about the markets not liking the fed's rate cut on September 18th I think that in hindsight it was too big sax believes the federal reserve's recent 50 basis point rate cut in September was a quiet acknowledgement that the US economy is facing challenges despite Fed chair Jerome Powell's optimistic statements shortly after the announcement saaks observed that the central bank has only cut rates by 50 basis points at the start of a cycle three times in history during the 2001 recession the 2007 financial crisis and the 2020 covid-19 pandemic each following a period of severe economic decline he argues that the fed's choice to be with such a substantial cut suggests underlying economic problems ahead during the episode saaks noted that the Fed was expected to ease into rate Cuts with a quartero reduction as anticipated by the market however he believes Powell and other fomc officials opted for a larger cut because they are already in panic mode working to project calmness and stability to prevent broader economic Fallout both Sachs and Friedberg view the recent strong performance of assets like gold and Bitcoin as validation of these economic concerns IND indicating potential turbulence for the US and Global economies into 2025 here are more highlights from the discussion so again the market is concerned that inflation is not whipped that the FED may have been overly precipitous and how it cut cut rates and then the other thing is they just do not like the long-term fiscal picture of the US one other chart we should bring up is interest on the national debt what you can see here is that it has gone absolutely parabolic in the last couple of years our interest on the debt what like 1.3 1.4 trillion a year 1.35 trillion run rate yeah $3,500 per American and it's something like 20 to 25% of federal revenue now is going to Debt Service and this continues to increase now I think there was an expectation that we'd be able to get this line to go back down once we had rate Cuts right because if inflation's licked and the FED can lower interest rates again and we can get back to a 2% 10year bond which is where we were a few years ago then all of a sudden that National Debt Service becomes a little bit more reasonable right I mean you can you could service that debt at half the cost but now it looks like that may not happen so just to to wrap this up I just think that the market doesn't like these fundamentals of the US fiscal picture you've got rapidly increasing debt service costs you've got an inflation picture that is murky and may not be going away and the bond markets are starting to price in higher interest rates for longer and this is why Paul tutor Jones is saying all rad lead to inflation and this is why Dr Miller is shorting us treasuries so just to give you guys a sense total us household corporate and government debt which include state and local and federal so household debt in the US about 18 trillion corporate debts about 11 trillion state and local government debts 3 trillion obviously the federal debt 36 trillion that adds up to whopping 68 trillion of total debt across um the US which if you assume a 6% average interest rate you know you got corporate debt and household debt so it's a little more risky so it carries a higher rate that means we're spending about $4 trillion do a year of an economy that's only 29 trillion a year to service the debt just to pay the interest on the debt so 15% of every dollar that trades hands is going towards interest payments on existing leverage on existing debt it's a highly Leverage system and if you look around the world this problem is not just a US challenge Global Leverage is a problem that's now becoming a crisis for uh countries everywhere so um this is becoming kind of a global leverage problem which might explain the flight to Safety in assets like gold and Bitcoin and um is going to present a lot of real struggles for every global economy now the question is does the US dollar maintain its Reserve status because ultimately I think it is inevitable that the Federal Reserve in the United States is going to need to buy the debt they're going to need to monetize the debt and which means printing money there is no one else to buy the debt so pull up the China chart Nick China's historically been the biggest buyer and owner of us treasuries but here's what's happened in the last couple of years it peaked at about $1.3 trillion about 10 years ago and then recently particularly starting around covid they began selling down and have been selling down at an accelerated Pace today China is back to the level they were at nearly 15 years ago in terms of their treasury Holdings and they have publicly declared that they are selling off us treasuries and buying gold instead so the biggest buyer of us treasuries has kind of left the market or is leaving the market who does that leave well at the end of the day the Federal Reserve has been the kind of buyer of Last Resort and if they end up buying treasuries that's where we have a problem with too many dollars and inflation kicking up and so it feels like a lot of the trades in assets are what's going to benefit from the inflation and it's going to be gold it's going to be Bitcoin in related news the international monetary fund has issued a stark warning about the rising Global public debt which IT projects will exceed $100 trillion by year end with the US and China contributing significantly to these levels in its latest report the IMF cautioned that Global public debt could reach 100% of world GDP by the end of the decade a situation it deems highly concerning verer Gasper the imf's director of fiscal affairs stated that government's debt calculations are often overly optimistic and prone to underestimation further worsening the debt Outlook the IMF report highlighted a fiscal trilemma facing many governments increased spending on security and growth resistance to raising taxes and an unsustainable rise in public debt levels countries in subsaharan Africa are particularly strained as they balance poverty alleviation efforts with limited tax revenues and challenging Financial conditions the IMF concluded that persistently high debt could destabilize global financial markets increasing the risk of a sudden sell-off this precarious situation could boost demand for Safe Haven assets like gold and Bitcoin as investors seek protection from fiscal instability Rising interest in these assets could drive prices higher in the coming months and years share your thoughts on the imf's report and predictions for the global economy and Safe Haven assets like gold and Bitcoin in the comments below
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