“Fed Watch” is a macroeconomic podcast, true to the rebellious nature of bitcoin. In each episode, we challenge traditional narratives and Bitcoin by examining current macroeconomy events across the globe, with a focus on central banks and currencies.
In this episode of “Fed Watch,” CK and I ran through several charts, giving market updates on bitcoin, the dollar (DXY), and the Hong Kong dollar. Then we looked at the deteriorating situation in Pakistan and asked the question: is this the next Sri Lanka? Finally, we discussed the Taiwan/China situation and I read several important excerpts, one from Chinese Foreign Minister Wang Yi and the other from think tank expert Wang Wen.
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Bitcoin and other currencies
We started by looking at a weekly bitcoin chart. We’ve done this on past shows because it’s a good way to ground our bitcoin conversation. As you can see below, the price has been very stable, sitting on the close as far as the volume-by-price indicator on the right is concerned.
If we zoom out, the last period with weekly candles similar to today was back in September/October 2020, just before the monster rally from $10,000 to $40,000. Of course, we’re not saying it will happen exactly like that, but it is possible.
The Dollar Index (DXY) is the other major currency we looked at. I think it’s important to check the dollar almost every episode because it’s bitcoin’s main competitor.
It looks like it’s peaked at the moment, but there’s no indication it’s going to crash. Instead, the dollar is more likely to form a new high range above 100 over the next few years. This is similar to how it formed a new higher range from 2015 to 2021.
I will add that a strong dollar is not bearish for bitcoin. Perhaps initially, a strong dollar correlates to a decline in bitcoin, but after the dollar stabilizes in an upper range, that’s when bitcoin has traditionally rallied.
Below is a screenshot from the Hong Kong Monetary Authority website. Every month, it publishes statistics on its foreign currency reserves, which it uses to stabilize its peg. Last week, I speculated that the continued peg of the Hong Kong dollar (HKD) was quickly depleting its reserves. However, according to this statement, it used just over 1% of its reserves in July to maintain the peg. This means that the HKD is likely able to hold the peg (if it wants to) for several years.
Pakistan on the brink
The developments in Pakistan have much in common with the recent collapse in Sri Lanka. In the podcast, I highlighted i5w’s involvement with the World Economic Forum (WEF). Pakistan has received hundreds of millions of dollars in funding to revamp its agricultural sector and add national parks.
Another similarity between Pakistan and Sri Lanka is the significant role Chinese funding has played over the past decade. Sri Lanka lost control of its main port because it couldn’t repay Chinese loans, and now Pakistan is saddled with around $20 billion in high-interest loans to China and businesses Chinese.
Pakistan has just two months left in the budget and is desperately courting new lenders. The Chinese have refused it, the Arab states are thinking twice, the only recourse is to go back to the IMF. And that means severe austerity.
It is perhaps unsurprising that Sri Lanka and Pakistan are important nodes in the Belt and Road Initiative (BRI).
As I have said many times, the BRI is doomed. China is trying to make places and routes economically viable where the long span of history has not. No amount of money can reverse millennia of culture and eons of geography.
Well, once again, one of the important links in the BRI has been bankrupted by Chinese central planners.
I’ve been discussing the Pelosi situation and the Chinese response for days on my Telegram live streams.
In this episode of “Fed Watch”, I read excerpts from a famous Chinese minister and a Chinese think tank expert. You can read Wang Yi’s full comments here. Suffice it to say for this article that he repeatedly said “One China” and called the US a party trying to change the status quo. He also had very harsh words for Tsai Ing-wen, the incumbent president of Taiwan. He said she “betrayed the ancestors”. In another translation, I heard Yi’s original comments also indicate that she had betrayed her ancestors (and her race).
The following comments I read were from Wang Wen, Executive Dean of the Chongyang Institute of Financial Studies at Renmin University of China (RDCY) and Executive Director of the China-States People-to-People Exchange Research Center -United. You can read his comments and many more here. He tries to explain why China’s response has been so weak, and that China should not provoke armed conflict with the United States until it can “outclass the United States in terms of power”. economy, achieve financial and military power comparable to that of the United States, and develop”. an overwhelming ability to counter international sanctions.
It sounds far. I would simply advise the reader not to get caught up in scaremongering rhetoric about Taiwan and China. They are disciples of Sun Tzu, who said: “appear strong when you are weak”. Wen also quoted Sun Tzu:
“A major military confrontation with the United States is not China’s foreign policy goal, nor the path to a better life for the people. Remember what Sun Tzu wrote in ‘The Art Of War’: ‘Don’t act unless there is something to be gained 非利不动; do not use military force without certainty of victory 非得不用; don’t go to war unless the situation is critical 非危不战.’ »
We ended the podcast by talking about the upcoming CPI data release and other things relevant to bitcoin.
This is a guest post by Ansel Lindner. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.