Now that three major banks in America have gone under the EU banking sector is looking extremely weak. Anyone who's been paying attention could see this coming a mile away. Europe is even more F'ed than America, that's for damn sure.
I've already seen a dozen Tweets in my timeline about how weak Credit Suisse is looking at the moment. Haven't really looked more into that, and I feel like I don't need to. It's quite clear that the current banking contagion has just started, and the markets are loving it.
Bad news is still good news to the market.
As ass-backwards as it sounds, the market WANTS high unemployment. The market WANTS a banking collapse. The market WANTS the FED to be trapped in a corner. Everyone wants a pivot and everyone wants the FED to lose all their credibility as an institution. Considering it take 9-12 months for rate hikes to cycle throughout the economy... lol the market is going to get what they want... very soon. Even if the FED stops increasing rates the situation will keep getting more dire because previous hikes have not been even closed to priced in fundamentally.
Most do not realize there was a dollar shortage BEFORE the FED started hiking faster than they ever have in recent history. Now the problem is exponentially worse, and it can't get any better given a complete lack of confidence in the financial sector. Doesn't even matter if the FED reduces rates to 0% and starts QE. Which banks are actually going to give out liberal loans in this environment? I'll wait here for the answer, but I won't hold my breath.
FED meeting is starting today and ends tomorrow with a decision on the fund rate. At this point it doesn't even matter. The writing is on the wall, and short term doesn't matter. Bitcoin is oversold all the way up to $50k. Doesn't matter what price you buy at today, be it $25k or $15k. No reason to get greedy with the entry-point, but that doesn't stop people from doing just that. MIN/MAX is a terrible strategy in crypto, and most of us fall victim to it constantly. I don't know about you but I've already seen a dozen people post the video of the Korean kid who lost a million dollars in minutes trying to short BTC during the last pump. Ouch.
Bitcoin is looking very strong...
A couple days ago it would have taken a 'miracle' to stop the MA(25) from death-crossing below the MA(50)... but it looks like that's exactly what happened. The market is pricing in a FED pivot, and is currently paused to see what happens today and tomorrow. Everyone was waiting for something to break... and something broke. By all accounts it will get worse. The war against 'inflation' has been lost, but don't be surprised if 'inflation' keeps going down even if the FED pivots. The FED never had control of this situation. The legacy economy has a mind of its own and can not be tamed.
Personally I think Bitcoin will need to confirm $23k one last time before we see real fireworks. If the FED hikes 25 points this would be my guess. If the FED pauses I expect more like $30k by the end of the full-moon cycle (March 22), than confirmation back at something like $25k. A bounce off of $25k is sorely needed in the future considering how difficult it has been to break through during these last few months.
Unfortunately the Hive chart (and other alts as well) don't look nearly as good as Bitcoin. This is somewhat to be expected considering the Bitcoin genesis block. Bitcoin was created for this exact moment: another banking collapse with associated bailouts. Even if this not technically true, people still believe it to be true and the market will reflect that.
I was worried that the 42-43 cent range would act as heavy resistance considering the MA(50), MA(25), and MA(200) are all trading within that range. This is exactly what has happened in the short term. Chance for rejection here is pretty high down to 37 cent confirmation... although if the FED pivots who knows what will happen. I'll feel better when we are trading above all the moving averages. Only then will it feel like a real bull market like it did a month ago.
To reiterate none of this short-term stuff matters too much. Just keep riding out the roller coaster and you'll be fine. Like I said when it happened: the golden cross between the MA(25) and MA(200) marked the trend reversal. We still have to wait for summer to see if we get a repeat of the 2019 run. March has always been a pretty blah month. Let's get out of tax season and see what happens.
What was this post supposed to be about again?
Oh yeah... Payroll Disruption.
This is something that I never even considered until Silicon Valley Bank went under and all those startup companies had their payroll frozen. Think about how big of a problem this is! Even if you know that the banking sector is going to collapse and you pull all your money out to keep it safe... your employer isn't going to do that. So anyone who works for a corporate entity could find themselves not getting paid because that money was bailed-in to the bank. Crazy thought.
FDIC insurance is good up to $250k per person, which sounds like a lot until one considers that $250k is a very small amount for corporate holdings. Interestingly enough the FED is implementing ninja bailouts using these new backstop operations. Will be interesting to see how that plays out. Certainly it won't work as well as they expect it to (or pretend to expect it to as the case may be).
All I can say for sure is that if banks freeze corporate accounts for even a month there are going to be riots in the streets. More than 50% of the population lives paycheck to paycheck, and this lifestyle is even encouraged by our capitalistic system based purely on consumerism and consumption to excess.
This may not be something we have to worry about too much in USA, but thinking about Europe? Yikes. They are so boned. Surely some of that hurt will bleed out into the rest of the economy. Everything is connected.
Now imagine a housing crisis on top of all of this. It's no secret that the entire system is floundering right now. When it rains, it pours. We've all been talking about how the next recession after 2008 is going to be even worse, and here we are. I don't know about you, but it's looking pretty bad. This is to be expected considering all we did in 2008 was kick the can down the road to deal with at another time. That time seem to be now. It will require a lot of financial gymnastics to kick it down the road once again. There is no fixing this broken system. We can only delay the inevitable.
I feel like I'm pretty well positioned for all of this. I don't own property. I don't have a lot of money in a bank. I don't work for an employer that has a lot of money in the bank. Personally, I'm good, but of course the spillover from everyone else being totally fucked will almost certainly have an affect on me. I dun know though somehow I'm not too worried about it. This was the entire purpose of crypto. If crypto fails during the darkest hour in which it was supposed to succeed, then we all have bigger problems to worry about.
Conclusion
The establishment would have you believe that the banking contagion has been quarantined and contained. Do you believe them? I think the notion is comical; Of course it's not over! At the same time the market is loving the idea of a complete banking implosion. Bad news is clearly still good news.
Anything that results in a pivot: the market will support. This is especially true for crypto, but not as true for the stock market. A decoupling is imminent. We've already gotten a taste of such decouplings during the FTX contagion, and I expect that to be kicked into high gear when shit really hits the fan. Yeah, centralized exchanges will have banking issues, but also hardly anyone is looking to actually cash out their crypto within this environment, so does that really matter?
Given an epic failure of the banking sector, anyone who works by the hour/year could find themselves without a payday. Over half the population can not afford such an expense, especially considering more credit cards are maxed out than ever and the risk within that industry is expected to come to a head as well. It's all looking pretty bleak (except for the stock market and crypto... which are completely irrational and try to price everything in ahead of time).