Markets won’t skyrocket anytime soon, so get used to darker times

Global markets, including the cryptocurrency market, are going through tough times. But judging by the Peanuts Gallery story, some observers didn’t seem to get the memo.

“I feel relatively safe in the medium term,” tweeted “CryptoKaleo” (also known simply as “Kaleo”). I have written In a September 12th tweet to 535,000 followers, he mentioned the US midterm elections in November. The forecast was accompanied by a chart showing his belief that the price of Bitcoin (BTC) will surge to $34,000 by the end of the year, up 50% from around $20,000 last week.

“Of course we can bleed,” said Pentosi, a Twitter mega-influencer who goes by a pseudonym. I have written September 9 letter to his 611,000 followers. “But the market at this price point is much more attractive than it has been over the past year or so. […] I grabbed a bit of $BTC yesterday/no alternative but nibble. ”

Their assessments come from “respectable” observers – people who have been regularly right in the past. One gentleman in my mailbox today — Charlie Shrem, who is trying to sell an ‘investment calendar’ — assured readers that “preparations” for major cryptocurrencies could begin tomorrow. Looking further, it’s not hard to find even more bullish forecasts. predict Bitcoin soars 400% to an all-time high of $80,000, with a market cap of $1.5 trillion, suggesting $500 billion more than all silver on the planet.

It’s good to see optimism rampant, but it’s mostly among influencers looking for engagement and paying customers. It shows dark.

FedEx said last week that it missed its first-quarter revenue target by $500 million, underscoring the possibility of worsening economic conditions. In an interview with CNBC, CEO Raj Subramaniam wryly pointed out that “these numbers don’t bode well.” His comments, including predictions that the numbers represent the beginning of a global recession, caused his company’s stock price to plunge 21% over the weekend, putting the wider market on a ride.

Related: What Will Drive Crypto’s 2024 Bull Market?

In response to the economic downturn, FedEx said it plans to take steps, including closing 90 locations by the end of the year. No, I don’t plan on visiting any of these places. Consumer debt reached $16.15 trillion in the second quarter of 2022. This is a new record. The Federal Reserve Bank of New York points out in his August report. This figure equates to just over her $48,000 to every man, woman, and child in the United States, and in all, he’s 330 million.

If the national average income is $31,000, this corresponds to an average debt-to-income ratio of 154%. If you want to factor in his $30+ trillion federally held debt, you can add another $93,000 per person. That adds up to $141,000 and a debt-to-income ratio of 454%. (The numbers are noticeably worse when you consider the fact that as of August only 133 million Americans were enjoying full-time employment.)

Policy makers may be indifferent about government debt, but more concerned about consumer debt. “I’m telling the American people that we’re going to get inflation under control,” President Joe Biden said in a CBS interview on Sunday, with observers predicting that he’ll make a potentially huge move to the Federal Reserve this week. , a 100 basis point hike in federal interest rates. Such a move could put the market into a temporary, irrecoverable tailspin.

Ironically, even that move may not be enough to keep inflation in check in the short term. It’s perhaps not surprising that there is little sign of a decline. Americans may not have much money left, but by and large that reality is not holding back demand.If the New York Fed report is any indicator, the cash that backs that demand comes from credit Thing. The bank noted that second-quarter credit card debt posted its biggest year-over-year growth rate in more than two decades.

Related: What will happen to the cryptocurrency market in 2027? Click here for 5 predictions

There is friction there. No matter how quickly the federal government moves to curb debt, it’s not clear when asset prices will rise. High debt levels that already exist mean less money to buy things. Raising the cost of servicing debt, as the Federal Reserve is trying to do, means less money to buy things. Pushing Americans into economic bankruptcy to keep costs down means less money to buy things. Uncontrollable inflation and allowing the cost of basic goods and services to continue to rise is, of course, exacerbated by the European energy crisis, which financial managers have little control over, leaving little money to buy other things. This means that the

Perhaps the outlook is the same one Elon Musk reached when he said in June that he had a “very bad feeling” about the economy. Other observers, including a well-known debt avoider, offer even more bleak opinions. rich dad poor dad Author Robert Kiyosaki. “The biggest bubble burst is coming,” Kiyosaki wrote on Twitter in April. “Baby boomer retirements stolen. $10 trillion in fake money spending is over. Government, Wall Street, Fed are the thieves. The hyperinflationary panic is here. Before the coyotes wake up. Buy gold, silver and bitcoin.”

Indeed, Kiyosaki’s assessment partly contradicts the results expected by pessimists. An economic catastrophe should lead to an across-the-board decline in asset prices, including the price of gold, silver and bitcoin. A more optimistic forecaster might hope that Americans will learn from their mistakes, pay off their debts next year, resume heavy spending in 2024, and avoid a hyperinflationary recession.

In either scenario, one thing is relatively certain. That said, neither cryptocurrencies nor any other asset class is on the verge of a record surge. If you want to succeed in investing next year, you better start learning how to buy short options from less market-savvy optimists.

This article is for general information purposes and is not intended, and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent the views or opinions of Cointelegraph.