The market isn’t surging anytime soon — so get used to dark times

Global markets are going through a tough time – including the cryptocurrency market. But judging from the conversation at Peanuts Gallery, it appears that some observers have yet to receive the memo.

“It feels like we’re relatively safe in the medium term,” Twitter’s “CryptoKaleo” — also known simply as “Kaleo” — wrote In a Sept. 12 tweet to his 535,000 followers, the US midterm elections in November were mentioned. The prediction is accompanied by a chart indicating that he believes the price of Bitcoin (BTC) will surge to $34,000 by the end of the year, up 50 percent from last week’s roughly $20,000.

“Of course we can bleed lower,” says Twitter influencer Pentoshi wrote In a September 9 letter to his 611,000 followers. “But the market for this value is more attractive than it has been in more than a year. […] I took a little BTC yesterday / no replacements, but will gnaw. “

These assessments come from “respected” observers – those who have been regularly correct in the past.A gentleman in my inbox today – Charlie Shrem looking to sell his “investing calendar” – assured readers that “a major cryptocurrency ‘acceleration’ could begin tomorrow.” Looking ahead, it is not difficult to find more optimistic forecasts, such as prophecy Bitcoin is on the cusp of a 400% surge that would take it to an all-time high price of $80,000 and a market cap of $1.5 trillion — $500 billion more than the value of all silver on the planet.

It’s good to see optimism running rampant, even if it’s mostly among influencers seeking engagement and paying customers. Unfortunately, macroeconomic headwinds suggest that reality is a little darker — perhaps much darker.

FedEx last week highlighted the possibility that economic conditions could worsen, announcing that its first-quarter revenue target had fallen by $500 million. “These numbers — they’re not very indicative,” CEO Raj Subramaniam quipped in an interview with CNBC. His comments, which included forecasts that the numbers represented the start of a global recession, sent shares of his company plunging 21% over the weekend, leading to broader markets.

related: What will drive a possible 2024 bull market for cryptocurrencies?

In response to the downturn, FedEx said it plans to take steps, including closing 90 locations by the end of the year. The good news: Americans are so heavily in debt that they are unlikely to plan to visit these places anyway. Consumer Debt Hits $16.15 Trillion in Q2 2022 – New Record – Federal Reserve Bank of New York famous in an August report. That figure equates to more than $48,000 for every man, woman and child in the United States—$330 million in total.

Total consumer debt held by Americans. Source: FRBNY Consumer Credit Team/Equifax

The national median income is $31,000, which equates to an average debt-to-income ratio of 154%. If you want to factor in the more than $30 trillion in debt held by the federal government, you can add another $93,000 per person—$141,000 in total, for a debt-to-income ratio of 454%. (If you consider that there are only 133 million Americans, the number obviously gets worse. like Full-time employment as of August. )

While policymakers may lack confidence in government debt, they are more concerned with consumer debt. “I’m telling the American people that we’re going to control inflation,” President Joe Biden said in an interview on CBS on Sunday, prompting observers to wonder if he was trying to preempt this week’s potentially huge Fed announcement of a 100-degree hike in federal interest rates. basis point. Such a move could throw markets into disarray, with no recovery for some time.

Ironically, even this move may not be enough to curb inflation in the short term. Given the rapid rise in debt, it’s not surprising that inflation — which rose just over 8% year-on-year in August — shows little sign of abating. Americans may be running out of money, but — by and large — reality isn’t dampening demand. If the NY Fed report is any indicator, the cash to support this demand comes from credit. The bank noted that credit card debt experienced its largest year-over-year percentage increase in more than 20 years in the second quarter.

related: What will the cryptocurrency market look like in 2027?Here are 5 predictions

The problem lies here. Regardless of how quickly the Fed moves to rein in debt, it is unclear when asset prices will rise. Already high debt levels mean less money to buy stuff. As the Fed tries to do, increasing debt servicing costs means less money to buy things. Forcing Americans into economic collapse to cut costs means less money to buy things. Failure to rein in inflation and let the cost of basic goods and services continue to rise – exacerbated, of course, by the European energy crisis that financial managers have little control over – means less money to buy other things.

Perhaps that outlook is the same point Elon Musk made in June when he said he had a “super bad feeling” about the economy.Darker views have been released by other observers, including a prominent debt averse rich dad, poor dad Author Robert Kiyosaki. ‘The biggest bubble burst is coming’, Kiyosaki wrote April on Twitter. “Baby Boomers have their retirement profiles stolen. $10 trillion in fake money spending is over. The government, Wall Street, and the Fed are all thieves. The hyperinflationary depression is here. Buy gold, silver, bitcoin before the coyotes wake up. “

Granted, Kiyosaki’s assessment is partly at odds with the outcome pessimists might expect. An economic catastrophe should send asset prices across the board – including those of gold, silver and bitcoin. More optimistic forecasters may want Americans to learn from their mistakes, pay down debt next year and resume big spending in 2024 — all while avoiding a hyperinflationary depression.

In both cases, one thing seems relatively certain: Neither cryptocurrency nor any other asset class is on the verge of a record surge. If you want to prosper by investing in the year ahead, you’d better start learning how to buy short options from optimists who don’t know much about the market.

Rudita Kara Is the opinion editor of Cointelegraph. He has worked as an editor or reporter in newsrooms such as Fox News, The Hill and The Washington Examiner. He holds a master’s degree in Political Communication from American University in Washington, DC.

This article is for general informational purposes only and is not intended and should not be considered legal or investment advice. The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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