The market is not rising recently – so get used to the dark times

Global markets are going through a difficult period – including the cryptocurrency market. But judging by talk from the peanut gallery, some observers seem to have missed the memo.

Twitter’s “CryptoKaleo” – also known simply as “Kaleo” – said: “We feel relatively safe in the medium term. He wrote on September 12 in a tweet to his 535,000 followers, referring to the United States’ November midterm elections. The forecast is accompanied by a chart indicating his belief that the price of Bitcoin (BTC) will rise to $34,000 – a 50% gain from last week’s $20,000 level – before the end of the year.

“Of course we can bleed less,” said Twitter mega-influencer Pentoshi. He wrote On September 9th, he delivered a missile to his 611,000 followers. But the market at this price is more attractive than it has been in over a year. […] Yesterday I held some $BTC / I will not say anything but shout.

Those reviews come from “respectable” observers – who have been consistently correct in the past. Today a gentleman in my inbox – Charlie Schrem, who wants to sell an “Investment Calendar” – assured readers that a “major crypto ‘run’ could start tomorrow.” Look ahead and it’s not hard to find more cruel predictions like it. Prediction Bitcoin is on the cusp of a 400% increase, bringing it to an all-time high of $80,000 and a market capitalization of $1.5 trillion — $500 billion more than all the silver on Earth.

It’s good to see optimism spreading, albeit mostly among influencers seeking engagement and paying customers. Unfortunately, the macroeconomic headwinds suggest that the reality is a bit bleaker – perhaps even bleaker.

FedEx last week said it fell $500 million short of its first-quarter revenue target, signaling that economic conditions could worsen. CEO Raj Subramaniam wryly said in an interview with CNBC, “These numbers – they don’t describe it well.” His comments included predictions that the number represented the start of a global recession and led to a 21% drop in the company’s share price over the weekend, sending the broader market for a ride.

Related: What will trigger the 2024 bull run?

In response to economic weakness, FedEx has announced that it plans to take measures, including closing 90 locations by the end of the year. The good news is that Americans are saddled with debt and don’t plan to visit those places. Consumer debt reached $16.15 trillion in the second quarter of 2022 – a new record – the Federal Reserve Bank of New York cited in an August report. The number is a little more than $48,000 for every man, woman and child in the United States — a total of 330 million.

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

With a national median income of $31,000, that equates to a median debt-to-income ratio of 154 percent. If you factor in the slightly more than $30 trillion in debt held by the federal government, you can add another $93,000 per person — for a total of $141,000 and a debt-to-income ratio of 454%. (The number gets even worse when you consider the fact that 133 million Americans held full-time jobs as of August.)

While policymakers may be indifferent about government debt, they are more concerned about consumer debt. “I’ve been telling the American people that we’re going to control inflation,” President Joe Biden said in a CBS interview on Sunday, leading observers to wonder if the Federal Reserve’s announcement this week could be a big one. , a 100 basis point increase in the federal interest rate. Such a move could send markets into a tailspin from which they may not recover for some time.

Ironically, even that activity may not be enough to control inflation in the near term. Given the rapid rise in debt, it’s perhaps not surprising that inflation — which rose more than 8 percent year-on-year in August — shows few signs of slowing. Americans may not have a lot of money, but — by and large — that fact hasn’t dampened interest. If the New York Fed’s report is any indication, the financing of the request comes from loans. The bank said credit card debt grew at the highest year-over-year rate in more than 20 years in the second quarter.

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

There’s a scratch in there. No matter how quickly the Fed moves to ease debt, it’s unclear when asset prices will rise. Higher debt levels – which already exist – mean less money to buy things. As the Federal Reserve is trying to do, raising debt service costs means less money to buy things. Forcing Americans into economic ruin to cut spending means less money to buy things. Failure to control inflation and allowing the price of basic goods and services to soar – of course, with the energy crisis in Europe over which financial managers have little control – reduces money to buy anything else.

Perhaps this view is similar to that of Elon Musk when he said in June that he had a “very bad feeling” about the economy. Other observers have drawn even darker measures, including a popular rejection of debt. Rich dad, poor dad Author Robert Kiyosaki Kiyosaki wrote on Twitter in April that “the big bubble will be disillusioned.” “Baby boomer retirements are about to be stolen. 10 trillion dollars in counterfeit money will end. The government, Wall Street and the feds are thieves. High inflation is here. Buy gold, silver, bitcoin without coyote waking up.

Admittedly, Kiyosaki’s assessment is partly at odds with the results pessimists might expect. A recession should lead to lower asset prices across the board – including gold, silver and bitcoin prices. A more optimistic forecast might hope that Americans will learn from their mistakes, take the next year to pay down their debt, and continue spending big in 2024 — avoiding high inflation.

In either case, one thing seems relatively certain: neither crypto nor any other asset class is on the verge of breaking records. If you want to get rich investing in the coming year, you better start learning how to buy short options from market promoters.

Rudy Takala He is an opinion editor at Cointelegraph. He previously worked as an editor or reporter in newsrooms including Fox News, The Hill and the Washington Examiner. He received his master’s degree in Political Communication from American University in Washington, DC.

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

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