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Major Increase In Bitcoin Trading Volume

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A significant amount of bitcoin changed hands on the United States’ most dominant spot exchange, Coinbase, as investors look to buy the dip.

The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

Thursday, May 12, 2022, was one of the most exciting and active days in the bitcoin/crypto market in months, with no shortage of volatility and fear from market participants. On the bitcoin side of things, the price plummeted to a low of $25,300 on large volume, before quickly rebounding and closing the daily candle at $28,900. With the fall came a strong response from opportunistic investors looking to buy the dip, as shown by the Canadian Purpose Bitcoin ETF, which saw its largest day of inflows ever, adding 6,902 BTC worth nearly $207 million. 

Canadian Purpose bitcoin spot ETF holdings

Similarly, Thursday saw the largest amount of bitcoin volume traded in a day on Coinbase since May 19, 2021, signaling that a significant amount of bitcoin changed hands on the United States’ most dominant spot exchange. Looking at Coinbase 3-day volume bars for bitcoin, large spikes are typically signals of inflection points near local bottoms or tops. While there is obviously a whole confluence of variables that need to be taken into account when looking for absolute market bottoms, a large volume spike in spot markets and subsequent bounce above $30,000 for bitcoin is a promising sign. 

Bitcoin price and volume on Coinbase

This aligns with our macro view that the U.S. economy is in the midst of a large stagflationary slowdown, which damages asset prices and leads to diminishing liquidity in financial markets as the Federal Reserve tightens monetary policy. As consumers continue to get their wallets squeezed, the slowdown of economic activity will compound in a positive feedback loop of diminishing growth and economic activity.

Our core thesis is that this will inevitably lead to additional fiscal and monetary stimulus, as the global economy cannot handle a sustained economic slowdown due to the mechanics of the debt-based monetary system we find ourselves in today, with a record amount of debt that needs to be serviced and refinanced.

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Goldman Predicts US Recession Odds at 35% in 2 Years, John Mauldin Wouldn’t Be Surprised if Stocks Fell 40%

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Goldman Predicts US Recession Odds at 35% in 2 Years, John Mauldin Wouldn't Be Surprised if Stocks Fell 40%

The American economy continues to look gloomy and signals pointing toward a looming recession continue to appear. In a note sent to clients this week, Goldman Sachs’ chief economist said the bank envisions the “odds of a recession as roughly 15% in the next 12 months and 35% within the next 24 months.” Furthermore, the renowned financial expert John Mauldin details that he would not be surprised if the stock market crashed by 40%, as he believes a recession is likely due this year.

Goldman Prediction: ‘Odds of a Recession Roughly 15% in the Next Year, 35% Within the Next 24 Months’

The U.S. economy is dealing with significant pressures as supply chains are restricted and consumer prices are soaring amid war taking place overseas in Europe. Just recently, Bitcoin.com News reported on last month’s consumer price index data that had shown America’s inflation rate increased sharply to 8.5% in March.

A couple days later, our newsdesk explained how the hedge fund manager Michael Burry believes the U.S. Federal Reserve has no intentions of fighting inflation. Moreover, the famed author, Robert Kiyosaki, thinks hyperinflation and depression are already here.

In a note sent to investors this week, Goldman Sachs’ chief economist Jan Hatzius detailed Goldman’s forecast and the probability of the U.S. falling into a recession. Hatzius said the Federal Reserve faces a “hard path to a soft landing” and Goldman expects the chances of a U.S. recession to be 35% over the next two years.

“Our analysis of historical G10 episodes suggests that although strong economic momentum limits the risk in the near-term, the policy tightening we expect raises the odds of recession. As a result, we now see the odds of a recession as roughly 15% in the next 12 months and 35% within the next 24 months,” Hatzius explained.

Hatzius further detailed that historical patterns are showing the economy could get rocky. He noted that 11 out of 14 economic cycles since World War II have led to a recession within a 24-month period. “Taken at face value, these historical patterns suggest the Fed faces a narrow path to a soft landing as it aims to close the jobs-workers gap and bring inflation back towards its 2% target,” Hatzius added.

Bridgewater Associates Founder Ray Dalio Expects a ‘Period of Stagflation’

Goldman’s chief economist is one of many predicting a downturn in the U.S. economy in the coming months. Over the last few months, a great number of financial analysts and economists have been attempting to predict the U.S. economy’s future.

During an interview with Yahoo Finance published on April 4, Ray Dalio, Bridgewater Associates founder, and co-chief investment executive, said he envisions a stagflation environment. Dalio remarked:

So what you have is enough tightening by the Federal Reserve to deal with inflation adequately, and that is too much tightening for the markets and the economy. So the Fed is going to be in a very difficult place a year from now as inflation still remains high and it starts to pinch on both the markets and the economy. I think that most likely what we’re going to have is a period of stagflation. And then you have to understand how to build a portfolio that’s balanced for that kind of environment.

Best-Selling Author and Financial Expert John Mauldin: ‘My Instinct Tells Me This Will Not Be a 12-Month Wait’

The well known financial expert John Mauldin is predicting an economic downturn as well, as he recently explained that he would not be surprised if the stock market crashed by 40%. “[Fed chair Jerome] Powell and his crew hope to engineer the fabled ‘soft landing,’” Mauldin opined. “I really doubt they can do it,” he added.

Mauldin remarked on how the 2-year Treasury yield recently surpassed the 10-year Treasury yield, which recorded an inverted yield curve. “That’s the opposite of normal. Then again, a bunch of things have been the opposite of normal lately,” Mauldin said. The financial analyst is known for predicting the U.S. recessions that occurred in 2000 and 2008, and he believes the tell-tale signs are no different. “We have many indications recession is near,” the blog post written by Mauldin notes. The financial analyst’s blog post concludes by stating:

There is absolutely no way to precisely predict when a recession begins. My instinct tells me this will not be a 12-month wait. I think things just continue to slow down and one day we’ll look up and see a recession. And then a little bit later we’ll be growing again. That’s how these things work.

What do you think about the predictions concerning a possible recession in the United States? Do you expect an economic downturn to take place in the near future? Let us know what you think about this subject in the comments section below.

US Treasury Yield Curve Highlights Recession Signals, Analyst Thinks Fallout Will Be ’10x Worse Than the Great Depression’

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US Treasury Yield Curve Highlights Recession Signals, Analyst Thinks Fallout Will Be '10x Worse Than the Great Depression'

Fears of a recession and a 1970s-style stagflation economy continue to grip Wall Street and investors this week, as multiple reports show that recession signals have intensified. With oil and commodity prices surging, Reuters reports that investors are “recalibrating their portfolios for an expected period of high inflation and weaker growth.”

While Wall Street Fears Stagflation, Analyst Believes ‘Global Markets Will Collapse’ This Year

This week there’s been a slew of headlines indicating that fears of a 1970s-style stagflation economy have risen and economic fallout is coming soon. Three days ago, Reuters’ author David Randall noted that U.S. investors are scared of a hawkish central bank, oil prices surging, and the current conflict in Ukraine. Randall spoke with Nuveen’s chief investment officer of global fixed income, Anders Persson, and the analyst noted stagflation isn’t here just yet, but it is getting near that point.

“Our base case is still not 1970s stagflation, but we’re getting closer to that ZIP code,” Persson said.

On Saturday, Bitcoin.com News reported on the skyrocketing energy stocks, precious metals, and global commodities breaking market records. The same day, the popular Twitter account Pentoshi tweeted about a pending “greater depression.” At the time of writing, the tweet was retweeted 69 times and has close to a thousand likes. Pentoshi told his 523,500 Twitter followers:

The most exciting thing this year. Will be global markets collapsing. Any market that trades above 0 will be too high. They will call this: ‘The greater depression’ which will be 10x worse than the Great Depression.

US Treasury Yield Curve Highlights ‘Recession Concerns Showing up More Prominently’

The following day, Reuters’ author Davide Barbuscia detailed that “recession concerns are showing up more prominently in the U.S. Treasury yield curve.” Data from Barbuscia’s report stresses that the “closely watched gap between yields on two- and 10-year notes stood at its narrowest since March 2020.”

Numerous financial publications are highlighting how rising oil and commodity prices are typically associated with a pending recession. Furthermore, recent filings indicate that Warren Buffett’s Berkshire Hathaway obtained a $5 billion stake in Occidental Petroleum. Berkshire Hathaway has also doubled the firm’s exposure to Chevron as well.

What do you think about the reported signals that show a recession or 1970s stagflation is looming over the economy? Let us know what you think about this subject in the comments section below.

Bitcoin And The Increasing Risk Of Stagflation

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Skyrocketing energy costs, risks of stagflation and a future credit crisis could have major implications on the bitcoin market.

The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

Last week, we discussed the beginnings of a global energy crisis and the downstream effects on bitcoin mining in The Daily Dive #069. Today, we’re covering the latest developments in the skyrocketing energy costs, the risks of stagflation and how these pose increased risk for a future credit crisis. 

The Risks Of Stagflation 

Last month, there were over 4,000 stories on the Bloomberg Terminal mentioning stagflation. It’s a growing economic concern in the market and one we’re watching closely. Stagflation refers to economic times when there’s rising inflation, a stagnation of economic output and a high rate of unemployment.

Historically, stagflation has often been accompanied by oil shocks. Now, we’re seeing the West Texas Intermediate Crude Oil price per barrel reach seven-year highs with a current global oil supply/demand imbalance. Along with the Europe and Asia natural gas and coal shortages, these factors are increasing the market chances of a stagflation scenario playing out.

Amidst the latest surge in energy prices, the Organization of the Petroleum Exporting Countries, Russia and their allies (known as OPEC+) met yesterday deciding to maintain its previously-agreed-upon production supply rather than raising supply further. The United States has called on OPEC+ to increase supply highlighting that rising gas prices are a threat to the global economic recovery.

For rising inflation, rising energy prices will affect gas prices, consumer heating bills and manufacturing production costs that can be passed onto consumers via higher prices and slow economic output.

We can already see this trend playing out through a rising surge in China’s Producer Price Index (PPI), up 9.5% in August while China Consumer Price Index (CPI) was 0.8%, showing weak purchasing demand for Chinese consumers. Chinese manufactures can look to pass on increased costs to western, foreign consumers with both demand and CPI stronger post pandemic. For the United States, this comes at the same time when monetary policy is ready to tighten.

Source: Bloomberg
Source: Bloomberg, Holger Zschaepitz
Source: Financial Times
Source: Bank of America

What is often misunderstood is that the Federal Reserve cannot respond to the stagflation of today like they could in the 1970s, when Paul Volcker hiked rates all the way up to 20% to curb inflation. Volker could do this because of the relatively low debt levels across the economic system, but the situation today is much different.

Source: yardeni.com

US Inflation Continues to Rise Amid Lockdown Talk, Producer Prices Jump 7.8%, Biden Blames OPEC

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US Inflation Continues to Rise Amid Lockdown Talk, Producer Prices Jump 7.8%, Biden Blames OPEC

The United States is facing severe inflation despite the Federal Reserve and mainstream media doubling down on saying the loss of purchasing power is just “transitory.” This week consumer and producer metrics from July have been published by the U.S. Bureau of Labor Statistics and inflation is growing stronger.

July CPI Stats Show a Jump to 5.4%, Producer Prices Skyrocket by 7.8%

President Joe Biden has been compared to Jimmy Carter as Americans are witnessing the rebirth of stagflation. The term “stagflation” was very relevant during the Carter administration because America saw slow economic growth and vast unemployment numbers. Economic growth and unemployment numbers in 2021, look a bit more gruesome because of the aftermath 2020’s Covid-19 lockdowns and government mandates caused.

This week’s data from the U.S. Bureau of Labor Statistics indicates that the Consumer Price Index (CPI) jumped to 5.4% last month. This is a CPI record not seen since 2008 and to make matters worse the U.S. has reached a record-breaking 7.8% increase in producer prices. Consumer prices have been a worry for quite some time now after the U.S. Federal Reserve ballooned the monetary supply more so in a single year than any other time in history.

US Inflation Continues to Rise Amid Lockdown Talk, Producer Prices Jump 7.8%, Biden Blames OPEC

The Federal Reserve chairman Jerome Powell said in April that the central bank believes the issue with inflation will be resolved quickly. Powell stressed the “nature of a bottleneck is that it will be resolved.” In many statements, Powell and his central bank colleagues have called the current inflation “transitory” and it won’t last. Powell also didn’t believe manufacturers would increase prices on Mainstreet consumers. “We believe producers are reluctant on passing on these prices to consumers,” Powell emphasized.

The August 2021 CPI report shows that inflation is rising on nearly everything. Real estate and rent prices have bubbled significantly, the index for hotels and motels jumped 6.8% in July, and gasoline spiked by 2.4%. The cost of groceries is through the roof even though the USDA believes inflation on food may slow in 2022. Airline fares are up 19%, the cost of appliances jumped 12.3%, and the price for used automobiles skyrocketed by 41%.

Paul Krugman Dismisses Inflation, Biden Administration Blames OPEC, Americans Sense Another Round of Lockdowns

Of course, Paul Krugman via the New York Times is telling people not to have “inflation anxiety.” Furthermore, the Biden administration says that the Organization of Petroleum Exporting Countries (OPEC) is the cause of the rising inflation. Instead of federal spending, the Biden administration is blaming the gloomy economy on oil prices and Biden says he gave OPEC a message. “We also made clear to OPEC… that the production cuts made during the pandemic should be reversed as…the global economy recovers, in order to lower the prices for consumers.”

US Inflation Continues to Rise Amid Lockdown Talk, Producer Prices Jump 7.8%, Biden Blames OPEC

Meanwhile, as Biden blames the price of oil, Americans have been dealing with a blitzkrieg of headlines concerning Covid-19 and the various variants. The initial stages of government-mandated lockdowns are beginning to resurface over the concern about these new variants.

At the end of July, the Biden administration revealed the White House is prepared to return to lockdowns, despite the data that shows lockdown tactics have been harmful. Another round of lockdowns could push the American economy even further into a hole. As far as OPEC is concerned, White House press secretary Jen Psaki, told the media that the administration wants to produce a “long-term engagement” with OPEC.

What do you think about the Consumer Price Index jumping considerably in July and the rise in producer prices? Let us know what you think about this subject in the comments section below.