The chart below shows the yield spread between the 10yr and 3mo and 10yr and 2yr. When the spread is below 0 (colored in red), the yield curve is inverted. This has been an indicator for coming recessions. The red areas on the SPX are the recession periods.
As you can see we saw an inversion last month (march). The next recession is just around the corner and this one is going to be big. With the Fed experimenting with interesting rates and propping the stock market up, and tech stocks, FANG, and the Get Big Fast strategies startups are using, the market is extremely overvalued.
I think with the awareness of bitcoin now and the upcoming halving, money could pour into cryptos when stocks start to fall. The confluence of all this makes me think bitcoin will moon. The timing of the halving with a possible market crash is amazing to me. I feel excited for cryptos. I want to buy gold and bonds, safe places for my money, but the prospect of HUGE gains from the crypto market is to enticing. Either bitcoin goes to zero and I lose all my money (all the money I can afford to lose, not my savings or monthly spending) or I become much richer than my parents. Lol.
I feel like the halvening is going to occur in too long a time relative to the (what seems to be) imminent stock correction.
AnotherAnalyst
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@julius007, Thanks for commenting! According to history, the yield curve inverting usually precedes a recession by 12-18 months, which will line up with the halving pretty close. Last time bitcoin halved the price actually went down and sideways for a little while before it moved up and eventually broke the high and took off. If you take a wider view, all these things (the yield curve, upcoming elections, brexit, the fed slowing down there tightening, the market trading sideways, corporate bonds reaching maturity, and the fact we are in the longest expansion period in the history of the US) all these things are lining up within a year or two, right when the halving occurs. Im very interested in seeing how this all affects bitcoin and the crypto market.
Rick_12
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I agree, the Great Debt Crisis is on the horizon. I’ve cashed out of the market for now (my risk tolerance is lower than many). My only hesitation with cryptos moving forward is the Banks control of cash being transferred to Cryptos. The last Crypto take off caught many off guard but I think the banks will be ready this time. They will protect their own interests by blocking transfers (or making it almost impossible). I hope I’m wrong and ill be there ready to ride the next wave up.
AnotherAnalyst
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@Rick_12, Thanks for your comment. I wonder how much control the banks really have over it. If I want to buy bitcoin from coinbase, how would they stop me? And if they did, what keeps me from moving my money to another bank or credit union that would allow this. In fact, I recently heard about a shop in my area that buys, sells, and trades bitcoin. I haven't looked into it to much, but it begs the question, will there be these crypto type of start ups were i can take cash to and invest directly through them instead of a bank transfer/debit card? Regardless, what is more worrying to me is getting my money out of cryptos when volatility and prices are soaring. Would there be outrageous fees or long holding periods? Will there be a new tax on crypto investments? In the long run, though, if I 10x, 20x, or more, on my initial investment will the fees really be that bothersome to me? These are just things that float around in my head. This is an interesting time, and I'm excited to be a part of history regardless of the outcome. On a side note, even though bitcoin awareness is higher this time around, almost everybody I talk to in my life (coworkers, family, and other acquaintances) still don't care enough about it to learn more or put money in it. I think the average person's sentiment won't change until we break the high of 20k and everybody is talking about it everywhere. Of course it'll be too late by then to make any serious gains (as far as crypto investing goes).
Tiger_Style
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I like it! Great writeup! Definitely agree that even in a risk off scenario, our cryptos will MEWWWNNN!
AnotherAnalyst
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@Tiger_Style, Thanks Tiger! I love it "MEWWNN" haha I'm really kind of "banking on bitcoin" as bad as that sounds. I do have other crypto holdings though. What are some of your favorites? For me, I have EOS, TRX, ETH, ZRX, ENJ, ADA, and a few others. I've been debating on buying some bitcoin cash just because of how fast it moves when bitcoin moves.
Tiger_Style
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@AnotherAnalyst, No banking on BTC makes sense. I think it is a fine strategy. I don't listen to the MSM, they are trying to manipulate us. I really love ETH and have been using it for awhile now, as well as mining it for some time. Zcash is another favorite of mine for their ZK Snarks tech...Still a fan of ETC, LTC and XRP (not a lot of XRP, but hey it is a top 3 coin). Definitely fascinated by BTC lightning network and have been running a lightning node for awhile now too. I really like being able to experiment with this bleeding edge tech, its feels like when the internet came into being when I was a teen, but then I was too young to buy stock in the emerging internet companies. I think a lot of people my age are disillusioned by the current financial system. When I graduated college the economy was in the toilet so I learned about Bitcoin then around 2011. Ran a full node for awhile but couldn't figure out how to mine BTC, it was really complicated then and ASICS were just starting to hit the market. I wish you all the best in your trading endeavors, and remember patience and small wins have served me well as a crypto trader (and equities for that matter)!