Crypto Hangover

On September 1st bitcoin took off like a speed demon, only to die out at $12,000. Bitcoin struggled to keep its next key support level for the fifth time now. Last article I wrote about how the market was moving too quick too soon. Now we’re seeing bulls carry it back to $11,400 after it fell to $11,230. We can only hope to see a slow and healthy rise to $12k but with so much volatility in traditional and decentralized finance we may not see it for a while.

Source: TradingView

USD Velocity

Speaking of traditional markets, we see that the velocity of the USD has been its lowest since the 1940s. Velocity measures how often the currency changes hands around the world. The Fed is looking for people to spend their currency but it doesn’t look like that’s happening soon. The funny thing is that the people who have the most liquidity are the ones that are unwilling to spend. This is causing the Cantillion Effect which is turning the beneficiaries in charge of the money printer to become the new elites.

U.S. M2 money supply velocity vs. money stock chart. Source: Federal Reserve

In Europe they’re experiencing negative interest rates which is a toxic environment to do business in. One commentator of the European Central Bank’s program to print money said it ‘definitively failed to achieve its desired effect’. This is kind of environment will serve bitcoin well in the long-run.

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