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Bitcoin Is Experiencing Huge Gravity; Watch Nigerian Naira As Interest Rate Rises

Bitcoin Is Experiencing Huge Gravity; Watch Nigerian Naira As Interest Rate Rises

Are you tracking this thing in real time? In the last 24 hours, the thing has moved south by close to $2,000. Bitcoin is quickly losing what made it amazing to many: decentralization. Yes, even though it is decentralized technically, it has been centralized at causing pain to many! Lol.

Any prediction on how low it could get? $10,000 is now possible when you expect some margin calls and forced sales to be put(!) at $15,000. If that happens, expect massive dump and sell-off, and that will quickly push it below $10,000.

The problem with BTC is that it has nobody to speak for it since it is “decentralized”. Other currencies would have seen a governor of the central bank issue a statement. The biggest fear now is the exchanges: if some begin to go under, some assets will go.

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With liquidity crises hitting, expect many ecosystems to pause withdrawals. Typically, when that happens, they fold since the legal cost at post-withdrawal becomes challenging.

From many angles, a global recession is coming. Russia is now reducing gas supplies to Germany. If they sustain that, the German economy will freeze and that will rattle the European Union economies. This time is not normal; be watching the Nigerian currency. With higher interest rates evolving on some of our loans, our total revenue may not even service our debts. #Prepare

While many economists agree a recession is likely coming in 2023, Wall Street veteran and Bitcoin bull Mike Novogratz has just given one of the most dire outlooks yet.

“The economy is going to collapse,” Novogratz told MarketWatch on Wednesday, adding, “We are going to go into a really fast recession, and you can see that in lots of ways.”

Novogratz, chief executive of crypto merchant bank Galaxy Digital, gave the interview just before the Federal Reserve raised rates by 0.75 percentage points—the largest rate hike seen since 1994. The rate hike came five days after U.S. consumer price increase unexpectedly surged in May to a 40-year high of 8.6%.

Novogratz pointed to the housing market, which is finally cooling down after a two-year hot streak, and inventories piling up as signs of a recession looming on the horizon.

“There are layoffs in multiple industries, and the Fed is stuck,” he said, adding that the central bank is in a position where it has to “hike [interest rates] until inflation rolls over.”

Novogratz accurately predicted in the interview that the central bank would lift rates by 75 points and that the market would rally on the news. After Fed chair Jerome Powell announced the rate hike, the Dow Jones Industrial Average rose by 1%, while the S&P 500 advanced 1.5% and the Nasdaq rose 2.5%.

Novogratz also predicted there would be a stock selloff in the next coming days, which happened right on cue. At 8 a.m. ET, S&P 500 futures were trading 2.2% lower, wiping out yesterday’s gains and plunging the benchmark further into a bear market.

“They are hiking into the popping of a bubble,” Novogratz said.

Comment on In and FB feeds

Comment: .” centralised at causing pain to many” lol. Sir I have a feeling you are very happy at this price range. Its a good entry point for a long term HODL if you ask me.

My Response: Not really – I am neutral. We receive many Bitcoin payments mainly from customers that cannot pay via USD or Naira. So, we have exposure but that is money we can afford to lose. People register for Tekedia Mini-MBA via it and I have used it as hedge in case BTC becomes $1,000. But if it falls, since it is money I can afford to forget, it has no impact. Fundamentally, I will not invest in BTC as I have explained here: it has no fundamental productive value. For example, no balance sheet and that makes it vulnerable.

Comment 2: I think only those who lack basic knowledge of economics will be shocked. At some point, few months ago, crude oil traded negative which means seller would pay for anyone offering storage but today, the same commodity is scarce and charging inflation. Crypto is no exemption to this push and pull factors. Remember it went from 30 to 3k in 2020 and then 68k+ just over a year and few months later.

My ResponseGood point- But crude oil slump was not random or overly stochastic as the real source could be pointed out. Without Covid-19, that would not have happened. The problem with BTC is that its behavior is uncorrelated, unaligned and ambivalent to the fundamental construct of demand and supply in the real economy. Why is it falling on Saturday?  There is nothing you can do to prevent that. 

So, I do not think that BTC follows the basic elements of economics except in that niche area of irrational exuberance where people buy some crazy asset classes and hope that others will believe and buy. The crude oil price issue was fixed by opening up the economy. Right now, what can somebody do to help BTC except to ask more to buy! Buying and reselling software-currency while a fair capitalist framework may not advance society when you compare the value crude oil brings.

Comment 3: Ndubuisi Ekekwe , although you mentioned a little about it, but the questions in my head are these: what’s casusing the current downward spiral in BTC value? Is BTC value being affected by the current rising global inflation? What are the other fundamental factors that drives BTC movement, upward or downward? Because if truly blockchain has come to stay and with the upsurge in BTC acceptance as a means of payment transaction globally, then the future might be bright for BTC, regardless of the present situation. Lastly, when experts talk about presence of adequate structure to back BTC payment system up, aside a monetary institution like Fed. Reserve or central bank, what other things are they referring to? Thanks.

My Response: institutional investors are dumping it. There are better assets. With interest rates high, you can invest in treasury bills, etc and have a good night sleep. Also, when rates go up, if not well managed, recession can kick in. BTC believers could lose their jobs and start offloading, pushing the value down. That cascade is why smart investors are getting out now. During recession, poor asset classes fade, BTC is considered a risky poor asset. I do not like writing much technically on this as it depresses many.


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1 THOUGHT ON Bitcoin Is Experiencing Huge Gravity; Watch Nigerian Naira As Interest Rate Rises

  1. There is instability in economies, BTC does not have a special power to hold things together, so it’s normal that it’s getting beaten too.

    You can never find anyone who will calmly talk about how BTC or any crypto is a great asset to acquire. Other than its speculative nature that can throw up millionaires over night, what productive feature does it have? Dollar is not stable because the name is dollar, rather the holders look at USA, if the US collapses economically, you cannot expect people to be holding dollars.

    Nobody is defending BTC right now, so it will keep receiving hits, until the forces punching it decide to rest.

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