Market Thoughts

As of today, the S&P 500 is down about 19% from the all-time high set 1/4/22. We’re also up 7% from the bottom set 6/17/22. We’ve had three bear market rallies during this downturn, including this current one. Based on my limited experience, markets don’t bottom until the Fed pivots. They’ll likely continue raising rates through the summer. I expect a dovish pivot sooner than most people.

Perhaps we’ll see new lows and even a capitulation far lower just before the Fed begins talking down rates. Maybe this happens in late 2022 or early 2023 as things break.

As of writing, Bitcoin is down 69.9% from the all-time high of $69,000. Nice. Bitcoin has become a large holding over the last two years. Bitcoin’s innate properties make it a pristine form of value held outside the control of any government or banking system. Its supply is perfectly fixed, and inelastic of demand, unlike any other asset or commodity in the universe.

Bitcoin is volatile because the range of potential outcomes is so great. Bitcoin could become the most monetized asset in the world, or it could be forgotten. The asymmetry is astounding. As of 6/27/22, bitcoin’s market cap is $376B. US Treasuries have a market value of $30T. That’s 80x larger. Imagine if bitcoin contributes to the marginal demonetization of treasuries, real estate, precious metals, commodities, and equities. etc.

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