The logic of bitcoin's ups and downs

Today, the United States has issued a green light for the CFTC (US Commodity Futures Commission) to approve the first Bitcoin futures with physical delivery in Bitcoin, and this is approved by LedgerX.

You may not know much about LedgerX. Its seed round is Google Ventures and Lightspeed Ventures. Investors in Round B include: Miami International Holdings Group (MIH) and the Huiyin Blockchain Investment Fund of the subsidiary of Huiyin Group. MIH owns the Miami International Stock Exchange MIAX, which is the main futures. Its annual trading volume of 2018 is ahead of the Japan National Stock Exchange and the Australian National Exchange.

Of course, what everyone is most looking forward to is the opening of the Bitcoin futures of the Bakkt exchange. The significance of this exchange is that its rules of the game are to trade Bitcoin as gold.

Last week, I published an article "Why Bitcoin is not falling", which caused a repercussions and discussed the reasons for the rise of Bitcoin and the reasons for the upcoming decline. As a result, Bitcoin plunged on the day. In the article, I also talked about the events and time points that everyone needs to pay attention to in July.

These are not the core of this article. My core is – what happened to gold in the near future?

In the recent commodity industry, iron ore futures have risen by 50% so much that CCTV has paid attention to the column program. In addition, the sharp rise and fall of Apple's futures has caused concern at the decision-making level. However, one commodity has quietly rose for half a year, hitting a six-year high, which is gold.

From the beginning of this year to the present, the price of gold has skyrocketed. Take COMEX gold as an example: in June alone, the increase reached 10%, and on June 25, it was once touched at $1,442 per ounce. After reaching the high point, the day quickly rose back, and gold ushered in a few days of callbacks, which ended the "Five Lianyang". On the other hand, it is unfortunate that at the same time that the price of gold has risen along the way, since June, the world's largest gold ETF holdings have continued to rise.

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Here, everyone suddenly feels exactly the same as the trend of Bitcoin, even the data behind the story is very similar. Although the Bakkt exchange ETF has not yet opened, the bitcoin spot is prepared in advance.

As I said in the last article, the next decade will be the Great Depression cycle of the Kangbo cycle, and there will be a systematic increase in gold. The current price of gold is mainly affected by several factors: global monetary policy, US and European Central Bank interest rates, supply-side production, industrial and living consumption, global economic systemic risk, global inflation and short-term funds.

The most central factor affecting gold prices in all factors is the monetary policy and the central bank's interest rate, which will also be an important factor that will profoundly affect Bitcoin.

Don't listen to the Bitcoin POW mining halving cycle is the most important factor affecting Bitcoin. This factor is very important. But is a good factor that the whole world knows will be consistently presented to the world through the market? Then why did the bitcoin soar in the current round, and the miners did not catch it at all. Basically, I did not hear which mining pool seized the opportunity to sneak out Bitcoin.

In any market, the most important thing is the game. Fear the market, because the market is always right, only if you have deviations and the market will never. When all the logic is not right, there are only two possibilities, either that your cognition is not enough or that your information is not symmetrical.

02

It is the Fed’s interest rate cuts that have led to a common upward trend in gold and bitcoin. Whether the price of gold is peaking or not, I will not comment for the time being. But there is a principle that everyone must remember. For whatever reason, the logic of interest rates and currency must be followed.

The median Fed funds rate is expected to be 2.4% at the end of 2019. The median Fed funds rate expectations for the end of 2020 and 2021 are 2.1% and 2.4%, respectively, both lower than the previous forecast of 2.6%. If the Fed decides to cut interest rates on August 1, central banks around the world will enter a new round of monetary policy easing. Where do you guess the liquidity will go? It is a factor that artificially controls change or a “consensus” that can be enforced strongly.

All uncertainty ends up being deterministic, which will be the starting point for a bull market common to gold and bitcoin.

In fact, this round of bitcoin skyrocketing is completely out of the independent market of the digital money market. What is the reason? Going back to the logic of gold's rise, everyone seems to have overlooked another very important force – silver. Gold prices soared, but silver did not follow suit. The gold/silver price ratio hit a new high in 26 years, and the highest has reached 91.

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In the past 100 years, the ratio of gold to silver has been almost stable between 100 and 15 times. The difference between the highest point and the lowest point is 6.66.

What we need to pay attention to is the second low of 15.67 formed in 1968 and the low of 15.13 formed in 1980. If you have read my article "Reading 2019" that was banned by the whole network, you should know that I have talked about the time of the last round of the Kangbo cycle.

In Kevin Phillips' book "A Book Reads the History of American Wealth", it is mentioned that from 1966 to 1982 it was the recessive period of the United States. The core performance is that the stock market collapsed only after the 1929 Great Depression. The United States experienced the worst inflation in peacetime, and prices rose three-fold, while middle-class income fell by an average of 10% over the same period. The gap between the rich and the poor in society has further increased. The entire economic depression led to the Harvard Business Review as a reader survey, with more than three-quarters of respondents showing extreme pessimism. In fact, it contains two phases of the Kangbo cycle, one from the 1966-1973 recession and the other from the 1973-1982 recession.

Did everyone suddenly realize what interesting details? In fact, the recession period and the depression period in the economic cycle are the core rising periods of gold and silver as a safe haven.

In the last round of the Kangbo cycle, because of the war factor, before the economic cycle entered a recession, gold began to rise, and silver accompanied the rise. Silver began to show a relative increase in gold two years after the beginning of the recession, officially confirming the turning point of the economic cycle.

In 1973 and 1975, the ratio of gold/silver hit a phased high of 45 during this period and then fell back to the lowest point of 15.13 in 1980. What happened in the middle of this?

In fact, the lowest point of the US stock market during this period appeared in 1975. On November 14, 1972, the Dow Jones index climbed 1000 points and fell to 550 points in early 1975. Soon the end of 1976, the Dow returned to 1000 points. However, because the US economy did not improve, it fell rapidly. Finally, from 1977 to 1982, it had been fluctuating within a narrow range of 800-1000 points.

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That is to say, between 1968 and 1973, gold as the main safe haven, when the economy experienced large fluctuations or serious uncertainties, the first to rise, while silver as a secondary safe haven is only accompanied by rising, the increase The range is lower than gold. It was not until the fall of the US stock market in 1975 that the Great Depression cycle was confirmed that silver appeared in addition to the simultaneous rise in gold, until the peak of the two years before the end of the Great Depression.

Gold's rise is not a sign of a safe-haven asset bull market, and silver is rising.

Then why has the ratio of gold and silver returned to the peak of 100.7 in 1990 since 1980? 1982-1991 coincided with the recovery cycle of this round of the Kangbo cycle. It can be understood that gold and silver entered the descending channel simultaneously, but silver as a secondary safe haven dropped more quickly until the maximum spread was reached.

If this round of bull market will be the big bull market that gold and bitcoin will open together, then look at the ups and downs of the bitcoin market, you should see who is the silver. The question is, if Bitcoin is "digital gold", then who is "digital silver"? As I said in the article "The Ten Years, I and Wang Sicong Gamble the Future of Blockchain", there is only one answer – Ethereum is the true " digital silver " .

Many people will say that Litecoin is digital silver, or that EOS is the replacement for Ethereum. I have already discussed in the previous article that the Litecoin is actually not a digital silver, but a "pseudo-coin", a "concept currency" without any real value. As for EOS, it is necessary to go to the complete decentralization and open source ecology to go to the next stage. These two digital currencies will become a footnote in history.

From the history of money, the essence of the confrontation between the Ming Dynasty and the British Empire was the confrontation between the silver standard and the gold standard. Even before the British Empire did not appear in the gold standard, silver was used as the currency of circulation.

Silver is precisely the "economic operating system" that has lasted for nearly a thousand years in the world's major empire, just as Ethereum is a completely decentralized "global computer."

how to prove? Let's take a look at the picture below:

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The price ratio of Ethereum/Bitcoin is the highest at 0.1515, which is the lowest value of 0.0073 caused by the unstable inflation in 2016, or the market has not reached the previous low point of “stable consensus”. In fact, Ethereum/Bit The lowest price ratio of the currency is 0.0239, and the difference is 6.34. Almost perfectly corresponds to the silver/gold spread difference of 6.66.

Because the total amount of gold and silver and bitcoin Ethereum is different, the unit price will not be the same, and the price difference between the high point and the low point will not be the same, but the point difference is the ratio value that contains all the factors. This is the most Persuasive. You said that it is a coincidence that by 2020, global silver will be mined. Since silver is a rare metal, silver consumption will use the stock market in the future. Like the POW+POS consensus mechanism of Ethereum?

It turns out that Ethereum is now at the bottom of its long history with Bitcoin.

On the other hand, looking at the price ratio of Litecoin/Bitcoin, after the sudden sudden increase in the data, the highest point is at 0.0529, and the lowest point is at 0.00275, with a spread of 19.269. In the entire six years since the sale of Litecoin in June 2013, there has almost never been a stable high and a stable low. Silver and gold have formed a stable price difference ratio in the past 100 years. This is the "consensus."

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Let us look at the price ratio of EOS and Bitcoin. After the sharp rise and fall, the highest point of the price ratio is 0.00243, and the lowest point is 0.00000815, the difference is 29.8, far from the price difference of silver/gold. Because of the birth time, there has not been a stable price difference for the time being.

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Don't ignore these data, the essence of human beings is the repeater. The history of mankind is only constantly repeating the same thing in one environment after another. Only by understanding what happened in history can you find what is going to happen in the future world. So why is the final total of Ethereum infinitely approaching 100 million? If it is not such a number, it will not produce the price of today. If there is no such price, there will be no stable price difference with Bitcoin. . If you can't form a stable point difference, you won't be able to become a real "digital silver."

The story of gold and silver in the world is only copied into the blockchain by Bitcoin Ethereum. The "consensus" that human beings have formed is long and long, not formed overnight.

You said that it is a coincidence that this round of bitcoin as a "digital gold" has skyrocketed from the digital currency market. Ethereum as "digital silver" is only passively rising, actually following Bitcoin. It has only appeared that the price ratio of Ethereum and Bitcoin has reached the lowest point of stable price difference of 0.0239, which means that the price of Bitcoin is 41.84 times of the price of Ethereum. At the beginning of the 1966 recession of the Kangbo cycle, gold took the lead in rising silver and only went up. After two years, silver continued to increase until the 1968 minimum price difference with gold reached 15.67.

Guess, two years later, Ethereum will complete the full POS upgrade in 2021, will it reach the highest price difference with Bitcoin?

According to the gold/silver price difference of 6.66, the Ethereum/Bitcoin bottom 0.0239, the Ethereum/Bitcoin high will reach 0.159. That is to say, if the gold and silver that have reached the "human consensus" with the same funds at the end of the market, it should be bargained at Ethereum, because in the next two years, Ethereum will exceed Bitcoin by 6.3 times.

From a short-term perspective, Bitcoin has not yet been adjusted in this round, but it is not far from the actual low. Bitcoin reached the lowest point of the previous round of bear market on August 17, 2015, and then rose all the way. On June 13, 2016, it reached a short-term high of 785.3 US dollars. The time is almost a full 10 months, which is exactly 67% of the peak of $1,175 in 13 years.

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This round reached the lowest point of $3215 in the bear market on December 17, 2018. After that, it rose all the way and reached a short-term high of $13,764 on June 25, 2019. The time is almost six months. It is exactly 69% of the peak of 19,191 US dollars in 17 years. That is to say, the rhythm of this round of bull market is faster than the previous round, and the time rate is 0.6 times of the previous round.

In the last round of bull-bear conversion, Bitcoin was adjusted on August 8, 2016, and it took nearly 2 months to adjust to 30%. From 564 US dollars to re-upensive until January 2, 2017 almost broke the previous high of 1175 US dollars, the time is close to 5 months.

Do you guess that the current round of bitcoin adjustment will end in about 35 days, just before the August 1st, 2019, when the Fed will announce whether to cut interest rates? Do you guess, will Bitcoin retry the previous high of $19,941 after four months, that is, at the end of October?

Still returning to my earliest point of view, any callback in Bitcoin is an opportunity for everyone in the world to get on the bus. If you want to make your life different, you should use 100% of your working capital. If you already understand the digital currency market, you should hold Ethereum 100%. Maybe everything will be different.

Author: Kai Luo Kai

Article transferred from the official number: Kyle Story