The market isn't going up anytime soon - so get used to the dark times

The market isn’t going up anytime soon – so get used to the dark times – Mail Bonus


Global markets are going through a difficult period – including the cryptocurrency market. But judging by chatter from the nut gallery, it seems some observers didn’t get the memo.

“Feels like we’re relatively safe in the midterms,” ​​Twitter’s “CryptoKaleo” — also known simply as “Kaleo” — wrote in a Sept. 12 tweet to his 535,000 followers, referring to the U.S. midterm elections in November. Spain was accompanied by a chart that indicated his belief that the price of Bitcoin (BTC) would rise to $34,000 – a 50% gain from around $20,000 last week – before the end of the year.

“Sure we can bleed lower,” dude Twitter influencer pentoshi wrote in a Sept. 9 message to his 611,000 followers. “But the market at this value is much more attractive than it has been for more than a year.” […] I grabbed some $BTC yesterday / no alts but will nibble.”

This assessment comes from a “respectable” audience – those who have regularly been right in the past. One gentleman in my inbox today – Charlie Shrem who wants to sell his “Investment Calendar” – assured readers that a “major crypto ‘rash'” could begin tomorrow. Look further and it is not difficult to find even more bullish forecasts, such as prediction that Bitcoin is on the verge of a 400% increase that will bring it to an all-time high of $80,000 and a market cap of $1.5 trillion – 500 billion more than the value of all silver on Earth.

It’s good to see the optimism reigning, even if it’s mostly among influencers looking to engage and paying customers. Unfortunately, macroeconomic headwinds suggest the reality is a little darker—perhaps much darker.

FedEx last week underscored the possibility that economic conditions could worsen with its announcement that it had fallen $500 million short of its first-quarter revenue target. “These numbers — they don’t translate well,” CEO Raj Subramaniam told CNBC. His comments, which included a prediction that the numbers signaled the start of a global recession, led to a 21% end-of-week crash in his company’s share price, which took the broader market with it.

Connected: What will fuel the likely crypto bull run in 2024?

In response to the economic downturn, FedEx said it plans to take action, including closing 90 locations by the end of the year. The good news: Americans are so in debt that it’s unlikely they’ve planned to visit any of these places anyway. Consumer debt hit $16.15 trillion in the second quarter of 2022 – a new record – the Federal Reserve Bank of New York said in an August report. The number comes to just over $48,000 for every man, woman and child in the United States – 330 million in all.

Total consumer debt held by Americans. Source: FRBNY Consumer Credit Panel/Equifax

With a national median income of $31,000, that equates to an average debt-to-income ratio of 154%. If you want to factor in the slightly more than $30 trillion in debt the federal government has, you can add $93,000 per person — for a total of $141,000 and a debt-to-income ratio of 454%. (The numbers obviously get worse when you consider that only 133 million Americans were in full-time employment in August.)


While politicians may be leery of the national debt, they are more concerned about consumer debt. “I’m telling the American people we’re going to get inflation under control,” President Joe Biden said in a CBS interview on Sunday, prompting observers to wonder if he was trying to preempt the Fed’s announcement this week about a potentially massive 100 basis point hike in the federal funds rate. Such a move would likely send the markets into a tailspin that they would not recover from for some time.

Ironically, even that measure may not be enough to tame inflation in the near term. Given the rapid rise in debt, it is perhaps not surprising that inflation – which rose by just over 8% in August year-on-year – has shown little sign of abating. Americans may not have much money left, but — by and large — that reality hasn’t dampened demand. If the New York Fed report was any indication, the cash that supports demand comes from credit. The bank noted that credit card debt in the second quarter saw the largest year-on-year percentage increase in more than 20 years.

Connected: What will the cryptocurrency market look like in 2027? Here are 5 predictions

Therein lies the rub. No matter how quickly the central banks move to reduce the incentive for debt, it is not clear when asset prices will rise. A high level of debt – which is already there – means less money to buy things. Increasing the cost of debt, as the Central Bank is trying to do, means less money to buy things. Forcing Americans into economic ruin to bring down costs means less money to buy things. Failing to control inflation and allowing the cost of basic goods and services to continue to rise – exacerbated, of course, by a European energy crisis over which financial managers have little control – means less money to buy something else.

Perhaps that outlook is the same one Elon Musk found when he said in June that he had a “super bad feeling” about the economy. Other observers have issued an even darker take, including the famous debt freaks Rich dad, poor dad author Robert Kiyosaki. “Biggest Bubble Bust Coming,” Kiyosaki tweeted in April. “Baby Boomer Retirement Will Be Stolen.” $10 trillion in fake money spending ends. The government, Wall Street and the Fed are thieves. Hyperinflation Depression here. Buy Gold, Silver, Bitcoin before the coyote wakes up.

Admittedly, Kiyosaki’s assessment is partly at odds with the results pessimists might expect. Economic woes should lead to falling asset prices across the board – including the prices of gold, silver and Bitcoin. A more optimistic forecaster might hope that Americans learn from their mistakes, take the next year to pay off their debt and resume big spending in 2024 — while avoiding a hyperinflationary depression.

In either scenario, one thing seems relatively certain: Neither crypto nor any other asset class is on the verge of a record rally. If you want to prosper with investments in the coming year, you should start learning how to buy short options from less market savvy optimists.

Rudy Takala is an opinion editor at Cointelegraph. He previously worked as an editor or reporter at news organizations including Fox News, The Hill and the Washington Examiner. He has a master’s degree in political communication from American University in Washington, DC.

This article is for general informational purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.


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