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less 2y ago 💬 7

For those not on Twitter:

Event horizon... my sequence of events (just a guess):

1. Remove US debt ceiling ✅

2. Massive debt issuance ✅

3. Absorb much of debt issuance via T-bill issuance and absorption from the overnight reverse repo (ORR) market ✅

4. ORR is depleted sometime in 1H 2024

5. Treasury market shows increased instability (via high and rising MOVE index)

6. Treasury slows issuance

7. Fed implements mandatory increased bank reserve requirements to help absorb Treasury issuance

8. US Treasury debt issuance speeds up

9. Severe bond market instability as private sector liquidity has been fully tapped dry

10. Financial institutions start to fail in earnest; contagion risks heightened

11. Risk assets crumble with extreme volatility

12. New Fed liquidity patches initiated/revived, but with little effect

13. Bear market recession; proverbial "blood in the streets"

14. Fed declares massive #QE

15. Bottom in risk assets; #bitcoin soars to new highs by late 2024-early 2025

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Discussion

Toxic Bitcoiner 2y ago

Most people don’t think about point 7. Cool that you included it. I wonder if they could mandate it for state and local pensions too.

Ivan 2y ago

Sounds like the next year going be far from the soft landing narrative. Strap in.

coach 2y ago

The last line confuses me. Are you saying the bitcoin ATH follows the bottom in risk assets or happens at the same time? You calling the decoupling to be this cycle?

less 2y ago

No. I should have added #16. Subsequent new highs for bitcoin after resumption of QE.

coach 2y ago

So we go from depleting the ORR in 1H 2024 to blood in the streets, risk bottom to BTC ATH in 1 year or less? Seems aggressive to me.

My base case is increasingly that we wont actually have a bull market for bitcoin this halving cycle due to the recession. This one is “skipped” and we wont get one until 2029. Thoughts?

coach 2y ago

And I know that reply guy picking apart timelines is the lowest hanging fruit. Thanks for your predictions, it’s really helpful

nobody 2y ago

Thanks. I’ve always thought one day bitcoin would turn into a risk off safe haven asset. Since virtually no one is expecting it now, maybe it happens now, this cycle? (i . e. money flows into bitcoin instead of treasuries)