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

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

“I feel like we’re relatively safe during the midterm,” CryptoKaleo on Twitter – aka “Kaleo” – Wrote In a tweet dated September 12 to his 535,000 followers, referring to the November US midterm elections. The prediction was accompanied by a chart indicating that he believes the price of Bitcoin (BTC) will rise to $34,000 – a 50% gain from around $20,000 as of last week – before the end of the year.

“Of course we can bleed more,” fellow huge Twitter influencer, Bentoshi Wrote In a letter dated September 9 to his 611,000 followers. “But a market at this value is much more attractive than it has been in over a year. […] I collected a few BTC dollars yesterday / no adjustments but I will nibble. “

These evaluations come from “respectable” observers – those who have been periodically right in the past. A gentleman in my inbox today – Charlie Shrem looking to sell his “investment calendar” – assured readers that the “big crypto rally” could start tomorrow.” Look no further, and it’s not hard to find more bullish speculation, Such as prediction That Bitcoin is on the cusp of a 400% rally that would bring it to an all-time high of $80,000 and a market capitalization of $1.5 trillion – $500 billion more than the value of all the silver on Earth.

It’s nice to see optimism rampant, even if it’s mostly among influencers looking for engagement and customers paying the price. Unfortunately, macroeconomic headwinds suggest that the reality is a little darker — and perhaps even bleaker.

FedEx last week underscored the potential for economic conditions to worsen with announcing that it slipped $500 million from its first-quarter revenue target. “These numbers – they don’t bode well,” CEO Raj Subramaniam said in an interview with CNBC. His comments, which included a prediction that the numbers represented the beginning of a global recession, sent his company’s stock prices crashing 21% at the end of the week, sending the broader market farther.

Related: What will drive the potential bullish trend of cryptocurrencies in 2024?

In response to the economic downturn, FedEx said it plans to take measures including closing 90 locations by the end of the year. The good news: Americans are so heavily indebted that it’s unlikely they were planning to visit any of these sites anyway. Consumer debt reached $16.15 trillion during the second quarter of 2022 – a new record – the Federal Reserve Bank of New York indicated in an August report. The figure comes to just over $48,000 per man, woman, and child in the United States — 330 million in total.

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

With a national average income of $31,000, that equates to an average debt-to-income ratio of 154%. If you want to factor in just over $30 trillion in debt that the federal government owns, you can add another $93,000 per person — for a total of $141,000 and a debt-to-income ratio of 454%. (The numbers obviously get even worse if we take into account the fact that only 133 million Americans had full-time jobs as of August.)

While policy makers may lack a sense of government 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 an interview with CBS Sunday, prompting observers to wonder if he was trying to preempt the Federal Reserve’s announcement this week of a massive possibility, a 100-point Fed rate hike. Basis. Such a move is likely to send the markets into a downturn from which they will not recover for some time.

Ironically, even this move 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 was just above 8% in August year-on-year – showed few signs of abating. Americans may not have much money left, but – on the whole – this reality has not dampened demand. If the New York Fed report is any indication, monetary support for this demand is coming from credit. The bank noted that credit card debt in the second quarter saw the largest year-over-year percentage increase in more than 20 years.

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

Herein lies the problem. No matter how quickly the Feds move to discourage debt, it is not clear when asset prices will rise. Higher debt levels – which are already there – mean less money to buy things. The increased cost of debt servicing, as the Federal Reserve is trying to do, means less money to buy things. Forcing Americans into economic ruin in order to cut costs means less money to buy things. Failure to control inflation and allow the cost of basic goods and services to continue to rise – exacerbated of course by the energy crisis in Europe over which financial managers have no control – means less money to buy anything else.

This may be the same view that Elon Musk came up with when he said in June that he had a “very bad feeling” about the economy. Other observers have released darker excerpts, including the famous hate of debt Rich Dad Poor Dad Author Robert Kiyosaki. “Biggest bust bubble is coming,” Kiyosaki wrote on Twitter in April. “Baby Boomer’s retirement heist. $10 trillion in fake money ends. Government, Wall Street and the Federal Reserve are thieves. Hyperinflation and depression are here. Buy gold, silver and bitcoin before the wolf wakes up.”

Admittedly, Kiyosaki’s assessment partially contradicts the results pessimists might expect. The economic catastrophe should drive down asset prices across the board — including the prices of gold, silver and bitcoin. The most optimistic forecaster might hope that Americans learn from their mistakes, take the next year to pay off their debts, and resume big spending in 2024 – all while avoiding excessive stagflation.

In either scenario, one thing seems relatively certain: no crypto or any other asset class is on the cusp of a record boom. If you want to thrive by investing in the coming year, you better start learning how to buy put options from the less savvy optimists in the market.

Rudy Takala He is the opinion editor at Cointelegraph. Previously he worked as an editor or reporter for newsrooms that include Fox News, The Hill, and the Washington Examiner. He holds a master’s degree in political communication from the American University in Washington, DC.

This article is for general information purposes and is not intended and should not be considered legal or investment advice. The opinions, ideas and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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