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Another Rate Cut Of .25% Causes Drops Across Finance and Cryptocurrency
#Crypto #Cryptocurrency #podcast #BasicCryptonomics
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Episode Transcript
[00:00:00] Out of cycle Update A rate cut. A bloodbath. CryptoTalk FM. My name is Leister. I'm your host, Jerome Powell. The Federal Reserve announces a 0.25 bp cut. So quarter of a percent cut. The whole industry, everything from Dow to on down to crypto, have taken craps on the news. People are wondering, why did that happen? There's a couple of reasons. I'm not going to go into the technicals in this. It's an out of cycle. The suffice is the drop that you're seeing is because the feds did this and people did not want further cuts to happen.
[00:00:42] Powell said he essentially was trying to strike a balance between getting everything back on track and not killing the business. And they felt that this is the right move. I don't think people have a problem with the rate cut. I think people have a problem with the timing of the rate cut because as I've said, and tinfoil. Okay, time to get my credit. Because I said it seems like every time there's these runs we have some event that kills the business. It happens all the time. It's the timing that's got people kind of up in arms, not necessarily the event. I honestly believe in the long run a rate cut is good. I said that back when we were first talking about it. I said that rate cuts I think would be a good thing, long as they're done correctly. Remember there was a point where we had rates down in like the 2 and even 1%. There are people now sitting on houses that refuse to sell because they know they're going to lose those amazing rates that they locked in for 30 years. So they don't want to sell their house. That's creating a supply constraint. Obviously there shouldn't be a supply constraint, but there is. And then people can't afford the new rates. They're not egregious, but they're significantly higher than what they used to be.
[00:01:48] And the thought is if you drop the rates, it's going to encourage more spending. If you increase the rates, it should help rein in inflation. But that's a, that's counterintuitive because that makes a lot of assumptions that could not be sustained. So with Bitcoin, then Bitcoin crapped all the way back down to a hundred thousand. As I record this and I don't, and it's trending strongly down. Some people said a support level of 88,000. In my last in the weekly update, I speculated that we were possibly going to head back down. That was because not of Jerome Powell, but just in general. I thought that it was running too hot. You know, we were due for some sort of correction level setting, get back on track. And what it is, I, I don't know at this point if, if it's a long term deal. I knew again that it was going to go down, but I, I wasn't sure it was going to stay down. I figured it'd be, you know, we'll get back on track and everything be cool. But this is good for, I think it's good for an awareness for you to understand how we have linked the larger economy and the financial, the normal, the stock, the so called traditional finance side into cryptocurrency in a very dangerous way and why I keep emphasizing that it's all gambling, rolling the dice for these situations.
[00:03:10] Bitcoin just within a day was close to 107,000. It was running hot, running up. This whole thing happens with the Federal Reserve announcement and all of a sudden it craps back down to 100,000 with a downward trend.
[00:03:24] The belief is they're thinking that the inflation numbers are higher than what they wanted. They're thinking that they, they said that they felt like they had to do it. And what really put the cherry on it was the expectation that there's going to be even more cuts, but not to the degree that was expected. So if we think that the cuts going back down to like the twos that's mythical, it's not going to happen. They're thinking probably about four, maybe four and a half, which isn't bad. But it's not where we wanted it to be.
[00:03:58] Part of bitcoin now.
[00:04:02] And the reason that I think if you can buy dips, I would recommend it. Part of the thing with Bitcoin is if you think about the fact that this is, it's at the whims of the stock and the whims of the larger financial, which means it's going to go up and down.
[00:04:18] If you look at it, there's, we still have not seen the biggest impact of the having. But more importantly you have an opportunity to stack more of it on the cheap and watch it go even higher because it's going to go higher simply by virtue of constraint demand. All of these are going to play in and it kind of washes out these events. The events are going to continue to happen. If you buy into the ETF side you're going to see some price up and down and you're insulated largely from tax liability.
[00:04:52] What I'm saying is, is that this type of a thing, the best thing you can do is invest.
[00:04:59] They take these as discounts, take these dips, not garbage coins. You know, I'm talking this kind of stuff where it's a reliable something. Take these dips as an opportunity to, to invest and get stronger asset levels, you know, because it's going to only benefit you in the long run. That's my stance on it. I maintain this and I won't change the way I feel about this. I think it's a great thing. I know it sucks because you're, you're like, geez, man, why can't we just get a break? We are. That's the thing. It's a discount opportunity for somebody to get in at a really good price since it's been running hot for so damn long. So that's what's happened. That's what's going on. I'll check back in for further news as I get it.
