"This Will Be A Game Over For Bitcoin" | Raoul Pal
, the fastest recession weve ever reached in and One of the deepest recessions, since i guess since 1929, 1930, 1931., Music, hello and welcome to money talks in todays video, real vision, ceo cryptocurrency, bull and former hedge fund manager, raul, pao, updates about the tightening of market conditions due to high inflation and rising interest rates. The chances of the economy going into recession and his thoughts on demand, destruction and supply restriction. Raul pao also discusses cryptocurrency adoption and compares it with internet adoption and the role of bitcoin in these turbulent times make sure to stick around till the end of the video. Where raul powell shares his macro thesis about the concept of the exponential age and its relevance with bitcoin, so without wasting any more time lets dive right into the video crypto story is still a technological adoption curve, its still metcalfes law its a slow year for adoption. But adoptions actually been sideways. People havent left the crypto ecosystem like in 2018, which is why weve had a much more of a sloppy sideways range, and i think that adoption continues and if it continues this way, you know by the end, by the by the time we get to 2030. We end up with five billion people or four billion people using crypto. This charts actually been updated since and we found that the rate of adoption was even faster. Last year we had a 186 rate of adoption. You can see what thats like compared to the internet.
Overall, its about twice the speed of internet adoption and thats truly extraordinary, and it tells us that going forwards, even though the internet as it becomes a more adopted network, the rate of growth comes down, but the numbers become huge, thats whats important to the valuation of The market cap of crypto bitcoin recently reached 28 528 falling from the 30 000 price level, its lowest since may 28th. Bitcoin had fallen in step with stock markets on june 10, which also finished the week, noticeably down the s, p, 500 and nasdaq composite lost 2.9 and 3.5 respectively. This was on the back of surprisingly high inflation data from the united states, which took a turn for the worst in stark contrast to expectations. At 8.6, annual inflation came in at the highest since december 1981.. Reacting market commentators were thus firmly on the bearish side when it came to future bitcoin price. So again, if we look at the these updated numbers, even if we assume some slowdown, whether it slows down by the same percentage change that the internet did after year, six starting at five million users took year six after that it started slowing down to 43 percent. If we adjusted by the same amount, we get a 76 percent growth in crypto, we still get to 2.8 billion users in the next four years. If we slow it down to match that of the internet, we get 1.2 billion users um and the internet.
At that stage, was at 500 million, so you can see the dramatic increase, and this is what increases the value of crypto. This is metcalfes law. This is network, adoption and whats. What were also finding is technology. Each one at a time comes at a faster speed. So bitcoins adoption was extremely rapid. Ethereum has been much more rapid and i think some of the other layer ones like solana have been even more rapid than bitcoin and i expect that to continue because the base layer was there. Bitcoin was adopted so fast because the internet existed, ethereum um was adopted so fast, because bitcoin had um existed and had been adopted and the same with the other layer ones same with nfts, which were even faster in adoption. Looking ahead, forthcoming decisions on rate hikes in response to inflation were primed to be major focus of the coming week. The federal reserves federal open markets committee minutes due for the meeting on june 14th 15th, will provide clues on how aggressive policymakers plan to be when it comes to stemming price rises. Additionally, at some point, the market will realize that inflation is not going away soon and that rates will still be relatively low yeah. So the market is currently obsessed by inflation, its obsessed by the central banks, its obsessed by interest rates going super high. We saw bill at coming out today. Yesterday, saying you know: interest rates need to go up to the moon.
I step back from the narrative and start looking at okay. What is the reality of that, and i think the reality is and ill show it in the presentation that what weve actually done is utterly destroyed. Demand already weve had the largest rate of change of interest rates in history, the largest rate of change of commodities in history, um weve had the largest rate of change of mortgage rates, all sorts of stuff, a very perky dollar as well a strong dollar that makes A big difference to this those things tend to be financial conditions. Tightening we can see it in the equity market. We can see it in the housing market. You can sit in the crypto market. Is conditions have tightened dramatically, the markets still looking at the previous cpi, prints and cpi is a lagging indicator. The forward looking stuff of the business cycle is collapsing and thats interesting to me, because that fits me with my secular framework, which is disinflationary slower growth over time um with this aging population, demographics, all of this stuff, all coming together so thats. Why im really paying attention right now? I think the markets probably wrong, and i think that its going to set up for a whole bunch of opportunities as the fed pivot fast and the economy goes into recession. Much quicker than anybody expects the bitcoin fear and greed index returned to extreme fear territory, reversing a slight uptick over the past few days, bearish sentiment has been a persistent theme over the past few months, which has kept some crypto buyers on the sidelines for now technical Indicators show short term deterioration in bitcoins price action similar to equities for bitcoin.
Risk now appears heightened of a re test of long term support around 27 200., noting intermediate and long term momentum gauges point to more downside, so my thesis is demand. Destruction is whats going on now. Most people have a tendency: economists, people in the commodity markets. Most people tend to look at supply, so we know theres a lot of supply restrictions um in commodities right now, but people dont realize that the other part of the equation is demand. So most people assume demand is stable and supply is the variable, and i find that demand tends to be the bigger part of the equation. So, even if the supply situation is very tight, if demand has been destroyed, then the picture can change super fast and weve. Seen it many times in the past whether it was the 1970s and and how people look at money, people look at money supply. We hear that all the time people dont look at money, demand and money demand is the real thing here. Money demand. We can often see, through things like velocity of money, that shows the demand for money as opposed to the supply of money, and if theres no demand for money, it tends to be a deflationary or disinflationary environment. If there is demand for money, then it tends to become inflationary and we havent seen that bitcoin declined from 33 000 resistance level last week, which indicates a loss of upside momentum. That lowers the chances of a prolonged relief rally.
It is roughly flat over the past week and has been confirmed to a choppy trading range. Initial support is seen at 25 000, which is near the may 12 price. Low momentum on the daily chart has weakened over the past few weeks. Suggesting bitcoins downtrend from november of last year could continue over the short term, but now lets talk about demand and where we are in the business cycle. The business cycle is looking like. It is about to roll over really really hard, and i talked about the massive monetary tightening weve had. This is the biggest monetary tightening in all recorded history in the shortest period of time, weve got rising, commodity costs, rising interest rates and a strong dollar. Those three things together are extraordinary, so here is the a combination of those three against the ism and its already pricing in a recession. Ism below 47 is a recession, its saying the nine month forward. Ism is going to be 37 and its still going, so it kind of feels that were going to go into a very sharp urgent recession and thats. What the mark! The markets are picking up thats what cryptos picking up thats what equities have been picking up equities are currently pricing the ism on a year on year basis at around 49., so theyve got further to go to price in some of this, but the com comparisons get Easier because the market went up a lot this time last year, going forwards so im looking closer towards the low and ill come into that in a bit.
Major altcoins also fell sharply in tandem with bitcoin as the consumer price index. The most widely tracked benchmark for inflation rose 8.6 on a year over year basis in may to a new 40 year high, topping expectations that it would decline either dipped by 6.3 percent over the past 24 hours, while solana and cardano fell 5.5 and 8.3 respectively. And if i look at it another way, people tell me that the financial conditions arent tight enough, yet financial conditions here on this chart are inverted, but financial conditions lag. They lag things like this year on year, rate of change and the financial conditions here on this chart are telling us that were going to see a massive move. Now this chart is cut off at a 300 percent increase in in rates because of scaling effects. It will tell us wed, have the most tight financial conditions in all history and we can use a number of these charts against it and theyll all tell us the same thing is we have massively over tightened and thats without the fed doing much? That was just the markets, doing it of their own accord as the inflation narrative took hold, so the markets have done their job, theyve, killed inflation, but theyve. Given us a big recession in exchange. So do you think a recession is looming and can bitcoin be a safe haven during these difficult times? Tell us what you think in the comments also dont forget to like and subscribe.