[IMPORTANT] "Crypto Tsunami Is Coming!" | Cathie Wood Latest Crypto Update On Bitcoin & Ethereum
We also have some uh information in there about uh ether, but in that report youll find one of the very positive signs. That weve surfaced is that the 200 week moving average of bitcoin remember bitcoin, peaked close to 70 000 last november, and it got down to somewhere in the 17 000 a dollar range very recently, and that broke the 200 week moving average uh. So that was a very negative sign, so the the technicians out there were saying well if it cannot reclaim and get back up there pretty quickly, then um then were probably going to 10 to 13 000.. It has reclaimed the 200 week moving average, which is a little bit above i think, 21 or 22 000 uh, so thats thats, reassuring weve seen some stabilization there and the decline this time around. Believe it or not. It was pretty intense but was not as steep as it has been in the past, normally its more than 80 percent decline, so this was close, but we didnt quite get there and then the other reassuring piece of news recently that came out uh was an agreement. Yesterday, uh between announced between blackrock and uh coinbase to partner, so that blackrock could, through its aladdin technology solutions, ecosystem uh, on which 40 trillion dollars worth of assets sit um. They wanted a seamless on ramp into crypto that coinbase is going to to provide uh. So this is another legitimization of bitcoin and crypto generally as a new asset class.
Some of this may have been caused by demand, pull institutions saying hey. We want to get involved and theyre trying, but but the plumbing was just too difficult, so so thats good. We did a study on um on institutions moving into crypto uh. You can see it in our big ideas. 2022.. You can see the picture and uh if were right, that 40 trillion just from blackrocks um uh platform hosting other institutions uh. That would translate if you just uh took our study, which uh, which basically said if you want to access crypto, but you want to minimize uh youre more focused on minimizing volatility than increasing your sharp ratio. Uh, then, you would put two and a half percent into crypto and if youre more interested in the sharp ratio so returns per uh measure of risk uh, then you are about that about volatility. Youd put six and a half percent. So, assuming that two and a half percent on this 40 trillion dollar platform thats one trillion dollars of demand now its not that and and that would more than double the bitcoin price right there. If we just assumed it was all done in bitcoin, which this agreement is only focused on on bitcoin now, what that misses, however, is um. What we call illiquid supply. There are hodlers out there holders for dear life or forgotten what thats all about hold on. For. Dear life, um, and so the illiquid supply, according to our estimates, is about 14 million out of the roughly, i think, were into near 19 million 18 to 19 million um bitcoin outstanding, so illiquid 14 million uh and by our calculations only three million units are truly Liquid the demand, if we were to see a a one trillion dollar increase in in demand, it would probably drive the price up much higher than the doubling that i just mentioned.
You can see that work also on our website site arc. Dash invest.com wrote a report. Uh really focused on what uh institutional demand might do for the bitcoin price uh. So, im really glad we have it you, you can take a look at it and and see our logic there on to market market indicators right now, well, uh july was a great month for innovation. Generally um, i would say, since mid may, has been a very good month, but in july, specifically the two best performing sectors: consumer discretionary up, 15 technology up about 13 and a half percent um. Those uh, though many of the stocks that caused that are associated with true innovation, disruptive innovation. On the lower end of the return scale, you had uh com services up, one percent, so thats uh facebook and a lot of the social media platforms which are being pummeled by cuts in advertising and thats. Another confirmation that were in a recession. Advertising is highly discretionary, and companies can pull the plug on it quickly and they have communication services and then healthcare is the other one that had only a 1.5 percent. I think the fears associated with the um the fiscal plan that just passed uh were part of the reason for that um in the fixed income markets. Of course, uh the fed increased and everyone anticipated that the fed would increase uh interest rates by 75 basis points on july 27th. That happened, but, interestingly um, the the long term interest rates uh did not cooperate or have not been cooperating with this idea that they should be going up in lockstep with the fit with what the fed is doing.
Instead, what were seeing is long term interest rates peaked on june 14th at three and a half percent, so this is the 10 year treasury bond yield june 14th at three and a half, and even after a bit of a backup today, in response to the employment Report um, the the interest rates are down almost 70 basis points to 2.83 percent uh. Meanwhile, short term interest rates two year treasury yields they have moved up in lockstep theyre at 3.24. So now we have an inverted yield curve to the tune of 41 basis points. Uh, its just getting more and more inverted and thats. Basically, the fixed income markets telling the fed uh okay, um somethings, going to give here uh is going to be the economy which is caving in in many ways or um inflation or both and uh. We think the answer is both, and we also think and ill get into this in a moment, um that the surprises are going to be quite significant on the downside when it comes to inflation on the high yield, high yield, spreads and credit default swaps. Both of those have been settling down as well, so those were moving up fairly rapidly, as i had featured in prior months, but theyre settling down the credit default, swap average peaked on june 30th at 104 and is now down to 81. um and uh lets see The high yield spreads uh and what that means is uh.
The the the spread over treasury yields um that these uh high yield bonds are. They were six percent higher than the uh than the 10 year treasury yield on july 5th and now theyre 4.9. So thats saying with the rally in july uh and the rally happened. I believe, because there are more people believing were in a recession and that inflation will come down uh so so that rally has taken some of the worry out of these other markets. Now, in terms of uh commodities, the commodity market um lots of evidence there just take copper. Now that thats, a metric thats, really a gauge of um how strong the economy is um, yeah, and so that was fluctuating in the fort of five dollars per pound range. Uh for about a year um and uh, the the copper price peaked. Finally, at uh, roughly five dollars in in march and uh theyre, now dead, down, uh to 354., so thats down um, 25, um and and if youre looking at month to month and year over year, theyre both down about 25 that is going to get in the Into the inflation indicators, other um metrics, i ive mentioned gold before ill. Just keep mentioning it. It was in a two year trading range. It peaked in august of 2020. Most people dont know that this is a very good inflation indicator and um its uh peaked at 20, roughly 2100, its down to 1790 towards the lower end of that two year.
Trading range, so copper broke hard below the trading range. Gold has not done that yet, but it is at the lower end of the trading range uh. Lumber has dropped to, and i wont give you the exact metrics here, but from one thousand seven hundred and eleven dollars to four hundred and seventy four dollars. So uh a huge decline there confirming whats going on in housing and other indicators. We did get the construction report this last week and it was down 1.1 percent uh in june thats, a very rapid decline for that sector. Iron ore peaked at fi in may of 21 at 219, its at a hundred dollars, dram prices actually peaked a very long time ago. I didnt know this uh december 17, 2017 at 9.6 and now theyre down to 2.97. The lithium index, interestingly, was as low as 115. I believe this is an index 115 in may of uh 21. It shot up to 1061 by uh may 6 of 22 and it has flattened out.