📉 How Fiat Currencies Crumble in Five Steps

What’s on the Menu 🍴

Markets were down big yesterday…

And a lot of investors are worried.

So today we’re taking a look at the S&P 500 chart, how the halving can impact bitcoin, and a closer look at fiat currencies.

Let’s dig in!

  • How Fiat Currencies Crumble in Five Steps 📉

  • The Halving Effect on Bitcoin ₿

  • The S&P 500 Channel Of Doom ☠️

Today’s newsletter is a 5 minute read.

How Fiat Currencies Crumble in Five Steps 📉

As the US dollar's journey since abandoning the Gold Standard reveals a stark erosion of purchasing power, we're left pondering the fate of a financial system built on trust, debt, and the delicate balance of monetary creation.

Picture this: a world where the very fabric of our economic system begins to unravel, thread by thread, under the relentless printing presses of central banks.

It's a scenario that's played out time and again throughout history, yet each time, we seem caught off guard.

Let’s take a look at the typical life cycle of a fiat currency:

Stage 1: The Honeymoon Phase

Our story begins with a nation basking in the glow of newfound economic strategies. Central banks, armed with the power to create money out of thin air, promise a future brimming with growth and prosperity.

It's a period marked by optimism, where the concept of living within one's means seems quaint, outdated.

Why worry about the future when the present offers such boundless opportunities?

Stage 2: The Party Gets Wild

As restrictions loosen, the money printers go brrr, fueling growth at an unprecedented pace.

But it's a facade, a castle built on sand. The value of money diminishes, and the citizens, blissfully unaware, find themselves working longer hours for the same standard of living.

It's a party, but the hangover is looming.

Stage 3: High Stakes Gambling

Now we enter the casino stage.

Markets, flush with cheap money, become the playgrounds of the bold and the reckless. Real estate and stocks soar, fueled by speculation rather than fundamentals.

It's a thrilling ride, but beneath the surface, the foundations of our economic stability are cracking.

Stage 4: The Descent into Chaos

Corruption and greed become the order of the day.

The rich get richer, exploiting the system for their gain, while the average Joe watches their purchasing power evaporate. Trust in financial institutions and government wanes, as the realization dawns that the system is rigged.

Stage 5: The Endgame

Hyperinflation hits, turning money into worthless paper. It's a financial apocalypse, a world where savings vanish overnight, and the currency that once oiled the gears of commerce becomes an object of derision.

But from the ashes of this monetary collapse, a glimmer of hope emerges. Scarce assets like Bitcoin and gold reassert themselves as the true bastions of value.

Untouched by the folly of human hubris, sound money stand as beacons of stability in a world gone mad.

In the end, our tale serves as a cautionary one, a reminder that the laws of economics cannot be bent indefinitely.

As we pick up the pieces, we're left to ponder: will we learn from our mistakes, or are we doomed to repeat this cycle ad infinitum? Only time will tell.

The Halving Effect on Bitcoin ₿

Bitcoin's gearing up for its big "halving" party this April 20th, and it's not just another date on the crypto calendar.

This event's about slicing Bitcoin rewards for miners in half, but here's the twist: it might not be the doom and gloom for Bitcoin's heartbeat, aka its hashrate, as some might think.

Why the Fuss?

Halvings are Bitcoin's way of keeping things scarce, like digital gold.

But instead of mining with pickaxes, we've got computers crunching numbers. Post-halving, these digital miners earn less, sparking fears of a mining exodus.

Yet, history whispers a tale of quick recovery, hinting this halving might just be a blip on the radar.

Tech Upgrade Time:

Think of the halving as spring cleaning for miners. Out with the old rigs, in with the new.

It's survival of the tech-fittest, pushing miners to embrace the latest gadgets to stay in the green. It's not just about keeping the lights on; it's about riding the wave of innovation.

The Global Mining Shuffle:

The halving's stirring a global game of musical chairs for miners, hunting for cheap electricity far and wide.

This global trek isn't just about savings; it's about weaving Bitcoin's fabric across continents, making it a truly borderless digital treasure.

Price Impact? Maybe, Maybe Not:

Every halving sparks dreams of price fireworks.

But with most of Bitcoin already out in the wild, don't bet the farm on a price surge.

The prior two halving events (2016 and 2020) showed very little price gains in the weeks leading up to and following the halving events.

So, as we countdown to halving day, remember, it's more than just a techie ritual.

It's a testament to Bitcoin's resilience, a nod to human ingenuity, and a new chapter in the grand crypto adventure.

The S&P 500 Channel Of Doom ☠️

From time to time, the S&P 500 gives us technical price patterns that are too strong (and beautiful) to ignore.

The big pattern we have been watching is the bullish trending channel that felt like it’d never end.

Just when there were signs that the trend may be slowing down, the market kept roaring to new highs.

Well, we may finally have technical confirmation that the trend higher in the S&P 500 could be on its way to taking a breather.

This market has needed a healthy correction. Its clearly on historical levels not cheap:

So, investors shouldn’t fret any pullbacks in price here.

We should all be doing the opposite and hope that we see downside follow-through so the bull trend can continue healthily.

It’s hard to want to deploy capital when you don’t feel like you’re getting a deal.

The technical channel in the S&P 500 has officially broken down:

We will call it the “channel of doom” for added drama.

We’re trying to now use support as an area for price to re-test as resistance.

So, all eyes will be on the $5,245 zone if price wants to get back up there.

The inflation report that is coming out today may be a big wild card in either direction for the market.

If inflation is running hot, the market could get a little jittery to the downside and follow through on this “channel of doom” breakdown. That means rate hikes are likely going to be pushed back even more.

However, if inflation doesn’t look too bad, that could lead to the market liking the idea that the Fed is pulling off what feels like the impossible: An economy that isn’t crumbling with higher rates.

So, we will stay tuned to see if the channel breakdown is just a fake out for the bears, or the start of a REAL correction.

Food For Thought 🧠

"Paper money eventually returns to its intrinsic value — zero.”
- Voltaire

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DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.