Fiat Debasement: Bitcoin hits all Time Highs against the Turkish Lira

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Christopher Attard

Aug 6 . 7 min read

Hi Everyone,

Even though bitcoin teaches you to expect the unexpected, it’s always surprising how many events can happen within the span of a few days.

In this edition, we’ll take a look at Swiss banking crypto developments, bitcoin hitting new all-time highs against the Turkish lira, as well as the all-but-confirmed 4% US Fed inflation rate, which is set to be announced sometime in the coming months.

The USD index is also telling an interesting macro story which could have major repercussions for every asset and company in existence — bankrupt or otherwise. Last but not least, we’ll dive into the short-term bitcoin technical data.

According to Finnews, the first Swiss Bank is working on eventually offering crypto banking operations. Typically, Swiss Banks are associated with taking care of offshore needs for the ultra-rich, but apparently fresh interest from young clientele is driving the bank towards innovation.

State-run Swiss cantonal bank Basler Kantonalbank (BKB), has officially become the first bank in the country to begin developing crypto operations. BKB’s subsidiary, Bank Cler is also working on offering trading and storage services for the crypto assets. Cler is owned by BKB but holds a separate banking license.

Although BKB didn’t specify which cryptos will be on offer, a spokesman confirmed it was going ahead with plans due to increased demand for such services — with bitcoin presumably being the number one asset of interest. While there is no timeline for Swiss customers to access the services yet, it will be the first cantonal bank to offer such services in Switzerland, where currently only crypto banks Seba and Sygnum operate.

On Sunday trading, bitcoin hit an all-time high against the Turkish lira (TRY), most notably due to the rise in bitcoin’s price against fiat across the board, but also due to the decline of the Turkish lira against the Euro.

While bitcoin bulls are measuring the asset’s performance against USD (and with good reason), it is the case that other national currencies have been in steady decline against the number one cryptocurrency.

In fact, one bitcoin could only be bought for over 83,670 lira — a record high. Meanwhile, one USD trades for 6.98 lira.

Interestingly enough, at the end of 2017, when the cryptocurrency hit its all-time high against the greenback, bitcoin exchanged hands at 76,000 lira. Back then, USD/TRY traded at around 3.75.

Meanwhile, the US Federal Reserve is expected to commit to target a higher inflation figure via a pledge to avoid raising rates until it hits at least 2%.

The policy initiatives could be announced as soon as September as markets are anticipating a more accommodating approach from the Fed in comparison to the Great Recession (2008 crash).

For years, the Fed and other global central banks have been trying to ramp up inflation while assuming that price appreciation is healthy for a growing economy, in spite of the fact normal economic cycles preclude this from happening indefinitely. Of course, they also worry that inflation feeds on itself, keeping interest rates low while giving policymakers little wiggle-room to enact any change as the monetary policy tool box becomes smaller and smaller over time.

Simply put, the Fed is telling markets that it is fully dedicated to printing more money, and they will announce this within the coming months (not that it wasn’t known already)

We believe that the Fed publicly would welcome inflation in a range of 2% up to 4% as a long-overdue offset to inflation running below 2% for so long in the past,” said Ed Yardeni, head of Yardeni Research.

Yardeni went on to say that the approach would be “wildly bullish” for alternative asset classes and in particular growth stocks and precious metals like gold and silver.

As is common practice with dinosaur institutions, the elephant in the room that is bitcoin was not addressed. All in due time.

As all this happens, it appears that the USD is currently stressed testing a major channel present since the 2008 great recession. Should the USD index continue to slide outside the channel, then the technicals would confirm the fundamental reality of US Dollar debasement.

This could mean that the market is both anticipating and pricing in a major devaluation in the dollar, partly due to the Federal Reserve’s all-out stance on supporting the entire economy to the nth degree. Briefly, this would translate into inflation in most assets and daily goods and services.

4-hour turns neutral to bullish

Bitcoin’s higher time-frame projection hasn’t changed since the last newsletter, which you can find here. Instead, we’ll focus on lower time-frames.

Since the 2nd August liquidation event, bitcoin has been trading sideways above $11,900, after having swiftly recovered from a dip at $10,500. On the 4-hour chart, bitcoin is consolidating within a rising channel (discounting the liquidation event). This suggests that market participants are content to buy and sell bitcoin at these levels for the time being, with neither FUD nor FOMO seeping into the collective market psychology.

In order for bitcoin to test the $12,000 region again, bitcoin would need to reclaim $11,400 and confirm it as support before another attempt. Presently, bitcoin is trading above the 20, 50 and 200 EMA on this time-frame, suggesting that momentum is still firmly in bullish territory despite the flash crash.

Both the RSI and MFI have also corrected and are meandering in marginally bullish territory, giving the go-ahead for upside continuation to take hold again.

Having said that, while the probability for continuation is higher, bitcoin could still re-test the $10,500 level before testing $12,000. As per the previous newsletter, a crash is often followed by a second attempt. But given the fact that the liquidation event happened during weekend trading (with less volume), it’s not unreasonable to discount the price-action as non-representative of the broader market (and simply a mass liquidation event of over-leveraged traders).

Additionally, the MACD (moving average convergence divergence) shows bitcoin’s prospects for continuation on the 4-hour time-frame as quite likely, at least until a re-test of higher levels.

However, bitcoin’s super-trend on this time-frame has flipped bearish, indicating that a re-test might get rejected at around $11,800. Such a scenario would be commensurate with the idea that bitcoin might enter into a range for the coming days (and perhaps weeks) before moving towards higher targets.

As a side note, it’s worth paying attention to commodities such as gold and silver, which might indicate price-action for bitcoin on a longer time-frame. Indeed, gold has already surpassed all-time highs and yet bitcoin is only halfway there. At the same time, the USD index appears to be on the verge of crashing outside of a technically significant zone, suggesting a tail-end possibility for bitcoin to simply go parabolic as a number of events reach their crescendo moment.

This will probably play out at some point, but on a much larger time-frame.

In any case, bitcoin is looking incredibly bullish in the long-term, and neutral to bullish in the short term. Needless to say, it really would be irresponsible to not have anything in this market before things take off into a new paradigm.

May your gains be high and your losses low.

Catch you next time.

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