Why Bitcoin and the US Stock Market are Growing
Director of Global Macroeconomic Affairs at Fidelity Investments, Yurien Timmer, in an interview with Yahoo Finance, expressed his opinion about what is pushing bitcoin to the 100K level, as well as about the future of cryptocurrencies and the prospects for the development of the stock market.
The number of bitcoin owners’ accounts where bitcoins have been held for less than three months has decreased to 15% of the entire bitcoin market. And this is below what was at most of the lows of this market, not to mention the price, which is approaching the historical maximum of $ 65,000.
Thus, this rise occurred without the help of speculators, which is a very good sign, because it means that there is something else that is causing bitcoin to grow, and that something is the fundamental demand for bitcoin and its network. $100,000 is really just a conservative estimate based on the intersection of the supply model and the demand model.
If you look at the network effect, and if these are not speculative traders, but we see who is increasingly engaged in cryptocurrency, is there a way to find out, for example, whether this demand comes from large financial institutions?
About the stock market
The US market is at a transitional point. And it cannot be said that it looks like a bear market, it is unlikely that this is the case. But the market, of course, is in that seasonal time interval when people are usually worried. And the markets are in some fluctuation. The market has fallen — not at the moment, but it has fallen by about 5% from the highs, which, of course, by and large does not matter for the stock market as a whole.
But now is the reporting season — profit growth is starting to peak, albeit at an extremely high level, plus 50%. And this is happening at a time when the score multipliers are starting to shrink. And this is also happening at a time when the Fed is apparently starting to remove liquidity from the market.
Thus, the general opinion is that in November they will begin to reduce asset repurchases by $15 billion per month, and the full purchase of assets will be completed by the middle of next year. And then, presumably, at the end of next year, they will start raising rates.
In general, we have a reduction in liquidity, a peak in profit growth and we have estimated multipliers from expansion to contraction. And this by no means means a bear market, but it means that a lot of things are happening in which a new chapter is coming, which is a kind of mid-cycle chapter, and it originates from the beginning of the cycle chapter.
And the difference is that at the early stage of the cycle, after the big bear market, which, of course, happened a year and a half ago, we have a massive V-shaped recovery, which is completely driven by the valuation, because the price was at the bottom before the profit. Then there were revenues, and, of course, the first and second quarters were quarters of significant profit growth, and rather, the third quarter will be the same, but somewhat more modest.
We are simply switching to another mode in which the market is still growing, but it is also going up in accordance with the historical long-term trend, which is about 10% per year, but not in accordance with our figures that we have seen over the past year, something in the region of 100% per annum.
Obviously not that cool. And we observed the same thing in 2010 after the lows of the IFC, when QE1 was supposedly ending, and we had some market fluctuations, and then the markets sort of leveled off or went up in accordance with historical trends. We saw the same thing in 2004. So the current fluctuations are most likely part of this transition.