Japan Rate Hike Fears Over?📈Crypto Market Update

The Bank of Japan raised its short-term policy rate by 25 basis points to 0.75%, the highest in nearly 30 years. Despite the rate hike, the Japanese yen fell against the U.S. dollar, while bitcoin saw a slight increase in value.

~This episode is sponsored by Mevolaxy & BTCC~
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00:00 Intro
00:10 Sponsor: BTCC
00:50 As expected
02:00 End of the road for the Yen?
02:30 More rate hikes coming through mid 2027
03:30 Recession levels
05:00 Consumer Sentiment record low
06:00 FOX trying to twist the numbers
07:30 Fear and greed
08:30 Bitcoin ETFs vs Wall Street
09:45 Contrarian view point
11:00 Institutional inflection point
12:00 Maybe Santa rally still in play?
14:10 Sponsor: Mevaloxy
16:20 Bitcoin vs S&P 500 chart
17:20 Tariffs in trouble
17:50 Fed chair announcement soon
18:30 Trump announces patriot games
19:15 Outro

#Crypto #Bitcoin #ethereum
~Japan Rate Hike Fears Over?📈Crypto Market Update~
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Episode Transcript

Speaker 1 (00:00):
Japan has their rate hike. In is the bottom near.
We'll break it all down for you. Let's just jump
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Speaker 2 (00:50):
Of course.

Speaker 1 (00:51):
One of the things that we've been all wondering is
how the Japanese rate hike would affect the markets. The
tenure yield rose to percent for the first time nearly
twenty years, is something that we've been seeing. The decision
was fully expected and passed unanimously. U Ada, of course
struck a cautious tone around real rates that are still negative.

(01:12):
Conditions still remain a little bit loose here. And also
if you look at the markets, they took it pretty well.
When you look at the dollar versus the yen, which
edged higher, nickay was steady, and risk assets were somewhat supported,
meaning crypto and of course no signs of carry trade
stress or the hawkish surprise, which is the big issue.

(01:32):
The carry trade is the one that we are a
little bit concerned with. And remember forward looking statements out
of the Prime minister there in Japan has been something
that we've been looking forward to, and of course she
has been playing it pretty tight. So the fact that
their version of fed with this direction is probably good
for the markets in general. They have reached the end

(01:53):
of the road, though it is a trap between rising
yields and a fiscal crisis or using the boj to
help artificially cap yields. That's going to be the thing
that plays out now going forward. And there's some things
that they're going to do to make this unwind slowly,
so I anticipate that we will see an alternative move
on many of these assets, US treasuries mostly, but obviously

(02:18):
you see there the sharp fall in the end as
a sign of things to come. This is something we're
watching very closely. I want to go to this next
clip which goes into how more rate hikes are coming.

Speaker 2 (02:27):
Take a look.

Speaker 3 (02:28):
We expect that the timinil rage one point five percent
will be reached in the mid twenty twenty seven. So
this is still a long way forward and as you
just mentioned that this is very slow process. What the
BOJ is doing is the structural change of the Japanese
economy where we have been trapped in the deflation in

(02:49):
the last two decades. The inflation rate has always been
around zello. But then now we are moving away from
deforation trap and the migrating to the new equal rep
where the increasing is normal roughly every six months. So
next to rate hike, we expect that your too set
on twenty six.

Speaker 1 (03:07):
I don't know if this plays out for Japan. I
know the strategy they're trying to work is easing into it,
trying to offset how the economy can basically respond to it,
especially from the investment crop that comes out and a
major investment angle globally of how the Japanese have been
basically barring low and arbitraging into other assets. That the

(03:29):
thing is going to be interesting to see how this
plays out over the next two years. One thing that
is not playing out is the US labor market, because
that is now suggesting that the economy is in a recession. Wow,
they actually agree with me, and I agree. I think, yeah,
it's been an intercession for a little bit. We have
continued to see unemployment at a problem. It's interesting, though

(03:52):
I don't think we're getting the full clarity here coming
out of the BLS and definitely not getting it out
of the administration. This has been something that has been
I think dealing with the American population for quite some time,
really about the last ten to twelve months, and I
think it's going to extend into.

Speaker 2 (04:09):
Next year by quite a bit.

Speaker 1 (04:11):
So this is U six unemployment rate, which includes persons
marginally attached to the labor force, and now they're just
reporting in that of course is up again. And then
also this captures people who want a job and have
stopped looking as another factor that goes into it into
a recession. And that's the problem that you're dealing with
right now, which is this rising curve that is not

(04:34):
a good look going forward. So remember two thousand and eight,
that's the kind of curve we're looking at right now.
And this was not a good day when we had
two thousand and eight, two thousand and nine unemployment numbers
in double digit that would be detrimental to the markets
in general. Other things that we have to kind of

(04:55):
look at is almost never in history of the US
economy has consumers s been this depressed.

Speaker 2 (05:01):
And I would agree with that. I think we are
in a position.

Speaker 1 (05:04):
Right now outside of the one percent, which is driving
the S and P five hundred to all time highs,
gold to all time highs, most.

Speaker 2 (05:12):
People, working class people.

Speaker 1 (05:13):
This is the kind of sentiment that we continue to
see coming in from the Michigan Consumer Sentiment NX, and
I think this is the thing that I'm most concerned
with of how do they unwind this sentiment and get
it back into a positive mode with inflation still at risk.
I know the inflation numbers that came in this week
were supposedly lower, but I'm still not believing that that

(05:36):
data just does not rhyme with what we're seeing right
now in the real world. The administration, I think and
say all they want. The reality is is this is
not going to paint out well.

Speaker 2 (05:46):
Now.

Speaker 1 (05:46):
Granted you have one or the other that you have
to deal with higher inflation or you know, Americans losing
their jobs. I think you have to be able to
offset the American losing their jobs and dealing with higher
inflation versus a little bit of both, which is what
power is going to be dealing with right now. Here
is Fox trying to twist the numbers.

Speaker 2 (06:07):
Take a look.

Speaker 3 (06:09):
That's forty one million homes sold on a four point
one three on an annualized basis.

Speaker 2 (06:14):
That is not strong at all. That's just not there.
We are also, let just read on consumer sentiments.

Speaker 4 (06:20):
What's that number?

Speaker 5 (06:21):
It surprise drop to fifty two point nine. This is
a December number, it's the final number, so it's pretty recent.
Consumers are just worried about the price of things and
long run inflation expectations as well.

Speaker 1 (06:36):
But with both of these dull numbers, the market seems
to like it, perhaps implying that we'll get more fed
rate cuts.

Speaker 5 (06:42):
Actually the market went up a little bit. All the
pieces of information being slightly weaker than the weakness I think.

Speaker 3 (06:46):
Is attractive bad news is actually good news for the market.

Speaker 2 (06:49):
Maybe maybe that's what we've got, all right, guys.

Speaker 1 (06:52):
This is the thing that I always say, and that
is it is the haves versus the have nots. And
that's what you're dealing with right now. And I think
most people in the crypto sphere, unfortunately, are there because
in some way or another you've been in a have
not position and you're trying to make it to the
next level. The problem is that the halves have continued

(07:15):
to drive this market on the S and P five
hundred more and more up. I mean, we continue to
see all time highs. It's up again. I'll talk about
that in a second. But yet crypto is looking like this.
This is where we are right now. The crypto market
at a twenty one past the four year cycle window.
If you want to call back and say, okay, the
one twenty six was the four year top, Okay, then

(07:36):
we definitely are in a position where we did not
had one of the most lackluster crypto bull runs ever
in the history of crypto, and I think this is
something that also plays out, is that we may not
be seeing crypto bull runs again. And here's why, you're
dealing with an institutional model now that is much more patient,

(07:58):
They're much more calculated, and they're fully willing to dump
and buy based on retail's interaction with the market. And
the problem is that most of retail, it's been in
crypto for the last ten years, five years, three years,
whatever range you've jumped in, you've been looking at historical engagement,

(08:18):
not looking forward to treat it like a traditional Wall
Street market, which is what they're looking at. And I
think that is the issue right now because it goes
back to the problem with the haves and the have
not so much so that IBIT, this is the mighty
Ibit is the only ETF on the twenty twenty five
flow leader board with a negative return for the year.

Speaker 2 (08:40):
This is not good.

Speaker 1 (08:42):
It does not look good for bitcoin, and it definitely
does not look good for crypto in general, because it's
showing that crypto cannot hold its weight in the ETF
crowd when it comes to ranking in to the top ten,
top five.

Speaker 2 (08:56):
Look at some of these returns.

Speaker 1 (08:57):
I mean you're seeing twenty eight percent on iEMG, You've
got thirty plus percent on VXUS. These are the kind
of opportunities that are out there, sixty four percent on IAU.
So those are the kind of things that we are
faced with right now. How Wall Street is playing into
this now, many people will say, well, Paul, this is
the Wall Street natives pushing this market down so they

(09:20):
can enter in, And I get that, but you know,
it's buckets. In my opinion, this is just traditional market
strategy that's always been around in Wall Street for the
last forty years.

Speaker 2 (09:30):
It's not changing. Crypto is just a new toy.

Speaker 1 (09:32):
It's just a new stock to them, a new play
into the market, and I think you have to change
the way that you are playing this market now. You
cannot look at this historically like what we have seen
in the past.

Speaker 2 (09:45):
Now.

Speaker 1 (09:45):
I've been a fan of Mike Alfred, and I won't
say I'm not a fan of him, but I don't
think he has played this right in the sense that
he is kind of a permeable when it comes to bitcoin.
But his statement here bears had numerous opportunities to push
bitcoins sustainably below eighty six. I think it probably will
continue to see that they've had the cycle narrative and

(10:07):
a chart squiggler brigade on their side, and then they
also try to scare folks with the things like the
Japanese in carry trade. I don't know that that was
a big scare because the S and P barely blinked
at that, and that's where liquidity is going to be
coming from. So I'm not necessarily on the same camp
with this.

Speaker 6 (10:24):
Now.

Speaker 1 (10:24):
Do I think that Bitcoin can catch a wind under it?

Speaker 2 (10:27):
Yeah, pretty much.

Speaker 1 (10:28):
It will depend on how Wall Street wants to do it.
It's going to be the institutions that drive the narrative
around it. The one area that concerns me the most
is going to be all coins, because I don't know
that at all coin outside the blue chips are going
to get underneath this unless they are fighting for the
trenches and only in the trenches. That's a different game

(10:50):
all in itself. But expecting retail to come in like
what we've seen in the past, I don't know that
that's going to be going on.

Speaker 2 (10:56):
A couple of things to consider here.

Speaker 1 (10:58):
Coinbase did all their announcements, they're very cautiously optimistic right
now for twenty twenty six. Tom le he's very optimistic
for twenty twenty six. But again, look at the headline
right there. Crypto near's institutional inflection point. That's all you
need to know to play this market. Follow the institution.
If you've been following stocks for the last five ten years,

(11:20):
you understand this game. And I think that's the disadvantage
that unfortunately crypto traders are dealing with. They have to
understand how oh yeah, they have to understand how these
markets move.

Speaker 2 (11:32):
You can call it what you want to call it.
Many people will use the N.

Speaker 1 (11:34):
Word, But if you understand it, you know how to
play this. This is going to be a game of
trading now, and that is getting your long end getting
your short end, and that's the way you're going to
be able to make gains. I don't necessarily like leverage,
but this is probably going to be the way that
people do it as long as you don't overleverage. If
you get in there on the risk level, maybe that's

(11:55):
the route. The way that this is winning for stocks
because it has been doing this for thirty years and
the US stocks extend gains continuously. Dunking on the market
right now is a NAZAK one hundred, up another percent
and hitting another all time high s and P five
hundred right now sixty eight twenty two. I mean, come on, guys,
this is just outlandish to see this kind of performance

(12:17):
when inflation out of control, jobs on.

Speaker 2 (12:22):
A spiral up.

Speaker 1 (12:23):
Basically, they're trying to get the last of the Turkey
leg that's still on the table, is what I'm getting
at here. And this is how the market is playing out.

Speaker 4 (12:31):
Now.

Speaker 2 (12:31):
There's a couple of analysts.

Speaker 1 (12:32):
That still believe this is very, very bullish for the market.

Speaker 6 (12:36):
Listen in, I'm really surprised that the end is continued
to weaken here. And I say that in context that
as you know, well, I'm a structural yen back, but
I actually thought that this press conference in context that
Governor Awada is always a very cautious individual, you know,
I didn't know, I don't know what people were expecting.
He was never going to be more hawkish than this.
Sure he wasn't particularly hawkish, but I thought he was

(12:56):
better as hawkish as he was ever going to be.

Speaker 3 (12:58):
To the market overreact to US CPU high print yesterday,
A lot of skepticism from economists, So do you trust
this drop in inflation.

Speaker 2 (13:09):
Yeah.

Speaker 6 (13:09):
I mean what's interesting is how quickly markets did this
kind of dismiss it. So markets, the yields did not
react to much.

Speaker 1 (13:17):
Okay, I'm going to ask a really dangerous question now, Mark,
is are we done with twenty twenty five?

Speaker 2 (13:22):
Can we can we all take some time off and
come back in twenty twenty six.

Speaker 6 (13:28):
No, But look, I think this is a market where
the price action suggests that, you know, the technicals are
a little bit fragile. The market is very bullishly positioned,
and I think, you know, structurally, as we've discussed a lot,
I expect stock markets to make fresh record highs in
twenty twenty six easily. I think it'll be a good
first half of the year because of the structural tail winds.

(13:49):
But I think there are some problems there in terms
of risk version side that have not played out. And
again I still draw attention to the fact that that
the digitalst treasury companies continue to trade weaker and weaker.
That spreads into the cryptosector, that spreads into retail sentiment
at a time they're getting squeezed by Christmas, and that
kind of ways in the favored AI names, the mean
names and that's why things be problematic for oother couple

(14:09):
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Speaker 2 (16:19):
All right, so there you have it.

Speaker 1 (16:20):
I'm just going to show you guys, this is the
S and P five hundred versus Bitcoin. Just the charts, Okay,
one on the left, S and P five hundred one
on the right.

Speaker 2 (16:28):
Bitcoin. I mean you begin to.

Speaker 1 (16:31):
Understand why we are seeing much more activity right now
because the liquidity hasn't moved into risk assets yet. That
is the factor as to how the strategy and the
psychographic of institutional capital is going to move into this market.
That is all you have to really consider right now.
With Bitcoin, of course holding not badly, you know, considering

(16:53):
where we have, but it is definitely in a sideways chop,
all right. So just look at the last thirty days
if you kind of understand where the S ANDP we
did have that little bit of a clip down in October,
but right back into it again, holding back up maybe
to where we could see that all time high again
on the S and P five hundred starting to brew
in again. With bitcoin, it has been a downward spiral,

(17:15):
which is why you saw the IBIT numbers coming in
like you did.

Speaker 2 (17:19):
Right there.

Speaker 1 (17:19):
One other thing that could change things a little bit
is the reaction to tariffs, and right now there is
a seventy two percent chance on the Supreme Court ruling
against President Trump's tariffs, and how this unwinds. I have
no idea of what all those tariffs that were collected,
how that would even work in terms. I'm assuming that
if the company or the country collected during that period

(17:41):
of time, do they just keep it? I don't know.
We'll find out. What I do know, it's going to
get messy. We're probably going to see a lot of
lawfair in the coming months over all of this. This
is the other thing that's going to play into this,
because this of course plays into the issue that we
all are dealing with, and that is, do we see
can continuation of interest rate cuts from the Fed? Well,

(18:03):
Trump is saying I'm gonna announce it next Federal Reserve chairman,
someone who he believes will lower interest rates by a lot.

Speaker 2 (18:11):
A lot.

Speaker 1 (18:12):
We'll see if a lot means, you know, down to
one percent. Again, if that's the case, hyperinflation on its
way running rampant, you know, unemployment, dogs and cats living together.
I mean, it's just going to be mayhem out there.
But don't worry, because when you have mayhem like that,
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Speaker 2 (18:33):
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Speaker 6 (18:34):
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