The market isn’t surging anytime soon — so get used to dark times


The global markets are going through a difficult period, including the cryptocurrency market. But judging from the peanut gallery conversations, it appears that some observers have not received the memo.

“I feel like we’re relatively safe through the middle ground,” Twitter’s “CryptoKaleo” aka simply “Kaleo” – wrote in a September 12 tweet to his 535,000 followers, referring to the US midterm elections in November. The prediction was accompanied by a chart indicating his belief that Bitcoin (BTC) price would rise to $34,000, a 50% gain from its roughly $20,000 level as of last week, before the end of the year.

“Of course we can bleed more,” Pentoshi, also a pseudonymous Twitter mega-influencer. wrote in a September 9 missive to his 611,000 followers. “But the market at this value is much more attractive than it has been in over a year. […] Took some $BTC yesterday/no alt but will be nibbling on it.”

Those assessments come from “respectable” observers, those who have periodically been right in the past. A gentleman in my inbox today, a Charlie Shrem looking to sell his “investment calendar,” assured readers that a “major crypto ‘run’ could start tomorrow.” Look further and it’s not hard to find even more bullish forecasts, like the prediction that Bitcoin is on the cusp of a 400% surge that will take it to an all-time high price of $80,000 and a market capitalization of $1.5 trillion, $500 billion more than the value of all the silver on Earth.

It’s good to see optimism running rampant, even if it’s mostly influencers looking for engagement and paying customers. Unfortunately, macroeconomic headwinds indicate that the reality is a little darker, perhaps a lot darker.

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FedEx last week highlighted the possibility of worsening economic conditions with its announcement that it had fallen $500 million short of its first-quarter revenue target. “These numbers, they don’t bode well,” CEO Raj Subramaniam wryly noted in an interview with CNBC. His comments, which included a prediction that the numbers represented the start of a global recession, caused a 21% week-end drop in his company’s share price that led the broader market to take a walk.

Related: What Will Drive the Likely Crypto Bull Run in 2024?

In response to the economic crisis, FedEx said it planned to take action, including closing 90 locations by the end of the year. The good news: Americans are so burdened with debt that it’s unlikely they were planning to visit any of those places anyway. Consumer debt reached $16.15 trillion during the second quarter of 2022, a new record, the Federal Reserve Bank of New York indicated in an August report. The number adds up to just over $48,000 for every man, woman and child in the United States: 330 million in all.

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Total consumer debt held by Americans. Source: FRBNY/Equifax Consumer Credit Panel

With a median national income of $31,000, that equates to a median debt-to-income ratio of 154%. If you want to take into account a little more than $30 trillion in debt held by the federal government, you can add another $93,000 per person, for a total of $141,000 and a debt-to-income ratio of 454%. (Obviously, the numbers are made worse by the fact that only 133 million Americans enjoyment full-time employment starting in August).

While policymakers may be indifferent about government debt, they are more concerned about consumer debt. “I’m telling the American people we’re going to get inflation under control,” President Joe Biden said in an interview with CBS on Sunday, leading observers to wonder if he was trying to get ahead of this week’s inflation. Federal Reserve Announcement from a potentially huge 100 basis point increase in the federal interest rate. Such a move would likely send markets into a tailspin from which they would not recover for some time.

Ironically, even that move might not be enough to control inflation in the short term. Given the rapid rise in debt, it is perhaps not surprising that inflation… a little more than 8% in August year after year, it has shown few signs of abating. Americans may not have much money left, but overall that reality hasn’t reduced demand. If the New York Fed report is any indicator, the cash backing of that demand comes from credit. The bank noted that credit card debt in the second quarter saw the largest year-over-year percentage increase in more than 20 years.

Related: What will the cryptocurrency market look like in 2027? Here are 5 predictions

There is the problem. No matter how quickly the feds move to discourage debt, it’s not clear when asset prices will rise. High levels of debt, which already exist, mean less money to buy things. Raising the cost of servicing debt, as the Fed is trying to do, means less money to buy things. Forcing Americans into a state of economic ruin to cut costs means less money to buy things. Failing to control inflation and allowing the cost of basic goods and services to continue to rise—exacerbated, of course, by an energy crisis in Europe over which financial managers have little control—means less money to buy anything else.

Perhaps this perspective is the same one Elon Musk arrived at when he said in June that he had a “super bad feeling” about the economy. Other observers have delivered even darker takes, including the famous debt aversion Rich Dad Poor Dad Author Roberto Kiyosaki. “The biggest bubble is coming,” Kiyosaki wrote on Twitter in April. “Baby Boomer pensions to be stolen. End the spending of $10 billion in fake money. The government, Wall Street, and the Fed are crooks. Hyperinflation Depression here. Buy gold, silver, Bitcoin before the coyote wakes up.”

It is true that Kiyosaki’s assessment is partially at variance with the results that pessimists might expect. The economic calamity should result in declining asset prices across the board, including gold, silver, and Bitcoin prices. A more optimistic forecaster might expect Americans to learn from their mistakes, use the coming year to pay off their debts, and spend heavily again in 2024, while avoiding a hyperinflationary depression.

In either scenario, one thing seems relatively certain: neither crypto nor any other asset class is on the brink of a record high. If you want to prosper investing in the coming year, you’d better start learning how to buy shorts from the less-savvy bulls in the market.

rudy takala is the opinion editor of Cointelegraph. He previously worked as an editor or reporter for newsrooms including Fox News, The Hill and the Washington Examiner. He has a master’s degree in political communication from American University in Washington, DC.

This article is for general information purposes and is not intended to be and should not be taken as investment or legal advice. The views, thoughts, and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.