Transcription
Everyone is focused on the Fed and what Powell has said, but nobody's really watching the Treasury and the war that is beginning to rage between the US government, Trump administration, and good old Jerome Powell. We need to be looking at treasuries. There are some subtle hints that are happening, and Wall Street is going to realize that we have a backdoor quantitative easing in play, and it's starting to quietly shape bond yields, liquidity, and Bitcoin's next major leg. We're going to be connecting the dots today. It's going to get a little wonky.
So, welcome back, crypto crew. It's your boy, Tommy, bringing you the hottest in Bitcoin and crypto action. If you like what you see, give us a like. Make sure you hit subscribe if you have not already. And of course, come on over to X and follow us on X where we talk about Bitcoin, crypto, all day, every day. And we have some really big guns that are reposting us. I want to put just your attention on here. Look at this. Bit mine, New York Stock Exchange is requesting good old Merlin the trader. Is that not cool or what? So, because of that, we are going to get really, really wonky today.
All right, I'm going to give you the warning. All right, because if you're not into learning some key insights, jump over to Tic Tac Toe or Insta Trash for your latest crypto update to keep yourself thumbed down. Okay, on this channel, we don't, we don't do thumb down. We take our time. We try to explain some really deep concepts for you. And today's is going to be a day you, if you're really interested in like getting into the weeds, okay? You're going to want to get your number two pencil out. You want to going to get want to get the beverage of your choice. You're going to want to realize that this is going to be a little bit verbose and long-winded. And I promise not to uh ask you to join our pro group more than seven times today. That will be number one that I said it. But I promise that I won't hit the pro group that hard today. That's twice I mentioned it.
All right. So anyway, let's just get right into it because we're going to go full macro nerd, uh, macro nerd mode today. And if that's not your vibe, like I said, go over to Tic Tac Toe or Insta Trash. They got you covered over there. But if you really want to see how big desks interpret what's happening under the hood, grab your coffee, chill, and let's just get into it.
All right, let's start with the short-term chart. I'm just going to go over this really briefly because I want to get, I mean, I'm really excited for today's video. I mean, because I am like a nerd and actually, I'm going to be full transparency. Um, I was talking to one of my fellow retired, kind of big institutional traders, and he watched one of, of, watch a couple of our videos because he just likes to make fun of me, you know. He says that, uh, well, anyway, I'm not going to get into what he thinks, but anyway, he says that, look, what you, you know, why aren't you talking to them about the bond market? Because you know the bond market is really the engine of everything, you know, of every country. The bond market is the engine. I said, "Uh, yeah, but that's like a deep, like type of thing to get into because, ah, you could gloss over it. They'll get it. They'll understand it." And, you know, it, it's be, it'll be a very, very good point for them to take forward with any type of trading that they do. So, if you start to understand yield curve analysis, you know, um, you know, it's, it's, it's very, very important when you start to understand like 10-year versus two-year Treasury yield spread, which is I'm actually doing for my own channel, Park Avenue Trading. I'll be doing like a, a video on this very similar to this, but, uh, more for, you know, fiat currencies, obviously, right? But really, what we're looking at, uh, for Bitcoin is, is this is going to be a master class and really understanding what's happening.
So, let's just get into the, the 2-hour chart. Okay, we, we, we are having support right now at the 106,000 level. Okay, Bitcoin's been coiling right now between, let's say, 106 and like 14. Okay. Now, we, we haven't spiked up to 114 yet. So, we say, let's just say 106 to 112, right? That's where we are. Okay. Now, there are bids that are still stacked, okay, at 105, 1048, 106. Now, heavy resistance is still sitting at 116,000. Whoever breaks first, we said it. It's going to, you know, be a, a massive movement, you know. Now, of course, I'm talking about short term, okay? So, like if we break, if we break down below this 105, what, you know, our next level that we could see is like, um, the 105,000 even. So, let's say 106, sorry, 106,000. If we break 106, we can drop down to like 105, and then of course, that all important level of 103, and then that massive spike down that we had on the ADL at 102. All right.
So, really, what we need to do, what Bitcoin needs to do in order to catch a bid is first get above this one 112, 112. That's, it's got to get above 112 and it's got to hold the 112 level, um, and then eventually break up through where, you know, we had that regression channel, right? 116. Okay, if we could do that, that's showing some absolute signs of strength. But right now, it's stuck in a quagmire. But I'm going to tell you that the cycle is quite different because every, every cycle before was really just about, you know, emotion. This one is fueled by not only structure, you know, we got ETF flows that are redefining the game, and they're going to start to think like this old guy thinks. You need to turn to the bond market. That's why I'm telling you it's going to be a little bit wonky, but just hang tight. You're going to really learn something from this video.
So, right now, the qu, the, you know, the crowd is quiet. The, the whales are already in. Okay, they're already here. That's not the issue. It's really what I think, once I explain this to you, it's the calm before the institutional explosion.
Now, here's where we really begin the wonkiness. If we look at last week's sell-off, right? We had it, it lined up perfectly with Powell warning that the December rate cut wasn't assured, right? So, the marketplace, the, you know, everything got sticky, the rates went up, you know, you know, the stock markets kind of flipped, everything went nuts at that point, right? But, you know, that's just short-term knee-jerk reaction. The big institutions were like, awesome, terrific, we're going to reload, no problem. I'm talking about stocks as well, okay?
Now, we also had Rick Ryder of BlackRock, right, the CIO and potential next Fed chair. He echoed the same message. So, at that point, markets puked, the liquidity dried up, but the institutions quietly accumulated. Now, I know, okay, I, I see the comments, okay, read the comments. This guy's just a shill for, you know, he wants to buy Bitcoin and he wants us to buy the Bitcoin so he could sell it to us at a higher price. Guys, gals, I, I mean, I try to give you both sides of this. So, I don't get, I'm not a shill. I'm a trader. So, I'm talking trading with you. If you, I mean, I'm not, I'm not an influencer. I mean, I wish I was. Those guys make like what, $4 million a year just talking, you know? I mean, it's crazy, but no, I'm not an inst, you know, an influencer, you know, uh, but hey, uh, whatever you, what you guys think, you think. But really, watch what I'm saying. I'm, I'm basically trying to give you some background here, and I'm, I say both sides of it. I told you there was resistance here, there's support there. I mean, I'm trying to do the best I can.
Now, if you get into our pro group, that's mentioned number three, they'll help you out on the day-to-day basis, and I'll show you how to get into the pro group later. Promise I won't mention it more than another four times in this video. All right.
So, anyway, so we said, we said in the previous video that it was the same setup we saw in 2020 and 2024, right? Jawbone, jawbone, fear drives yields up, flush, you know, flush the weak hands out, refill inventory for the big guns. Right. Right now, we're sitting right in the institutional reload zone. Now, if we lose 106, the, it's going to trigger the panic, and it's going to, it's going to make them even be able to buy more at a cheaper price. We told you this yesterday that like, you know, BlackRock, you know, they don't want to buy coin at 116. They want to buy it cheaper. They want to shake you out. They want to steal your bags. Okay, we said that.
Right now, my fellow crypto talking heads out there, I believe, never sat on an institutional trading desk. Now, that doesn't make me any type of guru. I'm just going to tell you the way I would be looking at it if I was sitting on that desk today. So, that's all I'm saying here. I'm not, you know, I'm not disparaging anybody. You know, there's a lot of great traders that have never stepped foot on a bank trading floor. You know, matter of fact, I could tell you stories. Most bank traders stink. But anyway, so that's, that's another story. But, you know, I'm not saying that. What I'm just basically saying is that how I would be looking at this at a bank and I, how I know like my up and ups would be actually wanting to engage in this marketplace and a, in a particular way, using US treasuries. So, we're going to get into that.
So, right now, the short end of the curve, the Fed controls only the short end of the curve. I saw one of our, our, our, um, YouTube posters come in. He says the Fed has control of the rates. The guy's absolutely 120% correct. They don't, he absolutely does not have control over the rates. They have control only over the short-term interest rates. The bond market controls the rates. So, kudos to our follower pointing that out. Yes. And I understood that very well. I'm going to take you through the scenario right now. But again, we got to say, hey, applaud the guy that follows us. You know, great, great point, okay? Because the short end of the curve is controlled by the Fed, the overnight money, okay? But the bond market, that's the master thermostat of global finance. Okay, that is the master thermostat of global finance. It basically controls where the money goes. It decides the cost of capital, the temperature of liquidity, and the direction of every asset on earth. Now, of course, you know, the European bond market does that for Europe, and it's, it's just a combination, right? It's not just the US bond market, but since the US is the leader of the G7, it really actually points the direction in the way.
So, right now, if we, uh, go over and we start looking at, and where is my 10-2? Where is my 10-2? Here's my 10-2 right here. Okay. The US yield curve is still flat to mildly inverted. Now, generally, a, a yield curve goes upward. You know, the longer term you go out on a yield curve, the higher the yields because people want to be paid higher for, you know, risk, right? So, right now, if we look at the 2-year, it's sitting right around 4.3%. I told you we're going to get wonky. All right? I told you. If we look at the 10-year, we're sitting at 4.8. There's no difference. If we're looking at the 30-year, 5%. No difference. So, short-term rates are anchored by Fed policy. They're, they're high and sticky. The Fed moves the front end, but the bond market moves the world. So, long-term yields are just slightly elevated because of heavy issuance, fiscal risk, and term premium returning. Okay, that's, but they're not really that high right now. So, the spread of the 10 minus the two is currently around 54 basis points positive. Now, while it's positive, the spread is, is, is far, is, is very compressed relative to historic norms. Long-term average is usually around, uh, 85 basis points to 125 basis points. Okay. So, this thing is extremely flat.
Now, you've got a market that's pricing in no immediate Fed rate cuts. That's the short term because of what he said. December rate cut is not assured. But that's not the granddaddy. What's happening right now is that, okay, no immediate rate cuts, but quietly hitting the next one. The next move will be lower with a CL. You know, that's a basic classic late cycle conditions type of statement that Powell made. He is not going to be around for long. Okay, you know who's coming in potentially is Rick, right, from BlackRock. Okay, now, if I was trading this at, actually, I, I don't, I wouldn't be trading it. I would be actually, you know, participating in it with foreign currencies, doing things like that. But the money market desk and the treasurer of the bank would be participating in this, and they would be performing. This is the, I know this is the, you know, the campaign that they would be performing. They'd be looking at a, at the sweet spot maturities, the 5 to 10 years, because that's where you would get the best convexity payoff. Convexity meaning the curve itself, the best payoff when the Fed would like pivot or the curve steepens. That's where the best convexity payoff is. So, if you look at the 5 to 10 year part of the curve, it benefits the most from falling yields because the duration is long enough to capture capital gains, but not so long that you get crushed if inflation all of a sudden spikes. That's why I have like this, this, uh, this bad boy up right there. Okay. So, this is what this chart is explaining. Okay. So, when you do something like this, you, the traders call this playing the belly of the curve. They're, they're long the belly, they're short the front. All right? So, they're getting long, right? The 5 to 10 years, and they're going short to hedge against the, against the front. So, an example would be long 5 to 7-year treasuries, hedge with short exposure in the two years, if I want a pure curve trade. Now, that might have got really too wonky, but anyway, the, the, the reason why I'm talking about this, okay, because if I go over and I look at what we've been showing you, gold versus Bitcoin. All right.
Now, because a flattened or near inverted yield curve, a 10-2 curve, signals the market expects weakness ahead or a rate cut ahead, which is what is the backdoor quantitative easing, hitting hidden liquidity. That's our idea. Now, short-term yields are elevated, making money expensive to borrow, but long-term yields have not risen with it. So, liquidity conditions may be tighter than they appear, right? But when the curve begins to steepen and the spreads rise again, you often get a liquidity tailwind for risk assets like Bitcoin, Ethereum, and altcoins.
Now, here's where it gets very, very interesting. Treasury Secretary Scott Patent said earlier this year that he and Trump are laser-focused on the 10-year because that number drives mortgage rates, okay, borrowing costs, and market confidence. Trump says in June, "We're going to refinance 9 trillion in maturing treasuries with short-term debt. Then get someone in the Fed who will lower the rates." Translation, translation right there. Flood the market with T-bills now, keeping long rates capped, and let the next Fed chair flip the switch. That's backdoor easing, meaning political timing. The look, you know, Powell and, and Trump don't get along. This is war between the Treasury and the Fed. They're not walking lockstep with each other. So, what's that going to do? This is, if this occurs as I expect it, well, gold is going to cool, and players will begin to look at high beta trades like crypto, and then the gold playbook would be unfolding for Bitcoin and all the cryptos. Okay? Because gold plinted its final fifth wave after breaking a 10-year ceiling. Now, Bitcoin's mirroring the same five-wave structure. The breakout's done. Wave five is next. Target much higher. Bitcoin standing on the launch pad. You got to watch the bond yields.
So, what I'm saying is that the Fed is not in the driver's seat, you know, for the long-term carry. They never were. The Treasury Department is quietly doing something that has the same effect, even a greater effect than what the Fed could do. So, this week, the Fed rattles, you know, rattle markets by warning. There may be no December rate cut, stocks wobble, the yields spike, but nobody's watching the Treasury's borrowing plan. By leaning on short-term T-bills instead of long bonds, the Treasury can artificially lower the 10-year yield even without the Fed buying anything. Now, Bank of America pointed this out. This is what led me in the direction. They estimate that if the Treasury boosts T-bills by 20% of total issuance, the same, it's the same as removing 1 trillion in of the 10-year supply, dropping yields 35 to 40 basis points. That's the slight of hand monetary easing through fiscal plumbing. The Fed says, eh, probably not going to do anything right now, but the Treasury is going to war and doing the opposite.
Now, this is all happening as we got Bitcoin at, you know, a, a major technical level, the 50 SMA. 2022, this line triggered the bare market. 2024, 2025, it fueled every bullish breakout. Okay, now Bitcoin is testing it again. Bounce and the next leg ignites. Lose it, the move flips fast. Now, the SM, the 50 SMA decides everything. But I'm telling you, the, what's happening in the background, the liquidity in the background is holding the line right here in my opinion. Oh, you're just a chill. You want it to go up. I don't really care which way it goes. I just want to trade it. I want to give you enough information that you could actually be the smartest trader in the pub, bar, sl, restaurant, wherever you go. Okay? And I just gave you, actually, just send me a check for the, you know, what, the macroeconomics class. All right? I'll be happy. Just enough to buy a box of cigars. All right?
Anyway, so I'm telling you that the old Bitcoin cycle is really dead. Kaput. I'm going to show you this. Hang on one second. Yes, the old cycle is kaput, as my German friends would say. Okay, the old cycle math is gone. 1064364 meant something before, but now we got the Fed that's pivoted for the first rate cut, 25 basis points. Now they're, they're saying it's on hold, but the Treasury has taken over. Liquidity will come screaming back. Capital moves faster than time, and Bitcoin is built to absorb it.
All right, now let's get on over to Ethereum where we're looking at Ethereum and altcoin rotations that are on hold right now. Man, good old Ethereum itself. It's lagging a little bit right now. It's, uh, sitting right now at 3,840. Um, it's still wrestling with structure. Now, if we looked at the Ethereum Bitcoin pair, it hasn't really broken down, but it's, it's fragile. Okay. Now, Ethereum micro, if we look at the opportunity here, Ethereum, if we, if we, we base Ethereum off of the Russell 2000 index. So, again, we're getting a little macro there, right? So, the Russell 2000 just broke out after three years of chop. Ethereum is sitting right below the same resistance. Stock, you know, you know, stocks lead, cryptos follow. So, this chart is screaming front running. And, you know, Ethereum is not going to wait forever. It is going to take off. Now, I know we've been saying it, but really, it's the Bitcoin dominance. Bitcoin dominance is just what's hold, you know, is, it's just holding everything back.
Now, I'm going to tell you something a little bit later in this video. Um, and I think that you should join our pro trading community. Uh, and I'll show you how to do that later on in the video. Is that number five? I only got two more times I can mention it. All right.
So, anyway, um, this is tells you we're like phase two of the cycle. Bitcoin is stabilizing. Ethereum is slightly starting to rebuild. So, Ethereum is following the Bitcoin playbook. And I'm going to tell you, if we overlay it with the 2024 Bitcoin fractal, it's the same setup. It's same rhythm. It, if, if the echo continues, Ethereum is about to rip. Of course. Now, we got to get above what? We got to get above like the 4,200 right now, right? Where's this top? Where's Frank at the top at? Oh, 48. All right. First level breakout 4,200. 48. Next 5,000, 5,004. Right now, it's got to hold the 3,600 line. It's got to hold the 3,600 line, or else we'll be talking about where the next level of support should be for a bounce. But right now, um, fractals don't lie. So, when the liquidity returns, the setup's already set up if we looked at it, right? It's already set. It's just waiting, waiting, you know, it's waiting for Bitcoin dominance to cool.
So, there is a wild card in this whole thing, and I want to mention it now as I'm talking about Ethereum, and it, it also plays into my quantitative easing. The wild card is stablecoins. Tether. Tether alone holds over 100 billion in T-bills. That's about 2% of the entire market. It is effectively one of the largest non-seigneurage buyers of US debt. Thank goodness for them because the Chinese walked away. So, that helped. They came in to save the day, actually. So, every time demand for, you know, US dollar token rises, or USDT, Tether has to buy more T-bills to back it. H, that injects liquidity in the short end. The same mechanism as quantitative easing, but decentralized. Now, again, my friends at Bank of America estimate that a 1% increase in Tether's T-bill share lowers yields by 15 basis points. Combine that with what I was just talking about, the Treasury's issuance tilt, and you've got a market being flooded with silent liquidity, all the while Powell plays hawk on camera. In short, the Fred, the Fed, the Fred, yeah, the Fred, the Fed isn't buying bonds, but Treasury and Tether are. And that's really the main backdoor QE loop. Rewind it so you can hear what I said again. It's very, very important.
All right, so before we wrap up, let's do the promo where you can join the fro, the pre-pro group, pre, yeah, you can join our group right here. You click this link right there, you'll be taken over to our Telegram trading community. It is absolutely free to join. We drop insane alpha trading opportunities every day. You want to talk macroeconomics? Get in there. Frank will, Frank will hit you up. He'll talk to you all day about the stuff that I just went through right here. Um, if you're just into doing it alone, where we offer two superior brokers, both low fees, fast execution, we got WEX. All right. Where actually, you know, they're offering some really sick, insane, uh, sick, insane. Yeah, that works. They're really, they're offering some insane bonuses for new clients. I believe it's free fees for life. I don't know. Click the link, they'll show you. Uh, BTCC giving away a 500 USD token. I mean, hey, think about that. If you're getting that and they're giving you US dollar tokens, you're adding to the liquidity of the market. We just went over that, you know, because they have to actually get, buy more T-bills. That would be awesome, right? But really, what I suggest is that you, you know, you level up your trading, you join our free group. It doesn't cost anything. All right? And, um, level up your trading with us, you know, and let's stack the profits together. All right, let's get back right back into it. Where was I? I don't even remember where I was. All right, here.
So, we were talking about that, right? So, now, uh, altcoins, right? Altcoins itself. We're talking about altcoins. All right, so altcoins are asleep, really, that way. No, because let's go over Bitcoin dominance. All right, if we look at Bitcoin dominance right now, it's 60.8. Come on, man. It doesn't want to slow down, you know? So, uh, really, you know, Bitcoin itself again, it's in the driver's seat right now. And, um, so we still got Bitcoin DOM is sitting at 60. All right. So, it got rejected from macro resistance. So, the Ethereum Bitcoin bottomed at a five-year support. That's good. Uh, this chart really is the cheat code, but really the bond market's the absolute ruler of it. You got to look at those yields, but it's not a question of if, it's only a question of when the altcoin season starts. So, we got to be prepared for ignition. You know, you got to have good utility coins. All right.
So, as it stands right now, volume at alts is very thin. Dominance sitting at 60, meaning big money still parking capital in Bitcoin. But that's how really every rotation begins, right? Starts off and, um, now we're waiting for the pros to, you know, a re-upping. They're not chasing. They're, they're watching for two triggers: Bitcoin dominance to roll over and, and also they're looking for basically, you know, the rates, right? You're looking at the bond market, right? So, when those two things line up, you got your phase three, alt rotations are going to start.
Now, if I look at, you know, altcoins themselves, right, uh, I got to get rid of my little cheat sheet over here. We can look at the altcoin market cap itself, right? So, what is it showing us? Well, it's a couple of handle, man. Cup and handle pattern. You know that basically, uh, the cup was built in blood, sweat, and tears. The handle is forged in fear. It's the last call before we get to parabolic stage. You just got to survive the b, you know, the boredom, man, to earn like the mania that's going to occur afterwards. That's my opinion on it. But really, as it stands right now, the volume is thin. So, until then, it's patience, okay? Institutions are not going to chase this. They're going to position early, then going to let retail do the lifting later.
Look, I wish I had my M2 chart, but anyway, uh, crypto trades on liquidity. Always has, always will. Every uptick in global M2 shows up sometime later in Bitcoin. So, when you see yields are easing without the Fed pivoting, understand that liquidity is still flowing, just through the back door. That's why Bitcoin keeps holding so far the 105, 106 level. And that's why Ethereum hasn't collapsed. And that's why altcoins will catch a tailwind once this liquidity shows up in risk assets. So, when the crowd is screaming, "Oh my god, it's tightening." The smart money looks at liquidity direction, not the headlines. Okay. So, when, when yields start falling while Powell's still talking tough, that's your confirmation that the liquidity machine is on. Whether the Fed admits it or not, the liquidity cycle is alive. It's just hidden from your view.
So, make sure you come on over to X, follow us on X. We'll update you on this. And remember, what do you got to do? Well, you got to join our free community. If not, what do you have to do? Well, you got to definitely trade with your head, not over it. You got to do your own research because I am just a trader like you, and I do not offer financial advice. And also, what do you got to do as a short-term trader? You got to enjoy the party, but dance near the door. Hey, all under 30 minutes.