In last month’s issue, I reflected on cryptocurrency’s relationship with the legacy financial system.

In this month’s issue, I look at the shifting paradigm as we potentially end the mildest bear market (statistically) in crypto’s history.

If you want to hear an auto-narration instead of my voice, head over to the Medium version of this post.

In the US, average wages rose about 8% over the past last year. Inflation fell to 5%.

That means workers’ “real wages” beat inflation by 3%.

On a year-over-year basis, real wages have gone up for the past four quarters.

On a monthly basis, wages have grown faster than inflation almost every month since the beginning of 2021.

We can’t have that, can we?

According to the US central bank, too many people still make too much money and have too many jobs. Rates have to go up until they go high enough to crush wages, profits, and employment opportunities.

And you wonder why your average American thinks the system is broken?

How screwed up is your monetary policy that it fails when people make too much money? What does it say about your economic model that it only works when asset prices go up, not when wages go up?

At what point do you look at your country’s fiscal condition and wonder why nobody can figure out a better way?

When do you start to question your financial leaders when they tell you “it has to be like this?”

As long as the money’s good

In crypto, never. We ask different questions.

What’s the price of bitcoin today? Is altseason here yet? Will [fill-in-the-blank decision/event] cause crypto to pump or dump?

I write about this for premium subscribers and sometimes in my posts on Mirror, Medium, Hacker Noon, Publish0x, and other outlets.

Also, in this newsletter. Now that prices have gone up for a while, nobody cares about deep, substantive questions like the nature of money, the role of the nation-state in monetary policy, or the ultimate goal of financial policy and who it should benefit. That’s sooo bear market.

What’s your exit target? Sell now? Take profits?

You know, bull market stuff. That is, assuming crypto is in a bull market.

I'll let others debate about bulls and bears. The facts are clear.

After almost a year of bottoming, crypto has moved from the anger/depression zone of the Wall St cheat sheet to disbelief.

No worries, we’re still getting good deals, but now the decisions get harder. Bitcoin’s price is already up almost 100%. Some altcoins are up 200% or more. Surely, this can't go on forever, right? We have to get a pullback, right?

Yes. The question is how high prices go before they fall.

If you followed my plan, you bought crypto during most of 2022 and the beginning of 2023. You’re probably up about 20%, though some of you might be up as much as 430% or down as much as 45%.

You’ve spent the last few months setting aside fresh cash. You’re in a no-lose situation:

• Prices go up? The value of your crypto goes up.

• Prices do down? You’ll eventually buy more at lower prices (possibly the lowest prices we’ll ever see again).

If you didn’t follow my plan, I hope you took one of my other ideas from February and March:

• Take the trade I mentioned in the February 2, 2023 update. (It's too late for that now.)

• Allocate enough that you'd get something really good out of the market if we never come back to today’s prices, but not so much that you can't take advantage of a 30-50% crash for bitcoin (50-80% crash for altcoins).

• Put in some money now based on your own considerations, recognizing the market conditions and developments I’ve talked about in my updates to premium subscribers.

Either way, you should have a significant allocation to crypto and money to spare. Not so much that you’ll suffer when prices go down but enough that your wealth can substantially grow as the market rises.

You can see my target allocation in my portfolio strategy.

Now, you’re preparing for the next opportunity.

That opportunity could come sooner than you might think. Bitcoin’s price might be in my buying zone by the time you read this post.

Even if it’s not, you have to think about altseason, crashes, exchange shenanigans, trading opportunities, and all the other things you’ll need to navigate the market over the coming weeks and months.

Upgrade to the premium subscription now so you can get into all of that before you get into too much trouble.

Is the revolution on pause?

Mark, the US dollar’s falling, crypto’s going up, grifters and VCs have less sway than ever, and adoption is exploding. Is now the time we finally break free of the shackles of legacy finance?

No.

Bitcoin maximalists in my chat groups have moved from “freedom money / bitcoin fixes this” to star signs, price targets, and rocket emojis. Twitter and YouTube are talking about taking profits. Your friends will let you buy altcoins now, but “remember to sell after your first double.”

It’s hard to build the financial networks of the future when everybody’s thinking about how to make money today.

But Mark, this is what crypto’s made for. People are scared and angry, they’re finding safety in crypto. This is what adoption looks like!

If you’re buying crypto only to sell to somebody else for more than you bought it for, does that count as “adoption?”

Yes, probably, but is that the kind of adoption that we really want? It’s not the kind of adoption that will support higher prices. Once the speculative enthusiasm dies down, everything will fall apart again.

A crash now would do wonders for everybody. That would keep expectations in check, tamp down on speculative enthusiasm, and give us an opportunity to build a bigger stake in the projects we believe in.

Then again, it would seem a bit fitting if the mildest bear market in crypto’s history ended with a face-ripping, nonsensical rally into a “blow-off top” on the back of macroeconomic weakness.

Look for signs

At this moment, we don't need to worry about that. Classic “top” signals like MVRV, Puell, etc remain low. We know from accumulation patterns and movements of bitcoins that the market’s in a good place. A 30-50% crash won’t change that.

Billy the Neighbor’s secretly stacking a few sats at every local peak, but he won’t tell you he’s back in the market until bitcoin’s price reaches a new all-time high.

As long as he’s still ashamed, you don’t need to worry about crypto unless you want to. Fear and uncertainty will keep people from putting too much money into the market.

As a result, prices can rise naturally and organically from growing communities and genuine interest, not people looking to make a quick buck, chase the markets upward, and buy into every scam they see.

Let’s hope that’s the case for a long time.

Builders need more time to build before the “community” starts to pester them with “why isn’t the token going up” and “you need more marketing.” We need more time to stake our claims before froth, greed, fraud, and grift return.

The technology needs more time to fail, iterate, and attract fans and supporters instead of moonboys and bag hodlers.

The problem is, at the rate this market’s moving, Billy the Neighbor might come out of hiding a lot sooner than you think.

Time to wait too long

The crypto market is a marathon masquerading as a sprint.

Most people rush from one token to another, chasing lines of resistance, charging into lines of support, and lunging at narratives.

Good work for those who can pull that off. If you’re like me, you prefer the easy path. Slow and steady wins the race.

More tortoise, less hare. Up 20% with money to spare, not rekt aping into the latest meme coin or waiting for an altseason that never comes. Waiting for crashes not buying tops and selling when the stop-loss triggers.

Now, the hares are running all over the place thinking they’ll get rich from stacking 20% swing trades and catching the odd 100% pump.

To be fair, with such low volume and strong accumulation, it won’t take much to send the market higher. Especially as skeptics and traders sell each “local top” or “drop below support.” Once they sell, they can’t sell again.

Are you sitting cash? Did you already take profits?

If so, you have some very hard decisions to make.

At what price do you get back in? What will you do if the market drops to just above that target price, then bounces up again? Do you chase the price upwards? Do you let the market go up, possibly forever? Do you enter higher, only to suffer more when the crash eventually comes?

Look on the bright side. At least you don't have to think about what's going on with other assets that are far more ambiguous.

Out of the frying pan, into the fryer

For example, government bonds.

Best rates in a generation. Arguably, the best opportunity in a century. One key plank of my bonds, bitcoin, and cash strategy.

Also, a heavily manipulated asset that’s traded in opaque markets and subject to the whims of insiders. With a wave of its magic wand, your government can wipe 30% off of the value of your bonds or destroy the purchasing power of your yield.

You risk locking up your funds in an asset that might not keep pace with inflation. If you want to sell before the maturity date, you risk taking a loss. If you hold it to maturity, you risk missing out on other opportunities that can generate more cash flow or deliver higher returns.

And that’s the “safe” part of your portfolio.

Cash sounds good until you realize it produces no income and generates no yield. On top of that, you can lose it to bank failure, theft, and accident. Anybody hoarding cash is already down almost 50% against bitcoin since November. Are you sure you want to take further losses?

Stocks are still overvalued against historical benchmarks.

What about residential real estate?

In the US, prices have fallen about 10% overall and more than 20% in some places, though other places still see rising property values. Housing indexes have started to trend back to historical benchmarks and the government has lots of programs to prop up the market and help new buyers. Residential supply is still tight and demographics are still supportive (as long as we continue to let immigrants buy houses).

While that’s encouraging, you’d expect to get a better price later this year, once laid-off tech workers, ZIRP prodigies, and cash-strapped 1%-ers start shedding failed airBNBs and unnecessary second houses. And if we get a recession or something worse, you might see prices drop even further.

Commercial real estate is screwed as big leases and financing arrangements end. Expect some government intervention to prop up the market—perhaps tax credits for refinancing? Subsidies for lenders? Changes in accounting rules for banks? We’ll get something, but will it be enough to blunt the impact of $1.5 trillion in loans that might fail?

What about CLOs and corporate bonds? You’re getting good prices but nobody knows whether they’re rated properly.

Junk bonds? Unless the business is sitting on a pile of cash, you might as well throw that money out the window. You’ll need one hell of a pivot to free yourself from that mistake.

(Though you might get your money back in bankruptcy as long as your government doesn’t pull a Credit Suisse on you).

A risk worth taking

Compare those assets with crypto at these prices and in these circumstances.

We can all agree that bitcoin remains below historical benchmarks. It’s a mandatory portfolio asset. Get some when it’s undervalued and underappreciated. “Buy low and grow.”

What about altcoins?

No altcoin is worth the price you’re paying for it today. Few have any mainstream usage. Of those that do, it’s mostly niche cases.

Once bitcoin’s price goes back into my buying zone, pick up some altcoins anyway. The good ones will be worth so much in the future, you’ll look back on this moment and wonder why you had any doubts.

Stablecoins suck but if you can’t get your hands on dollars, they’ll do just as well. But which one?

BUSD is a scam, USDC can freeze your tokens at any time, GUSD is a niche product, DAI depends on a DAO, and HUSD only matters on Huobi platforms.

That leaves USDT as the safest stablecoin.

Yes, Tether. Can you believe it?

It’s been around longer than any other stablecoin. It has processed 100% of withdrawals without any halts or delays. Its attestations show it has 100% reserves (just not where the reserves came from or where they’re kept). It’s passed as many audits as the US military.

The worst proven accusation? For a few years, Tether had only 77% reserves, which is 77% more than your average US bank.

Ironic, isn’t it? Or, perhaps, a sad indictment of stablecoins in 2023. Sometimes, you just have to suspend your disbelief and accept the circumstances.

Just a little bit more than the law will allow

Some say crypto is doomed. If a global recession doesn’t kill it, then governments will.

That’s silly. Crypto is computer code. Code can never die. It does whatever it’s programmed to do, whether you like it or not.

Businesses, governments, government policies, institutions, entities, and people will come and go. The protocols will always persist. As long as people use the protocols, they will live forever.

If we make the protocols useful, we will never need to worry about “the law.”

Until then, we will continue to fight a strange battle. Everybody seems to understand “there’s something there” but nobody knows quite what it is.

I’m certain that has nothing to do with the merits of the technology, but rather how abstract and foreign it seems.

For example, DeFi will transform the way humanity creates, stores, accesses, and distributes wealth and capital.

The problem?

The whole concept depends on people using tokens. That feels odd. Uncomfortable. Inhuman.

At the most basic level, DeFi protocols move assets from speculators to people who want money. Investment banks do the same thing.

While the DeFi tokens and investment bankers never capture value from the deal itself, they’re valuable because of the role they play and the fees they generate for playing that role.

Sometimes, everybody makes money. Sometimes, everybody loses money. Sometimes, one party gets the better or worse end of the deal. Sometimes, everything falls apart.

Why do investment bankers seem so different than DeFi protocols?

Because you can’t shake hands with a DeFi protocol. That protocol is not going to invite you for a round of golf or a nice lunch. If can’t cozy up to your regulators and politicians.

Your friend’s wife isn’t going to brag about her DeFi protocol at your next dinner party. No corporation is going to finance its next venture using a DeFi protocol.

Your government has a sensible regulatory framework for investment bankers. You have somebody you can call when things go wrong.

DeFi protocols have none of those things. They have only code. That makes all the difference.

Many countries recognize this. They’re developing clear standards, guidelines, and frameworks that can protect and foster the technology so we can get real value out of cryptocurrency beyond flipping, trading, and speculating.

One country that’s not doing this?

The US.

It’s hard work! It puts Wall Street in an awkward position. And regulators, too, because nobody knows which laws should apply or which agencies should enforce them.

Legislators, policymakers, and financial leaders don’t want to have uncomfortable conversations about the nature of money, the limits of government powers, and the role of the US in the world’s financial system.

Maybe the US doesn’t matter that much anymore

Do we need the US involved? US entities and institutions dominated the market in 2021 and 2022. That didn't work out so well.

Especially when you add some hostile actions among a small group of regulators, for example, a haphazard, modestly-effective attempt to cut off crypto businesses from the US banking system.

I’m talking about Nic Carter’s “sophisticated, widespread crackdown” on crypto banking. “Chokepoint 2.0.”

It's a bad situation and certainly not helpful to anybody. Sophisticated and widespread? I guess it depends on what you mean.

All of the targeted businesses are still in business. Only the banks failed. At least one of these so-called “crackdowns” almost caused a global financial crisis.

The federal securities regulator said one of the banks failed because of crypto while the state banking regulator said crypto had nothing to do with it.

The US government is getting sued over some of its decisions. Some of its activities have opened up sensitive jurisdictional battles among Federal agencies. Congress is gearing up to investigate perceived incompetence and bad-faith actions.

If that's what you get with a “sophisticated, widespread crackdown,” I'd hate to see what an incompetent, uncoordinated crackdown looks like.

As best I can tell, they've made everything harder and more expensive for US entities and put some good people out of work. Some victory!

We still have frauds, money launderers, criminal elements, shady exchanges, and everything else that comes with crypto.

Certainly, Wall Street will fill the gap with “safe, regulated crypto,” but that doesn't mean the rest of the world won't move ahead without us.

In fact, you can bet the rest of the world will do just that.

A bull market for everybody except the US

So many English-language publications and analysts focus on what’s going on in the US. Should they do that anymore?

Look at Google Trends across any random timeframe for crypto search terms on a “worldwide” setting. What do you notice?

The US ranks low on the list of countries that show interest in these search terms. Many non-English-speaking countries ranked higher.

(Google doesn’t survey China and some other large countries but you can bet the US would rank lower if it did.)

Maybe interest in crypto is stronger among non-US and non-English-speaking countries?

Also, look at what’s going on with the US dollar.

Earlier this year, it broke an almost two-year parabolic move and went into freefall. You can see this on the Broad US Dollar index:

Once broken, parabolic moves generally take a long time to recover from. That suggests we’ll continue to see weakness from the US dollar in the coming months if not years (with rallies along the way).

A cheaper dollar helps commodity prices and any assets that are denominated in dollars (e.g., crypto).

Some people worry that a shortage of US dollars will crush “liquidity,” but the US central bank has swap lines to trade dollars for friendly countries’ currencies and dollar-denominated assets. These swap lines push more dollars into the world’s financial markets.

More importantly, many low- and middle-income countries show strong economic growth.

You still have some sovereign debt issues here and there, and of course, a default could spark contagion, but until somebody can name the time, place, and extent of any such tragedy, we can’t act on that knowledge.

On top of that, the market has started to shift from US-based stablecoins to USDT and TUSD. They’re up $10 billion over the past month while, for example, BUSD and USDC are down $12 billion.

Relative to previous years, crypto is getting more money and interest from people outside of the US.

A new theory?

It’s safe to assume that big US entities left the market or at least trimmed their exposure. We saw this happen from the end of 2021 into the beginning of 2022.

Maybe they never came back? Or, if they did, not in large enough amounts to matter?

If true, this would also explain the “whale-eating fish” phenomenon we saw for months after FTX collapsed. Big transfers among whales and crazy growth and accumulation among small- and medium-sized wallets.

Big players left and small folks—like us—picked up the slack.

Maybe, that’s the way it always should’ve been.

How much of this year’s pump was driven by people with smaller allocations from countries that generally don’t use (or need) US dollars?

Hard to say.

Since November, we’ve cleared out a lot of sellers and watched trading volume and network activity slow, though that seems to have changed in recent weeks. Still, these conditions make it easier for small inflows to push prices higher.

When you throw that in with everything that happened on the regulatory side and tighter financial conditions for VCs and institutions, we may not need to put as much weight into what's going on in the US—or the “macro,” for that matter.

How much emphasis do you put on the “macro” when “macro” means “the US and some of its friendliest trading partners.”

Of course, you can't ignore the US. It’s the world’s financial engine. It holds a quarter of the world’s wealth and remains the leading economy.

At the same time, let’s not assume the US is the biggest deal in crypto anymore. Maybe it is, but sometimes, things change.

All fun and games until . . .

If bitcoin’s price stays above $15,600, we’ve been in a bull market for five months.

Fortunately, it will take a long time—possibly years—before we will know whether we are in a bull market or not.

Don’t worry about bull and bear markets. Bitcoin crashes 30 to 50% regularly during bull markets and pumps 100 to 300% regularly during bear markets. Does that necessarily mean anything for your decisions?

Take advantage of opportunities as they come so you can squeeze the most juice out of the market. This is a long-term, upward-trending asset class with massive tailwinds and plenty of room to grow. Don’t fight it!

Follow my plan so you can make the most of these opportunities. Even if you don’t like my plan, you will make better decisions with my commentary and analysis.

Mark, recession’s coming, the World Bank said global GDP will contract—you’re buying into the echo bubble bull trap final exit pump!

We’ll get a recession and a global contraction. Everybody knows that.

As long-time subscribers know, I’ve been preparing for this since the end of 2021, when the US reached full employment. A recession always happens within five years after the US economy reaches full employment. 100% of the time, guaranteed. Since 1970, that recession has come within three years, every single time.

If only somebody knew when it will start, how long it will last, and how bad it will get!

. . . somebody cries

In the first half of 2022, the US had two consecutive quarters of negative growth, but no recession.

Does that seem strange? The literal definition of “recession” is “two consecutive quarters of negative growth.”

The joke’s on you! The US government changed its definition of recession a few years ago. What’s the new definition?

So . . . a recession can be whatever the US government wants it to be. Under this definition, the US may never have another recession ever again!

That’s very helpful for economists. At the beginning of 2022, they said a recession would come in the second half of that year. When that didn’t happen, they moved it to the first half of this year. Now, they’re targeting the second half of this year. Maybe they’ll push it to the first half of next year.

When economists can move the goalposts at will and your government can define a recession however it wants, do you really need to fuss and worry about dates, times, or prices? Do you need to be so tactical?

Just take the market as it comes, appreciate the circumstances, and act accordingly.

You have my plan and portfolio strategy. Premium subscribers, you have my analysis, perspective, and updates.

You also have lots of other amazing content creators, brilliant thinkers, deft analysts, and savvy professionals posting awesome free and paid information. The world is your oyster.

For every viewpoint you want to have, there’s a person who will give you reasons to believe it. If all goes well, you’ll have mine, too.

Relax and enjoy the ride!

This post is also available as an NFT on Mirror.