Bitcoin Has Already Bottomed — And Almost Nobody Sees It | Dan Tapiero

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Scott Melker (0:31)

Bitcoin has already bottomed and almost nobody sees it. I'm having a conversation with my friend Dan Tapiero today about the Bitcoin market, what's being built in crypto and the future of our industry. And I can assure you that when we talk, it's always, always very, very bullish. We're also doing the weekly reckoning today, reviewing everything that happened this week. Hope you guys are ready for a good show. I know I am.

What is up everybody? Happy Friday morning to all of you who celebrate. I'm going to go ahead and bring on Dan right now, so we can dive right into it. Good morning sir, how are you?

Dan Tapiero (1:25)

Good. Good to see you. How have you been?

Scott Melker (1:26)

You look relaxed. You look like you're enjoying. Good.

It's good. There's a lot I want to talk to you about.

Dan Tapiero (1:33)

How should I look?

Scott Melker (1:35)

You know, some people come on and they look stressed. You look relaxed. No really? Yeah.

Nice glow. You look like you've been getting some sun. So listen, there's so much happening right now on the macro side. First of all, let's talk about the Fed and the Treasury, because we had Bitcoin make a almost 25 percent move seemingly overnight on the news that the Treasury was going to intervene in the bond market, right? And even though it was only 2 billion, and then 4 billion, and then 6 billion, they keep up in the ante. Interest rates haven't believed it, and Bitcoin went up massively. I view that as the spark. And right now, it seems like we're in a very tenuous environment here for the trade.

Dan Tapiero (2:18)

Hold on, hold on. I think that was partially the spark. I think you'll recognize also, and this is as an old time macro guy, even though I don't trade in those markets much anymore, can't ever seem to ignore them when I pull up my Bloomberg. And if you look at the dollar yen exchange rate, I think that had more to do with the bottom in Bitcoin.

The Bank of Japan and the US., this is Scott, came in to intervene at around 163 or so, 162, and they've continued to intervene, pushing the dollar yen lower. I think it's at least 10 percent now, or a little less than 10 percent, but it looks to me like it's got another 10 percent maybe to the downside. And so that's the first time in a long time that Japan and the US have done concerted intervention. Scott Besson, I love this guy, comes out yesterday and says, I am the house, all takers. Anybody that wants to take the other side. What's that?

Scott Melker (3:25)

It's like the quote of the century.

Dan Tapiero (3:27)

Yeah, it's a great quote from a Treasury Secretary who probably understands dollar yen better than any Treasury Secretary in the history of the country, obviously has traded it for over 30 years. And anybody, any of the civilian population that wants to fade Scott Besson as the Treasury Secretary, as he said, I am the house, I know things you don't know.

It's true. He's playing on the other side. And I think you'll see the bottom in gold coincided closely with the bottom in the top in dollar yen and also the bottom in Bitcoin. So gold and yen have a dollar yen have a very strong inverse correlation over the years. I mean, maybe it loses correlation over a six month or a year period. But if you look over a very long term, they have very strong correlation. So I think it was more about that that US said the dollar has gone high enough. And if you look at the broad trade weighted index, which no one except like a bunch of macro geeks looks at, you can find it on your Bloomberg.

The dollar, based on that broad index, was pretty much at an all time high. And that's against the trade weighted index, which is against our counterparties that we trade with. So it's a broad basket. And I think that's probably what he's looking at. And the dollar yen is a proxy. So maybe that's not as well understood as the catalyst, but that would also potentially mean, when the dollar goes down, there is more liquidity, and that's why gold took off, and then I think Bitcoin followed. There are other reasons as well. I mean, I would just put it down to that one.