Federal Reserve Interest Rate Cuts

Crypto Robot

🔥 The U.S. Federal Reserve’s interest rate cuts could reshape the entire crypto market. Lower rates historically drive liquidity, weaker dollars, and higher risk-asset demand—a recipe that has often led to Bitcoin and altcoin rallies. But will this time be different?  In this video, we break down the impact of US rate cuts on Bitcoin, Ethereum, and DeFi protocols, exploring whether crypto is about to enter another bull cycle. From lending protocols gaining inflows to tokenization growth across Web3, this move could signal massive opportunities for traders and long-term investors alike.  Do you believe crypto will act as a safe haven asset in a weak-dollar environment—or remain a risk-on play? Drop your thoughts in the comments below 👇  👉 Subscribe for daily alpha on crypto market trends, bold Bitcoin predictions, and altcoin gems that could 10x your portfolio! – https://www.youtube.com/channel/UCpjN8bNE-CoAgpfMatghM9g  📧 Email: cryptorobothelp@gmail.com  💰 Affiliate Links  Sofi Checking & Savings – Get $25 free ➝ https://www.sofi.com/invite/money?gcp=16a53d0f-b4b2-441d-9100-cfb506305260&isAliasGcp=false  Sofi Investing – Free $25 in stock ➝ https://www.sofi.com/invite/invest?gcp=ab31edd8-701e-4109-9225-51b41e35d246&isAliasGcp=false  Coinbase Exchange – Earn up to $300 BTC ➝ https://coinbase.com/join/YPUQLCY?src=referral-link  Tracking Tools – CoinGecko | CoinMarketCap  Trading Tools – Get $15 off TradingView ➝ https://www.tradingview.com/pricing/?share_your_love=cryptonextsteps  #Crypto #Bitcoin #Altcoins #DeFi #Web3 #Ethereum #BTC #CryptoNews #FederalReserve #RateCuts #USMarkets #Dollar #MacroCrypto #BullRun

Transcript

00:00have you ever felt that that sort of hum in the financial world that feeling like something big

00:11is about to shift something that could change things for well everything from your house

00:16payments to maybe some of your more speculative investments well you're probably not wrong today

00:22we are doing a really critical deep dive into exactly one of those huge shifts at the US Federal

00:29Reserve they're widely expected to start cutting interest rates and we want to explore the profound

00:33really far-reaching impact of that yeah the big and our focus really getting under the hood of what

00:39this means for you especially if you're anywhere near the crypto market which is let's face it

00:44always dynamic often unpredictable right we've gone through I mean mountains of sources detailed

00:49economic reports top-tier financial analysis the latest crypto market insights basically trying

00:55to cut through all the noise and give you a clear actionable picture and that's exactly the

00:59mission here this isn't just about you know repeating headlines we're aiming to unpack the

01:05really complex and honestly increasingly tangled relationship between traditional finance the

01:11feds monetary policy and this constantly evolving crypto world tangled is a good word for it it is so

01:17we're going beyond just if the cuts will happen we want to know what they actually signal for the

01:22markets how similar moves have played out historically across different assets and crucially where this

01:28might realistically lead us and your portfolio in the coming months maybe even years okay the goal

01:34is to give you clear contextual insights maybe a few surprises those little aha moments you know so

01:40you feel genuinely informed but hopefully without drowning in technical jargon keep it understandable exactly

01:46think of it as understanding the ripple effects these huge macroeconomic shifts how they wash across your

01:52entire investment landscape from big coin all the way out to the fringes of defi all right so let's

01:57really dig into this this huge shift for what feels like ages now we've been sailing in financial waters

02:03dominated by these aggressive interest rate hikes from the fed relentless is the word yeah it really

02:09felt like it a dominant force hitting everything cost of buying a home how much companies could borrow we

02:15all remember why they did it right the main reason was that fierce fight against inflation which was soaring

02:20multi-decade highs uncomfortable territory absolutely so the the fed's playbook was pretty straightforward

02:27then make money more expensive cool down the economy because it was running too hot right classic monetary

02:33tightening but now the whole story isn't just shifting it feels like it's doing a full 180 degree pivot

02:39the general agreement now among economists market watchers is that the fed is actually getting ready to start

02:46cutting those rates the expectation is definitely baked in now so the big question for us for you

02:50listening why why this kind of abrupt change what are the economic signals really pushing them in this

02:57new direction it's such a delicate balancing act isn't it and what's really fascinating here is how the

03:04fed is trying to walk this tightrope they need to make sure inflation stays down but they absolutely do not

03:09want to accidentally smother the economic growth they're supposed to be nurturing right the dual

03:14mandate exactly so this potential move towards cuts it's really driven by a few key economic indicators

03:21coming together first and probably the most important one inflation itself the very thing that forced

03:27those hikes it is cooled significantly by most measures we've seen the numbers drop cpi pce precisely

03:35especially pce which is the fed's preferred gauge we've seen a pretty consistent downtrend now are we

03:40totally at the two percent target yet maybe not quite everywhere but the direction is clear the pace of

03:45price increases has really stabilized across the board yeah that takes off some immediate pressure okay

03:50so inflation is less of a raging fire what else second point the job market despite that really

03:55aggressive tightening cycle the most aggressive in decades the labor market has been incredibly resilient

04:01yeah unemployment stayed low surprisingly low to many stubbornly low it defied a lot of predictions

04:08that strength gives the fed a really important cushion it suggests the economy can handle some

04:12policy adjustment without immediately triggering mass layoffs or something drastic so strong jobs provide

04:18some breathing room right but then there's the third piece and this one's getting louder the worry

04:23about a hard landing right or even you know tipping into a full-blown recession if they keep rates too

04:27high for too long ah the risk of overdoing it exactly there's a real fear that keeping money

04:32expensive for an extended period could start to really squeeze business investment maybe dampen consumer

04:38spending too much and ultimately cause an unnecessary contraction so it's about preventing that downturn

04:44that's becoming the focus remember that dual mandate maximum employment and stable prices

04:50with inflation looking more under control and employment still strong their objective seems to be subtly

04:56shifting it's moving towards proactively supporting sustainable growth and this is the key phrase

05:02engineering that soft landing the elusive soft landing easier said than done historically oh incredibly

05:09rare which raises that big question can they actually thread this needle can they ease rates just enough to

05:15keep the economy going without you know reigniting the inflation they just work so hard to put out

05:20history suggests it's a very very difficult trick to pull off it makes watching their next moves

05:25absolutely fascinating high stakes really that distinction fighting inflation versus actively

05:31trying to engineer a soft landing that feels really crucial and like you said it highlights the razor's edge

05:37they're on and this expectation of cuts it's not just like random speculation is it no not at all it's

05:43deeply rooted in serious economic analysis and maybe most revealingly if you really scrutinize the minutes

05:49from the federal open market committee meetings the fomc minutes the fed watchers favorite reading

05:54material exactly when analysts pour over those documents they're not just looking for the headline decisions

06:01they're dissecting every subtle shift in language especially around forward guidance they look at the

06:07nuanced phrasing about future economic projections and crucially those individual member forecasts the dot plot

06:15showing where each member thinks rates are headed the tea leaves of monetary policy pretty much

06:21that's where you spot the signals about their longer-term intentions for inflation jobs growth

06:27often months before a formal announcement it really points towards a strategic well thought

06:32out pivot happening and the basic mechanism here lower rates stimulating the economy how does that

06:36actually work in simple terms well at its core it's about the cost of borrowing lowering the feds target

06:42rate makes it cheaper for banks to borrow money and that lower cost tends to ripple out through the

06:47entire financial system so mortgages get cheaper car loans get cheaper businesses find it less expensive to

06:53borrow for expansion or new equipment it basically incentivizes spending and investment it's the main

07:00lever the fed has to either cool things down like they did with hikes or like now potentially inject some

07:07life back into an economy that might be slowing down simple concept incredibly powerful effects okay so

07:13let's zoom out a bit if the fed does cut rates what are the broader sort of ripple effects across the whole

07:20economy the most obvious one seems to be that cheaper borrowing you just mentioned absolutely that's the

07:25most direct consequence lower interest rates mean cheaper borrowing costs pretty much everywhere so for you

07:31know regular people what does that look like think about mortgages rates might come down making buying a house

07:37more affordable or maybe refinancing what's attractive again car loans get cheaper even the interest you

07:42pay on credit card debt could potentially ease off a bit right so it potentially frees up some money in people's

07:48budgets exactly or it just makes those big purchases seem more manageable either way it tends to encourage

07:54consumer spending and consumer spending is you know the engine of the u.s economy roughly 70 percent of it

08:00okay so it boosts the consumer side what about businesses huge impact there too cheaper borrowing is a

08:06massive incentive for corporations suddenly funding that new r d project or expanding a factory or

08:12investing in new tech or even just hiring more people it all becomes less costly the hurdle rate for

08:17new projects drops precisely this lower cost of capital acts like a stimulant it encourages companies to

08:24invest to innovate potentially leading to more job creation down the line it's like getting a discount on

08:29the fuel for the economic engine makes expansion look a lot more appealing right yeah definitely makes sense

08:34it lowers the barrier to taking risks basically it does but and this is important this discount isn't

08:41always applied evenly or instantly it really matters how it flows through different layers of the credit

08:46markets from ultra safe government bonds all the way down to say venture capital and those secondary

08:53effects especially on risk appetite further out that's where it gets particularly interesting for our

08:59conversation right the knock-on effects those are key and connecting this to the bigger picture one of the most

09:04critical things to watch is what happens to the u.s dollar rate cuts often though not always lead to

09:10a weaker dollar we usually track this using the dollar index the dxy okay the dxy against that basket of other

09:17currencies exactly the euro yen pound canadian dollar crona swiss franc when u.s rates are high compared to other

09:25countries international investors tend to want dollars to buy u.s assets and get those higher yields that strengthens the dollar makes sense money flows to where it gets the best

09:32money flows to where it gets the best return but when u.s rates start to fall

09:37that attraction fades the dollar might weaken against those other currencies and the consequence of

09:44that a softening dollar can really change investor behavior how so a weaker dollar often pushes investors to

09:51look for hedges assets that tend to hold their value or even go up when the dollar is falling or maybe when there's

09:57just general uncertainty about fiat currencies like gold that's the class gold is the textbook example

10:02yeah a store of value for thousands of years but what's really striking especially in the last decade

10:08or so is how bitcoin has increasingly stepped into that conversation as an alternative hedge a newer one sure

10:16but recognized so people see it as like digital gold in that context increasingly yes yeah we've seen this play

10:22out multiple times now you look at charts of the dxy versus bitcoin there's often a noticeable inverse

10:27relationship when the dollar weakens bitcoin often strengthens suggesting investors are rotating capital

10:33into these non-fiat decentralized assets it really bolsters the narrative for assets like bitcoin

10:39positioning it as this potential digital counterpart to gold especially for people worried about you know

10:44long-term currency debasement or just wanting diversification away from the dollar system and it's not just a story

10:51you can often see this reflected in correlation data during periods of dollar weakness and falling

10:57real interest rates okay and this is where it gets really interesting for you the listener especially

11:01if you're anywhere near the crypto space because lower rates aren't just about cheaper loans or a

11:07weaker dollar they fundamentally pump more money more liquidity into the whole financial system a rising

11:14tide of capital right when borrowing is cheap and money is easy to get there's just more cash floating

11:19around looking for a place to go looking for a return and where does that extra liquidity often

11:25end up it tends to gravitate towards risk assets exactly categories of investments that offer the

11:30potential for higher returns but also come with more volatility more risk in traditional markets what does that

11:36usually mean typically stocks do well especially growth stocks tech stocks often lead the way in that environment

11:42but critically that wave of liquidity doesn't just stop at the stock market's edge does it no absolutely

11:48not it inevitably spills over sometimes quite dramatically into crypto assets yeah the crypto market with its let's be

11:56honest high volatility but also potential for massive asymmetric gains becomes a prime target for that influx of

12:02capital historically when there's more money just sloshing around the system a good chunk of it finds its way into

12:09speculative growth focused investments and crypto is definitely seen that way by many oh absolutely from

12:14the big names like bitcoin down to the smallest newest altcoins they're often viewed as the ultimate

12:21expression of that risk on sentiment it transforms crypto from just a niche hobby into potentially a major

12:28destination for global capital when investors are chasing yield and growth in a low rate world and what's

12:34really insightful here is watching how bitcoin specifically acts almost like a sophisticated

12:40gauge for the whole financial weather system it's not just reacting to the raw amount of money the

12:46liquidity its performance seems very closely linked to this more nuanced idea of real yields okay real

12:52yields let's break that down quickly that's the return you get after accounting for inflation right

12:56exactly a simple way to think about it is taking the nominal yield on something like a 10-year treasury bond

13:01and subtracting the rate of inflation may be measured by cpi or as the fed prefers pce that gives you your

13:08real return got it so how does that connect to bitcoin well big one is showing this really strong

13:13historical tendency to rally when those real yields go down why is that what's the mechanism think about

13:18it from an investor's perspective if traditional safe investments like government bonds are offering a real

13:25return that's very low or maybe even negative meaning they aren't even keeping pace with inflation you're

13:31actually losing purchasing power by holding them precisely when that happens the opportunity cost of

13:38holding an asset that doesn't pay a yield like bitcoin goes down significantly why hold a bond that's

13:44losing value in real terms when you could hold an asset with potential for high growth even if it doesn't pay

13:50interest right the comparison becomes more favorable for bitcoin exactly capital naturally starts looking for

13:55alternatives assets that might not just preserve purchasing power but actually grow it

14:00and this isn't just a small effect think about large institutional portfolios pension funds family

14:05offices when real yields sink it forces them to fundamentally rethink their traditional safe asset

14:11allocations they start looking for that asymmetric upside potential hunting for real returns and that's

14:16often when assets like bitcoin appear on their radar and you can see this in historical data well yeah there are

14:22some compelling analyses comparing bitcoin's price moves against fed rate changes over multiple cycles they often

14:28show this inverse relationship with real yields quite clearly especially when real yields dip below zero or

14:35even below minus one percent historically that's often been a pretty powerful catalyst for money moving

14:40into non-yielding digital assets like bitcoin that distinction between nominal and real yield is so important

14:47it explains a lot about capital flows okay so if bitcoin is maybe the uh the main engine here the rocket

14:54establishing the path what about ethereum eth and all the other altcoins yeah that's a great analogy if

15:00bitcoin is the rocket then eth and the wider altcoin market can often act like the booster stages they

15:06tend to amplify the market's moves so if this overall risk appetite comes back strongly because of rate cuts and

15:12liquidity then altcoins could potentially benefit even more than bitcoin percentage wise why is that is it just

15:17because they're smaller partly but it's more about their beta in finance beta measures how much an asset's

15:23price tends to move relative to the overall market altcoins are generally considered higher beta assets

15:29meaning they swing more wildly exactly in a strong bull market when confidence is high and people

15:34willing to take more risks altcoins often shoot up much faster than bitcoin of course the flip side is they

15:41tend to fall much harder in downturns too higher risk higher reward potential that's the game so as this

15:47wave of liquidity and risk appetite washes through the system investors often become more willing to

15:53bet on projects with let's say more speculative potential or ambitious growth stories that often

15:59triggers what people call an altcoin season where money flows down from bitcoin and ethereum into smaller

16:04cap coins which raises a really practical question for you the listener where does your comfort level

16:09sit on that risk spectrum are you looking to ride those potentially bigger waves with higher beta alts or

16:15do you prefer sticking closer to the relative uh stability of bitcoin and maybe ethereum that's

16:20a key decision in managing your exposure absolutely and your point about all coins is boosters it connects

16:26directly into another really fascinating area the interplay between traditional finance trad fi and

16:32decentralized finance or d5 because here we see a potentially powerful arbitrage opportunity opening up

16:38arbitrage how so think about the risk free rate and trad fi that's usually based on things like

16:44government bonds maybe high yield savings accounts money market funds as the fed cuts rates the

16:49yields on those instruments shrink they become less attractive right your savings account starts

16:54paying next to nothing exactly now compare that to the yields you might be able to get within d5

16:59protocols often on stable coins digital dollars essentially if traditional banks are offering you

17:05say 0.5 percent on your savings but a well-established audited d5 lending protocol is offering maybe

17:11four percent or five percent on a stable coin the d5 option suddenly looks a lot more compelling doesn't

17:15it hugely more compelling on a relative basis even if there are perceived smart contract risks in d5

17:22the yield difference becomes hard to ignore this creates a really strong incentive for capital to

17:26move out of those low yielding trad fi assets and into the d5 ecosystem specifically chasing those higher

17:32stable returns on stable coins so you expect more money to flow into things like d5 lending we

17:38anticipate increased activity yeah in protocols like of compound others wherever investors can

17:43find sustainable yield on stable assets and this isn't just guesswork we can actually watch for

17:48this by tracking on-chain data like stable coin movements exactly if we see a big surge in stable coins

17:54moving on to decentralized exchanges or flowing into the major lending platforms especially right after

17:59we see yields really compress in traditional markets that would be a strong signal that this capital

18:04migration is happening it highlights how d5 isn't just this separate thing it becomes genuinely

18:10competitive with trad fi when traditional yields are low okay so we've painted a pretty positive picture

18:15here cheaper money rising risk appetite potential booms for bitcoin alts d5 but it can't all be smooth

18:24sailing can it we need a reality check absolutely crucial a dose of realism is needed while the underlying

18:32trend the macro tailwind definitely seems favorable for risk assets like crypto we have to acknowledge

18:38the volatility caveat markets don't go up in straight lines never especially not during major policy

18:43shifts like this there's always the potential for short-term market nerves maybe even a brief panic

18:49what if for instance the market interprets these rate cuts differently how do you mean what if

18:53they're seen not as a proactive move to support growth but as a reaction a sign that the fed sees serious

18:59economic weakness ahead that they're hitting the panic button because things are worse than they look

19:03ah the cutting into weakness scenario exactly if that narrative takes hold even temporarily markets

19:09could react negatively at first we could definitely see a choppy period maybe even an initial sell-off

19:14as investors try to figure out what the cuts really mean and reassess their own risk so potential for

19:19some initial downside it's definitely possible but and this is important historically that kind of initial

19:26panic often fades once the positive effects of the lower rates actually start filtering through the

19:31economy cheaper borrowing stimulating spending and investment more liquidity finding its way into

19:37assets the market tends to stabilize and then rebound so the initial reaction might not be the final word

19:44usually isn't the underlying trend that increased risk on sentiment driven by liquidity

19:49is likely the more durable force but you have to be prepared for that potential choppiness

19:54it takes a resilient sort of longer-term view to separate the market noise from the fundamental shift

20:00don't get shaken out by short-term volatility if the bigger picture still looks positive and that

20:05long-term perspective you just mentioned is so vital because the impact of these rate cuts goes

20:10way beyond just day-to-day price swings it reaches deep into the actual structure the architecture of the

20:16whole web3 ecosystem okay so beyond just prices going up or down how well if we connect it back to that

20:20bigger picture this isn't just crypto gets a boost it's more fundamental it's about where capital is

20:27now incentivized to go looking for returns and that shift is likely to significantly impact defi lending

20:33protocols think about the big players like av compound and others they seem particularly well

20:39positioned to see increased inflows because of that yield differential we talked about exactly let's hammer

20:44that mechanism home traditional finance yields on safe stuff savings accounts money markets short-term

20:50bonds they shrink when the fed cuts rates that creates this powerful economic pull investors

20:57especially those starved for yield in the traditional world start looking elsewhere and defi offers an

21:03alternative a compelling one it's like this alternative financial plumbing system that just becomes

21:07dramatically more competitive when the old pipes aren't delivering much water so to speak so capital

21:12flows into defi this strengthens those protocols which can create positive feedback loops like more

21:18liquidity in the pools makes borrowing and lending smoother more efficient more capital might even lead

21:24to lower borrowing costs within defi itself attracting even more users and that whole environment

21:29encourages more innovation new financial products new services being built on top so it's not just about

21:35yield it's about driving adoption and innovation in defi precisely it helps move defi from being this

21:41niche experiment towards being a genuinely competitive maybe even mainstream option for a wider range of

21:47investors especially those really focused on making their capital work harder okay so defi gets a boost what

21:54else in the broader web3 space well think about diversification lower rates push investors to look beyond just

22:00stocks and bonds and this trend directly benefits one of the really exciting growing areas in digital assets

22:07the tokenization of real world assets rwas ah putting things like real estate or commodities on the

22:13blockchain exactly or precious metals art maybe even intellectual property when traditional assets are

22:20offering lower returns investors are naturally more open to exploring these new frontiers they're looking for

22:26better yields sure but also just better diversification and tokenization helps with that massively rwa tokens are

22:34potentially revolutionary because they can allow for fractional ownership of assets that were previously

22:40really illiquid or had super high barriers to entry so you could own like a tiny piece of an office

22:45building or a famous painting that's the vision and you could potentially trade that token easily on a

22:50blockchain the lower rate environment makes investors more adventurous more willing to look at these

22:55innovative structures it's effectively bridging that gap between the old world of traditional finance

23:00and the new world of decentralized systems so what does this all mean for you as an investor navigating

23:06this it means that this idea of digitally representing physical assets isn't just some tech fantasy

23:12anymore it could become an increasingly important investment avenue blending your physical world assets

23:18and your digital investments into maybe one more cohesive strategy it opens up totally new ways

23:24to build a portfolio very interesting the lines are definitely blurring now you mentioned earlier how

23:29bitcoin is attracting attention beyond just retail investors what about institutions how do rate cuts play

23:36into that this is where things get really fascinating i think and it really speaks to how much the

23:41crypto market has matured it's not just driven by individual enthusiasts anymore there are now these

23:46institutional frameworks being built almost like super highways allowing massive amounts of capital to

23:52flow in and these flows are directly influenced by these macro shifts so rate cuts could accelerate

23:57institutional adoption very likely we're talking about the potential for significant capital rotation from

24:03traditional assets into the crypto space by major players think multi-billion dollar hedge funds large asset

24:11managers maybe even conservative players like pension funds eventually they might start increasing their

24:16allocations to bitcoin to ethereum and maybe most significantly to those recently approved crypto ETFs why ETFs

24:25specifically because they solve a lot of problems for institutions this rotation becomes especially

24:30likely if those real yields we discussed compress even further for huge institutional portfolios that

24:36need to deploy billions and are constantly optimizing risk adjusted returns holding traditional low risk

24:42assets that barely beat inflation or don't even beat it becomes really unattractive so they need

24:46alternatives that can actually generate returns exactly and regulated products like the spot bitcoin ets

24:52provide a structure they understand it's familiar it's audited it's accessible through their existing brokers

24:57it allows them to get exposure to crypto without having to deal with the headaches of direct custody

25:01complex compliance or setting up new operational processes it lowers the barrier for the big money

25:07massively and that intensifies the impact of liquidity on crypto by orders of magnitude

25:13we're not talking about small retail buys anymore we're talking about institutional capital

25:18potentially moving in chunks of hundreds of millions even billions flowing through these

25:23established trad fi pathways you can actually track this starting to happen through data providers like coin shares

25:30looking at their weekly digital asset flow reports or reading research from firms like massari

25:35who constantly analyze this macro crypto connection so it's not just about the price going up it's about the

25:41fundamental structure of global finance starting to incorporate digital assets as a real and maybe even

25:47necessary component that's exactly it it's a sign of maturation a really profound shift underway you

25:53know they say history doesn't repeat itself but it often rhymes that feels particularly true when

25:58you look at these big macroeconomic cycles doesn't it oh absolutely the patterns can be remarkably similar

26:03and thinking about rhymes if we look back at that period roughly 2020 to 2021 when we had basically zero

26:10interest rates or near zero the zirp era zero interest rate policy right those rhymes start sounding pretty

26:17loud almost deafening that whole era was defined by ultra loose monetary policy quantitative easing

26:23just an incredible amount of liquidity flooding the system and what happened in crypto it fueled the

26:29biggest bull run in bitcoin and defy history pretty much undeniable yeah it wasn't just a coincidence was

26:35it it felt like a direct consequence a powerful real world case study we saw just explosive growth crazy

26:42innovation in d5 nfts took off yeah the whole crypto world burst into the mainstream consciousness

26:48so those conditions back then driven by all that easy money they really do offer a potent glimpse of

26:54what might be possible again if we see a sustained period of lower rates right remember that wild ride hard to

26:59forget it wasn't just random luck the low rate environment massively inflated asset prices pretty much

27:05everywhere making those speculative growth assets incredibly attractive and crypto with its built-in

27:12volatility and huge upside potential was arguably the single biggest beneficiary it showed a really

27:18clear observable link a central bank policy directly impacting digital asset performance that 2020 2021

27:25period is definitely a powerful reference point but you know beyond just the sheer scale of the growth

27:30there was another more recent event that raises maybe a more fundamental question about crypto's role oh which

27:35event was that the banking crisis back in march 2023 remember silicon valley bank signature bank yeah

27:41that felt pretty unstable for a moment there a lot of nervousness exactly and during that period of

27:45real stress in the traditional banking system we saw this surge in what the market called fed pivot fears

27:51the expectation grew rapidly that the fed would have to loosen policy maybe cut rates or stop hiking

27:57just to stabilize things and prevent a wider contagion okay and what happened with bitcoin then

28:02bitcoin's price got a significant boost now what was really interesting was how it behaved even as the

28:08broader market was jittery and traditional finance was clearly in crisis mode bitcoin seemed to act

28:14almost like a flight to safety asset really not just another risk asset selling off it didn't behave

28:20like one then when the stability of actual bangs was being questioned capital seemed to flow into bitcoin

28:26it challenged that long-held idea that bitcoin is only a high-risk speculative bet so it acted more

28:32like a safe haven in that specific crisis it certainly behaved that way it forced a lot of people

28:38especially institutional strategists to seriously reconsider bitcoin's role could it actually be an

28:44uncorrelated asset something that offers refuge when the traditional system is under duress the 2023

28:50crisis provided some compelling evidence that under certain conditions the answer might be yes it adds

28:55another layer to the bitcoin narrative that's a really significant evolution and how people might

28:59perceive it and speaking of narratives and assets that offer refuge it feels natural to draw a

29:05parallel here between bitcoin and gold the comparison comes up constantly right they're often viewed

29:10differently one ancient physical the other new digital but in terms of how they react to monetary policy

29:18shifts they actually show some remarkably similar patterns don't they they really do both gold and bitcoin

29:24have historically shown this tendency to rally when interest rates are falling especially real interest

29:29rates gold's been the classic inflation hedge the ultimate store of value for millennia it often

29:35does well when the real return on holding cash or traditional bonds goes down and bitcoin seems

29:40to be following a similar script increasingly so as this sort of emergent digital store of value

29:46it's mirroring that dynamic more and more you use the analogy earlier think of them as different chips

29:51but they're sailing in the same macroeconomic winds both tend to catch a nice tailwind when central

29:56bank rates are dropping and liquidity is easy so it reinforces that idea of bitcoin as a legitimate

30:02digital alternative especially when people are worried about fiat currencies or just looking for

30:06something outside the traditional system exactly and again it's not just a story you can often see

30:11it in correlation studies their responses to things like real yields and dollar movements are often

30:17quite aligned though not perfectly of course okay so we have historical parallels of evolving narratives

30:23what about the infrastructure you mentioned etfs earlier how crucial are they in this whole picture

30:30connecting macro policy to crypto flows oh they're absolutely transformative this speaks volumes about

30:36the market maturing the significance of those huge etf inflows especially what we saw starting in 2024 and

30:42likely continuing it just cannot be overstated because they make it easy for big money to get involved

30:47precisely those surges in institutional demand are directly linked to periods of easy money abundant

30:53liquidity when rates are low capital is plentiful these big institutional investors pension funds

30:58sovereign wealth funds big hedge funds they're far more willing and frankly need to allocate funds to

31:04new asset classes to find returns especially assets that might offer uncorrelated returns and the etfs provide

31:10the perfect vehicle the perfect wrapper it's regulated it's accessible it uses infrastructure they already

31:16know they don't have to worry about custody specific crypto compliance hurdles it removes massive friction

31:23points so it just opens the floodgates for institutional money when the macro conditions are right

31:28it intensifies the impact exponentially billions can flow in through these familiar channels it really does mark

31:36a new era these macro policy shifts by the fed can now translate much more directly and much more

31:43powerfully into huge sustained capital flows into the digital asset world the plumbing is now in place

31:50for that institutional wave and just to make sure we're not being too u.s centric here does this

31:55dynamic play out elsewhere do we see similar things in other parts of the world that's a great point yes

32:00absolutely it's insightful to look at emerging markets for examples there are plenty of historical cases where

32:05aggressive rate cuts in those economies have triggered significant flows into alternative

32:09assets and in recent years that increasingly includes crypto why is that particularly the case

32:15in emerging markets often investors there face even more pressure maybe their local currency is unstable

32:21or traditional investment options within their own country offer really poor returns perhaps eroded by

32:26high inflation in those situations investors are often much quicker and more aggressive in seeking

32:32out assets anywhere in the world that can actually preserve or grow their wealth so crypto becomes

32:37an attractive option for them too definitely it's not just an isolated phenomenon in the u.s or europe

32:43it reflects a truly global investor tendency the underlying forces we're discussing the hunt for yield

32:49the desire to escape currency debasement the appetite for growth when traditional options look weak

32:54these are universal drivers it shows how interconnected global finance is and how central bank policies

33:00especially the feds ripple outwards and influence investor psychology everywhere hashtag tag got an outro

33:08okay so we've covered a lot of ground here after this really deep dive let's try to boil it down what

33:13does this all mean practically for you listening for your financial outlook yeah let's synthesize the core

33:18idea seems to be the fed looks likely to pivot towards cutting rates the main driver is wanting to avoid a major

33:26economic downturn a hard landing and that big policy shift is expected to ripple outwards right cheaper

33:33borrowing costs across the board a potentially weaker us dollar which pushes investors towards alternatives and

33:39maybe most importantly just a big boost in overall liquidity more money flowing through the system exactly and all these

33:46factors together seem to create a generally positive maybe even robust environment for risk assets

33:52that includes bitcoin ethereum the broader altcoin market the growing d5 space even things like real

33:58world asset tokens and underpinning all of that is the potential for much larger more sustained flows of

34:05institutional money coming in really cementing crypto's place in the wider financial world that sums it up pretty

34:11well but you know it also leaves us with a really profound question to think about as these lines keep

34:15blurring between traditional finance and this rapidly evolving crypto world driven by these huge macro

34:21shifts how might your own personal understanding of what constitutes value or even what a safe haven asset

34:28is how might that evolve in the coming years interesting will this next phase if it is indeed fueled by

34:34easier money will it really kick off another massive bull run like we saw in 2020 2021 with that kind of

34:40huge growth and adoption or are there other factors out there maybe inflation proof stickier than expected

34:46maybe some geopolitical curveball maybe new regulations could those things kemper the enthusiasm lead us down

34:53a more complicated maybe more volatile path so history rhymes but maybe not perfectly this time it's the big

35:00question isn't it genuinely fascinating and definitely pivotal moment to be watching all this unfold these huge

35:06tectonic plates are shifting under us it creates incredible opportunities but also some complex

35:10challenges to navigate indeed these are exactly the kinds of questions that will shape our financial

35:17future before you dive deeper into mulling over these ideas maybe rethinking your own strategy please

35:23do make sure you like subscribe hit that notification bell yeah it really helps us out it lets us know these

35:28deep dives are hitting the mark for you and it helps us keep bringing you the analysis on the topics that

35:33really matter we really appreciate you joining us for this crucial conversation on the deep dive

Category

Transcript

Be the first to comment

Recommended