Don't Trust the Bitcoin Price!

Assalaamu Alaykum everyone. I hope you are doing well. Today is June 10th and Bitcoin is sitting at 69,500 and I'm going to tell you in this live why Bitcoin's price is not to be trusted. So without further ado, let's get started. As always, this is not financial advice, so be sure to do your own due diligence before making any investing decisions. So big week ahead, we have a number of pretty impactful macro economic data coming out. We have CPI inflation data on Wednesday. That's, I suppose, the big one. Then we have the Fed speech interest rate decision, not too impactful or although a lot of people pay a lot of attention to what the Fed says. I don't really because I don't really think they know what's coming down the pipe. And therefore, they're where it should be discounted. They've been proven wrong time and time again. And they have a pretty consistent track record of flip flopping. So I don't really pay much attention to what they say, but a lot of investors do have the FOMC projection same as the Fed speech impactful, but I don't really use it or rely on it that heavily. We have PPI inflation the day after on Thursday, and then we have consumer sentiment data on Friday. So a pretty loaded week in terms of macro economic data points. And so expect volatility in the markets as it relates to the Fed's rate decision, there's basically no chance that the Fed is going to cut rates on Wednesday. The market here is assigning a 0.6% chance, probably less than that. The markets probably being generous here. If you go out to September, you can see basically a 50 50 split with a slight edge to no cut being priced in. These percentages will change probably dramatically if the inflation numbers that come out on Wednesday, and then the PPI on Thursday come out to be very different than expectations. Just to take account of where we are in terms of our fight against inflation, it does seem like we're making progress, but it's not linear progress. So we do seem to sometimes be taking two steps forward one step back. So if you look at the red line here, the blue line, by the way, is just the S&P, and it's been steadily chugging along to diverse macro economic environments. If you look at the red, you can see that it spiked in 2022, 2023, and then we were able to get a handle on inflation, so the red represents inflation. But in the last couple of months, we have seen some retracement in terms of our progress on inflation, so we've gotten a few readings that were hotter than expected. So a cooler than expected inflation reading will be very much welcome news for the market, and the market is likely to react rather positively to that. Now, if you look at inflation on a multi-year basis, now we're only trained and used to looking at inflation on an annual basis, because if you look at it at a multi-year time frame, it's rather discouraging and rather scary. So if you look at home prices, for example, home ownership costs, since 2020, they've spiked 26% across the United States, some places like Utah spiking as high as 44%, just since 2020, which is tragic if you're living in Utah, or you wanted to live in Utah. Idaho, Hawaii, Montana, basically some of the most beautiful states in the union have had the highest rates of home ownership expense inflation. Just since 2020, by the way, we're not talking about a long time ago, just since 2020, and nationwide, the average is basically a quarter higher today than it was just four years ago, which is pretty tough on many homeowners. And if you look at groceries, they're not any better. So if you look at something like a dozen eggs, on average, we're from $1.50 to $3, so 100% price increase since 2020. Now, I can tell you that $3 for a dozen eggs actually seems quite cheap. Now, especially if you're looking for like free range dozen eggs, you're looking at north of$5 at least. So $3 is actually being quite generous. If you look at other items, I mean, lettuce is up 50%, if you look at milk is up 50%, bananas up 50%. So really, I mean, should be thinking about investing in inflation, and that's why we Bitcoin as they say. Now, unemployment is also starting to go up higher, albeit by a modest amount. So unemployment is now at 4%, which raises the risk of stagflation. So stagnation and inflation, that being said, we're still much lower than the levels that we've been at previous recessions. So if you look at 2008, 2009, we were much higher, closer to 6% on our unemployment number. And even if you go back to 2000, 2001, we were at higher levels than where we are right now, albeit by not too much. But it's still getting investors imagination going with regards to, hey, what if unemployment continues to rise and inflation is not brought under control. So that gets a lot of people very nervous. Now, the reason why I mentioned that the Bitcoin price should not be trusted is the following. So if you look at the Bitcoin ETFs in the last seven days, they've had a very, very strong seven trading days in terms of inflows. Even GBTC has seen inflows. I don't know why people are buying into GBTC, but they are. I don't know why considering their fees, but perhaps they're the only option that some people have, or they just don't know about the alternatives and differences in fees. But $2 billion has flown into the Bitcoin ETF in the last seven trading days. And yet, if you notice the price of Bitcoin hasn't done much of anything. So why is that? Well, shorts have now reached a record level. So people who are betting against the price of Bitcoin have reached out a record level. And now you've heard me talk on this channel before about how shorts are essentially manipulating the market by creating artificial supply. So when something is borrowed and sold, the owner is not putting it up for sale. So you're creating artificial supply for that thing. And eventually, what's going to happen is that that artificial supply cannot go on indefinitely. What matters is what is the true supply and what is the true demand. And true supply is determined by the owners of the asset, not by someone who borrowed the asset and is putting it on the market. So what's happening right now is that you have a shift in fundamentals on the demand side. So there's real demand for Bitcoin. But the supply on the market right now is very much artificial. It is short term. It's not long term. Eventually, that short term supply is going to yield itself to the real actual supply that the market determines that the owners of the asset determine. And with demand having risen, this is going to cause the price of Bitcoin to pop like a balloon that you're pushing underwater. Eventually, the harder you push downwards, the higher the pop upwards. And that is inevitable. So I would not trust this 69,500 price that you're seeing next to Bitcoin. I think had it not been for shorts, which are again, artificially manipulating the price through creating artificial supply. Had it not been for the shorts, then the price would have been much, much higher. So that's why if you focus on the fundamentals and you see this, this is an opportunity, I think, to accumulate more while the price remains artificially suppressed. Not financial advice, this is what I think. If you are not a PIF member yet, do make sure to become a member and join our community of Hello Conscious investors. Follow our portfolios. Move, move, trade for trade. With that, let's take some questions. Oh, nice to see you. Make sure if you're doing a hedge, make sure to remember us in your draw. That would be really appreciated. Very underwhelmed by Solana, seeing the very promising and I know you're a fan. Are you still? Well, I think the question you need to ask yourself is why are you underwhelmed? Is it because of any data points or are you underwhelmed by the price action? Looking at price action is not investing. Look at the fundamentals. Are the daily usage stats improving or how are they moving? Are they losing ground to other layer one solutions? That's the question you should ask, not the price action. I have a feeling, and maybe I'm wrong, but I have a feeling that if the price right now was $2.50, you would not feel underwhelmed. The gain that you're going to make in investing comes when you don't follow the sentiment of the market. Solana is down. The price may be underwhelming, but the fundamentals may be improving and in which case that's your cue to buy. Are we seeing an increase in defaults? Yes, we have seen increases in defaults. The consumer is running out of savings. They're using credit and there is an increase in defaults. We haven't reached historically unprecedented levels in default. But it is something to keep an eye on. Any other solution to inflation aside from interest rates? That's a good question. I think the entire system needs to be rethought. It really doesn't make, first of all, obviously you know my position on interest rates. But I don't really think you need to determine what interest rates are. I mean, can two banks who are dealing with one another agree on what interest rate they want to use? But that's just working within the system. I think the entire system needs to be changed. Certainly it doesn't make sense for currency to be created through debt. It doesn't make sense for the Fed to actually charge interest whenever it creates money. This is absurd. I think anyone who really understands how the monetary system works would agree. But my hope is I'm optimistic that more and more people as inflation becomes more and more an acute problem. More and more brain cells are going to be focused on finding a solution to this. I think that any system that allows debt, interest-bearing debt, will end up following the steps that we've seen in terms of the system eventually overburdening itself with debt. Certainly a democracy that has access to debt is okay with debt from an ethical perspective. Will end up bankrupting itself because people will always choose whichever candidate is offering more benefits. And so people in government will, in order to maintain their jobs, will end up the country in order to offer more and more benefits to their constituents until the country is bankrupt. So without a prohibition on interest-bearing debt, any democracy will end up sooner or later bankrupting itself. So the solution here is to, I think, take a page from Islamic economics and ban interest-bearing debt altogether. I think this is the fundamental shift in policy that would save us. Cannot shorts sustain themselves indefinitely? Well, because taking out a short position costs money. And so you have to pay interest on your short position. And when the fundamentals are becoming, and by the way, the interest is even more expensive. So it costs the money to maintain their position over time. And so eventually they have to either close their position or be forced to close their position. And then when you have the fundamentals on the other side improving, that makes the possibility of them being forced to close their position even more acute. Anything artificial really in the market is not sustainable. So this is why when the profit piece upon him was approached and asked to put price limits on things, he refused and he said this is something that the market determines because he understands that this is not something that's sustainable. If you put a price limit, you end up doing wrong by either the seller or the buyer, and eventually it's unsustainable and the market wins out. So I think, you know, Islam is one of the very first sort of theories that really promotes market forces because they are, you know, what is sustainable, what does right by the most number of people for most things. I'm not talking about cases where there's a monopoly on an item. That's obviously a monopoly is outside of market forces is unnatural thing. And or things that are essential, those are instances where, okay, I think there's a case to be made for the government stepping in and making sure that it's provided for everyone. But in normal circumstances, the market is the one that should determine. I talked about mean coins before, basically very quickly. I don't think that we should be imposing or we should be calling things. I don't think that there's as it relates to mean coins. There's no stipulation in Islam and the Koran or the Hadith that says you cannot buy something for, you know, a certain, because it's, you know, a meme, or you cannot buy something because you cannot buy something that you don't intend on using. There's no such stipulation. You can buy things as basically collectors items or things that for the soul reason that you think you can turn around and sell them for more. And I've mentioned before that I think mean coins at their base level. Any mean coin has the following utility, which is that you can send it to someone else with very little fees, typically, especially mean coins on Solana. You can send them to someone across the globe with very minimal fees. So there is some value there. It's not true to say they have no value. So yeah, I'm generally comfortable with mean coins. What is Semic ETF has the highest gain? Perhaps I'll do a review. It's been a while since I've reviewed Semic ETF. So I think perhaps it's time to do another review. Do you see any risk in countries banning Bitcoin? I think the possibility of that has decreased substantially considering now the Bitcoin ETFs have been approved. And a lot of people have poured a lot of money into these Bitcoin ETFs. It would be political suicide, basically, for a politician to try to ban Bitcoin ETFs. And therefore it's increasingly a remote possibility that any ban will be affected, at least in the United States, other countries, it's certainly possible. Altcoins look more bearish. What's opinion? So it's that time where you have to just go through a lull in activity and lull in gains in altcoins. And they go through fits and starts and this is pretty natural. So you have to have patience if you have an altcoin that you think has merit to it, then perhaps you should be thinking now about buying more. But this is nothing unusual as it relates to altcoins. You have to have patience. The markets are a mechanism for transferring value from the inpatient to the patient. So make sure that you are on the right side of that transfer. If you enjoyed this live, do leave a like. Hit the notification bell so you know when we go live again. Really appreciate it. And until next time, take care of yourself. Salaam alaikum and peace be upon you all.