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GM everyone. This is 2036, the newsletter that makes you smarter on crypto in 3min/day.

We all know a guy who thinks he can predict the price of bitcoin tomorrow based on an obscure chart that looks like this:

But we’ve got bad news.

99% of short-term charting is useless. It’s just astrology for nerds.

Charts are mostly useful for understanding long-term trends, like exponential adoption and repetitive cycles.

And one chart matters more than any other to understand where crypto is going.

Let’s take a look.

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Get smarter on crypto in 2 minutes

Remember when your parents said that the job market used to be much simpler back in the day?

Well, that’s only partially true.

When the baby boomers entered the workforce in 1976-1978, they had to compete for jobs.

This created inflation (as more people bid for the same stuff), except wages didn’t go up at all (because they had to compete for jobs).

But the government still needed to grow GDP. And there are only 3 ways to do that:

• population growth

• productivity growth

• debt growth

Unfortunately, we weren’t getting that much more productive. So the government chose to take on a lot of debt.

We all know how that went. In 2008, everything blew up.

At 2% per year, GDP wasn’t growing fast enough to cover the interest payments on the debt (which were at 6% per year).

So the treasury cut rates to zero and printed A LOT of money. This was called Quantitive Easing (QE), something we had from 2010 to 2015.

Turns out - the markets loved it.

In fact, they loved it a little too much. Just like a heroin addict eventually gets withdrawal symptoms so severe they can’t stop - the markets got addicted to money printing.

Printer on = markets up 📈

Printer off = market down 📉

It’s gotten so bad that there is a 97% correlation between the stock market and liquidity - the main measure of money printing.

That makes this chart the most important chart in finance 👇

Without money printing, risky assets like stocks go nowhere. And crypto is the ultimate risk asset.

For the last 18 months, we’ve had decreasing liquidity. Almost like clockwork, the market’s been in decline ever since.

And when the Fed started pumping money into the system to save the banks, crypto pumped.

So where do we go from here?

Well - the liquidity cycle is about 3.5 years long. You can see that on this chart 👇

Right now, we’re in a similar spot to the end of 2018. That’s the last time the Fed paused.

But the Fed will likely pivot soon. The banking crisis is only getting worse, and things are breaking again publicly.

Frankly, this isn’t a controversial opinion anymore. Virtually every major investor and economist agrees.

And the last time a pivot happened:

• The S&P rose by 15%

• The Nasdaq rose by 25%

• Crypto rose by nearly 300%

So we’re watching liquidity very closely and will keep you updated, of course 👀

Let the money printers run brrrrr.

🐉 In Other News

News, podcasts, videos, blogs

• Grayscale, the company behind the famous Grayscale Bitcoin Trust, files for Ethereum Futures ETF (link)

• EPIC CEO jokes about the supposed death of the metaverse, which has 600 million active users (link)

• Large crypto whales are accumulating $PEPE coin (link)

• Read the story of how $3.4 BILLION of crypto was hidden in a popcorn tin (link)

• Markets pull back as memecoin mania cools (link)

• President Biden decries tax loopholes for ‘wealthy crypto investors’ (link)

• Active Ethereum deposits hits all-time highs (link)

• Venture capitalists should bet on America (link)

• Coinbase manager sentenced to 2 years in prison for insider trading (link)

• a16z launches new $500M fund to support American dynamism (link)

• Canada becomes latest country to discuss digital dollar (link)

• Coinbase considers UAE a potential international hub (link)

• 60% of all ETH burnt since the Merge happened in the last 30 days (link)

• Total Value Locked in Arbitrum reaches all-time high of $2.4 BILLION (link)

🖼️ Crypto meme of the day

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