The Communist Party Congress, the OPEC meeting, the rise in rates, the recession and inflation, everything leads to taking refuge in the Bitcoin.
A very ominous CCP congress for inflation?
The Chinese Communist Party Congress has come to an end. As expected, Xi Jinping has run for a third term as party leader. A first made possible by the People’s National Assembly which abolished the limit of two presidential terms in 2018.
The reshuffle of the Politburo Standing Committee has confirmed Xi’s hand. This sanctuary of seven people making the most important political decisions will now deal with the head of the Ministry of State Security, Chen Wenqing.
But also Li Qiang, the party secretary of Shanghai, who was Xi’s chief of staff when the latter was governor of Zhejiang province. Li appeared on stage right after Xi, suggesting he will be made prime minister next spring.
This appointment speaks volumes. Shanghai, the first Chinese port, was indeed blocked several times under the pretext of Covid to disrupt the global supply chain to cause inflation in the West.
Overall, the nominations for this 20th Party Congress are seen as a bad omen across the Taiwan Strait.
Taiwanese Kuomintang leader William Tseng declared that changes to the CCP’s constitution commit it to “resolutely oppose and deter” Taiwan independence.
Indeed, two secret service pundits and military chiefs responsible for the “reunification” with Taiwan have taken the place in the Poliburo of leaders of the Central Bank and the Minister of Finance.
This Party Congress sends a clear message to the rest of the world: a conflict is in the making. No Chinese leader had filled his cabinet with so many experts in the fields of aerospace, armaments, espionage and the military.
A war with Taiwan has become more likely since this weekend. Knowing that Taipei produces 92% of semiconductors in less than 10 nm. An embargo against Taiwan would soon trigger a severe disruption in the global supply of semiconductors.
However, the United States and Europe consume 45% of all semiconductors. And much more if we talk about the most advanced chips (less than 10 nm).
[À ce titre, ne manquez pas notre article sur la société chinoise Bitmain (fabriquant de machines de mining de bitcoin) qui est frappée de plein fouet par l’embargo US sur les puces avancées.]
An embargo would cause a new inflationary wave in the electronics sector. The annual inflation rate will then rise to around 20% on both sides of the North Atlantic.
All this to say that the geopolitical tectonic plates continue to shift in favor of stores of value like bitcoin.
WWIII
The actions of China and Russia are a coordinated attack on the existing world order.
The status of the dollar as an international reserve currency is threatened, and with it the empire of Uncle Sam. Let us remember that all the wars of the United States are aimed at ensuring that energy is sold in dollars, and no other currency.
This was the case when Saddam Hussein decided to sell his oil exclusively in euros. Or more recently in Syria, when Damascus gave the green light to the construction of the “Friendship Pipeline”, to connect the old continent to Iran rather than to Qatar. Iran and Qatar share the same gas field (South Pars), except that one sells gas in dollars and the other does not…
Since 1975, all oil and most raw materials are displayed in dollars. It is for this reason that the central banks keep their reserves in this currency (7,000 billion $ placed in the debt of the US government).
In other words, the dollar gives Americans a $7 trillion slate on the rest of the world. Of which 300 billion belonging to Russia which have just been “frozen”… China holds for its part 1000 billion dollars.
So much counterfeit imperial money that the Middle Kingdom could get rid of if the oil-producing countries accepted the yuan. This is why the yuan is freely convertible into gold and why Beijing has been accumulating it without counting since the war in Iraq. What for if not to prepare for the after dollar?…
The tensions we see today stem directly from the threat that China, Russia, Iran and many other countries pose to the greenback.
When you hear “rules based international world order”understand “petrodollar”:
The FED, guardian of the dollar, participates in the war effort by aggressively raising its interest rates as well as reducing its balance sheet. In doing so, the US central bank is exposing economic fault lines from London to Tokyo.
In other words, the dollar is being used as a weapon. As such, the Colombian president was the first to draw declaring last Thursday that Washington ruined “all the economies of the world”. “Our currencies are all falling, not just the Colombian peso.”
It’s a safe bet that the FED is trying to force the world to side with Ukraine by dangling lines of credit (currency swaps) for those who will participate in the sanctions against Moscow.
Politicizing the dollar is a double-edged sword, however. The BRICS no longer make any secret of their intention to get rid of it. Knowing that Saudi Arabia, Turkey and Egypt will soon be part of this club…
Moreover, OPEC’s decision to cut its oil production completely upset the table. This support for the Sino-Russian axis is probably not unrelated to the fact that several Fed governors are beginning to temporize in the face of this new energy reality.
Either way, central banks are ultimately trapped, including the Fed. The debt has become too great.
Look at what the only interest payment on the American debt represents. They will soon cost as much as the defense budget:
There are not 36 ways to pay off debt:
1- To default, which would spell the end of the petrodollar. Out of the question.
3- Increase productivity (good growth). This requires a technological breakthrough or a drastic increase in energy consumption. Very unlikely. The US shale oil miracle of 2008 will not happen twice.
2- Take on more debt by spinning the printing press.
Money printing for various “emergencies” (pandemic, war, energy bill) is the most likely outcome. Except that printing money makes inflation worse.
It’s a vicious circle. This headlong rush will inevitably end in tragedy. A drama for those who have left their savings in their bank account or in real estate.
Weekly Summary of Glassnode’s On-Chain Bitcoin Analysis
Glassnode emphasizes in its report that the number of BTC on the exchanges continues to decline. We are at a four-year low. In the month of October alone, “123,500 BTC have been withdrawn, or 0.86% of the circulating supply”.
The big bitcoin declines occur when BTCs instead flow into the exchanges. Thus, a priori, no purge in perspective.
Another satisfaction, the number of BTC saved is at an all-time high. More and more hodlers wisely adopt a long-term strategy. In all, 66% of BTC has not moved for more than a year.
In contrast, the growth rate of addresses with a non-zero balance has stagnated since August. Thus, despite the approximately 400,000 new addresses per day, as many addresses are empty of all their balance:
Another reason not to think that the bull run would be very close: trading volumes in bitcoin. They continue to collapse, at 19 billion dollars a day all the same.
Let’s end by welcoming the evolution of accounting standards in favor of bitcoin in the United States.
The appreciation of the BTC can now make the balance sheets of companies like Microstrategy, Tesla or Block shine. Enough to encourage other multinationals to take the plunge for their cash.
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