How 2 Cycles Can Converge to Send BTC Higher

By Juan Villaverde

Last weekend, Bitcoin (BTC, “A”) suffered one of its worst crashes in recent months. Ethereum (ETH, “B+”) followed suit, falling even harder. Altcoins tanked pretty much across the board. 

First, let me say this sell-off does not signal the end of the bull market.

Not only is a correction at this point in the cycle expected — as my colleague Dr. Bruce Ng explained on Tuesday — but it is relatively shallow compared to historical precedent. 

In fact, my colleague Beth Canova mentioned on Wednesday that the long-term bullish trend should remain intact even with a drawdown to $50,700. 

Second is that the same catalyst that sparked this latest push lower will likely become a bullish one in time.

Let me explain … 

This sell-off was prompted by a series of ramped-up military strikes in the Mideast.  

Just like cryptos follow distinct cycles, there is also a war cycle that is just as accurate as our Crypto Timing Model. And as a cycles analyst, I foresee war on the horizon, likely centered in Mideast, although it may take a while to fully manifest. 

I take no pleasure seeing conflict flare up in another part of the world. War is hell. The damage it inflicts on innocent life simply cannot be overstated.  

That said, there is no reason to ignore the impact it’ll have on assets.  

Traditionally, when the war drums sound, you see a “flight to quality” in asset markets. Investors typically ditch stocks and other investment deemed “risky” and rush to the perceived “safety” of U.S. Treasury markets. 

That is NOT what we saw this week.  

Instead, investors dumped their U.S. Treasuries, pushed gold to all-time highs and bought Bitcoin for good measure.  

To me, this is quite telling.  

The market expects conflict to intensify in the Middle East, yes. But it also recognizes Uncle Sam — burdened with the biggest peacetime debt in history — is effectively broke.  

This is a situation I’ve talked about before.  

The White House can trumpet its commitments to defend Israel. But simple math dictates the U.S. government cannot afford this war. 

Yes, Uncle Sam will step into this latest Mideast conflict … but it’ll print a metric ton of money to do so. 

Fiscal deficits are already near record highs. Inflation is rearing its ugly head again — even as the Fed signals rate cuts later this year. 

Meaning the ONLY way America can afford another geopolitical conflict is to run sky-high fiscal deficits … 

Order the Fed to monetize them … 

And watch U.S. dollar melt away faster than an ice cube in hell. 

In response, gold and crypto are going higher. How do I know this? Well, look at how gold has responded so far.  

As markets opened Monday, bonds tanked. Gold, however, surged to a new all-time high around $2,400, where it remains as I write. 

You recognize a tree by its fruit. And the fruit borne of war amounts to the most powerful catalyst crypto and gold could hope for.  

This is what the markets loudly signaled this week. 

This is why gold hit all-time highs this week … 

This is why bonds cratered …

And it is why Bitcoin is heading to the stratosphere in the months and years ahead. 

Of course, the market may not know quite what to do initially when war breaks out. When panicky investors make a dash for cash, they sell anything that’s liquid … including gold and Bitcoin. 

But that would likely be just a knee-jerk reaction in the heat of the moment, so to speak.  

Over time, as rational thought returns, markets will inevitably come to understand and appreciate one thing: Massive monetary debasement (resulting from yet another military conflict) will send crypto prices to the moon. 

So, use this dip as a buying opportunity. Because if the worst happens — and war sets the Mideast on fire — you may never see Bitcoin trading under six digits again. 

Get in while the getting is good. 

Best,

Juan Villaverde