A Dollar Breakout Will Crush Bitcoin and Emerging Markets


Hey There Income Hunters,

 

The dollar is having its best week since June.

 

I can guarantee it is making life miserable for many people. And I am not talking about traders that have been bearish on the dollar.

 

A stronger dollar is a nightmare for emerging market countries because most issue debt in dollars … and a stronger dollar raises their cost of servicing that debt.

 

This massive Eurodollar market, many think it’s a market for Europe, but it represents all debt issued by non-US countries in dollars.

 

As you can see in the chart below the overall market cap in these countries is declining as the dollar rises. If the dollar trend kicks into high gear, it could trigger an emerging market crisis: 

 

Graphical user interface, chart, line chart Description automatically generated

 

This scenario can also crush Bitcoin. So, today I want to show you the damage a stronger dollar can do and how to take advantage of dollar trends in your trading.

 

Let’s take a look …

 

The Bitcoin Hedge That May No Longer Be Needed

 

The big Bitcoin story was that we needed a safe replacement for the dollar

 

But if the dollar continues to rally and we get the reopening trade, will Bitcoin buyers bail?

 

If the Democrats can push both bills through and interest rates continue higher, we may get a domino effect in which commodities not in great demand give way.

 

Check out how closely Bitcoin has tracked the dollar …

Graphical user interface, chart, line chart Description automatically generated


Well, now the dollar is trending higher (inverted in the chart) and Bitcoin is sitting just above major support.

 

The Fed Is Behind This Push in the Dollar 

 

I have been saying for months the Fed can delay the inevitable but the can does not reverse its course.

 

Let’s think about this clearly. The Fed is out of bullets and they are now on the verge of pulling back QE because inflation is out of control.

 

So, it is critical that they lower inflation, right? Well, the best way to lower inflation is to raise the dollar, and they do have control over that.

 

The Fed uses the Bank for International Settlements (BIS) to manage silver and gold trading in London. And the European banks were forced to get out of that market, but the British desks are still there until the end of the year. That means they can control selling Silver and Gold for dollars to prop the dollar up …

 

This will work in the short-term; however, it will only delay the inevitable, especially as the Fed is losing the public’s confidence for two reasons:

 

      • The recent scandal inside the Fed with two federal reserve bank presidents trading massive amounts of S&P futures 
      • The public realizing the Fed has deceived them on the severity of inflation.

 

Watch for the Dollar to Fail 

 

The dollar may grind higher and interest rates may grind higher but here is what you need to prepare for:

 

      • Interest rates going higher are a nightmare for the Fed. It will trigger a debt crisis and burst the equity market and housing market.
      • The Fed will have no choice to cap interest rates to avoid crushing the markets.
      • Yield curve control will happen. Tapering QE and rising rates will be the signposts for the next leg of the inflation trade.

 

Let’s check the U.S. Dollar Index (Ticker: DXY) technical setup …

 

Chart Description automatically generated

Look for DXY to fail against the 200-day moving average and the 94.70 level of resistance … 

 

Bring It Home 

 

The Fed will use every “tool” it has to hold the markets together. When they have the opportunity –and I am thinking 1.8% to 2.00% in the US 10-year — they will deploy yield curve controls … 

 

Then the next step would be modern monetary theory (MMT) when they can cut out the banks, send money directly into the economy and not even have to issue government debt to pay for it.

 

That is when the second stage of their ridiculous experiment begins. The dollar will accelerate to the downside, and real assets will soar.

 

I will keep bringing you all the pieces of the puzzle to prepare you to beat inflation and generate massive profits. Have a great day and as always …

 

Live and Trade With Passion My Friends,

 

Griff 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.