BITCOIN: This Economic COLLAPSE Indicator Is Flashing in a Macro Bull (Yield Curve Data)

Jason Pizzino

Introduction to the Market and Economic Analysis

Bitcoin has broken through $100,000, reaching $102, just 6% away from a new all-time high. The yield curve has recently uninverted, sparking concerns about an economic collapse.

Analysis of the Yield Curve

  • The 10-year minus the 3-month treasury yield curve has returned to positive territory after being inverted for over two years.
  • Historical data shows that the economy does not always contract after an uninversion, but the percentage of times the market goes up and the average and median results are worse across all timeframes following an uninversion compared to the baseline.

Market Performance After Uninversion

  • The first month after the signal shows a potential rise, but subsequent months may see a fall.
  • 12 months after the signal, the median percent return is 0.4%, indicating a potentially flat year.
  • However, extending the timeframe to 18, 21, and 24 months shows improving returns, with a 70% hit rate of seeing more positive prices.

Implications for the Stock Market

  • Despite the uninversion of the yield curve, the stock market does not always decline.
  • Historical examples, such as 1980 and 2020, show that the market can continue to rise after an uninversion, especially if it occurs during the mid-cycle phase.
  • The data suggests that while the market may not perform as well as the baseline after an uninversion, it does not guarantee an economic recession or a bear market for stocks.

Bitcoin and Cryptocurrency Analysis

  • Bitcoin is experiencing extreme volatility, a common feature of cryptocurrencies.
  • The USDT dominance has pushed lower, indicating a potential trading range similar to what happened in 2021.
  • If Bitcoin breaks out of its current top, historical examples from 2017 suggest that it could lead to another correction, but part of the end-stage cycle volatility.

Conclusion

  • The recent uninversion of the yield curve does not guarantee an impending economic recession or a bear market for stocks.
  • The stock market and Bitcoin are expected to experience extreme volatility, with potential for significant swings up and down.
  • Historical data and analysis suggest that while returns may be lower than the baseline after an uninversion, the market can still rise, and investors should prepare for volatility rather than pessimism.