Bitcoin Bottoming as Currency Wars Enter Next Phase; Future Dollar Cycle Low Could Coincide with Next Crypto High
Bitcoin Bottoming as Currency Wars Enter Next Phase; Future Dollar Cycle Low Could Coincide with Next Crypto High
01/30/19 INSIIDE Track – Currency Wars: The Next Act: “From a longer-term perspective – involving the 40-Year Cycle – one of the expectations for this overall period (2013 – 2021) has been to see a heightened battle for currency supremacy. That has occurred every ~40 years since 1773 – 1781 (and before) – usually involving the battle between hard and fiat currency… or between gold (and/or silver) and paper dollars.
This battle was/is expected to be multi-faceted, involving a domestic battle (gold v. dollar v. crypto) and a global one (Dollar v. Yuan v. Euro v. basket of currencies, e.g. SDR). The general expectation was that a new shift would unfold – very subtly until the tail end of that period when moves often accelerate or go parabolic – in an attempt to unseat the US Dollar as global kingpin. Ultimately, that could be a seismic shift!
East v. West
The global battle against US Dollar hegemony has been discussed repeatedly. This involves the fundamental attack – against the US Dollar – that has been forecast for 2013 – 2021. (Simultaneously, the technical analysis for the forex value of the Dollar has been projected to rise through a good portion of this multi-year period, masking what is chipping away at the underlying foundation of the Dollar.)
That included the launching of the BRICS New Development Bank and the Asian Infrastructure Investment Bank, the Shanghai (Yuan-based) gold fix, multi-decade oil refining & transporting agreements (with Saudia Arabia, Russia, etc.), and the Yuan’s inclusion into the IMF’s Strategic Drawing Rights… among many other developments.
China (and Russia) are mounting this challenge, or battle, against Dollar supremacy, in a repeat of the Currency Wars and currency battles that have resurfaced on a consistent 40-Year Cycle. That was and is expected to usher in a crescendo in the final months or years of this 2013 – 2021 period.
Paper v. Paper
In the midst of this transition, the most overt representation of the Dollar’s value – or at least its perceived value at any point in time – is the price of the US Dollar Index. That highlights its comparative value against other fiat (paper) currencies.
While some might argue that the swings in the Dollar Index are like the various positioning of the deck chairs on the Titanic, it is still the present reality of the Dollar and its standing. That is why it has been repeatedly emphasized – since 2013 – that the Dollar’s value would likely increase during the lion’s share of this 2013 – 2021 transition period.
That was compared to the ’drawback’ phase of an incoming tsunami when the entire ocean – from the coastal residents’ perspective – does the opposite of what would intuitively be expected. During that phase of a tsunami, the water actually recedes – often in dramatic fashion – from the coast, prior to the incoming tidal wave.
At that point, only the astute and educated observers recognize what is unfolding and perceive the seriousness and danger of what is being presaged. Similarly, the Dollar Index was expected to rally during the majority of this Currency War period – placating the average investor or trader into a sense of complacency… not realizing what is likely to ensue.
One of the most consistent cycles in the US Dollar Index has been an approximate 3.25-Year Cycle* that averages 38 – 40 months in duration. The table on page 2 is an update of that cycle, which has been featured many times during the past several years.
[*Keep in mind that a similar but staggered ~3.25-Year Cycle has governed stock market action throughout this century – pinpointing multi-quarter and/or multi-year lows in 3Q 2002, 4Q 2005, 1Q 2009, 2Q 2012 & 3Q 2015 and projected to time an ensuing low in 4Q 2018 – ideally in late-Dec. 2018. The next phase comes into play in 1Q 2022, coinciding with 40-Year Cycle analysis that also pinpoints a major equity bottom for 2022.]
That cycle timed the Nov./Dec. 2018 Dollar peak and anticipates a corresponding low in May – Sept. 2019 and an ensuing high in Jan. – May 2020. This is a very general cycle and often times secondary highs or lows, so more specific expectations need to be derived from more specific cycle and technical sources.”
Bitcoin has bottomed since reaching its major, 6 – 12 month & 1 – 2 year downside target at ~3,200 (see July 13, 2018 The Bridge) – returning to long-term trend support and its overall equilibrium point. That took place as cycles bottomed in mid-Dec. 2018 and portended (at least) a 3 – 6 month bottom.
At the same time, the Dollar is topping and could see selling pressures mount as this topping phase transitions into a down phase. That is when Bitcoin would have its greatest potential for a sustained advance.
See Weekly Re-Lay & INSIIDE Track for additional analysis and/or trading strategies.