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January 23, 2022 | Mark Jeftovic: Bitcoin Is The “Short The Status-Quo” Trade

John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What to Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website in 2004, sold it in 2022, and now publishes John Rubino’s Substack newsletter.

From Mark Jeftovic at

During one particular nasty down-day during the April – May crypto-mini winter, I put out an email alert to my premium list telling everybody to remain calm and keep the bigger picture in mind. At the time I said something like “It is not my intention to step in with a calming letter every time cryptos get beat up”.

Since then, we’ve gone on to fresh all-time highs and when cryptos did start moving again, it happened very fast.

So here we are again, we’ve been pondering for a few issues on whether cryptos will come off with the wider markets now that The Fed is pretending to take the punchbowl away.

On top of that, the Russian Central Bank released a report calling for a blanket ban on cryptos. For some reason, when flat out authoritarian states like China or Russia come out against emancipatory non-state money, people take it as a bearish sign. What did you think they were going to do? Nevermind that the Russian news doesn’t amount to a Bitcoin ban, it states the central bank’s recommendation on Bitcoin. Hardly surprising, given that Bitcoin is a non-state monetary system.

So the wider markets are imploding. TLSA, NFLX, ARKK, it’s a total sh*tshow. Cryptos beat up as well. Coinbase, who we already know from previous quarters actually experience increased transaction revenues during times like this, is under $200/share and now trades at a P/E of 14.

We know from past issues of TCC (citing their own shareholder letters) that Coinbase’s revenues increase during episodes of volatility. I bought more COIN on Friday afternoon.

So even though I said I wouldn’t make it a habit to do pep talks during drawdowns, we do have quite a lot of new subscribers since last year’s crypto mini-winter. I will bring your attention to a couple things.

This is an infographic of Bitcoin corrections by year since 2012:

Measured from the high at around $68.5K USD, we’re off around 44%.

I’ve seen worse. Lot’s of times. We will see worse in the future. We may even see worse now. This is what an unfettered, unmanipulated, non-curated market looks like. (It is also worth noting that Bitcoin is, in a typical year, good for about four decent sized pullbacks of 20% or so. Every year).

What I also know is that if the Fed raises rates 4 or 5 or even 7 times, if they come out with a 50bpt “surpise” hike in March, then it means that somewhere along the line the decision has been made to completely destroy the entire global financial system. Because that is what the outcome will be.

If that’s the case, there will be (for starters) a 400 Trillion dollar exodus from the global bond market, and at least some of it is going to flee to where central banks and governments can’t touch it: crypto and precious metals.

As Greg Foss put it in that What Bitcoin Did interview I linked our last issue: Clever hedge funds think the pair trade to be in is: long equities / short Bitcoin (what Foss calls “hedged and wedged”).


They don’t realize that Bitcoin’s correlation to risk-on assets is not a causal one. It will come unglued if interest rates truly rise and the 40-year old bond bubble bursts (the US 10-year treasury touched 1.8% today. It was 1.34% in December, it was 1.15% in August).

In addition to being a short on all fiat currencies, Bitcoin is also a short bonds play, with a never expiring call option on long volatility. Bitcoin may more accurately be viewed as the Short Everything trade. It’s The Great Opt-Out that can’t be manipulated away by plunge protection teams or The Fed. It can’t be confiscated, it can’t be redistributed, redenominated or rehypothecated unless its owner explicitly agrees to that.

Never forget the core thesis from The Crypto Capitalist Manifesto:

Numerous commentators expect the Fed to back down, maybe get in a rate hike or two (perhaps even that “surprise” 50bpt in March), which will simply allow them to reset rates marginally higher before they cut again and restart QE. One more kick-the-can on what will then be a rapidly imploding global financial system.

This would bring the Fed in to rescue markets, including risk-on assets, which Bitcoin is currently perceived to be. Given how much carnage has already happened, before the first rate hike has even occurred, this is still the most likely outcome in my mind.

However, if the Fed doesn’t back down, and lashes itself to the mast and carries out its announced intentions of 4 or 5 rate hikes in 2022 and beyond, the bond markets crash, the debt bubble implodes and that means 400 Trillion dollars of global bonds will start looking for the off-ramps.

There’s a third possibility, factoring in that perhaps, possibly, central bankers aren’t stupid people and they realize the quandary they’re in. They may look for an easier, softer way to regain control of the global financial system and seek salvation through Central Bank Digital Currencies (CBDCs). If all the dollars are digitized, the logic will go, they can control it all from the Eccles Building. Yield curve control, money supply, even who gets to spend how much and on what (social credit).

If this third-way is aggressively pursued, even that will impel capital to flee the centralized banking systems and embark on a one-way trip into decentralized crypto-currencies. That said, The Fed did just release their position paper on CBDCs and if anything it seems to signal just how far behind the curve they are on having the ability to deploy one. When they finally go this route it will probably be via stablecoin regulation and a partnership with Big Tech.

To summarize:

Fed backs down: Currency devalues. Everything Bubble back on. Bitcoin up.

Fed hikes and normalizes: Global bond bubble implodes. Debt collapse. Capital flees, at least some of it into Bitcoin

Central banks issue CBDCs: Yield curve control, no more cash, social credit (no jab = can’t spend). Capital flight to cryptos.

No matter which way the Fed goes, the game theory calls for more capital moving into crypto. In this Lockdown Era of unelected bureaucrats and career politicians perpetually moving the goalposts on your autonomy and economic sovereignty, Bitcoin is truly the only inalienable property right standing.

So while the nocoiner NPCs suffering from monetary Stockholm Syndrome gleefully celebrate Just Another Crypto Correction, remember to zoom out and keep the big picture in mind. We aren’t dealing with an asset bubble in Bitcoin, we’re dealing in a collapse of the global monetary regime, the decentralized revolution and the obsolescence of the nation state.

Most of this post was excerpted from a market alert sent to my premium list: The Crypto Capitalist Letter. TCC covers global macro as it pertains to Bitcoin with a tactical focus on crypto stocks. Get the overall investment thesis for free here, or try our premium service for $7 here.

Mark E. Jeftovic is the founder of Bombthrower and CEO of, a company he co-founded in 1998 which has been operating along the lines described within these pages

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January 23rd, 2022

Posted In: John Rubino Substack

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