FED Propels the Dollar Towards Hyper-Inflationary Collapse?

4 min readJun 1, 2021

The US Federal Reserve and central bankers continue to signal that infinite deficit spending does not matter. They’ve set us on a path to hyper-inflation and bitcoin is the only available lifeboat.

As history seemingly repeats itself with the slow decay of time, bitcoin and ethereum are setting up for a directional move in the coming days.

Let’s dig in.

US Federal Reserve Heads Towards Hyperinflation

The United States inflation rate just hit a 13-year high, something which central bank-affiliated economists argue is ‘temporary’ due to a supply shortage.

Of course, anyone with average intelligence knows that the new inflation figures come as no surprise given the massive stimulus that took place since covid.

Check out the full article here!

Technically speaking

Bitcoin coils up

BTC/USD has formed a range between $42,000 and $30,000, coiling within a tighter and tighter pennant.

Such structures have a tendency of breaking out in the same direction price entered, which is to say that there’s technically a higher probability for BTC/USD to fall to lower levels.

On the 12-hour chart, the BolingerBands confirm that a sizeable move is imminent, and will most likely take place by the 3rd of June.

Volumes have also been on the decline, which is typical of maturing structures reaching their apex.

Zooming in on the 4-hour time-frame, we can observe price-action at a closer level.

So far, BTC/USD trades beneath the range point of control (POC). The POC is a level within a given range where most volume took place, making it a pivotal price-point that serves to inform future prices depending on how the market reacts to it. Bulls face an uphill struggle with several layers of resistance, but bearish exhaustion just might tip the scales in favour of a sustained relief rally.

Levels to watch

4-hour close above $39,000 suggests continuation to $44,000.
Close below $34,000 suggests retest of $30,000-$28,000.
Weakness below $28,000 suggests a draw-down to $21,600.

Ethereum retains bullish setup

Meanwhile, ETH/USD has retained a bullish posture above the 20-weekly EMA, unlike BTC/USD.

Prices appear to be forming a ‘W’ bottoming structure which could spur further growth towards the .618 Fib level at $3,350 before sellers come rushing back in.

Levels to watch

Weakness below the 20-weekly EMA suggests a move to the 2017 high at around $1,400.
A low-time-frame break above $2,900 (W neckline) suggests an attempt to the .618 fib level.

All in all, the market is coiling up within a range with open interest reaching levels not seen since early January. Given this low open interest, the potential for highly explosive moves is lower (since futures provide rocket fuel to either side due to liquidity events). While targets for sustained downside are technically more likely (according to by-the-book technical analysis), historical precedent and on-chain data do not offer confluence for a re-test of Bitcoin’s 2017 all time high.

Separately, the macro environment has not changed, with the Biden administration planning to roll out another $6 trillion in deficit spending. While anything can happen, price action would break with all historically noteworthy behaviour if it were to tank another 20%-30% after a somewhat brutal 54% drawn-down.

Bulls lead the way.

Catch you next time.

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