How inflation and interest rates impact crypto markets and investment strategy

Transcript

don't [ __ ] this one up it really is so easy to capitalize on an industry that is going to Forex in the next 12 to 18 months GM good morning welcome to milroad radio where we teach you the ABCs of crypto and make it easy as one two three I'm Jay Hamilton and today we're joined by Kyle rehead now today the usfed shared main inflation numbers and announced their decision on interest rates causing the markets to go up and then down and back up and the volatility continues and we're going to make sure you understand what the heck is going on and most importantly what it means for your investments in the short term and the long term Kai thanks so much for joining us today welcome back to the

show thank you excited to be here all right let's jump in the Federal Reserve had their meeting today where a bunch of old white dudes gather around and decide if your money should be worth a little bit more or a lot less Kyle what happened yeah so before the FED met actually we had inflation numbers that came out this morning US inflation numbers which is which is quite important for markets at least right now when people really care about macro they really care about interest rates and obviously inflation numbers is what guides the rate numbers so we had some good news finally in inflation so the expectations for CPI in the US was 3.4% and it actually came in at 3.3% so that was a bullish news of

the morning and why markets went up more importantly if we look at core inflation or core CPI in the US it came in at 3.4% which was at 3.6 the month before and 3.8 the month before that interestingly there's a lot of noise around inflation at the moment and I feel like I've been a broken record on this podcast for like a year just saying it's going down it is going down I don't know why there's so much concern and if you look at the chart of core inflation it literally has just gone down and down and down for the last like what year and a half almost I feel like people are living in the past and living in this like 2022 terrible bare Market era when we had super high inflation it's like guys it's just going down I don't know why

everyone's so confused about where markets are heading it's pretty clear to me that it just continues to go down if you look at core don't get caught up in in CPI is my my clear takeaway there anyway the markets Lov this and everything pumped in the morning so markets were super green everything was up like I don't know I think salana was up like eight nine percent eth and Bitcoin were up around 4% interestingly the day before markets were down and actually really bad the timeline was super bearish and it was because everyone expected inflation to actually be higher and so funny timeline super bearish the day before inflation comes out timeline is all of a sudden super bullish because inflation came in lower than expectations the weird thing about this is every single month the analysts that basically come up with their predictions of where inflation is going

to be they get it wrong almost every single month so why do we keep basing our projection on this it's it really blows my mind anyway today was an interesting day because we had the inflation numbers which are super important and at the same time on the same day we had the fomc numbers what is that that's basically just the FED coming out saying are they going to raise or lower or keep interest rates the same last week we had the bank of Europe which lowered rates we had the Bank of Canada which lowered rates so that was pretty exciting and people were kind of speculating what's going to happen here with the US and unfortunately the news well I don't know fortunately unfortunately it's staying the same the same as we had last month and the month before that I think it's 5.25% or whatever rates are at right now

in the US they're not budging and interestingly actually it was a bit of a hawkish meeting and by hawkish I mean guess you could call it bearish basically it was no rate Cuts but also when you look at the expectations of those in the FC meeting the expectations are now just one rate cut this year at 25 basis points whereas last month it was maybe three cuts at 75 basis points so a little bit more bearish than I think what we thought and so the market didn't love that and so that was kind of the jerk backwards in markets after had the inflation news so a little bit of wildness but overall I mean to see inflation come down is good I didn't expect them to lower rates in this meeting so I'm not too concerned I think the rate Cuts will still come I think we

just need to be patient I also just one more point before we move on here the job of the FED is I mean they're trying to control inflation and then eventually they need to lower rates they just they have to lower rates because they need to help with unemployment they need to help stimulate the economy Etc so they need to lower rates at some point but but they can't do it right now because they're afraid that inflation might pick up again and so their job is to kind of thread the needle here and so what they're doing is basically they're seeing inflation coming down they could lower rates right now but what they want to do is Spook the market and so they're telling you they're not going to lower rates for a long time and we're going to stay higher for longer I still think we

see probably three Cuts this year two or three and I think it's you know at least I think it's at least 50 basis points not 25 like they're saying this is them like kind of playing with the market they've got to put up a bit of a front they've got to lie a little bit and then eventually like they were saying they're going to be higher for longer they're never going to lower rates at all this year and yet they're still going to do it you know so they have to just sort of like play with our perspective a little bit which is just kind of interesting just like when you're trying to you know get on that first date or something like that you know you got to tease it a little bit you can't go right to the point you know you gotta hold back okay

Kai so when this news came out little bit bullish a little bit bearish kind of heading in both directions how did you respond and what does it make you think about your investments in the short and in the long term I mean interesting the market moved a ton on the inflation news I think crypto added like 60 billion or 70 billion unto its market cap I can't remember but it it pump billion in one hour 67 in one hour yeah right so it's interesting I don't do much on these because I'm looking more into the future and playing the my portfolio and my investment strategy more longterm and so to me it's pretty clear inflation goes down over time maybe on a month-to-month

basis it might go up it might go down but like if you look over a year if you look at where the trend going is going inflation is going down if you look at where the trend is going for rates it's going down the amount of central banks around the world that lowering rates is increasing significantly really really fast especially over this last week with Europe and Canada and so where's the trend going with rates it's going down and so what does that mean well it means that risk assets are probably going to go up over time again what's the trend we are not in the 2022 Trend where things are getting worse and worse and worse we're in the opposite Trend now we're back into a bull cycle where things are trending upwards in terms of risk assets and so for me I'm not trying

to capitalize on a Fed meeting like in the news that comes out in that little move that we had of 4 per or 5 perc in eth I'm not trying to trade that most people shouldn't try to trade that and so for me absolutely nothing changed in in terms of my portfolio because I'm already invested for where I think the Market's going to be 12 18 months from now and so a little meeting today a little inflation news today doesn't impact me at all actually what I do do sometimes in moments like this was yesterday leading up to this news people tend to get spooked and as I said markets kind of went down a lot yesterday and people were quite bearish and so I bought I bought some meth I bought some so I bought some maker and as we talked about in yesterday's

episode and that's about it right I I'm not going to trade around much I'm not getting scared I actually wish we had worse news and prices went down even lower that would be completely fine so I don't do much when when markets move like this so let's bring it back to an episode uh that we had last week because last week we did an episode where we talked about we went through about 12 charts and looked at a bunch of key indicators to build out the case for why we felt that the markets were the macro situation the economic situation and the crypto onchain numbers were showing that we were in a very good position to likely see a pump now we don't know exactly when that comes timing is tough

right so we don't know if that's going to be could be tomorrow it could be months from now and I think that leaves that's a tough position to be in because that kind of brings up the question of like okay well what do you do now then sure the setup is there that it's going to come but what's your advice for navigating and and also it's summer which is always can be a bit of a choppy period what's your advice for navigating these next few weeks these next few months through what could be an up and down summer yeah I know a lot of listeners they listen to that episode probably and they got super bullish which is is great as you should be but then they get impatient and they go well

wait a minute you said last week that it was an inflection point and it's all going to happen and it's like well rewatch The episode we didn't say it was going to happen today as you just said said it's going to happen at some point and actually for me again you think about you said macro economics and then crypto sort of like bullishness or bearishness of crypto and it's not like I actually asked someone today was getting worried or yesterday in our Pro channel was getting worried about the markets and they were like well looks like Soul's going down a lot should I sell like what should I do blah blah blah and I just asked them was like has Solana's Tech gotten worse has like are less people going to adopt crypto now for some reason like has anything changed and the answer is no and so as

long as nothing has changed there if anything things have gotten more bullish we've had a bunch of new projects launch a bunch of good things have happened in the space new wallets new like ux improvements Etc and so for me the longer it takes for markets to to to have its move based off sort of macro and yet crypto continues to get more bullish in terms of fundamentals all that for me just says we're gonna have a bigger and bigger move think of it like when you shake a bottle of coke the more you shake it the more it's going to explode once you open that lid that's kind of what's happening right now the more bullish that the adoption of crypto and the tech around crypto just improves improves over time here it's like you're shaking up that bottle of coke even more and then all of a sudden rates get

lowered or we start to print some money and that's taking off the cap maybe throwing a Mentos in it and boom the thing just absolutely skyrockets that's kind of a good explanation of how you can put it so again when I think of my portfolio I don't think of where things are at right now I think where is this where is it going to be in 12 months in 18 months and as I said a bunch of times I think the market cap of crypto goes to maybe 10 10 trillion over the next 12 to 18 months that's a Forex from here and so all I do is spend my time not looking at what the price is today I'm looking at okay if the market is going to be 10 trillion in 12 to 18 months what's going to make up that market cap is Bitcoin

going to be 50% of that or 55% like it is now is it going to be eth is defi going to be the sector that outperforms is it gaming is it that's the stuff I'm trying to think of right now so that I can position myself to capitalize on that growth period right I'm not buying and selling right now that's a waste of everyone's time you you you're going to if you're a professional you maybe get it right when you day trade like 50 to 55% of the time now hopefully you have your risk and and things like that kind of figured out so that you can be profitable but imagine that you get it right half the time if you're even lucky and if you're really really good doing this every day and so I'm not doing this every day I run a business multiple

businesses and that's not where I want to spend my time my attention what I want to think about is where is this industry going and then how can I allocate right now to capitalize on that and so what I'm looking at is which sectors do I think are going to outperform which Protocols are building and doing the best right now and I'm trying to just like study and build conviction rather than worry about these price movements that are happening on a daily basis any tools or practices that you have to manage the movement though because the prices do move on a daily basis yeah and unless you live under a rock or throw your phone in the lake then you're still going to look at it so there it's right in front of your face and that that is going to be stressful right I gave a lesson this morning actually to

one of our Pro members who I could tell was stressed out over the markets and I was okay maybe you're I don't know maybe you have too much allocated to this like I'm not quite sure but one of the lessons that I taught was if you are stressed if you allowing the markets to stress you out you're going to make bad decisions right the time that you are more likely to make bad decisions in life in general is when you are stressed out and so your goal as an investor is to find ways to make yourself less stressed especially during Market volatility right now how do you do that well that's different for everyone in this example this person had alerts on his phone where he got an alert saying that salana was down 10% in however long and then he got an alert saying it was

up eight% the next day in however long and I was like dude turn those off that's only adding to your stress that's the last thing you want to be doing right the best way to sort of like alleviate stress is one have a plan have a strategy right because then these little movements aren't going to impact you they're not going to worry you and then the second thing is like build conviction right one of the questions that I kept asking was like has something changed in your conviction has something changed in your investment is the technology getting worse from yesterday hell no right and so if you're building conviction in the assets you're holding and not just gambling in them like look if my whole portfolio was meme coins hell yeah I'd be stressed because I have zero conviction in any of them there's no reason why I'm holding them

other than it's just a random bet right it's like if you go and throw $100,000 on something in Vegas today you're going to be hella stressed on you know if the right number pops up in your gamble right and so if you invest in things that you truly believe in and you understand them and you build conviction in them then these movements don't really bother you and so a lot of investing is about controlling your emotions part of that is having a strategy building conviction and then it's like I don't know trying to understand your emotions in a lot of our reports and a lot of my like analysis and things I say to write things down write how you felt when prices moved a ton and when prices moved down a lot what were your like initial reactions what were your instinction that you

wanted to do you probably wanted to sell something even though you know it's a bad time to sell when things dump 10% and it's also a bad time to buy when things go up 10% but that's what we do right and so you need to try to learn and understand those emotions the fear the greed because it's always going to exist it doesn't matter how good of an investor if you're an Institutional Investor if you're professional or not those emotions are always there the good investors what separates good and bad investors is can you handle those emotions can you manage those emotions if you just let those emotions force you to take action and sell things and buy things at irrational moments you're going to be a terrible investor right even if you have the best investments even if you know all the right assets to

buy you'll still [ __ ] it up but if you can learn to manage your emotions in those moments that's the key to a good investor right there and if you can consistently do that over time as we've talked about before throughout multiple Cycles so I feel like you you almost need a therapist to help you manage your emotions throughout cycles and throughout volatility but it's really what it is the thing that stands out to me here is a famous Warren Buffett quote that I remember where he talks about it's not the IQ that makes the difference in a good investor or a bad investor it's their ability to manage their temperament and the ups and the Downs which is rather comforting to those of us who don't have 160 IQ it's like okay great we could still do well

but also puts into perspective the need to hey here's the one of the greatest investors in the world saying it's not IQ that matters it's your temperament and your ability to manage your emotions so everybody turn off your Al alerts on your phone unless you're a day trader you don't need those alerts on anymore Kai any final thoughts to share with us today before we let you go yeah don't [ __ ] this one up it we it really is so easy to capitalize on an industry that is going to forx in the next 12 to 18 months seriously guys just don't [ __ ] that up it's it's not that hard you can literally close your eyes right now put Capital into any token in the top 100 in coin Gecko and you'll probably do well

over the next 12 to 18 months that's the stage that we're going into in the bull market I'm not saying you should do that but you can that's how easy it is in a bull market I mean same with in Tech right now you can buy Apple you can buy Google whatever they're all going up right and they're going to continue to do that as rates go down and as liquidity goes up it's that simple when you start to trade and you know TR to get cute on these meetings and different news and price performance ETA like that's when you [ __ ] this thing up and you just you miss it and that to me makes no sense when crypto moves it moves really really fast and it moves quickly and it's like one day or two days and you have all the the gains and

then nothing happens for a while if you miss those moments if you're not in them because you're trying to get too cute that's literally how you [ __ ] this up and so just don't [ __ ] this up that's my advice wise words I'm going to mic drop that one Kai thanks so much for joining us today in other news today in case you missed it h a report from bitwise predicts a 20 trillion boost to Global GDP by 2030 through the combined power of crypto and AI now this bitwise report highlights the Synergy between Bitcoin Miners and the AI industry due to the computational power they can provide also they highlight blockchains Technologies transparency in security which can be leveraged to authenticate

AI generated content in other news the UK and 24 European countries can now use PayPal to purchase crypto through moonay which will make it even easier for UK and EU residents to onboard and buy more crypto and finally nosis and chain link have made a partnership with nosis will be integrating chain Link's ccip now this integration is a win-win for both gr projects for nosis it means access to chain Link's powerful offchain computation capabilities enabling them to build more complex and featur applications and of course they also benefit from reduced gas fees and then

for chain link this partnership further solidifies ccp's position as a leading interoperability Solution that's a wrap on today's show folks thanks so much for listening and we'll see you again tomorrow thank you for listening to milk Road radio the easiest path to get smarter about crypto if you like this episode share it and hit subscribe or follow so you don't miss out on the next one there's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game then we'll leave a link to milk Road Pro as well your number one resource to help you invest successfully in crypto one final note this podcast is for educational purposes only nothing we

say is financial advice crypto is risky so you should never invest more than you're willing to lose thank you friends and we'll see you in the next one