Treasury Bonds, Bitcoin (BTC) And The Future Of Financial Markets

The global economy is in an unprecedented state of confusion as investors look for direction. Bitcoin (BTC) may be trading sideways for now but there is something bigger brewing on the global scale that very few are paying attention to. The 20 Years US Treasury Bonds have an inverse relation to the S&P 500 which means every time one of them rises, the other falls and vice versa. However, at this point in time, both of them are struggling to get past the 21 Month EMA. This is just a small depiction of the uncertainty and confusion we have in financial markets at this point. On top of that, Gold and Bitcoin (BTC) are not moving anywhere either. So, the question is, “What is really going on and what is the future of financial markets?”

The monthly chart for 20 Year Treasury Bond (TLT) shows the price facing a strong rejection at the 38.2% Fibonacci retracement and falling back below the 21 Month EMA during the same month. Please note that the mainstream investor does not care about treasury bonds and neither does mainstream media outlets. This is why you will rarely find CNBC and other popular media outlets talk about treasury bonds. Most of the time, they will talk about the Dow Jones Industrial Average, the S&P 500 and Nasdaq. So who care about treasury bonds? Institutional investors care about treasury bonds especially the 20 Years US Treasury Bonds. Many a time during previous market cycles, we have seen the 20 Years US Treasury Bonds to be a strong indicator of what is going to happen in the stock market.

This is reasonable to expect considering only professional traders and institutional investors care about this asset class. So, when the TLT tops out, professional traders know that a stock market rally is around the corner. If the 20 Years US Treasury Bonds had fallen below the 21 Month EMA under different conditions, we would be expecting a stock market rally. However, the monthly chart for S&P 500 (SPX) shows that the stock market is also in trouble. If both the S&P 500 (SPX) and the 20 Years US Treasury Bonds (TLT) close the month below the 21 EMA, we will see uncertainty and confusion reach peak levels and the Volatility Index (VIX) would reflect that.

This state of utter confusion and uncertainty that we see in financial markets today is not a coincidence. In fact, this is the direct result of failed economic and monetary policies worldwide. With the imminent collapse of the US Dollar (USD) around the corner coupled with uncertainties in most financial markets, cryptocurrencies like Bitcoin (BTC) have a solid chance of gaining mainstream adoption a lot faster than anticipated. Amid the confusion and anarchy facing global governments and central banks, the general public is expected to run towards commodities like Gold and Silver as well as cryptocurrencies to protect itself against the damages of the next global financial crisis.

The monthly chart for BTC/USD shows that the recent bear market can be chalked up as a minor retracement in the grand scheme of things. The price is still in a long term uptrend and as the state of the global economy continues to deteriorate, people are going to get a lot more interested in cryptocurrencies in general and Bitcoin (BTC) in particular.