Bitcoin is now cheaper than 90% of its history, says big print author Lawrence Leppard

The Fed chairman is playing both sides

Lepard explained why he has faith in the Fed chairman Kevin Warsh signals a rate cut even as market prices rise. Before accepting the role, Warsh publicly argued that the Dallas-based PCE average, about 100 basis points below the headline CPI, might be more accurate inflation sensor. He also compared today’s rise in artificial intelligence (AI) productivity to the technology boom of the mid-1990s, when Greenspan kept the stakes low without causing inflation.

“I think both of those things meant to me that he wanted to lower the rates,” Lepard said during the meeting an interview. “I suspect he said both of those things to Trump. I suspect that’s partly why he was elected to the job.”

That changed after the bad inflation prints related to the increase in oil prices after Strait of Hormuz closing Now the market is seeing an increase in rates. Lepard thinks the reading is wrong.

His reasoning: The US government incurs an annual interest expense of $1.3 trillion. In his opinion, it is structurally impossible to raise rates materially. The newly formed Task Force Warsh on inflation Leppard argues that the measure is intended to provide political cover for the declaration inflation less than the headline numbers suggest, paving the way for cuts ahead of the midterm elections.

“The chances that the Fed will raise rates this year are zero,” he stressed. “And the market thinks there’s a 100% chance they’ll raise rates this year. One of us is right and the other is wrong.”

Bitcoin and the power law

Bitcoin broke below $60,000 during the interview. Lepard noted that it also broke below the 200-day moving average and briefly fell outside the power-law corridor, a log-scale model developed by researcher Giovanni Santastasi and extended by mathematician Fred Krueger that fits bitcoinPrice history with 95% R-squared correlation.

Lepard described the current price as near or below half a standard deviation below the mean power law, zone bitcoin occupies less than 10% of the entire trading history. In the previous one bear marketsprices in this zone tend to recover within weeks or months.

He quoted the previous one bear market 70%, 80%, and 90% drawdowns as context as to why this cycle’s roughly 50% correction from the October peak may indicate acceptance is maturing and the decline volatility. He does not rule out a further drop to the lows of $50,000, but sees less than $50,000 as unlikely.

” Bitcoin right now compared to its historical 200-day moving average is really quite cheap,” he noted.

Lepard continued:

“It was that cheap less than 10% of the time.”

The next large print

Lepard’s main macrothesis is that the US debt-to-GDP ratio, currently around 124%, cannot be solved through growth alone. He cited former Treasury Secretary Hank Paulson’s recent appearance on Bloomberg after 15 years of public silence as a signal that insiders are preparing markets for the future liquidity crisis.

Each successive intervention by the Fed has been larger than the last. The answer in 2008 was about $2 to $3 trillion over three years. The 18-month response to COVID reached an estimated $5 trillion. Lepard expects the next intervention to exceed both in size and speed.

He frames goldsilver, and bitcoin as cash devaluation insurance, essentially a devaluation trade. Bitcoin ranks first in its hierarchy because it cannot be printed, transfers in minutes, requires no storage costs, and has a 16-year track record of growing adoption, despite​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Strategy and mathematics

Lepard also told critics of Michael Saylor Strategy did not do basic math. Strategy’s preferred stock dividend liability is approximately $1.7 billion annually. About $55 billion bitcoin on balance at the time of the interview, Lepard estimates Strategy will need to sell about 4% of its holdings bitcoin per annum to cover this obligation. If bitcoin estimates a minimum of 4% annually, ordinary shareholders break even on this mechanism alone. BitcoinHistorical annual revenue is well above this level.

“You can’t break the Strategy,” he said. “I mean, you’re breaking it when bitcoin breaks. But when bitcoin stays at $50,000 to $60,000 for a few years, they’ll be perfectly fine.”

He added that he sells some gold and silver positions to buy both bitcoin and Strategy stock at current prices, which he sees as attractive given Strategy’s $33 billion market capitalization against what he predicts is multi-trillion long-term potential.

Where is Leopard

Leopard keeps a large personal bitcoin ( BTC) stack and a significant position of the Strategy. He told the listeners the size bitcoin exposure so that a 50% reduction would not result in a sale and said that at current prices he would consider a lump sum rather than dollar cost averagingconsidering how rare it is bitcoin reaches this price zone relative to its history.

Its price target is about $180,000 in the next two years, $1 million in about 2031 or 2032 based on the power law, and about $6 million per coin over 15 years. It frames these targets as consistent model results that persist with a 95% correlation. bitcoincomplete history of the market.

Hero/Feature Image Source: RE:Bitcoin episode of the Youtube show “We Broke Below the Power Law with Lawrence Lepard”.