September 22, 2022, 11:00AM EDT · 5 min read

Hey Reader,

So the Federal Reserve just raised interest rates another 75 basis points bringing the Federal Funds Rate to 3.25%.

While nowhere near all time highs, the rate that it is increasing is significant. This is the third rate increase of 75 basis points in a row. And if you listen to Jerome Powell's speech he's obviously hyper focused on doing whatever it takes to bring inflation back to 2%. Asset prices be damned.

What stood out to me was the fact the very first thing he spoke about was inflation. Not the stock market, Ukraine war, CBDCs, de-globalization, energy prices or any of the other myriad of problems facing us this decade, but inflation.

Inflation is a serious problem and it's good to see the Federal Reserve is taking it seriously. 8.3% is way too hot for stable prices and without stable prices we have no country. Democracy only works with stable prices.

So while Fed actions will hurt asset prices in the short to medium term, letting inflation run wild would be much worse. History has too many examples of what happens when inflation becomes uncontrollable. Think famine, war, revolution, etc.

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With this in mind, I think it's safe to assume stagnant price action on crypto assets for the rest of the year. And with Ethereum's transition to proof of stake behind us, we don't have any major catalysts to keep crypto assets in the mainstream conversation.

And the irony of crypto assets designed to supersede central banks responding to central bank actions isn't lost on me. It's unfortunate how much control this 12 member private institution has on our lives.

That said, I don't see any reason to take big risks with any assets until inflation is under control. For now I'm simply DCAing into BTC and a few other projects and stacking cash. But DCAing into ETH or other L1s makes sense if you like NFTs and DeFi.

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We have plenty of time to accumulate our favorite crypto assets at these depressed prices. The risk reward is strong and the macro environment isn't changing anytime soon. Just focus on quality crypto assets and only invest what you are willing to lose.

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In previous cycles, once BTC surpassed a previous high it never went below that price again. We surpassed December 2017's high of $19,000 in December 2020 and many thought we'd never trade below it again. This proves that the world in 2022 is vastly different than 2008-2019.

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Globalization is coming to an end. The US Navy will no longer be the world police for global trade routes. And people haven't come to terms with what a world where America isn't importing majority its energy looks like. And because of inflation, the Federal Reserve can no longer print money as bandaid to everything.

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So the calculus is either we range around $18k or bears push us down to ~$10k (-85% previous all time high of $69k). Know, I'll be unloading the truck if the latter happens.

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And if we break $10k, God help us. Although now that I said this, I have to mentally prepare.

KB