Yogi Berra’s Bitcoin Advice

“When you come to a fork in the road… take it.”
 – Yogi Berra, New York Yankees legend

I know exactly how Yogi feels.

We’re coming up on a fork in the road, and we’re gonna take it.

Question is: Are we going left or right?

The answer is yes.

Just a few days from now, bitcoin will go through its much-anticipated fourth halving. This is a deeply technical moment that really only matters to those who mine bitcoin.

Without getting too “inside baseball,” I’ll tell you that the halving in its simplest terms reduces by half the daily amount of newly mined bitcoin supply. Basically it makes mining bitcoin doubly hard.

It’s the device that bitcoin’s creator, “Satoshi Nakamoto” (nobody knows his real name), built to address worries about coin inflation.

But for me and the rest of the crypto community, the issue isn’t how hard bitcoin mining will become.

What we are all wondering is this: Where does bitcoin go post-halving?

I remain supremely confident that bitcoin sees a six-figure price, ultimately peaking in the range of $280,000 in this bull cycle, and likely crossing a million in the next cycle later this decade.

Others think we see a mil this time around.

That said, I do have a worry… the Federal Reserve and its response to sticky inflation. It doesn’t help that oil prices are causing a problem again, either.

What comes about with inflation, and what the Fed says or does to address it, will have an impact in the crypto market.

Crypto investors are the human embodiment of a chihuahua—prone to nervous angst, with a lot of useless yapping, and they flee quickly when challenged.

Thing is, I’ve been right all along on three fronts, and all those fronts are converging at the same moment.

Front One: January 2023, I called the bottom of the bear market in crypto and said here in Field Notes that it was a buying opportunity. Lo and behold, bitcoin is up nearly 3x since then, Ethereum is up more than 2x, and Solana has risen nearly seven-fold.

Front Two: I was writing across all of last year that inflation was not under control and that the Fed was destined to lose the fight because the Fed has no sway over events that are causing inflation (war, weather, supply chains, and America’s debt, which is now dropping $1 trillion into the economy every 100 days—in the form of the Fed’s repayments to banks that have lent to it).

And here we are. Inflation data keeps coming in hotter than expected and well above the Fed’s targeted 2% rate. Just last week, core inflation hit 3.8%, surprising everyone but Field Notes readers.

Front Three: I’ve been saying for a while now that exploration dynamics in the oil industry would soon bite and we’d see oil prices rising again. Those dynamics: Spending on exploration and production has plunged in recent years because of the excessive focus on green energy. The result is that the industry hasn’t been finding enough new reserves to replace dwindling reserves, even as daily demand for oil continues to grow.

That naturally leads to a supply/demand imbalance… which brings us higher and higher oil prices.

To that end, oil is now $85 per barrel, up nearly 25% this year. Higher prices are coming.

How does all of this play into the halving? You might rightly be wondering.

Well, it’s a big bag o’ mixed signals. And the crypto market is not very good with mixed signals.

Post-halving, one fork in the road focuses on the past and the fact that all three previous halvings have seen bitcoin race up hundreds or thousands of percent.

There’s no reason that can’t happen this time, too.

In fact, I’d argue there’s an even better chance of it because now we have bitcoin exchange-traded funds which are seeing inflows of billions of dollars as institutions and individuals dive into the easiest way to own the granddaddy of crypto.

The other fork in the road, however, takes us down a path of consternation…

If inflation keeps nudging higher—particularly as rising oil prices begin to bite the consumer pocketbook—the crypto chihuahuas are going to fret about the Fed stepping in to raise interest rates, not cut.

That’s going to cause a bit of a freak-out and will weigh more heavily than the halving on short-term investment decisions.

All of which brings us back to Yogi’s quote: When you come to a fork in the road… take it.

We’re coming to the fork. It’s inevitable. And I am preparing by taking both roads at once—figuratively.

I’m not changing my exposure to crypto. Vastly higher highs are baked into the cake at this point.

But I am also anticipating a temporary downdraft because the Fed does not have a handle on inflation, and the Fed has zero control over oilpatch spending.

Crypto markets will nervously sell off if the next inflation report remains higher than expected.

And that will be a buying opportunity!

See, humans have a unique ability to normalize new situations. It takes us a while, sure. And there’s lots of sturm-und-drang on the road to acceptance.

But we adjust to the new reality and find a way to comfortably operate within it.

That is where we are headed.

Inflation is not going away. It’s chronic at this point.

But the Fed is not likely to raise rates because the impacts on the consumer, Wall Street stock prices, corporate profit statements, and particularly Uncle Sam’s debt-repayment schedule are simply too much for each of those constituents to bear.

So, the Fed will learn to live with chronic inflation.

Investors, too.

Investors will reach that moment long before the Fed does, because the Fed is very slow on the uptake.

Nevertheless, this is the path forward that seems most probable.

And the result is this: Crypto prices run higher for longer… after a very likely decline post-halving.

Use that decline as a buying opportunity because it’s going to be the last, great chance to buy and own certain cryptocurrencies for one of history’s most epic bull markets.

As Yogi once said, “It ain’t over till it’s over.”

And it ain’t over by a long shot.