The market is also pricing in a good chance that rate Cuts could start as soon as September. History shows that from the time rate hikes are paused until the first cut happens can last anywhere from 1 to 15 months. In most cases, recessions are officially declared within a few months of the First Rate Cuts happening. Although not always, we have a lot of mixed data here, sometimes recessions don't come for years after the rates are cut which could happen this time or not. Currently, the inflation is high though higher than any other year, economic growth is also low lower than any other year, the S P 500 earnings forecasts at 18x is second highest since the .com bubble which is not something you want to be compared to.
Silver Lining here is that in all cases the S P 500 put in higher returns in the three months following interest rate hike pauses and in most cases we saw that markets were actually much higher 12 months after the FED paused rate hikes except in the .com boom again. But the the .com era rate hikes actually the pause coincided with the market top not a low like right now. Our current market structure very different from the .com heroin rates started changing in many ways right now. We're in uncharted waters, we see a lot of mixed data there. Right now, we're seeing Equity markets are having near wreck levels of shorts. It seems a lot of players think the worst is yet to come, so is the crowd wrong?
Bitcoin has not been super closely correlated to the stock market. While the stocks are doing okay at the moment, these last few days Bitcoin has not being doing so much. In fact, Bitcoin has been much more correlated with gold. It is good we're correlating with store value when you know stocks are doing better.
Tether is buying lot of Bitcoin and so far they have bought about 52,000 Bitcoin. How is tether a company running a Stablecoin able to afford this? It's very simple, they are holding tens of billions of dollars in things like U.S treasury bills thus they are making right now because the interest rates are so high. Massive gains off the payouts that they're getting. They are 10 taking that money and plowing their profits into Gold and into Bitcoin. This is essentially the stable coin business model, we give them cash and they get to earn interest off of the money that we give them and we get Casino chips that bear no interest.
They are not using BTC to back USDT, these are simply company profits that are being held in BTC and it has nothing to do with the backing of USDT. Also, they said that they're going to continue to buy BTC using 15 of their profits moving forward. That equals at current rates around 75 million dollars per month or about 900 million dollars a year, that's about 3,000 Bitcoin per month or 36 000 Bitcoin a year at current prices and current interest rates. I think it's good to see more companies buying Bitcoin crypto but the thing to watch for now is when Tether starts selling all that Bitcoin because they will probably Mark the market top in late 2024 or early 2025.