Part 3/7:
- Repair/Reset Phase: A phase where debt forgiveness or restructuring takes place, lending standards reset, and the cycle can begin anew.
Throughout history, these phases have varied dramatically in duration, but the pattern remains consistent. Presently, we find ourselves at a critical juncture that could dictate the future direction of Bitcoin and the broader economy.
Current Phase of the Credit Cycle
Determining the phase of the credit cycle we are currently in remains a subject of debate. Some may argue we are in the late contraction phase, characterized by rising defaults, paused Federal Reserve actions, and prevailing macroeconomic uncertainty. This perspective highlights the potential for continued downside risks.