Prelude
Around 2016 was when I first entered the Crypto world. I watched my modest $400 rise to almost $4000 before a dead drop back down to $400.
Nothing ventured, nothing gained.
With my world moving more towards silver manipulation & the Global Debt issue.
I was contemplating that there must be a World War at some point. Then came along a Bird Flu scare in HK and I said to my boss at the time, "I think it doesn't have to be a World War. It could even be a pandemic."
And, it morphed into a pandemic.
I was made redundant a few months later. With my redundancy I decided to follow the old creed, "Put your money where your mouth is."
So, I bought silver, some stocks & some cryptos. After extensive research I thought I had picked some winners.
But, as Covid hit around March 2020, all my stuff dropped 50% - so much about being clever.
You only lose when you sell
The thing with investments that drop, but don't go belly up, is that you only lose money when you sell. At that point you crystalise your loss. This can be helpful if you want to minimise tax or if you want to cut your "book" losses to move into something more lucrative.
I held onto all my stuff. I liked it regardless of what the markets said.
Vindication took place when the Crypto market surged.
My lesson of 2016 was that you cannot expect it to last. Everytime that I doubled my profit, I sold down 50%. I kept doing that until I was happy with my profit taking & with what I had left. Technically, I could have made much more money. But I am conservative in style and prefer the bird in the hand than the 2 in the bush.
Icebergs, Inflation, Tsunami & Floodgates
As governments have "printed" much more money which then expands further as banks apply Fractional Reserve Lending, there is a tsunami of monies entering the global market place.
Normally, if the market was small, like a country, then inflation would ruin the economy. But with the monies awash within a global setting then the tsunami has less of an impact initially.
Crypto went from under a Trillion to $1.8T very quickly. I often imagine what the impact would be for that money if Crypto had not absorbed it. My guess is that real estate, stocks, commodities & prices would have been much higher.
Crypto was like an iceberg. Trapping the cash within its structure. The same for all of the other Assets that have absorbed excess cash. It has tempered inflation to some extent.
But now that crypto market cap has dropped to $1.5 trillion, where has the other $1.3T gone? Has it gone into the tempting Bond market now that rates have climbed?
Inflation is increasing. Prices were already increasing obviously higher than the Govt claims. Guvment says it is 2% but most of my bills are probably on average increasing at 8-10%.
Where does the money go?
With certain Governments trying to stifle/ban/restrict crypto it has obviously caused a stir to get money to safe havens. Is it because of Elon's commentary?
Where do you think people are moving their money to? I'd like to hear your theories.
(images from coingecko and google image searches)
Judging by the housing market around here (Kentucky, United States) it wouldn't surprise me if a lot of that money has wandered over to real estate. In the neighborhood my mother lives in, single family homes that were built in the late 1930s are selling for 300K USD, a year and a half or two years ago they were going for 170K.
Also, how much of that 1.3T that is 'gone' never even entered crypto to begin with? Market cap is a fun metric but it's hypothetical, I suspect that much of what is gone was simply paper gains that will remain unrealized.
Yes, definately alot of asset bubbles. Here in Australia we are full of asset bubbles as we have had many overseas investors pumping up our realestate for a very long time.
I would never be able to afford my house at today's prices and I live in a meagre house in a working class suburb.
The average person has no clue about price inflation, monetary supply, market manipulation, and so on.
I am quite happy that the crypto market has consolidated into some more normal levels.
So, maybe it is just a lower selling prices that lowers the market cap in aggregate? mmm interesting. I guess you don't require alot of lower selling transactions to affect the "market cap".
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