I was reading an article recently that was looking at the growing fear of inflation, something that around this time last year, the same media was saying, "inflation being bad is old thinking". Well, I think we are soon going to see that it might not quite be true - especially for the ordinary people who just always seem to lose out. With stagnant low interest rates for years, investors chasing yields have had to keep investing into rising prices, but with nothing to back it. That isn't sustainable.
However, during this time, the financial institutions have been able to rake in massive amounts of deposits and then loan out enormous amounts at a very low interest rate. What this means is that they have been able to clear their debts, while encouraging more people into further debt and then, as interest rates start to rise, they can reap the rewards with the debt-laden getting squeezed.
Blame Covid-19 all you want, but as you can see from the gold trends that have moved about 50% since 2018, people have been making moves to secure their gains from the disreality of the stockmarket in something tangible for a while.
But for most, they think there is no alternative to the traditional markets they know, but over the last year or two, crypto is fast gaining notoriety as an alternative, especially with the interest turning to firstly the DeFi liquidity pools and increasingly onto tokenized assets like NFTs. I think that while from within the crypto industry this is going to be the way many people look to secure some part of their bullrun gains, it is going to become more attractive for the traditional investors to turn to in order to safeguard themselves against the inflation being driven by government handouts and ludicrous amounts of debt taking by consumers.
Yes, the prices on debt have been low making it attractive to take on more, but as people have done so and the interest rates start to rise, they are going to have to also pay back more, which is adding more magical fiat into the money supply - more inflation. See how this is going to probably play out?
Purchasing power is going to be heavily eroded as the rising interest rates will take money out of the pockets of debt carriers, and the inflation of costs will mean what is left in those pockets won't be able to buy as much. However, the banks that issued the loan debt will be able to rake in increasing amounts to cover themselves and the governments who handed out all of this "free money" will be hamstrung, because they have artificially held rates so low for so long and, that is pretty much all they have at their disposal. A lot of pain is coming.
Which is great news! Well, it sucks for many of us of course, but if there was ever a time for the average persona to wake up and see how fundamentally broken the economy is, it is now. The reason is that "There Is No Alternative" is no longer true. There are alternatives, but it currently takes somewhat of a leap of faith into an industry that is still in its infancy and a change in paradigm that an economy can only be underpinned by centralized authority. It is the latter that is the largest leap for most investors, as they are accustomed to only having semi-autonomy over their holdings.
But, as we have seen over the last couple years with a few larger and more visible companies making forays into crypto and the growing hype on the returns running into a bull market, there is going to be a lot of people raising the question on what to do. Most people know there is a crash coming as that is always the way it plays, but they aren't sure where their haven is going to be this time. Stocks are overpriced, currency is getting devalued and things like gold may move rapidly up, but comes with its own problems of economic mobility.
This could be a perfect storm for the "blow-off top" that many are predicting for Bitcoin, as new investors start to pour into crypto (Bitcoin being the mane target) in the hope to either secure their funds or make some outsized gains on the hype. This could see some very aggressive upward movement in crypto, but what will be very interesting to find in the coming couple years is, where the new floor will be.
If Bitcoin hits the 100, 200, 400 marks rapidly, it will naturally suffer a massive retrace, but where will that bottom out? I suspect that if it hit 400, we might not see 25 again, as there will be so many people who have bought higher than that, that they are not going to sell and that in itself is going to create market scarcity, which should hold up the base relatively well. I also predict that if BTC did see that kind of movement, many of the largest sellers are old-timers in crypto, so they are less likely to go back out to fiat, which means an increasing amount of wealth is going to be looking to settle onto the blockchains.
Will a Bitcoin whale look to secure their wealth in Shib or Doge? Unlikely I think. I reckon they are more likely to look at NFTs, games and tokens that have usecase and usage behind them. After all, this is what they have been waiting for - crypto adoption - why lose faith now?
Of course, I don't know what is actually going to happen across all of these highly dynamic factors that are subject to all kinds of FUD and FOMO influence, but what I do believe is that while here was no alternative - now there is.
And the alternatives are looking better by the day.
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Beta
I have this mental image of a fiat millionaire being prevented from moving to El Salvador, as he's unable to demonstrate an ability to support himself long term.
There will be more fiat millionaires than ever - though they won't be able to buy much.
There’s always been alternatives. And if there isn’t, someone will make some 😆
This is why I think crypto is looking bright for the future
Been on this platform for a high, but I really took the dive into crypto this year. Considering that my profession hasn't had wage increases in about +20 years and the cost of living goes up about 5% a year it is just getting ridiculous. Then, with inflation this year, I started taking a little gig work just to counterbalance the inflation atm. Luckily my investments this year are outweighing both factors stated above as I write this. Just a matter of if I time the market well enough for this bull run and drop. Stake my investments and I should be secure going forward.
20+ years? That is terrible.
I think this is a solid plan and I am trying to do the same :)
Just remember, we don't need to be perfect. If my stop lose means I lose a few hundred, well whatever. Also might just dca out, not entirely sure atm.
I am MVP (minimal viable product) all the way! Perfection is definitely not in my genes :)
I think that the chance to buy and secure a home loan is rapidly passing. Once a home loan is locked in, then you know your RENT price. Unless an individual went with an adjustable rate mortgage then they are going to be pretty safe.
Real estate options for right now buy before the inflation run I would think would be in small scale apartment complexes. Once banks start to foreclose on scared home owners those ex-home owners are going to need a place to stay and that means apartments.
In the last housing crash, small apartment owners did pretty well.
The NFT's, and block chain games and toys could be a safe place and a chance to increase ones wealth. I am hoping that my first two NFT purchases will help my Hive wealth, time will tell.
I too have seen a few stories of inflation, but more importantly, I have seen and taken note of it in the grocery store. Right now it is the American Comfort Foods, (junk food), that are increasing the most over $2.00 for a bottle of soda, $2.00 or more for a small bag of potato chips. Candy bar prices increasing, for most Americans this is where things are getting tough, and the price of vegetables is really taking off also.
Inflation has been here for awhile now, people are just now taking note because it is hitting the food basket.
I think so too. Rents are going to increase also, as people who overpaid for investment properties, try to claw back ROI.
For sure. When it hits people's stomachs, the feeling gets real.
I get what you are saying, but I still think that we will be having a bear-like market very soon. A market where we will retrace to maybe 30-35k for BTC and 3k for ETH. The market is still very volatile and still very unstable - DOGE and SHIBA are still too strong with their market caps and I suspect they will need to be flushed out. But the future is bright, we see many popular faces buying and staking their part in the NFT and that is just awesome to behold :)
yes. I think the retrace will be after December and then the major run up in late Q1 before the real bear starts.
Do you see any possible scenario within the upcoming years where BTC 'll collapse, and the other cryptos which actually have use cases 'll take away the marketcap of it? While gold have a role within the industry and is used in many manufacturing procedures, its value is based on something beside the ppl evaluation of it. Think about what would happen if gold would not be needed at all anymore except for jewels. Look at diamond's price, its going down for a decade. The industry make its own synthetic material of it. Bitcoin within my eyes is similar to diamond instead of gold. The crypto industry replacing a part of BTC each day, the time should come where the replacements on their own will form the whole, it will be nothing more than a memento of the start or a jewel within the crypto world.
Because of the missing use cases, and the unsustainable ecosystem of BTC, in my eyes BTC got a red flag and i still don't see a reason to have it.
Actually there are only alternatives to do the dethronement.
I don't think so, at least in the next five or so. Possible later or at least, it will become less important for the market.
This is not a good example, as diamonds are not rare at all and everyone knows they have a monopolistic supply constrained by De Beers. There is a very good reason it isn't listed as a commodity.
I don't think dethroning is the endgoal, it is just that there will be so many chains and tokens that bring value in various ways, just like business today.
I used diamond as an example, because within my eyes both has the same actual value: nothing. I don't like bitcoin thats a fact, but there is a reason, the ecological footprint of it is too high, it should not even exist while the energy used by the whole system could power up a country, and it doesn't rly matter if it's green or not green energy. It's a waste, while there are many options for sustainable solutions.
Dethroning is not the goal, but dethronement will happen when it's not so important for the market anymore.
Interesting times we live in
Indeed. Nice beard!
I am rotating though a few punks to see which one feels right
"inflation being bad is old thinking".
That's not true. I feel that my purchasing power is lowering day by day. As we talked in one of your previous post, the inflation rate is %20, and the real interest rate is negative here.
There is no more way to protect the value of money, except crypti. It is the only alternative for now.
I know it isn't true... that is why I called BS on it when it kept getting said in the media a year or more ago :)
It is really shaping up to one of the only things that people can actively do to protect themselves. interestingly, they simultaneously protect others too.
It could mean inflation with no production but more money-to-money investments. Do you mean like this?
That is what has been happening for a while already.
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