Comment on Has there been a significant move to cryptocurrency in Canada over the last few days?

• sj_zero@lotide.fbxl.net ⁨2⁩ ⁨years⁩ ago

  The big money in cryptos isn't ideological, it's speculative. They are buying into a thing because they think they'll be able to sell it for more fiat currency tomorrow than any other investments they might make.

  The moment that it doesn't look like it's going to rise anymore, or the moment that it appears that there is a safer investment with equal or greater capacity for growth, there'll be a run on cryptos.

  At the moment, something like 75% of investors in bitcoin are down from their buy-in price. Combine that with the fact that bond interest rates will be rising to exceed inflation and lots of money is already starting to flow into lower risk assets I expect we're going to see a lower demand for cryptos from the investment community and we're going to see lower demand from the ideological community as they are embraced and regulated by governments.

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  • goldenballs@wolfballs.com ⁨2⁩ ⁨years⁩ ago

    I agree with a lot of that, but I think its hard to make the case that crypto is not ideological for some when you read the twitterfeed of bitmaxers like Max Kaiser. They clearly are doing more than just speculating. I saw a recent article saying about 80% of bitcoiners wiuld HODL come what may. They seem to regard Botcoin as digital Jesus, and pray for a second coming and financial salvation.

    I watched many crypto fanatics/"experts" this year glibly predicting $100,000 and $400,000, and aside from losing any credibility, frankly these fuckwits know next to mothing about economics and finance, they are simply talking up FOMO. We have to remove emotion and look at what the data is saying, and it seems clear that the charts are not saying "it's just like gold", and the charts are saying "it's just like a tech stock", so yes, speculation, and like tech stocks, no earnings - but then again it never will have any earnings! Sure gold doesn't either, but gold is a commodity, and crypto isn't. You only have to look at commodities like Lithium, Nickel, Aluminum, Copper, LNG, and also foid commitiies, lumber, and the main one to watch is still oil, and gold still has its position, and it doesn't look like changing because of gold's optimal chemical (as well as aesthetic) properties.

    Despite the rise in the 10-year UST bond yield, the 20-year TLT is still pointing downwards, and we're yet to see a markéd yield curve inversion, though its shadow looms. There's been a lot of outflow from bonds, and the Fed's yanking out of that seems to be pushing yield up, but I don't see how they can raise rates beyond 1.25%, it's just going take such a bite out of everything. Some say that when rates rise and the markets shit themselves, the Fed may feel driven back into debt monetisation. The unresolved question may be the impact of the deflationary collapse of China's economy on offshore dollars, as well as drying up consumer spending everywhere. Other economies that are dependent on China, like Turkey, are turning to junk. That lower confidence in global growth could find expression in a return to a deflating bond market, as economies seek to default on the collosal debt, via currency debasement.

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    • sj_zero@lotide.fbxl.net ⁨2⁩ ⁨years⁩ ago

      I absolutely wouldn't say there's no ideological buyers. There's even people who buy it with the intent to trade it as a currency. It's just that those individuals are in the minority.

      I called stagflation about 2 years ago back when governments were first shutting everything down and printing a bunch of money, and I think we're on track for that. We've got leaders trying to stimulate an economy that's already at the highest output it can possibly be given the massive worldwide restrictions and disruptions. I expect further inflation, and unless central banks intend to nationalize all debt, I expect at least some bonds yields to rise a lot because otherwise nobody will want to buy bonds with a -7% real yield.

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      • goldenballs@wolfballs.com ⁨2⁩ ⁨years⁩ ago

        The Fed is not a central bank, its an inflation expectation soothsayer... https://m.youtube.com/watch?v=b8uF8r0r0Fc

        There is not the extent of inflation that people believe. There are price hikes, and there is some leakage of expanded bank reserves, but for the most part, ...because money is created by primary dealer banks creating credit (and thus money) for NBFI; and, ...because QE us gov/treasury debt/bond buying pushes prices of bonds up and yields down; and, ....because money markets set nearzero interest rates by betting on economic activity flatlining under the weight of gotesque public (i.e.: federal/govt) and private (i.e.: corporate and personal) debt, the fed has to follow, and pretend it's doing something (and by implication pretend that it knows what its doing).

        The problem is the debt and the demographics, which are deeply constraining for the global economy. I start to see that the whole energy market is driven boomers again trying to ensure that they get everything, and to hell with everyone else. Both energy snd land will be used as proxies for indentured labour by the young to pay for the lifestyle of the old.

        I don't see "further inflation", i see extended lockdown price gouging to replace falling earnings, but consimer disposible income drying up in the face of it. Just stagnancy and depression. You can see in Japan the social impact on birthrate and motivation and socual isolation due to being priced out.

        For bond yield to rise, the market-distorting bond-buying by the fed has to end, and they have to sell to flood the bond market with cheap bonds, and require NBFI to buy some to keep interest rates from being driven too high and collapsing markets and compressing government budgets.

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  • mayonesa@wolfballs.com ⁨2⁩ ⁨years⁩ ago

    I agree with this. There is a brief sweet spot where the product is hyped, so speculators make a tidy profit, or at least one per hundred does and the other ninety-nine have to explain to their spouses how they lost everything in crypto after finally paying off the house loan for the house they lost in Vegas ten years ago.

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