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- Excessive Liquidity: There's money sloshing around the global economy looking for a place to go. - Crypto Marketability: It's become very easy for people to

- Excessive Liquidity: There's money sloshing around the global economy looking for a place to go. - Crypto Marketability: It's become very easy for people to buy and sell cryptocurrency. - Speculation: Regardless of what problems cryptocurrencies pretend to solve, their actual value so far has only been as a speculative investment. Like traditional equities, cryptocurrency is benefiting from the highly speculative market we live in right now and the FOMO of investors trying to make a quick return. The situation that you're seeing with cryptocurrency has historical precedent with investment bubbles involving other technologies that were perceived to be "world changing". The bicycle mania [1] of the late 19th century and the dotcom bubble [2] of the late 20th century being notable examples. 1: https://www.nasdaq.com/articles/revisiting-the-great-british-bicycle-bubble-of-1896-2020-12-08 https://www.nasdaq.com/articles/revisiting-the-great-british... 2: https://en.m.wikipedia.org/wiki/Dot-com_bubble https://en.m.wikipedia.org/wiki/Dot-com_bubble

imtringued 5y ago
> - Excessive Liquidity: There's money sloshing around the global economy looking for a place to go. Here is an intuitive explanation: China runs an trade surplus vs USA. China gets USD and USA gets products. Because of the trade surplus there is no reason to invest into USA because as long as China is sending products to the US there is no reason to produce those products in the USA. Yields for conventional domestic industries drop as they move to China. The problem is quite obvious. If China spends its money on American capital it is inherently engaging in speculative investment. A basic understanding of economics tells you money should go where the highest yields are, in other words, the money should stay in China until their wages rise and they have no competitive edge. Well, but the trade surplus is born from foreign exchange policy. So the money comes rushing into American stocks and housing regardless of the risks. It's plausible that Bitcoin is just being used to evade capital controls. The speculative nature of Bitcoin isn't a downside, it's actually a nice bonus to them.

imtringued 5y ago

> - Excessive Liquidity: There's money sloshing around the global economy looking for a place to go. Here is an intuitive explanation: China runs an trade surplus vs USA. China gets USD and USA gets products. Because of the trade surplus there is no reason to invest into USA because as long as China is sending products to the US there is no reason to produce those products in the USA. Yields for conventional domestic industries drop as they move to China. The problem is quite obvious. If China spends its money on American capital it is inherently engaging in speculative investment. A basic understanding of economics tells you money should go where the highest yields are, in other words, the money should stay in China until their wages rise and they have no competitive edge. Well, but the trade surplus is born from foreign exchange policy. So the money comes rushing into American stocks and housing regardless of the risks. It's plausible that Bitcoin is just being used to evade capital controls. The speculative nature of Bitcoin isn't a downside, it's actually a nice bonus to them.