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Crypto and other speculative assets are reasonable investments when inflation and interest rates are low - this allows toleration of high risk profiles. When in
by kiernanmcgowan 4y ago
Crypto and other speculative assets are reasonable investments when inflation and interest rates are low - this allows toleration of high risk profiles. When inflation/interest rates rise, theres generally a cash exodus to safer assets.
Monetary policy for the past decade has made it "reasonable" to take a much more risky portfolio stance, that situation has changed, and everyone is realizing it at about the same time.
And so we're seeing the paper tiger of crypto valuations - once the market situation changes such that crypto is too risky, everyone leaves and dumps what they have. It just took 10 years for people to learn that the hard way.
- throwawayffffas 4y agoI am inclined to disagree on the reasonable part, I have a feeling that the difference between cryptocurrencies and say stocks or commodities is a difference in kind not a difference in degree. Sure when there is risk appetite again cryptocurrencies will rebound along with other risky instruments. But I just can't shake the feeling that cryptocurrencies in general is just a huge pyramid scheme.
- kiernanmcgowan 4y agoFair enough - I'm using reasonable here to represent the balance of "this is a very risky asset" vs "inflation is low so I can hold onto this for a long time and wait for the right time to sell". Theres also just an insane amount of hype about crypto is the future of <gestures vaguely at topic du joir>, and therefore it's valuable in the future. Amazon made no profits for so long because all dollars were reinvested into the business. Crypto made no dollars because it's as useful as a beanie baby.