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For the first several years of its existence, the bitcoin exchange rate was completely decoupled from the broader economy. It went up and down seemingly with no

For the first several years of its existence, the bitcoin exchange rate was completely decoupled from the broader economy. It went up and down seemingly with no relationship to other markets. This attracted a lot of investors who were looking for an asset that didn't move in the same direction as everything else. In late 2020, the bitcoin exchange rate began a meteoric rise. One hypothesis was that this steep rise was foreshadowing massive inflation ahead. It was, of course lambasted as ridiculous. Inflation was dead and everyone knew it. Fast forward to 2022 and an inflationary spike is bearing down on the economy with its jaws wide open. It has taken central bankers everywhere by complete surprise. Now the bitcoin exchange rate is collapsing. The article's take on "what this means" is something along the lines of a fool and his money are soon parted. What the article never considers is the possibility that this collapse in exchange rate is the canary in the coalmine signaling that inflation is about to fall off a cliff. Money is being destroyed at rate that central bankers can't even fathom, at the same time they're raising short term interest rates and starting QT. This would have very ominous implications for the world economy if true. The financial collapse starts with Bitcoin because it's the most highly-levered and least regulated market. It now feels the brunt of the global monetary ebb and flow first. Only time will tell how accurate this interpretation is. But if it's true, there will be far more important things to worry about than the schadenfreude of scammers getting their comeuppance.

DeathArrow 4y ago
I hope you are wrong.
- Barrera 4y ago
  Me too.
abrichr 4y ago
> But if it's true, there will be far more important things to worry about than the schadenfreude of scammers getting their comeuppance. Thanks for the analysis. Could you please elaborate on this last point?
- KerrAvon 4y ago
  I don’t necessarily buy this analysis, but the world economy between WWI and WWII would be one possible parallel. There were stories in Germany of people taking a wheelbarrow full of cash to the store to buy a loaf of bread. At the extremes, the billionaires will be able to escape to New Zealand or some island retreat; the rest of us, including the middle class, upper middle class, wealthy, and the independently wealthy — even double or triple digit millionaires, could be very screwed.
  - kareemsabri 4y ago
    Sorry, what is this a parallel to? Hyper-inflation in Germany was due primarily to war debts denominated in foreign currency, and massive reparations imposed by the Treaty of Versailles, which forced Germany to purchase foreign currency at ever increasing prices.
literallyWTF 4y ago
I find it incredible that there are people out their who actually think the price of Bitcoin, Ether, NShitCoin, etc. are actually somehow predictive of something.
- chihuahua 4y ago
  If someone is running a pump+dump scheme, it could be useful to produce a flurry of writing that pretends that those cryptocurrencies are somehow serious business. It might help lure more unsuspecting victims into the market.
- nikanj 4y ago
  They might be predictive of GPU prices!
overtonwhy 4y ago
What an absolutely insane narrative from a new account. The entire crypto expansion directly correlates with Tether printing $40,000,0000,000 in assets. Tether is used to move funds to and from unlicensed off shore exchanges. That's it. That's what is popping. Do your research.
- globalreset 4y ago
  > The entire crypto expansion directly correlates Correlation does not ... > Do your research. Thousands of times this has been brought up and debunked. Tether is minted when there are new fiat deposits. It's the influx of fiat money that is creating new tether and raising crypt prices. That's how it is supposed to work. Nothing suspicious about it. Note: I have no idea if Tether had and/or still has all the assets backing all the minted Tether, and maybe it will collapse in 5 minutes so I'm not here to defend them, but before you tell other people to do their reserach, maybe you should do some yourself, and go with some more educated criticism.
  - kanwisher 4y ago
    It hasn’t been debunked, if anything tether has been proven to be a scam by multiple usa government entities and having to pay fines explicitly that it’s a scam
  - overtonwhy 4y ago
    Read it for yourself: https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21
    - globalreset 4y ago
      This has nothing to do with more tether being minted when crypto is going up. I am NOT claiming that Tether is some stellar and trustworthy company.
- anm89 4y ago
  Obnoxious, and most importantly incorrect. It is certainly not the case that the sole thing driving crypto prices is tether.
nikanj 4y ago
This interpretation conveniently ignores all the previous BTC crashes. Did inflation go through the roof the previous times BTC fell like a brick?
kevinmchugh 4y ago
I find it very strange to read that "inflation is coming" was seen as a fringe view in 2020? "Inflation later is better than a recession or depression now" was the thinking behind all the increased government spending in 2020. Maybe "future inflation will be worse than any consequences today" was fringe, but I think at least eg Larry Summers was saying that. I don't understand macroeconomics but "government spending causes inflation" is a pretty mainstream ideological precept - the opposite opinion is fringe. Edit: maybe I didn't put enough weight on "massive" when reading the above comment
- gunapologist99 4y ago
  Larry Summers was in the minority among economists. https://www.wsj.com/articles/on-inflation-economics-has-some-explaining-to-do-11655294432?mod=Searchresults_pos1&page=1 https://www.wsj.com/articles/on-inflation-economics-has-some...
- anm89 4y ago
  Mainstream economics including people like the Fed have been substantially more worried about deflation than inflation for the last 5-10 years. Many thought that inflation was dead forever and that their biggest problem was that they couldn't print money fast enough over the longterm to avoid a deflationary bust. It's hard to understate the degree to which fed economists didn't see this coming.
- padjo 4y ago
  In summer 2020 local investment advisors were running radio ads with the phrase “worried about inflation? Talk to us”. It was pretty obvious what was about to happen!
- native_samples 4y ago
  "government spending causes inflation is a pretty mainstream ideological precept - the opposite opinion is fringe." Hoo boy. "the current Fed chair, Jerome H. Powell, has dismissed claims that the Fed’s money-printing is fueling today’s price spiral, emphasizing instead the disruptions associated with reopening the economy. Like his most recent predecessors, dating to Alan Greenspan, Powell says that financial innovations mean there no longer is a link between the amount of money circulating in the economy and rising prices" https://www.washingtonpost.com/business/2022/02/06/federal-reserve-inflation-money-supply/ https://www.washingtonpost.com/business/2022/02/06/federal-r... You're right that the idea government money printing doesn't cause inflation is fringe absurdity. Unfortunately the fringe that believes in it are central bankers.
mhh__ 4y ago
I would have to see evidence about this inflation-risk Bitcoin-price theory. The argument of dumbest meaning is just to say that the BTC bull run was just because of a bunch of bored people speculating.
- Ekaros 4y ago
  Not to forget the semi-smart who had to use the money entrusted to them to produce some results... Taking the management fee of "investing" to cryptos was still easy and simple money to them...

DeathArrow 4y ago

I hope you are wrong.

Barrera 4y ago
Me too.

abrichr 4y ago

> But if it's true, there will be far more important things to worry about than the schadenfreude of scammers getting their comeuppance. Thanks for the analysis. Could you please elaborate on this last point?

KerrAvon 4y ago
I don’t necessarily buy this analysis, but the world economy between WWI and WWII would be one possible parallel. There were stories in Germany of people taking a wheelbarrow full of cash to the store to buy a loaf of bread. At the extremes, the billionaires will be able to escape to New Zealand or some island retreat; the rest of us, including the middle class, upper middle class, wealthy, and the independently wealthy — even double or triple digit millionaires, could be very screwed.
- kareemsabri 4y ago
  Sorry, what is this a parallel to? Hyper-inflation in Germany was due primarily to war debts denominated in foreign currency, and massive reparations imposed by the Treaty of Versailles, which forced Germany to purchase foreign currency at ever increasing prices.

literallyWTF 4y ago

I find it incredible that there are people out their who actually think the price of Bitcoin, Ether, NShitCoin, etc. are actually somehow predictive of something.

chihuahua 4y ago
If someone is running a pump+dump scheme, it could be useful to produce a flurry of writing that pretends that those cryptocurrencies are somehow serious business. It might help lure more unsuspecting victims into the market.
nikanj 4y ago
They might be predictive of GPU prices!

overtonwhy 4y ago

What an absolutely insane narrative from a new account. The entire crypto expansion directly correlates with Tether printing $40,000,0000,000 in assets. Tether is used to move funds to and from unlicensed off shore exchanges. That's it. That's what is popping. Do your research.

globalreset 4y ago
> The entire crypto expansion directly correlates Correlation does not ... > Do your research. Thousands of times this has been brought up and debunked. Tether is minted when there are new fiat deposits. It's the influx of fiat money that is creating new tether and raising crypt prices. That's how it is supposed to work. Nothing suspicious about it. Note: I have no idea if Tether had and/or still has all the assets backing all the minted Tether, and maybe it will collapse in 5 minutes so I'm not here to defend them, but before you tell other people to do their reserach, maybe you should do some yourself, and go with some more educated criticism.
- kanwisher 4y ago
  It hasn’t been debunked, if anything tether has been proven to be a scam by multiple usa government entities and having to pay fines explicitly that it’s a scam
- overtonwhy 4y ago
  Read it for yourself: https://www.cftc.gov/PressRoom/PressReleases/8450-21 https://www.cftc.gov/PressRoom/PressReleases/8450-21
  - globalreset 4y ago
    This has nothing to do with more tether being minted when crypto is going up. I am NOT claiming that Tether is some stellar and trustworthy company.
anm89 4y ago
Obnoxious, and most importantly incorrect. It is certainly not the case that the sole thing driving crypto prices is tether.

nikanj 4y ago

This interpretation conveniently ignores all the previous BTC crashes. Did inflation go through the roof the previous times BTC fell like a brick?

kevinmchugh 4y ago

I find it very strange to read that "inflation is coming" was seen as a fringe view in 2020? "Inflation later is better than a recession or depression now" was the thinking behind all the increased government spending in 2020. Maybe "future inflation will be worse than any consequences today" was fringe, but I think at least eg Larry Summers was saying that. I don't understand macroeconomics but "government spending causes inflation" is a pretty mainstream ideological precept - the opposite opinion is fringe. Edit: maybe I didn't put enough weight on "massive" when reading the above comment

gunapologist99 4y ago
Larry Summers was in the minority among economists. https://www.wsj.com/articles/on-inflation-economics-has-some-explaining-to-do-11655294432?mod=Searchresults_pos1&page=1 https://www.wsj.com/articles/on-inflation-economics-has-some...
anm89 4y ago
Mainstream economics including people like the Fed have been substantially more worried about deflation than inflation for the last 5-10 years. Many thought that inflation was dead forever and that their biggest problem was that they couldn't print money fast enough over the longterm to avoid a deflationary bust. It's hard to understate the degree to which fed economists didn't see this coming.
padjo 4y ago
In summer 2020 local investment advisors were running radio ads with the phrase “worried about inflation? Talk to us”. It was pretty obvious what was about to happen!
native_samples 4y ago
"government spending causes inflation is a pretty mainstream ideological precept - the opposite opinion is fringe." Hoo boy. "the current Fed chair, Jerome H. Powell, has dismissed claims that the Fed’s money-printing is fueling today’s price spiral, emphasizing instead the disruptions associated with reopening the economy. Like his most recent predecessors, dating to Alan Greenspan, Powell says that financial innovations mean there no longer is a link between the amount of money circulating in the economy and rising prices" https://www.washingtonpost.com/business/2022/02/06/federal-reserve-inflation-money-supply/ https://www.washingtonpost.com/business/2022/02/06/federal-r... You're right that the idea government money printing doesn't cause inflation is fringe absurdity. Unfortunately the fringe that believes in it are central bankers.

mhh__ 4y ago

I would have to see evidence about this inflation-risk Bitcoin-price theory. The argument of dumbest meaning is just to say that the BTC bull run was just because of a bunch of bored people speculating.

Ekaros 4y ago
Not to forget the semi-smart who had to use the money entrusted to them to produce some results... Taking the management fee of "investing" to cryptos was still easy and simple money to them...