Maelstrom

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Billionaires Are Embracing Crypto in Case Money ‘Goes to Hell’

The Benchmark

  1. Tokens tied to Layer 1 protocols that are looking to become “the next Bitcoin or Ethereum.” Said coins are more scalable, can handle more transactions per second, are actually anonymous, and/or have a mining reward system that encourages decentralisation. Monero is to Bitcoin what Solana is to Ethereum.
  2. Tokens that use existing Layer 1 protocols — most frequently Bitcoin or Ethereum — as a means to accomplish some desired function. One example would be Axie Infinity, a token-based play-to-earn game that uses NFT assets residing on the Ethereum blockchain.

Timeline

  1. Recorded Consumer Price Index (CPI) growth numbers decline below 2%. Given the way this index is “managed” by government statisticians, it is almost impossible for that to happen. But if the CPI trend is sharply lower and the political pressure from pissed off constituents dissipates, then maybe the Fed can publicly reverse course.
  2. Some parts of the extremely complex and opaque money and US Treasury markets break. You will know it when you see it — and it is the one thing the Fed is deathly afraid of. Given that all TradFi assets are valued using prices from the US money markets, the Fed must ensure this market functions in an orderly manner at all costs. Usually, restoring order necessitates printing a fuck ton of money.
  3. Inflation ceases to be the number one issue American voters care about in the run up to the November elections.
  1. The SPX trades down 20% to 30% from its all-time high (reached in 1H 2022). Whether you are an Asian or European net exporter or a wealthy American, you likely own a gigantic amount of American equities. The US stonk market is the best performing stonk market of any developed country. It also is the largest and most liquid. There are too many rich people who pay taxes and profligately consume for the Fed to let them down if the equity markets wobble hardcore. Another interesting reflexive fact is that the traditional wisdom of maintaining a 60 / 40 equities-to-bonds portfolio mix means that if the 60% in equities declines, fund managers of trillions of dollars automatically must sell bonds to maintain the ratio. It is literally written into the mandate. Thus, if the Fed allows equity prices to fall, it will increase the borrowing costs of the federal government — because as bond prices fall, yields rise — at a time when the government is running record deficits.
  2. Some parts of the extremely complex and opaque money and US Treasury markets break.
  3. The November 2022 elections are over.

Chaos

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Co-Founder of 100x. Trading and crypto enthusiast. Focused on helping spread financial literacy and educate investors.

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Arthur Hayes

Arthur Hayes

Co-Founder of 100x. Trading and crypto enthusiast. Focused on helping spread financial literacy and educate investors.

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