Money Printing Is The Tinder To This Bull Run, DE-Fi is Gasoline

Hey JessInvestors

I know we say this all the time, but for real this time is different, but for real this time, it is different. BTC has had three major bull runs, the previous one in 2017 being the most recent and most memorable runs that were started by its stock to flow model change, but what led the way for investors was the ICO boom. Plenty of people made money, and plenty of people got burned and lost money, and it was a wild ride and a learning experience for all of us getting into crypto.

This time around I think it's going to be a bit different and I think we're going to see valuations that will make your mouth and eyes water once depending on if you got into the market or not. Each cycle as BTC halves, it becomes more scarce, and as it becomes less and less available and harder to mine, miners aren't willing to sell on the cheap and this drives up prices in the beginning.

This is what we refer to as the new stock to flow, model if buying pressure remains the same, but miners are dumping less BTC on the market the price would naturally go up slowly over time.

This is the actual growth of BTC. However, as it picks up speed, other market forces tend to squeeze it higher than it otherwise would have and we see gross overvaluations and "bubblenomics", which is all part of a healthy market, overcorrections and under corrections and those who read the trends and curb their greed tend to win.

Currency debasement

Governments and central banks around the world are printing money by the trillions and trying to pump up asset prices and provide base money into the economy that can be lent out for productive use, unfortunately, with lockdowns there is only so much productive lending and the rest is going to asset speculation. As more money chases fewer and fewer goods and focuses on asset acquisition; instead, we see asset prices rocket.

Besides, the currency they print is losing its value, so it's more of a hot potato that investors would much rather move into assets that hold or increase in nominal value.

We can see this in the price of gold hit its all-time high and stonks continuing on its 10-year bull run.

It's only a matter of time before more of that money turns its attention to crypto.

Overvalued markets

As you can probably tell from point 1, money is chasing a select few goods; we see this in the overpriced housing market, we see this in the lack of dividend-paying stocks, we see this in the fact that stocks are at all-time highs. Even bankrupt companies are issuing shares and people are buying them—anything to get out of fiat at this point and ride the casino of money printing.

The corporate bond and government bond markets are at all-time high record valuations, As the central banks move more of them onto their balance sheet, it forces investors to dip into the junk bond market for yield and even more misallocation of capital, investing in zombie companies that cannot even service their interest.

It's only a matter of time before this money dips a percentage into crypto.

Rampant speculation

As I mentioned, the stock market has a fed put, a floor where the central banks won't let it dip under which allows for investor moral hazard but also limits the peaks and troughs, with crypto there is none.

It's a free market so once speculators get a taste of 10 - 15% even 50% swings on alts daily, they're going to come a-running to try and get in and swing markets even bigger.

Desperation

Then there's desperation, people are out of jobs, seeing their purchasing power destroyed, looking for ways to earn an income and with the crypto gains looking like a sweet option, many will try to get in to cover shortfalls from job losses or trying to turn a nest egg into something bigger.

The stimulus cheques we see from governments are also going to be pumped into speculative markets as you play with the house's money and not your own.

Locking up of funds

Now what sets the De-FI space apart from the ICO space was that ICOs were about getting in early, waiting for exchange listings and then selling into the hype, it was a quick pump and dump. DE-FI, while many will also be pump and dumps, will also see many users lock up their funds for periods at a time, pulling liquidity off the market.

At a time when money will be flowing into space for the reasons mentioned above, locking away funds is only going to see an even bigger squeeze on supply, and the slippage on exchanges shoot up.

The dumb money will then get to pile in pushing it further, once we reach crazy valuations, we'll see one last pump through a short squeeze trying to kill off early shorts who think they made the right call.

Once the momentum stops, we're in for a good old healthy correction. However, by that time we'll probably see ATH that we could not even dream of, what do you think BTC will peak out at this time around considering all the factors I've highlighted?

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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