While a lot of people (including me) in crypto are looking toward a large surge in value across the board in the next six months, the economy as a whole is probably heading into a severe downturn, as all of the debt that has been created starts to effect conditions. I was reading an article in Australia as the overheating housing market are starting to be addressed and fear is creeping in. Many have taken on large amounts of debt into a market that has averaged 20% over the last year, which is enormous in real estate. The last time housing value grew at the same pace was back in 1989, just before a global economic meltdown, which was called in Australia by the Treasurer, "The recession we had to have".
I was eleven or twelve when that was said and interest rates on housing rapidly increased and looked far more like credit card interest. My parents took a second loan on the house in order to cover expenses and the recovery was very painful for all concerned. Well, not all, because as always, a small group of the population benefitted very heavily before the crash, during the crash and after the crash.
It is no different now, as over the last couple years while the governments have been pumping future money (inflation) into the economies globally in order to keep people afloat, that money has flowed into the pockets of the same group again. The wealthiest amongst have made massive gains on an already astronomical wealth gap and as they divest first to instigate the collapse, the retail investors will fall into line behind them, taking massive losses, only to have their blood vacuumed up by the group at the top.
This is a rinse and repeat economy, where essentially the same group will continually control the flow of wealth and only let people taste the rise, in order to chop them down again and se how much more they can extract. It is not the wealthy who aim to inflict pain on everyone else in general, it is just the way incentives are aligned and how the rules work, or can be manipulated to work.
This is going to obviously affect the crypto markets also, which means there is going to be far more volatility to come, which is good for those who are able to make a few good decisions, bad for those who like I have in the past, only held. However, holding isn't such a bad thing either, since there is far more upside in crypto than there is downside, despite the massive movements.
This is something a lot of investors don't fully understand or acknowledge when considering getting into crypto, as while yes, there can be 50% swings across a month, or 30% swings in a 24-hour period, long-term, the upside potential soaks up the loss and adds far more gain. The premium paid is the risk potential, not the price - at least when it comes to the projects with some legs. Factor in the possibility to gain yield "dividends" on what is held, and things change again.
Yes, Bitcoin might crash back to 10,000 at some point and all the other tokens will follow suit, but even then there will be a lot of people earning from holding. It might not be as much as they want or as much as today, but these trickles will matter and for some, it will actually be a lifeline in the worst of times that see them through, whilst still holding onto their principle. It is a bit like having the value of a housing property drop considerably, but still able to earn on rent to cover some of the overheads. Plus, there will be more holders, more builders, more people willing to move their wealth into the future of crypto, so I don't think the floor will be as low as many predict.
But, for the majority of people in the economy, economic collapse leaves them at the mercy of the people who engineered the economic collapse, with very little possibility to make their own decisions. Many will lose their jobs and many who were encouraged to push their debt to the max due to low interest rates in order to get a house will no longer be able to service their loan, so many will also lose their homes. People who just prior were living the illusion of the "good life" will suddenly feel the very visceral reaction of realizing that the life they were leading was not their own, it was the bank's all along.
Debt is not a sustainable condition and while currently it is ranging far and wide, eventually the bell will ring and it will come home to roost. But, debt is an conceptual proxy that attaches to a tangible reality - us. It is a marker on our economic activity, just as the money in our bank is, and as such, it can be bought and sold, as well as used to control the flow of wealth. And while we are exposed chickens, the house is also full of foxes - and they are the ones who rang the bell.
Taraz
[ Gen1: Hive ]