My commons sense take on WHY crypto currencies are going to soar in value...VERY SOON.

in #blog6 years ago (edited)

I'm no professional in financial markets. In the slightest.

I am very good at seeing what's front of my face.

Here is why I think crypto is about to get much higher - In straight forward language that even I can understand!

Reason 1

The bond yield curve is about to invert.

The (US) bond yield curve is about to invert and it does this almost every time there is recession or depression.

What is a inverted bond yield curve, though?
This is when you get the same (or less) interest on government bonds, for a longer investment period as you would for a shorter time period.

That's sounds crazy, right? It is, that's why.
I.e. it's illogical, and slightly insane.

See the screenshots to illustrate a 2005 bond yield curve of US bonds, and today and where it is going in 2018 approximately. The difference is fairly obvious.

gtgy.jpg

Reason 2

'Paper' gold (and silver).
Paper contracts (ie a contract to deliver but without physical ownership) are recent financial instruments.
And they are leveraged to insane levels.

gtgy.jpg

For every 1 oz of real gold, there are over 600 oz's of 'paper gold'. (these are 2016 figures, and the ratio is now much higher)

There is nowhere near enough physical gold to match the paper contracts. Prices will hike, big time ,when bonds collapse and people want their gold in real, physical form.

And this is fantastic news for crypto.

Why?...

Reason 3

When confidence in bonds collapse, so does the stock market – And this stock market is way, way overvalued.
Prices of shares to earning from that share ( earning ratio) is off the scale.
'Free money' printed by the federal reserve over the last 10 years, has meant the money has flooded into the stock market. The money HAS to go somewhere.
( It was called quantitative easing, in an attempt to keep the debt based economic system going as long as possible).

MONEY HAS TO GO SOMEWHERE...

So, there is no money in bonds, the stock market is emptying of investors, there isn't enough physical gold and silver to satisfy the market...
Where is the money going to go.....?

Crypto is the only place left to park your money.
MONEY HAS TO GO SOMEWHERE...

Kaboom!

gtgy.jpg

That's my common sense take on it...if I'm wrong, tell me why. (in normal language please)

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For the yields, they are fairly similar until after 10Y. Actually, 10-year Treasury yield hits its highest level since 2014 on April 20 2018! It is arguable that speculation on derivatives is a substitute to crypto but I get it !

Though we need to consider the downward pressure:

  • The highly unregulated market is under regulators scrutiny, from Macau to the USA in the news lately, for its money laundering risk and terrorism financing risk among other things.

  • Huge adoption barrier due to volatility, risk of theft, and lack of education on technology prevents mass adoption.

Huge adoption barrier

yes, true - but where does the money go...? (if it is exiting the places I mentioned above, as I believe it will- in massive amounts)

People are getting tired of the fiat monetary bull shhhhhhhhh..... It will be interesting to see how this develops.

I don't seeit as an ideological thing in this case - I see it as BIG money needing to put it somewhere..no morals involved...

No morals you say? They'll absolutely love it.

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