Does the $2T crypto loss balance out the $2T money supply expansion? Do those two things balance out? (Some estimates put the stock market loss at around $7t or $9t, additionally). |
Does the $2T crypto loss balance out the $2T money supply expansion? Do those two things balance out? (Some estimates put the stock market loss at around $7t or $9t, additionally). |
Anyway, crypto being a zero-sum system (ignoring network costs for simplicity) means the $2T crypto loss would be a $2T crypto gain elsewhere, so no value has changed in the end, there are still the same number of coins out there after all even if the owners of some have changed.
And the $2T figure is based on the nonsense "market cap" metric that has almost no relationship to the actual amount of real world currency that was spent on the crypto it refers to. The BTC "market cap" of $335bn today assumes each one of the 19.3 million BTC mined so far is worth $17.2k, but that doesn't mean each coin was purchased for $17.2k of USD or mined at that cost, after all there were nearly 4 million coins mined by the time BTC had a USD value at all, and another 7 million coins were mined before BTC hit $100, and so the real money spent is far less than £335bn.
> And the $2T figure is based on the nonsense "market cap" metric that has almost no relationship to the actual amount of real world currency
It's impossible for both these statements to be true.
Is that better? Not sure why that was confusing you though, what about this?
> the crypto losses are crypto gains elsewhere
The normal economy will still experience inflation arising from money supply expansion without that effect being counterbalanced by crypto losses, because the people who experienced those losses may forgo luxury purchases in the real economy (Wen Lambo? Not for a while) but the inflation isn't in luxury goods for the most part it's in much more mainstream goods and services. I would expect that the effect will almost be like the interrelated currencies of two neighbouring countries - they do affect each other because people convert between the currencies a lot, but they are not exactly the same.
That way readers will know it's a question and not the title of an external article.
The answer to your question is “No.”
As a contrast, around $500B of US Treasury bonds trade every. single. day, and they’re all made with real currency
On the other hand, the $2 trillion money supply expansion refers to the increase in the amount of money in circulation, usually as a result of government stimulus measures or monetary policy decisions.
In general, the two are not directly related and their impact on the economy may differ. The cryptocurrency market is still relatively small compared to the global financial system, so it's impact on the economy is limited.
I think this article might be of your interest: https://www.ratherlabs.com/post/how-to-make-money-on-crypto-...
An interesting question is whether the new USD holders are less likely to spend the money. If so that is a bit like a reduction in money supply but hard to quantify.
The only sinkhole is mining costs but that money ends up with chip manufacturers and electric suppliers etc.