FTX, 3AC, Celsius, etc. took the crypto pill and believed their investments were going to the moon with no way to stop it. That's why they took such risky bets (with customer money, too) - because in the certain case that Bitcoin hit $1M they would be trillionaires.
Of course because of this attitude there was way too much leverage in the system, which drove up prices to ATHs temporarily, but when the money supply ran out things quickly came back to reality and that leverage turned into bankruptcy.
Though in an alternate universe, the fed never raised rates, GBTC became a spot ETF, crypto fervor continued, and SBF is the richest man on earth having leveraged customer funds in a scam that actually worked out.
> in the certain case that Bitcoin hit $1M they would be trillionaires.
I never could understand this. Crypto currently makes up about 7% of the world's money supply, according to a quick search.
Bitcoin is currently ~30k USD.
If you bumped that to 1 million USD, a 33x increase in value, and assume that other crypto would go up roughly the same amount...
... You get the impossible answer that crypto would be worth well over 200% of the entire rest of the money in the world.
This is ignoring inflation but from what I heard crypto nuts really thought this was possible in a short time frame, like 5-10 years, in which case inflation of real money wouldn't make a huge difference.
This is just ridiculous. All the possible outcomes don't make sense:
* you end up with a small group of mostly men controlling nearly
all crypto so it's no different from the old system.
* Except there's even less checks and balances.
* It would massively destabilize the world economy and cause all kinds of inequality issues for people who don't have internet/technical ability
* But most importantly, the existing world governments would never accept it. At some point they would see this new force destabilizing their economies and established power structures and just say hell no. It would start with China and US, but eventually
nearly every country in the world followed this. Then crypto is worthless because you can't spend it in a legal way and there's no way it would maintain a high value.
A 33x in Bitcoin price would put it just above the value of all the world's gold. Obviously not really realistic but if you're a crypto-piller and believe Bitcoin will be the next Gold then it's a decent benchmark moon price.
Also the article you posted very specifically says that the market cap of cryptos is equivalent to 7% of the narrow money supply (not the full money supply, and NOT that crypto currently makes up about 7% of the world's money supply). Doesn't make sense to compare non-narrow with narrow IMO - i.e. you need to include ALL assets with the same liquidity.
Ok, thanks for the feedback. Do you think my points are still valid under this less extreme scenario?
Let's assume a 25x - 50x increase of the value of all crypto in a 5-10 year time span.
What percentage of all relevant assets would that make up? And would it be enough to destabilize world economies enough for governments to take action?
Of course because of this attitude there was way too much leverage in the system, which drove up prices to ATHs temporarily, but when the money supply ran out things quickly came back to reality and that leverage turned into bankruptcy.
Though in an alternate universe, the fed never raised rates, GBTC became a spot ETF, crypto fervor continued, and SBF is the richest man on earth having leveraged customer funds in a scam that actually worked out.