Explanation for the Bear Market
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You can take a look below at an explanation for the crypto bear market.
[https://www.barrons.com/articles/fed-taper-stocks-bonds-inflation-51636057075](https://www.barrons.com/articles/fed-taper-stocks-bonds-inflation-51636057075)
I’ll explain:
One of the reasons for the invention of bitcoin is the “printing press” of the United States Federal Reserve and other Central Banks across the world. The Federal Reserve prints money, buys government bonds. This has a variety of effects:
1. Inflation: more money is chasing the same number of goods. Companies are still selling the same number of bananas and chainsaws but now there is more money to pay for these things so it all becomes more expensive.
2. Financial asset price increases. This one is more extreme than inflation. Financial assets include land, bonds, stocks, and of course cryptocurrency. First the Federal Reserve prints the money so more money is chasing the same number of assets. Then the Federal Reserve exchanges that money for bonds. Thus the first to get that money are investors in government bonds. They reallocate their gains in their bonds to other financial assets making financial asset inflation more dramatic than inflation.
3. Weakening of the currency.
So the Fed has declared that maybe printing like crazy is a bad idea and they want to print less and less. This makes the United States dollar (USD) a better store of value. Better does not mean good. It just means that if you thought that the USD was a 3/10 now it is a 3.5/10. More people will be willing to hold USD for a longer time than BTC.
I do not think that the Federal Reserve has the moral authority to tell Congress that it caused a recession that caused people to pay their debts just to improve the quality of the USD even though it does have the legal authority to do so. They’ll eventually go back to the printing press.
Thanks to Ray Dalio for providing a large chunk of this information for free.
I think BTC is still a buy.
Cryptocurrency
