Dear Reader,
Cryptocurrencies are the best performing asset class in 2020 up till now.
Are cryptocurrencies a bubble? Yes, cryptocurrencies are overvalued, but they are here to stay. Cryptocurrencies are USD 2.0, a means of exchange, unit of account and store of value, which are the characteristics of money. Since cryptocurrencies are volatile they do not fulfill all these criteria perfectly, but they go far enough.
As more liquidity flows into the cryptocurrency market, cryptocurrencies will get nearer to real money. But sooner or later, the current stocks, bonds and real estate bubble will burst. Stocks measured by the main global indices will fall more than 30 %, while the Nasdaq Composite could fall more than 60%. Cryptocurrencies fall will closely follow that of the Nasdaq composite.
But for now the everything bubble seems to be in full swing.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
1 comment:
Thank you. You are right. We are in the everything bubble. There is also this search for higher yield, which pushes the derivative volumes higher. It would be interesting to share knowledge about the derivative market. It is growing bigger and bigger and it seems there is no limit to the volume of OTC derivatives, commodity related, credit default swaps, interest related, etc.
The moral hazard therefore is also growing - if the financial system is about to be saved again, then the ones, who hold the right side of the derivatives will walk away with the profits, and the ones, who are on the wrong side are going to be bailed out with taxpayers money or bailed in with depositors money.
You have a zero risk put therefore.
We do not live in a free market capitalism, we live in a capitalism, where gambling is rewarded big and even if you fail - you have the bail out/bail in put saving you.
I was wandering how big the surprise will be when the passive investors, all crowded in all of those funny ETFs, index funds and strange products created out of derivative mixtures become suddenly aware that they are holding not the underlying assets, e.g. businesses, but some promises to buy of sell those businesses, which cannot be kept.
The rush to the exit will be huge.
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