It’s honestly pretty crazy how spoiled crypto has been the past couple of years, especially during the period of money printing in ‘20-’21. It’s obvious that it was a perfect storm of events: a new technological asset born amist a period of cheap credit and a booming stock market.

None of us wanted the bull market to end (and there are probably still plenty of people that are still in disbelief) but looking back at the past months, there were no actual surprises.

The FED started to have talks about monetary policy in November ‘21 (quantitative tightening, interest rates)… and it’s been down only ever since. Hindsight is 20:20, and I’m as clueless about macro as everyone else, but really wish I was given this simple heuristic much earlier:

When money is cheap to borrow, what asset is it safe to park your money in?
When money is expensive to borrow, what asset is it safe to park your money in?

It is cheap to borrow during quantitative easing, when a central bank starts buying assets and adds liquidity into the economy. During this period, probably a good idea to hold crypto.

It becomes more expensive to borrow during quantitative tightening, when a central bank starts selling assets and removes liquidity from the economy. During this period, probably a good idea to hold cash.

There were no surprises this year, and probably won’t be for the rest of ‘22. Those in disbelief, who expect this market to bottom out soon will soon learn the true meaning of goblin town.

Get in loser, cash is king!