The winning trade of the post-pandemic era would seem to be long the past, short the future. bloomberg.com/opinion/articl… 1/7
But the current "crypto winter" seems unlikely to drive Bitcoin down as far as in previous bear markets: bloomberg.com/opinion/articl… 2/7
If Bitcoin is "an option on digital gold," then Fed tightening was bound to drive down the price, just as Paul Volcker drove down the price of gold after 1979. bloomberg.com/opinion/articl… 3/7
But this isn't 1970s inflation and so we won't need Volcker-era real rates to tame it. Paul Schmelzing's work on real rates in the long run is illuminating on this point. bloomberg.com/opinion/articl… 4/7
The prospects for DeFi are different, as @mrinconcruz has argued. Just as the skeptics missed the beginnings of Big Tech in the wake of the dot-com bust, so today’s crypto haters are missing the beginnings of a major disruption of the financial system in the form of DeFi. 5/7
DeFi looks like a bona fide financial revolution, taking advantage of new technological possibilities to reduce transaction costs in exciting ways. Skeptics love to insist that Ethereum isn’t money in the textbook sense. This is to miss the point entirely. 6/7
This crypto winter will be followed by a spring in which Bitcoin continues its steady advance toward being true digital gold; and DeFi defies the skeptics to unleash a financial revolution as transformative as the e-commerce revolution of Web 2.0. bloomberg.com/opinion/articl… 7/7
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