Thread by @explain_briefly

1/ Everyone talks about the Banana Zone, but you don't know what it is?

I mean, you probably should as this is when the most money is made

cc: @RaoulGMI

🧵

2/ Banana Zone is a finance idea conceptualized by Raoul Pal

This gentleman is one of the few who predicted the 2008 crisis

He is said to be one of the most successful hedge fund managers of all time

Cool, let's see what he's up to, then

3/ Banana Zone refers to cyclical price appreciation of crypt0 and tech stocks

It's a 4-year-cycle grouped for Spring, Summer, Fall, and Winter

And we are approaching the Summer phase

Sun, beaches, mojitos, chill…

…and your coins pumping like there is no tomorrow

4/ We are particularly interested in the Summer and Fall phase

This is when our beloved tokens experience the most exponential moves

We’re 5 months into the Summer (2024) phase, so technically, we have 19 months left of fun

Until the end of the Fall (2025) phase

5/ If we look at historical data of BTC, then yeah, we can see that there is something to it

The Seasons Cycle (just came up with this term, hope you Raoul ok with it) is a consequence, or rather an aftermath, of the 2009 crisis

6/ What sorceries are behind those bull runs?

Well, as always - liquidity

Money

Lots of money

Billions of moneys

moni.

7/ According to modern economy theories, most crises & recessions were, to a great extent, caused by the lack of liquidity in the economy

Liquidity refers to how easily and quickly money can be accessed and used for transactions

Things go bad when there is no money, innit

8/ After the 2009 crisis, governments have decided they will never allow this to happen again

They will do whatever it takes to prevent it

They will even end up in debt for amounts much higher than their “income” (GDP)

9/ To briefly explain the 2009 crisis: the banks were illiquid as their money was in real estate and once their clients, all together, demanded their money back, the banks were like:

“bro me don't haves ur moneys”

The so-called bank run

10/ If you wondered how banks work:

You give them money to put it in a “saving account” that gives you, idk, 5% a year

They give 90% of your money to some guy who needs a loan with, idk, an interest rate of 8%

Banks profits 3% 🤝

11/ Ok, but to the point

Governments won't let any bank to just “fall” and leave their clients in shambles

They will bail it out which means paying all its debts and obligations to keep it afloat

Even with money the government doesn't have

Whatever it takes

12/ The current financial system is based on constant inflation

Things get more expensive by a least 2% a year

Basically, everything is pumping - not that violent like crypto, but it still is

Just look at the indices like S&P 500

13/ @RaoulGMI noticed that there is some cyclical order regarding liquidity

Governments borrow a lot of money

And then, when it's time to pay off the debts, they borrow even more money to pay it off and borrow more

And over and over again

14/ Raoul noted that the majority of bonds (the “debts”) have to be paid off in ~4 years

So every ~4 years there is printed a lot of money that is used to handle debts

This printed money increases the total supply of money in circulation

15/ “sir explain it in @gainzy222 terms”

ok

Jack has 5 moneys

Mark has 10 moneys

Y'all want Thai Chicken so bad

Thai Chicken costs 1 money

Mom sends y’all 10 moneys more for each, just like that

16/ Thai chicken guy sees it

The amount of Thai chickens haven't changed tho

"hmmm😏"

He doubles the price of the chicken

Y'all got more money but can't buy more Thai Chicken

Super-ultra-giga simplified, I know

17/ So a lot of freshly printed money flows into the economy every four years

A lot of it flows into crypt0

Because bros who got that extra money to spend decide to put it into crypt0 as it's hot

Extra-ultra-mega simplified, I know

If you are a 5-year-old with a short attention span, you probably struggle to understand crypto

Stay assured, I'm here to @explain_briefly

If you want to see more of my mustache on your timeline, then idk follow me and like & retweet the post:

https://twitter.com/explain_briefly/status/1793340081836806511?t=k-qMUja1zQd607WgR3hM-g&s=19