BTC and ETH are up ~20% in the last few days. Why? The distrust and falling stock prices of TradFi banks is the obvious answer, but is that the full answer?
Degens and crypto funds are exiting stablecoins en masse probably
There's only one correct answer đ https://twitter.com/tier10k/status/1635403803418824704?t=fdvqZ_iJmcKG8niBnB9Cug&s=19 Distrust is probably not the full picture since even tokens like ETC are up...
Straight from the hip: bailing out banks is inflationary and higher levels of unlocked cash means higher prices for everything. Crypto markets are most efficient, hence price adjustment is rapid compared to lagging increases in other goods.
Iâm skeptical re distrust of banks reasoning. Theyâre up because the USDC concerns abated. Btc and Eth are still risk assets. That may change, but I donât think it will any time soon
adoption rates in countries with low trust in the institutional banking system is high trust was lowered
Everyone is betting fed stops raising rates soon and then eventually cutting rates which means cheaper money and more of that into risk assets. I'm not buying it.
Protected self custody vs prospect of failing banks (pmf here), + also systemic bank sector risk seen as almost certain pause on Fed tightening = reopening conditions for assets to run (stocks too), + also inflation down today (see above)
Unbelievably multidimensional But, one key one, Interest rate expectations dropped BIG yesterday (e.g. Dec 2023 fed futures dropped ~70 bps). Expectation of lower interest rate environment -> investors have to search for yield -> investors buy risk assets.
Price adjustment due to interest rate change expectations
crypto natives worried about getting debanked, traders trying to profit maximize during crisis, tradfi failing but crypto generally working as expected so people more bullish, ai fever slowing down (but now we have gpt4!)
i think this is narrative that crypto bros want you to believe more likely answer is that people are getting more optimistic that fed has to stop rate hikes and start reducing rates (because their actions of rapid hikes started to break things), and lower rates are bullish risk assets
