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nostr:npub1guh5grefa7vkay4ps6udxg8lrqxg2kgr3qh9n4gduxut64nfxq0q9y6hjy hypothetical (based on musings by Dave Collum)

Inflation and end of credit cycle squash equity valuations back to historical trend and briefly below in the 2030s

All the financial engineering such as indices, buybacks etc fail to attract enough capital to sustain monster valuations. NVDA etc crash back to reasonable P/E.

Can you imagine how much salt there will be with BTC $2M S&P $2000

nicodemus 1y ago

I don’t get these takes. Bitcoin is and always will be tied to economy. If the stock market drops by 60%, it means there is economic distress. This means selling of bitcoin for USD. Bitcoin will go down. People will exchange at least some of their savings in btc for survival.

The same argument (low supply on exchanges) for the price rapidly going up is also the same argument for why it can go down in just as rapid of a fashion.

Until we live in a btc-denominated global economy, this is the way it is.

I am fighting for that future but it is not here, yet. Its fun to dream, but people also need to be real about this.

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Discussion

VINNY 1y ago

What exactly is “economy” at the end of a credit cycle though? When the house of cards starts to topple value seeks solid ground. Don’t confuse volatility for lack of stability in a long term view

nicodemus 1y ago

If you think the eurodollar world currently sees bitcoin as stable ground, you are in for a big disappointment. There is still a ton of work to be done and bitcoin, as devoted as I am to its purpose, still has a lot left to prove. I believe bitcoin is, in the long term, the best destination of value during a flight to safety - but it has yet to prove it can handle the eurodollar scale. I think it can, as-is, with some bumps along the way, but the world at large certainly does not agree, else adoption would be higher.

The idea of bitcoin being 10x higher and the stock market being 80% lower at the same time suggests a huge economic downturn (way beyond typical volatility) AND the eurodollar participants exiting the system into bitcoin. Think about all of that value leaving that system and into another, and what that means. Highly unlikely.

Much more likely is that the shift to bitcoin is slow and gradual, such that stocks are fine. OR, if the stock market plunges, it means a huge hit to production - which will hit bitcoin too.