The real vs digital assets equilibrium
2024-07-18 10:54:00 +07:00 by Mark Smith
I wrote at the weekend about the future of crypto and high end NFTs. Some market analysts are predicting based on passed trends, that the coming bull markets in the crypto space will necessarily increase the marketcap by approximately $8tn by 2030. That’s a large amount of value that will accrue.
The thesis by people like Raoul Pal is that, as with previous generations, the winners in these spaces will want to invest the money they make into property and art. Historically speaking, these have been the assets that the rich have bought to preserve their wealth in the face of currencies that get debased. He believes that they will want to invest in the digital equivalents of property & art, namely Bitcoin & high end NFTs.
I think he’s identified something very interesting, but I’m not completely convinced by his conclusions. It’s true that norms in this generation of money managers are different, they will certainly be more into crypto & NFTs, but why wouldn’t they just buy hard assets just like their predecessors? Why didn’t their predecessors buy their own financial instruments?
Well I bet they did buy quite a lot of their own financial instruments, as well as real physical assets. It would be very interesting to see the numbers on this dynamic, because perhaps there is already a sort of equilibrium between how nuch the winners put back into the system and how much they take out into hard assets. Isn’t it likely that the very same equilibrium is passed down into the next generation of the financial system?
What’s more, isn’t it the case that if a country finds itself flip floping from hard left to hard right governments, that this equilibrium is seriously miss balanced?