TL;DR
As cryptocurrency turns into broadly adopted and controlled, its volatility will go down – which implies the ‘alternative velocity’ will go down.
Which means…It will require bigger preliminary investments and longer time frames to make the sorts of returns we have now been having fun with within the present market.
Full Story
In todays “enjoyable truth we noticed on Twitter that made us go ‘huh, that is neat'” information:
@Jamie1Coutts made an fascinating analogy:
“The right parallel for at present’s #crypto market? The US inventory market of the early 1900s.”
Sadly he offers no actual proof to again the assertion up exterior of ‘belief me bro’ anecdotes…
Buuuut – we are able to kinda see what he is getting at:
“Within the pre-1933 & 1934 Securities Act period, the US inventory market operated in a ‘unfastened’ regulatory setting, was extremely fragmented, massive whales dominated, and data asymmetry dominated the day. >>> Very very similar to crypto markets at present”
Our takeaway?
If (IF!) Jamie is correct right here, it alerts that:
As cryptocurrency turns into broadly adopted and controlled, its volatility will go down – which implies the ‘alternative velocity’ will go down.
Which is a needlessly fancy manner of claiming…
It will require bigger preliminary investments and longer time frames to make the sorts of returns we have now been having fun with within the present market.
E.g. Bitcoin going from $16k in January, to $42k at present? Regulation and broader adoption will possible push these costs and time frames up.
So the subsequent time we’re experiencing some face melting, panic inducing downward volatility, we will remind ourselves of this story.
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