When thinking about crypto from a macro economic perspective and trying to stay away from the short term FUD and noise I think the main reason why, in the long run, Bitcoin and Cryptos will prevail is because an entire generation (Millennials and below) are losing trust in Banks, the stock market and governments in the US but also around the world.
Millennials might not account for much as we speak with only 5% of all US wealth (CNBC Source) but this will change progressively as boomers pass on over $68 Trillion to millennials (FORBES Source) making them the richest generation in America’s history! Although not all that money will go in Cryptos we can expect the an increasing amount money will be invested in this new asset class. A recent survey shows that 83% of millennials already own cryptos (CNBC source).
The hypocrisy of the government wanting to regulate cryptos “because it’s used for fraudulent purposes” while bailing out banks time after time knows no limit. Now don't get me wrong, some regulations are needed for cryptos but for the right reasons... to protect retails investors against scams and not to prevent them from making money because it displeases the old guard.
Here are some recent events that have contributed to erode trust in central systems:
- The GME Case (Game Stop) where brokers and exchanges such as Robinhood blocked buying the stock, allowing only to sell because it suited hedge funds shorting the stock and against retail traders (how ironic for a company named Robinhood). (Source)
- The US central bank printing roughly 30% (or more) of all dollars in existence in the last 12 months causing inflation to spike to highest level for nearly 40 years (BBC Source) and just recently raising its debt ceiling by another $2.5 trillion (NYT Source).
- JP Morgan fined $200 million for failing to track work related communication (NYT Source)
- Panama Papers show how the rich, 12 national leaders and 143 politicians are avoiding hundreds of millions in taxes by using off shore accounts. (The Guardian Source).
- Pandora papers also showing how billionaires, 35 world leaders and 300 public officials are using off shores accounts to avoid taxes or for "political donations". (The Guardian Source)
- They US Secretary, Janet Yellen, that wants to regulate cryptos paid $7 millions in speaking fees by banks (The Guardian Source).
- The estimate $498 billion bank bail out of the Sub Prime Crisis (Mitsloan Source). A crisis caused by the bank themselves out of pure greed.
- HSBC, a very anti crypto bank that has blocked transfers to Crypto exchanges quoting that cryptos are used for fraudulent reasons now find $85 million for Anti Money laundering failings (Reuters Source).
Please tell me what other events (not necessarily in the US) have also damaged your trust and I will add them.
TL;DR / Conclusion: The more banks, governments, exchanges and central systems break the trust of Millennials and the more the wealth of boomers is passed on to us the more decentralized alternatives will gain traction. This will increase lobbying power and investments in favor Bitcoin and DeFi. So, find crypto projects that have a promising future, invest ,stake and be patient. It will be a bumpy road but cryptos are here to stay.
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