Total crypto market cap 2.7T, total gold market cap 11T. If you treat them as the same, it's 13.7T in big non-fiat instruments 🤔 . World total market cap is ~100T, so that's 13.7%
If crytpo didn't exist, would gold be at 13.7%? To what extent is crypto just cannibalizing gold?
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Related question. If the % of such assets is treated as the "exit pressure" from the state-backed economy, how extreme is this regime? How often does the world hit 13.7% in non-fiat instruments?
Could you treat this as "discount all futures based on state power" by 86.3%?
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This is conveniently 1 in 7, so you could say if you were doing scenario planning, you should think in terms of 1 in 7 futures being based on collapse of state power perhaps...
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What got me thinking about this is rise of retail crypto in India. India is already the world's biggest retail gold sink since it has historically been a place where people basically saved in gold. I think retail crypto in India is basically a natural extension of gold jewelry.
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Weird when something looks like utopian exuberance from one angle (crypto valued in fiat is a boom, largest random wealth transfer in history) and utter ruin and collapse from the other side (fiat valued in crypto = dollar has collapsed to 1/600,000th of its value since 2009.
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This is not generally true of a boom, even one in a fundamental factor of production. If there's a real estate boom, it is not meaningful to say "dollars valued in terms of land is collapsing in value"
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Okay, that was an ill-posed question due to gold standard effect. So allowing for a decade of structural adjustment, how often since say 1981 has gold been more than 13.7% of world market cap? 🤔
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Replying to @vgr
It was like 100% as recently as 1971!
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I'm less comfortable with this more vague estimate of world dollar-denominated wealth, since PPP distortionary effects get more marked. But the principle is sound. twitter.com/max_arbitrage/
This Tweet is unavailable.
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Basically, I'm trying to get at the answer to the question: how seriously should the value of crypto be taken as a signal of impending civilizational collapse?
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It's a different class of people with... let's say more colorful imaginations... being cryptobugs as opposed to goldbugs or ammobugs or toiletpaperbugs. But the quant question finesses *why* you think the world is ending, and just values that class of bets.
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If cryptobugs don't have stories of collapse that are any more compelling than gold bugs, there's no reason to weight the significance of the 2.7T in crypto differently.
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Theory... goldbuggery is fantasy, cryptobuggery is science fiction
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Null hypothesis. It's exactly zero sum, and crypto marketcap does not add any net apocalyptic scenario weightage at all. Only if crypto+gold do like a 2x relative to fiat will it be a signal of something.
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