DRIC | Exnetwork Capital

From the crash of 2022 to the rally of 2023, asset prices have rebound to near all-time-highs. While traditional markets have bounced back, crypto has failed to recover. Why has crypto not recovered like other assets? In an earlier thread I wrote about how the Federal Reserve once controlled money supply growth, and this has power shift is now in the hands of the US Treasury. Now, US Treasury holders, with $1 trillion+ in interest payments, are the key players propping up the global economy. These interest payments far exceed the amount of Quantitative Tightening done by the Federal Reserve. As a result, money supply has returned to inflationary. So, Quantitative Easing is going directly to Treasury holders this time. Who are these Treasury holders? Typically, they fall into the upper-middle-class category or institutional investors. Unlike those struggling to make ends meet, these Treasury holders do not spend their interest earnings on necessities like food, electricity, cars, or holidays. Instead, they invest this money into financial assets like equities and real estate. A different kind of spending, one that does not inflate the Consumer Price Index (CPI) but keeps asset prices strong. So while we have CPI at 3.2% currently, it does not tell the whole story about inflation. This change in spending patterns explains the drop in CPI inflation with Treasury holders investing in assets rather than spending on consumables. Remember the Covid stimulus checks? 3 rounds of stimulus checks were sent to people of low-income. These people spent their unexpected money on necessities (food, electricity, other bills) and some luxuries, like cars, causing CPI inflation in those areas. Compare that to the interest payments to Treasury holders. US Treasury interest payments = stimulus checks for the wealthy. Instead of buying groceries, they are investing in stocks and properties. Why has this asset price inflation not trickled down to crypto? Interestingly, these upper-middle-class bond holders have no interest in crypto. The demographic is just different, generally boomers who are content with the traditional financial system. Unlike the bottom 50% of the population who gambled their stimulus checks on platforms like Robinhood or on crypto memecoins, bond holders stick to more conventional investments. Unless stablecoin market caps start increasing, it is clear that there are no money inflows into crypto yet.