A $2 Trillion Free-Fall Rattles Crypto to the Core

finance.yahoo.com

25 points·pseudolus··7 comments

Something that stands out to me is that using market cap to estimate a speculative asset is plain wrong. 3 trillion dollars is the GDP of France and 3 times the market cap of Amazon. For a sector that produces not much besides waste heat and procedurally generated monkey images.

There's nothing 'wrong' about it. There's nothing 'right' about it. It's a fact. It's the current value of that market at current prices. GDP is a temporal figure, it's not the value of France, or the market cap of france whatever that means, it's the value of what France produces over a time period. So this comparison is just not useful.

"Wrong" isn't the right word, but "obviously wildly overvalued" is.

Wealth is around 4-5x annual gdp currently. Interestingly debt is also about the same as 4-5x gdp.

I wish there was a real-time dashboard or index / futures product that tracked global wealth / debt / leverage I guess the closest we have is the forex market.

https://www.usdebtclock.org/

https://www.usdebtclock.org/world-debt-clock.html

A common problem with fiat currency is that it is actually difficult to create a definition of the money supply that is actually relevant.

Bitcoin has an upper bound on the money supply but the actual money supply that is circulating is much smaller, it could be 25% of the supply and thereby negate these crypto market caps. With the USD each dollar circulates once a year but it is hard to track how big the bitcoin economy is. What is the GDP of black markets using it? Hard to know.

Money supply isn't what matters, it's the flow of cash that represents the economy. Bitcoin ain't got much flow. 264,000 transactions per day is nothing compared to the many billions of transactions per day of fiat.

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