Commentary
If we look at the staggering decline of the cryptocurrency index in 2022, we may understand an uncomfortable truth. Cryptocurrencies were created as an alternative to the monetary insanity in the fiat currency world yet became a massive bet on the money expansion they were supposed to combat.
Cryptocurrencies didn’t become uncorrelated assets independent of the monetary policy cycle: Their market value was entirely dependent on monetary expansion.
The correlation between cryptocurrencies and non-profit tech stocks is enormous, but it’s even clearer when we look at the impact of rate hikes and central bank balance sheet increases or contractions….