During the week, The U.S. Department of Labor reported that consumer prices rose 5% in May, the largest year-on-year rise in inflation since 2008. Interestingly, the exchanges rejected the event and closed with a profit. The SP 500, for example, hit an all-time high according to the report. Investors have been worried about inflation for weeks. However, the May report strengthened the consensus that this price hike will (likely) be temporary.
The latest inflation data are being interpreted by investors as a sign of an economic recovery. So, a transition period. A significant part of the price hike in recent months has been related to used cars. The shortage of new vehicles, caused by the shortage of parts (especially microconductors), creates inflationary pressure in the secondary vehicle market.
The additional demand is due to car rental companies buying cars to renew their fleet before the summer vacation. So there is a lot of catching up to do and failures in the production and sales chains. Whether or not inflation turns out to be temporary remains to be seen.. However, the prevailing opinion among investors right now seems to be that it will only be temporary. In other words, optimism returns to happiness.
On this side of the sidewalk Bukeles El Salvador made headlines by using Bitcoin as legal tender. The measure came as a surprise. In fact, the plan was announced and the law passed in less than a week. Reckless action or a populist strategy? I dont know.
Now let’s talk about this week’s most popular crypto news.
We talk about risk. The success stories are very nice in that regard. For example. A man is on the verge of bankruptcy. You go to a casino and you win big. By listening to this anecdote, it is easy to make the grave mistake of misinterpreting things. You might think that going to a casino while in financial trouble is an excellent idea. The crypto room is full of stories with people like CZ who became billionaires in a few years. Does that mean we have to sell our house now to invest everything in Bitcoin?
As seductive as these stories are to us, it is not always a good idea to follow suit. In order to invest in cryptocurrencies and survive the attempt, it is very important to have a very good understanding of the concept of risk. Better to be patient than crazy in the investment world. Happiness favors patients.
Well, surely there are the patterns. Markets tend to follow a more or less defined behavior. Of course, Bitcoin can continue to fall in the coming weeks. It is possible. However, there is no such thing as a perfect model. And all indicators give wrong signals from time to time. In other words, we cannot take anything for granted. That a hundred year financial model says it is not safe. Unfortunately, the markets are not that easy to predict.
The “hyperbitcoinization”? That is, the Bitcoin standard for everyone. The maximalist’s dream came true in 10 years. Save who can! He personally did not rule out that Bitcoin will become increasingly popular in the future. He also didn’t rule out the asset could hit new all-time highs in the years to come. That is not only possible. In fact, it’s pretty likely. My doubts lie in the proposed disappearance of the Fiat. Will the Dollar Disappear in 10 Years? I have reservations.
We cannot confuse the massive adoption of Bitcoin with a global currency revolution. It is one thing to invest in Bitcoin and quite another to support the libertarian utopia of the maximalists. Many speculators are not into Bitcoin because of the political problem. You are for the money. The acceptance of Bitcoin as an asset does not automatically mean the unbridled desire to abolish the fiat system. I’ll leave this here for thought.
Predictions are always made with assumptions. It’s the future seen from today. That is, it does not take into account future events. You talk about the future, but with a bias. However, it was to be assumed that this consolidation period would be extended by one to two months. Then the hikes could begin (again). But everything seems much more conservative to suggest. That is, with more progressive increments. In this case, it can be expected that liquidity will depend more on the real economy and less on artificial stimuli.
In this case, it is possible that the first beneficiary will be Bitcoin, as it is the “safest” asset. from the group. And altcoins are taking a back seat for the time being. A sharp rise in altcoins indicates an optimism we don’t yet have. We could have it in later stages, however. Of course we are entering the world of assumptions here. Of course, that is not a certainty. Anything can happen in the future. An unexpected event and suddenly everything changes.
Although I personally find all these meme coins ridiculous, I do not consider it completely stupid to throw some money into one or the other project. It is not a contradiction. It’s simple and vulgar speculative opportunism. Vitalik claims to have invested $ 25,000 in Dogecoin in 2016. Then, in less than 5 years, he made millions of dollars. What was the risk? Very little in terms of its legacy. When it comes to risk vs. chance, the move wasn’t bad.
I’m not blaming merchants for trying their luck with meme coins to make extra cash. That’s not necessarily a bad thing. But we need to understand very well the high risk involved in investing in a junk project. Apparently Vitalik invests in such projects and then donates the proceeds to charity. Good for him. Vitalik can afford to invest $ 25,000 in a project with questionable profit. With this type of investment, everything is a question of risk. Everyone chooses their level of exposure.