The world of money is a highly complicated cloak and dagger business; it's designed to keep the normies out and protect those that run the game. As a new investor learning how markets work, I've made my fair share of mistakes. But as they say in investing, you either get richer or wiser by every trade you make, which is true in life, business and money management.
One part of fiat money I struggled to get my head around is the Bond market; I always found it strange that a worth market, I think, 4x the equity market, is never talked about.
People rave about Bitcoin being at 1 Trillion, but the fixed income market could be around 300 Trillion or more; who knows anymore at the rate they keep rolling over bonds.
Fixed income is the risk-free rate, and the better the credit rating, the better chance of you getting your return. Pensions love these things, be it corporate bonds or government bonds and are happy to lend them money for that guaranteed return.
What's the difference between a bond investor and a ham sandwich?
The story of the bond market is a long and complicated one, but the TLDR is that as interest rates decrease or rather are artificially suppressed, it forces bond yields higher.
Bonds are a debt-based investment where an individual loans money to a government or corporation. They do so on the condition that the borrower will pay the money back when the bond reaches its date of maturity (expiry), plus any coupon payments that are due.
Since bonds are fixed, and you can always collect that interest, if interest rates are forced down, those bonds older bonds with the better interest rate enjoy a higher value on the market.
When the central banks have got your back, it's pretty hard to fail at trading these things, and even a ham sandwich could be a bond trader and come out on top. It's been a great trade over the last 4 decades, and one people don't talk about or realise as the smaller equity market captivates the headlines.
Speaking of equity, capitalising on all the headlines.
Tokenising old world assets
I saw a recent fuss about Tesla stock now tokenised and trading on Binance which is a great first step into bringing the equity market into the web 3.
I get people to buy these stocks because of the narrative and the idea that Tesla will dominate everything transport and electric and go to the moon. I've seen predictions from Cathy Wood at Ark say Tesla could go to $4 000 a share.
Since we live in a fiat world, moon juice articles tend to do well; all people care about is the number go up regardless of what that number means.
I do think Tesla is overpriced in the short term, and I wouldn't buy it myself, but what I would be interested in is Tesla's bonds.
I'd be more than happy to buy a tokensied share of that market and collect my coupons each quarter or trade it depending on what happens with interest rates.
Tokenising of assets
All assets will be tokenised in the future, but they will have to compete with Bitcoin for capital. These tokenised assets are not bearer assets and need centralised services or oracles to validate them, whereas Bitcoin is validated on-chain.
That's why I feel regardless of what gets tokenised, Bitcoin will always be a step ahead, and with its riding monetary policy, it's not going to beat for yields as the rest of the financial world goes crazy around it.
ALL of the fiat money isn't going to die tomorrow or in a few years; perhaps some countries will shit the bed, but honestly, it will be a slow wipe out starting from the bottom. As currencies hyperinflate against Bitcoin and their bond and equity market crash up, people will seek refuge in Bitcoin.
This is why I think Bitcoin will be the bond bull market going forward.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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