Buying Bitcoin Is Like Trading The Bond Market Since Over The Last 40 Years

in LeoFinance21 days ago

Hey Jessinvestors

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.

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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.

These central bank policies have pushed bonds into a 40-year bull market which may be coming to an end.

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.

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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.

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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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pretty amazing talk on bonds / credit default swaps / and bitcoin that got a lot of buzz from the bitcoin people i follow on twitter this week ... i listened to the whole thing ... fyi and peace 👍

https://www.theinvestorspodcast.com/bitcoin-fundamentals/bitcoin-and-bonds-greg-foss/

I loved this one Gregg Foss was the reason I wrote this post, I also listed to him on What Bitcoin did, the guy is on to something here. I am getting my Bond blow up insurance.

Bitcoin to me seems ALOT like the CDS - Credit default swaps of the early naughts, that were worth billions when the housing market blew up

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I think bitcoin has a great future,thank you for the exchange, have a good weekend

Well I hope you're stacking your sats and participating in the potential upside of what Bitcoin is building

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Interested to see how this bitcoin ban in Turkey works out. That's the first thing these governments will try to do when people lose faith in their currency.

I always say you can’t ban Bitcoin you can only ban yourself from Bitcoin it continues on! This is something they’ve never heard to deal with the treat that cannot be shut down by the swing of a pen

It doesn’t mean they won’t push their citizens into poverty, these people will do anything to retain control and remain relevant

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I think most of the bond market players tend to play the macro view or years out. So I think the experts in those market tend to care more about the fundamental analysis of the underlying bonds. I personally don't think the junk bonds or most bonds right now are worth it, but there are some who do.

As for Tesla, I had a plan for Tesla today but I did not action it so I am having some FOMO. I second guessed myself and missed out on a +50% gain options trade (Tesla into earnings). The reason why was because it was just overvalued.

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Indeed it’s all about valuing time in the bond market either you take the current value or you hold for the coupon returns! It’s meant to be the time value of money but the bond market is now so broken that to me Bitcoin has taken the reigns as the time value of money

It’s becoming the risk free rate we will peg and measure investments against to see if they are worthwhile or not

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Yea I agree. The patches in the bond market are only getting worst and when it blows up, it will be a massive crushing defeat for anyone in the fiat world. When bonds go, the housing market goes and the companies just default.

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interesting comparison of bitcoin with the bond market, thanks for the exchange