Crypto correlation to equity and other markets driven by primary factors driving markets. For the past few years this has been monetary policy, bringing many correlations much closer.
When dollar supply increases, assets relative to dollars decrease — i.e. JPY, BTC, Housing, etc.
- Key to consider non-dollar denominated economy e.g. JPY purchases in local economy vs. dollar-denominated purchases with JPY.
“Inflation is not up this year; measures of inflation are up this year.” (inflation has been growing for years via growth in money supply)
The real change this year is not increased inflation but decreased expectations about future inflation (i.e. US dollar money supply expanding less quickly)
IN CURRENT MARKET: high real rates bad for crypto since less liquidity available for purchases…exacerbated by fact that the same people and firms that invest in equities also invest in crypto and both are down…hence crypto on the table for raising liquidity when equities drop and vice versa
In different markets, other things may become emphasized
Is crypto good or bad for the dollar?
It’s complicated
All digital assets including bitcoin provide ways for fiat rails to be more efficient and effective which is helpful for the dollar. But stables can also be an asset to hold which decreases demand for dollar.
Hope that stables put pressure on very poorly built fiat systems to adapt, while giving support to functional monetary systems (e.g. good for dollar, bad for lira)
“Look for opportunity in OTC assets…and the counter is extremely wide.”
Privacy tokens (Monero, Zcash etc.) likely to be problematic for widespread adoption in their current forms due to incongruity with KYC/AML necessities (obvious)
Gut instinct: more liquidity = better (for all assets). Problem: practical action (e.g. FTX stock is private)…wouldn’t list even if could…because of real impacts on e.g. company fundraising ability, employee behavior, etc. If figured these things out, could move towards more liquidity. Must “adjust the world to liquidity system” before moving to it.
Bull case for crypto apps: interoperability between apps.
Ask people to convince you of their advice (as opposed to give you advice). Cross-check with what you already know and see if it is new, what you already believe, or what you have already refuted…”Bayesian hunting”.
People are way too risk averse…and specifically so when it comes to things that are altruistic.
More headcount = bad. Less headcount = good.
It is very easy for a marginal employee to be a net negative. At many companies most employees are. Diffusion of responsibility; lack of internal alignment and management, etc. therefore additional employees = decline in total productivity.
Only grow dev team to the extent that you can (1) know what they need to do, (2) integrate them into culture, and (3) manage and teach them.
Predictors of success (in FTX employees):
- Things that just matter everywhere, plus
- Being able to handle messy worlds well…accepting the messiness of the world and making reasonable trade-offs as a result
- Working well with colleagues. There is no reasonable arbitrage in hiring smart assholes and accepting that. Only exception is if you controlling environment controls behavior (e.g. people in the right environment work better with colleagues and become acceptably tolerable and more productive).
- Being a good colleague, being aligned to company and its mission, hard workingness….THEN intelligence matter.
Effective Altruism: do the actions that maximize utility for the world when all is said and done. Last part is key e.g. cannot ignore effects of setting negative precedence, breaking rule of law, etc. Full utilitarianism with full consideration of nth order terms (accepting that these can be very large).