housing bubble
Newsletters 11 min read

A Bubble That Everyone IGNORES!!

By Guy

Earlier this year, people coined the term the “everything bubble”. Numerous asset classes that were inflated thanks to monetary policy. 

More recently though, as interest rates have started to rise, many of these assets have seen large falls in value. However, there is one asset class that still seems to be holding up – and that is the housing market. 

But, is it due to follow the same fate as equities or crypto? Or perhaps even worse?

That’s exactly what I explore in my latest video. I take a look at the global property market and analyse exactly what has been driving the frenzied buying that we have seen in the world’s hottest markets. 

I also dissect a recent Fed report which warned of a “property bubble”. This report seemed to come out of nowhere and got many market participants worried – were we about to see a great unwind?

All in my latest video

📊 Main Portfolio 📊

No changes to the portfolio at the moment and I am quite happy with my top-heavy Bitcoin and Ethereum allocation. Depending on how the markets progress over the next few weeks, I may consider shifting even more weight to these in my portfolio.

I will keep you updated in my official telegram channel. 

BTC 39.31% | ETH 35.82% | SOL 5.04% | DOT 4.97% | ATOM 2.92% | RUNE 2.05% | ADA 1.77% | NEAR 1.47% | HNT 1.37% | APE 1.16% | AR 1.08% | MATIC 0.98% | FTM 0.70% | LINK 0.64% | INJ 0.63% | XDEFI 0.10%

📈 Thoughts on Market 📈

Let’s start with Ethereum. There are a few factors that are hitting ETH hard, and the first is the apparent discovery of bugs during the Ropsten testnet Merge. For reference, Ropsten is Ethereum’s longest-running testnet, and doing a simulation of The Merge on Ropsten is one of the final steps before the actual Merge. Or at least, it was. 

The second factor hitting ETH hard is the official delay of Ethereum’s difficulty bomb on Friday, something that’s so significant pp a it was picked up by Bloomberg. This is because the difficulty bomb is meant to force proof-of-work miners off of the network in preparation of proof of stake. Logically, another delay of 2.5 months means The Merge might be delayed. 

This ties into the third factor hitting ETH hard, and that’s the depegging of tokenised staked ETH or stETH offered by Lido Finance. As reported by CoinTelegraph, stETH’s use in apps like Celsius and DeFi protocols like Aave means a depegging could create serious issues for the crypto market. FYI, there’s over 4.1M ETH in Lido, and stETH is 5% below its peg

Besides that mentioned above, there are additional macro factors that have been moving the crypto market and if you watched our recent video about that you’ll know which ones I’m talking about. One of these is the release of the inflation figures for May in the United States via the CPI. Not surprisingly, the CPI came in at another historical high

What’s funny is that the market was reportedly pricing in a CPI of around 8.2%, which is optimistic because producer inflation was a whopping 11% in April and producer inflation tends to be a leading indicator for consumer inflation. The next producer inflation reading comes in next week, specifically Tuesday June 14th, so be on the lookout

Another macro factor that’s been moving the crypto market is the belief that the Fed is going to raise interest rates even more aggressively in response to all the inflation I just mentioned. The Fed will be announcing how much it plans on raising interest rates during its press conference this week, specifically Wednesday June 15th, so get ready for more volatility. 

There’s also been a lot of chatter about incoming energy and food shortages all around the world, starting with Sri Lanka, where there isn’t even enough ink for students to complete exams. An interesting video about the crisis predicts that Pakistan will be the next domino to fall, followed by the countries I mentioned in my own video about the subject

For what it’s worth, on-chain analytics suggest that BTC accumulation continues, as BTC leaves exchanges for crypto wallets. It also looks like Bitcoin miners have almost stopped selling their BTC, which could provide some relief to the crypto market. Historically, BTC has seen a rally after Bitcoin miners stopped selling BTC, so let’s hope it happens this time too. 

I’ll end with a little more optimism from a recent video by one of my favourite crypto YouTubers, Bob Loukas. Bob believes that we’re likely to see the bottom of the crypto bear market later this year or early next year, which is more or less in line with our own crypto bear market prediction video. You know what that means… get ready to accumulate! 

🔨 Bitcoin Fixes This 🔨

The other day I was having a discussion with one of my colleagues here at the Coin Bureau, and we came to an interesting realisation. This might sound crazy, but most if not all the problems we’re seeing today – climate issues, war, inequality, inflation, and even the increasing totalitarianism of governments – are due to fiat currencies. 

Allow me to explain… 

There’s an idea in economics called the “misallocation of resources”. As the term suggests, the misallocation of resources is when money isn’t being allocated in an efficient way. In other words, it’s when money is spent on useless, or even harmful things. There is arguably no shortage of this happening today, and that’s for one reason: money printing. 

When currencies were backed by gold, there was a sort of limit on how much money could be created. This meant that there was a huge incentive for the allocation of this limited capital to be efficient as possible. Interestingly, we see a similar dynamic in cryptocurrency today, notably DeFi, probably for the same reason (constraints of coin and token supply). 

When currencies stopped being backed by hard assets like gold, all of a sudden there was no limit to how much money could be created. This meant there was, at the very least, less incentive to allocate capital efficiently. When you add inflation to the mix, this means there’s also less incentive to hold currency for very long, which accelerates capital inefficiency. 

This second idea lies at the heart of Jeff Booth’s famous book, The Price of Tomorrow, which I highly recommend. In short, inflation incentivizes people to spend rather than save. This leads to the sort of overconsumption that causes the climate issues we’re facing today. This is where things get a little complicated, so bear with me. 

First, a question: why is there inflation in the first place? 

In truth there are many reasons, but I want to focus on one: government debt. It’s long been said that the US government has used inflation to shrink the actual value of all the debt it owes. Why do governments have so much debt? Ultimately, capital inefficiency caused by the ability to create money on demand. 

Here’s the thing, it’s not just the government that gets caught up in this capital inefficiency. Wealthy individuals and institutions see the inflationary conditions, and, assuming interest rates are low enough, realise they can borrow large amounts of money to buy real assets which they can then borrow against, hence the term buy, borrow, die

As time goes on, the individuals and institutions closest to the money printer (the central bank) become wealthier and wealthier, be it because they have access to lower interest rates or have some secret dealings with the central bank and government officials. As far as I can tell, this is fundamentally what has led to the massive wealth divide we see today

This wealth divide has led to an increase in domestic and international conflicts, which makes sense given that it’s not poverty that causes crime, but relative poverty. Consider for a moment that even investment trends like ESG wouldn’t be possible were it not for the capital inefficiency coming from the on-demand creation of fiat currencies. 

In sum, if an asset like BTC does become the world’s next reserve currency, this would solve many of the issues we’re seeing today, simply because these issues are being driven by capital inefficiencies being caused by the ability to create currencies. This technically makes BTC the most ESG-friendly asset, but it would put the likes of Blackrock out of business. 

Can’t have that, can we? 

🤯 Buidl That Knowledge 🤯

Many people talk about using a bear market as an opportunity to “buidl”. This isn’t only true of protocols and technology, but also for knowledge. It is in these times of less hype, FOMO and volatility that real learning can take hold. 

As such, there are a few resources and tips I wanted to share with you to best guide you in “buidling” that Giga crypto brain. 

Firstly, if you haven’t already, I highly encourage you to read the Bitcoin whitepaper. If you are only ever going to read one whitepaper in your life, then this is it. That’s because, not only is it relatively easy to follow, but it also lays the foundational principles that underlie crypto’s tech and use cases. 

If what you read is intriguing and you want to learn more about the tech backing your favourite projects, then you should also consider going over their whitepapers too. Yes, some of these can be pretty long and a chore to read, but there is a way to skim through it and get most of the important information – see my video on it.

If, however, you cannot face reading a white paper, then there are plenty of books out there that will definitely help. I still regularly read crypto-related books and I have talked about them on a number of occasions, here, here and here. Part of the reason why I think reading in bear markets is so much easier is because it’s one of those things that can take you away from the PC – one less excuse to refresh CMC or check prices

Something else that you can do that doesn’t require using your computer is to listen to some crypto podcasts. It’s a great medium for cramming knowledge in when on the move, relaxing or even just doing the chores. Apart from doing my own podcast, I am a massive fan of them in general and have talked about the best podcasts to listen to here and here. 

Of course, it’s not just about what you should be focusing on, but also what you should be avoiding. 

You can be certain that over the next few weeks and months, the mainstream media is going to dial up the crypto FUD to the max. We have already got a flavour of this as regulators and politicians attempt to ramp up the pressure. It can be tough to completely tune out headlines as they try to gaslight you about the future of crypto – but you have to try. 

Very little “breaking” crypto news that is being pushed right now will change the underlying fundamentals and broader use cases. They are unlikely to change the longer-term trajectory and potential of the industry. So, it’s important to tune out the FUD because the more attention you give it, the more likely these outlets are to reward you with more FUD. 

Lastly, a bear market is a great opportunity to buidl those longer-term relationships with other people in the space. Now that the pandemic is (we hope) a thing of the past, we should use the opportunity to grow our crypto networks. Getting together with fellow cryptopians is a great way to share knowledge and get some other points of view. I love nothing better than talking crypto with people and getting their take on things. There’s no better way to pass a few hours!

A portfolio may not be immune to price falls, but the friendships you build in the community are rock solid.

🔥 Deal of The Week 🔥

Still bullish on the future of Ethereum? Well, proud ETH holders might be interested in the first ever baseball cap that we’ve designed for the store!

👉 Get your ETH baseball cap today!

🔮 Video Pipeline 🔮

  • BIS DeFi Report – Protocol Level Regulation!?
  • China’s GDP: Can It Really Be Trusted?
  • Leaked US Crypto Regulations – What Do They Say?
  • Binance Coin (BNB) Update: What’s Going On?
  • Elon’s Twitter Takeover: Will It Ever Happen?

🏆 What’s New At CoinBureau.com This Week? 🏆

Crypto.com Exchange Review 2022: A World-Class Crypto Exchange

Raydium Review: Solana’s DeFi Liquidity Mammoth

That’s all for now. However, the whole Team at Coin Bureau would like to thank you for your continued support!

Yes, sentiment is dire and many may have left. However, we are going to keep ‘buidling’ our educational content. 

And for those of you who are sticking around, we hope that this content will help equip you to make the most of the next bull market

Guy your crypto guy

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