Powell & Yellen in Congress, Typical Crypto Investor's portrait

24 Mar 2021

The speeches of the head of the Treasury Department Jannette Yellen and the head of the Federal Reserve System Jerome Powell in Congress were main events of yesterday. Although there was no need to talk about any intrigue at all, because the texts of the speeches of both were published in the press in advance. And nothing new was there. All the same assurances that a lot of money is great, and the more money is even better.

By the way, about "even more". Biden appears to be serious with his infrastructure plans and the US economy could prepare for another $3 trillion injection of money.

It’s even surprising that against the backdrop of all this abundance, as well as the decline in Treasury yields, the US stock market declined. Although it is actually surprising that anyone is buying at the current sky-high prices.

After all, who are these people who buy Bitcoins at 60K? Almost any professional will say something like “crypto assets are very risky and speculative”, “consumers should be aware of the high risks of buying and / or owning these instruments, including the possibility of losing all their money” (these are quotes from the latest review by the main regulator of European financial markets)... So who, then, and why is buying the crypto at current prices?

FCA (UK Financial Supervision Authority) has compiled a portrait of a typical new generation crypto investor. As it turned out, this is a woman under 40 from the BAME group (black, Asian and ethnic minorities) who use social media for advice and news. Tellingly, the motive for investing in the cryptocurrency market was by no means a balanced decision based on the analysis performed. But the emotional component there is: to have fun and emphasize your status as the owner of the cryptocurrency and, accordingly, a direct participant in what is happening.

This portrait is, in fact, a verdict on the cryptocurrency market. The collapse of Wall Street in the 1920s and a host of other bubbles and crises began precisely when housewives and other householders decided that they were competent enough for investment activity. As a result, prices lost their full connection with reality. History teaches that there is always one end to such stories. So we are waiting.