The market has already gone upwards, so this post may be a little late. However, I'd like to share some of my ideas on the current economic situation.
There was many discussion about recession fears lately, even at my work place.
In my opinion, there will be no recession because many firms are still developing or contributing to society in some way. Goods are still in high demand. In addition, if there is a crash, the alternative investment should crashes first - which I have yet to notice.
My view is that there is still a lot of money out there, probably staying on the sidelines or "stuck" in investment that may not be as liquid, such as NFT and Cyptocurrency.
Personally I do not think money will really be destroyed. To me, money is a flowing concept.
The volatility or the sudden lack of liquidity in various investments over the last 2 years has been a result of the massive quantity of money rotating, from one type of investment to another.
|Information taken from CBInsights|
Is it a coincidence that the decline in NFT trading volume coincides with the rise in equity markets?
I believe the recent rise in equity market continue to support my theory that the money is just in rotation or on the sidelines. Furthermore, due to the fed printing of money since 2020s, the quantity of money rotating is just too huge that cause significant volatility in various investments.
My belief is that the previous rise in investment into NFTs in particular was a result of the lack of liquidity in the equity markets.
Therefore, why did money rotated came back to the equity markets? This is probably due to the certainty since Fed has spoken and the China Government has recently change its stance.
Nevertheless, with the recession fears out of the way, there are still other concerns in the market, such as supply chain shortage and inflation, which investors must still take note of.
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Stay tuned for the next write up!