a source familiar with the matter on Nostr: "if everyone sold all other assets their price would crash" Yes. This would be a ...
"if everyone sold all other assets their price would crash"
Yes. This would be a deflationary crash.
However, I think it's easier to understand the other way around.
If everyone suddenly really wanted dollars and was "buying" dollars with their homes, we would expect the value of the dollar relative to homes to rise and the value of the homes relative to the dollar to fall.
"What if everyone spent all their BTC for stocks"
This is a hyperinflationary crash. If EVERYONE spent all their currency on stocks, this would include the people who just received payment for selling their stocks. The holding period for currency balances approaches zero, the value of currency balances approaches zero, and people quickly stop accepting BTC in payment at all. Imagine the stock market is going crazy - you put $10 in and minutes later you have $100 - everyone is going nuts. P/E multiples approach 1,000 or more. You make a few hundred thousand dollars and go to the grocery store to buy yourself some nice steaks. How many dollars do you think those steaks are going to cost?
Yes. This would be a deflationary crash.
However, I think it's easier to understand the other way around.
If everyone suddenly really wanted dollars and was "buying" dollars with their homes, we would expect the value of the dollar relative to homes to rise and the value of the homes relative to the dollar to fall.
"What if everyone spent all their BTC for stocks"
This is a hyperinflationary crash. If EVERYONE spent all their currency on stocks, this would include the people who just received payment for selling their stocks. The holding period for currency balances approaches zero, the value of currency balances approaches zero, and people quickly stop accepting BTC in payment at all. Imagine the stock market is going crazy - you put $10 in and minutes later you have $100 - everyone is going nuts. P/E multiples approach 1,000 or more. You make a few hundred thousand dollars and go to the grocery store to buy yourself some nice steaks. How many dollars do you think those steaks are going to cost?