The narratives that mainstream commentators have constructed around crypto focus on conventional economic views and thinking, erroneously brushing off crypto price moves as unintended consequences of central bank action.

Because of this central-bank-centric worldview, such commentary fails to see that crypto assets could actually be worth something to someone. Here, QE, bank reserves, and low interest rates have absolutely nothing to do with crypto’s value.

First of all, anything can be an asset, simply because anything can have value, even if it has little to no actual use. All that is needed is for enough people to believe that it has value and hence be willing to pay money to own it.

Yes, it is all about Paradigm again.

Similarly, the biggest (and loudest) criticism of crypto assets is the consequence of holding on to a different paradigm. Those who consider cryptocurrencies to be worth nothing because of their lack of intrinsic value are simply folks who firmly believe in the notion of assets needing to have value in and of themselves.

Because they cannot, or choose not to see perspectives that lie outside of their paradigm, they cannot see things from the crypto believer’s standpoint.

Through the eyes of the true believer, cryptocurrencies represent independence from a financial system that is built on flimsy fiat foundations. With this as the foundation of their worldview, it is only natural that they would seek an alternative asset with which to reduce their exposure to fiat currencies.

This leads us to where QE has had an effect on crypto, which is also, ironically, what both camps can agree on.

However, and even more ironically, their agreement is based on a common misconception of what QE is and does! 

Broadly speaking, both camps are big believers in the narrative that QE = money printing; and therefore jacks up equity prices, gold prices and crypto prices, while grossly debasing the USD.

Regular readers know that all of these are misconceptions(see: stocks, gold, USD) derived from the erroneous belief that bank reserves are money.

They aren’t, and are stuck on banks’ balance sheets.

Which means that the most likely effect QE has had on crypto markets is to increase the number of crypto buyers who are buying because of a false belief!

And therein lies the irony – who is doing whom a favor here?

The mainstream non-crypto believer driving up the price of crypto assets because they believe the Fed leaves them no choice, thereby enriching crypto believers in the process?

Or the crypto enthusiast who is providing these “fiat refugees” with a crypto safe haven away from fiat insanity?

In this mad world where even the people in charge don’t understand what they are doing, who really knows?