What Is Smart Money?
Smart money generally refers to capital controlled by large institutional investors, central banks, and market experts who oversee and transact large volumes of capital. It can also extend beyond the financial sector to include well-connected investors who often have greater access to information, expertise, and opportunities.
Smart Money Is Changing: Welcome To The Era Of Smarter Money
Smart money has always been linked to three main sectors: the stock market, real estate, and business ownership. The triggered shift will ultimately have a significant effect on these sectors. In my opinion, the acceleration and growth of crypto will ultimately create smarter money. Those who choose to build mechanisms that will ultimately capture value during this wealth transfer stand to experience significant growth.
The creator economy alone is set to experience significant growth. When you consider that traditional financial voices are calling for a $13 trillion metaverse market cap by 2030, you begin to see the growth factor at play. However, tokenization is set to exceed the metaverse far and even contribute to it in various ways, including ownership, value transfer, and generation. Tokenization and RWAs are the next chapter of crypto.
Unfortunately, Web3 concepts such as SocialFi are struggling to achieve broad adoption and to develop effective tokenization models. Many of these platforms perform well initially. However, over time they tend to weaken at best, or collapse. Provided SocialFi platforms can create a working recipe, the sector stands to advance. Until this happens, I don’t think it is reasonable to expect much growth within the sector.
Yesterday’s Wisdom Is Not Necessarily Tomorrow’s Wisdom
This mode of thought is where I believe the once smart money begins to unhinge. Just because something still works does not necessarily make it significantly beneficial or profitable. I recently compared Warren Buffett and CZ to illustrate this point. Buffett is still wealthy, but others are outpacing him and fast! CZ has reached Buffett’s wealth bracket in a few short years, while Buffett has spent an entire lifetime amassing his wealth.
Most men retire in their 60s, and yet Buffett has had to dedicate his 90 years to building his fortune. New sectors and ideas that experience far-reaching adoption ultimately create fortunes. CZ was an early innovator, and as a result is in the upper 1% of wealthy individuals. Much of this is thanks to his BNB holdings, which have absolutely soared since inception in 2017. Furthermore, Binance processes approximately a trillion dollars per week in trading volume.
Why The Well-Connected Are Already Preparing For The New Economy
In watching and speaking to a few wealthy individuals in my city, I can see that they are viewing investments as business as usual. There is not even so much as a hedge. This is largely due to a dynamic I refer to as The Evil Twin. Once someone has reached a level of success, they somehow always seem to simultaneously develop a mindset of being unconquerable. Along with success comes the twin of arrogance.
Unless this dynamic is noted and special attention is given to keeping it in check, it will ultimately mature into destruction. It appears that the well-connected are being given advice and adjusting, while the smart money as a whole continues in prideful arrogance. However, when you evaluate traditional investments over a decade, many are falling significantly short.
Understanding The Transition To The New Economy
In the boom of 2017, everyone began to envision a new future. A few short months later, crypto is a forgotten “failure to launch” story. These continuous boom-and-bust cycles that are part and parcel of a developing market manage to deceive the majority into thinking it was just a fad. The typical smart money is also deceived and so will ultimately miss out. Even at this stage of the game, they are appropriating decades-old strategies.
In my opinion, anyone who continues in the traditional path of “wealth wisdom” will ultimately be watered down into a lower echelon. We are entering the age of intelligence where even data becomes a form of currency. This is a topic I have discussed for years, and now we are seeing it unfold in DePIN, MachineFi, and the economy of things (EOT). There is a transition regarding value and the inherent creation of value.
Why Hyperinflation Is A Certainty
What the FED refers to as “aggressive” is nowhere near what is needed, or even possible. It’s a catch-22 with no remedy. Modest gains will become impotent if they aren’t already. Crypto has very high yields via DeFi and other strategic approaches. This is what is required to stay ahead of this tsunami of economic destruction. Factor in monetary expansion and inflation, and I don’t see how traditional investing stands a chance, even at these early stages.
Not everything is fixable, and that is the harsh reality the world is about to learn. The average person thinks things can get better, but that’s just hoping without understanding how the economy and monetary policy work. The average person has zero understanding of the creation and issuance of the currency they use and work for every day. What they don’t know is that the only way governments can effectively conquer debt is to inflate it away.
There is a conflict of interest: governments need higher inflation while simultaneously being morally obligated to reduce it. Who do you think wins in this scenario? Furthermore, the formula for inflation has been adjusted twice, making it appear less than it inherently is. Furthermore, inflation is determined using a basket of goods and services. If you calculate inflation using products that are minimally impacted by inflation, you have a softer figure.
Why The New Economy Needs Fresh Blood
The stock market is already pushed beyond reality, along with the real estate market; however, not in all countries. Many countries are experiencing a decline in property valuations. How much longer will printed money be pushed into these asset classes? With greater adoption of crypto comes another wave of injection. Is it not better to pump money into an asset class that is in its infancy, or an asset class that is at breaking point?
How long before the FED prints money to distribute it into the crypto market? There’s not much meat left on the bone of traditional asset classes. As crypto grows, it will also cause traditional assets to shrink. Markets are relative. It’s a scenario of the most perfect compounding effect. Traditional asset classes will begin leaking value as more capital rotates into crypto and AI.
Final Thoughts
This is how I see this playing out. Of course, this will transpire over years, not months. We have, however, not addressed the companies and business models that will adopt and incorporate crypto and blockchain-based models. This will ultimately also be a deciding factor in who and what continues to prosper. We can revisit this prediction in the years to come. It will be rather interesting to see who and what is considered smart money on that day.
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