Crypto’s Place in the Risk Hierarchy
When the global economy is doing well,
crypto is where capital goes last.
Not first.
Not early.
Last.
Because when everything is fine:
cash earns yield
bonds feel safe
equities grow
risk is rewarded without needing extreme volatility
Crypto becomes relevant only after optimism peaks
and investors start reaching for maximum risk per dollar.
Now flip the cycle 👇
When the economy breaks:
liquidity dries up
leverage collapses
uncertainty replaces narratives
And crypto is where capital exits first.
Not because it’s “bad technology”,
but because it is:
liquid 24/7
highly leveraged
non-contractual
pure risk appetite in its rawest form
In a crisis, markets sell what they can, not what they believe in.
Crypto is the easiest sell.
That makes crypto:
last in during good times
first out during bad times
This is not a weakness.
It’s crypto’s structural role.
And it leads to a critical implication 👇
If you build a strategy assuming crypto behaves like gold — it will fail.
If you build a strategy assuming crypto is just random gambling — it will also fail.
Crypto is neither.
Crypto is the outer edge of the risk curve —
the first expression of excess optimism,
and the first casualty of fear.
Understand that,
and crypto stops being confusing.
Ignore it,
and every cycle will feel like a surprise.
#MacroEconomics #MarketCycles #liquidity #RiskManagement #crypto