Story time

Between Apr 12 & May 21 in 2017, USDT dropped to $0.89 (Tether screwing up). When this happened, it appeared everywhere like BTC was mooning hard because sites like CMC factored in BTC/USDT pairs in the price. BTC went from $1200 -> $2100 on Bitfinex in this period.

I was trading/monitoring the market closely, and from what I could tell, *most*/average people weren't paying attention to the USDT<>USD discrepancy. They just saw the prices on CMC and USDT-paired exchanges and began to FOMO, adding real firewood to the flames.

This made things difficult because the price was going up partly because of this accounting/UI error, but partly it because people were really buying. And before the Tether discrepancy was gone (USDTUSD = 1) "Number Go Up" fomonomics had already taken over the show.

Now in 2020-21, a similar effect is occurring.

But this time it's not Tether's fault, it's the Fed's.

From the last ATH in Dec 2017, the M2 money stock (USD in circulation) has increased 39%.

So instead of USDT = $0.89, we have USD = $0.72 (based on M2).

It's not really correct to base the USD's relative value on M2 alone (it doesn't account for monetary velocity or the distribution of money), but we know at least that USD is more abundant in Jan 2021 than it was Dec 2017, and asset prices are inflating.

This is causing the same psychological effects because now when people look at the BTC price they're absolutely flabbergasted. The NgU fomonomics are intensified, the FOMO is even more dizzying. An accounting error, once again, adding real firewood to the flames.