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Comment by human | Hacker News Reader

It doesn’t work like that though. If I buy BTC at 60k then someone is selling BTC at the same price. The fiat is just moving from one account to the next. The people getting cash-rich from crypto are either spending it (on lambos) or putting it back into the stock market.

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It's a little more complicated than that.

You buy 1 BTC from me for 60k. Now let's say I want to buy BTC again, but you want to sell it for 120k, so now I buy 0.5 BTC from you for 60k, and if everyone agrees that 120k should be the fair price, we've just bid up the market cap and value of BTC without really increasing the fiat.

Now imagine that with different crypto, stocks, other financial instruments, real estate, etc etc and in different combinations and with margin and derivatives and what not.

> we've just bid up the market cap and value of BTC without really increasing the fiat

If anyone in their chain borrows against their inflated crypto, that creates new fiat.

Depends who you are buying it from and which country they are spending in

I think most of the fiat money spent on crypto goes to miners, who then turn around and pay the electricity bill with it.

In all probability, you’re selling to a crypto trader or bot who then uses those funds to make more crypto trades, so the money is in a sense trapped in crypto markets until someone withdraws it from the exchange. The extent to which this money is being absorbed by crypto can be seen by analyzing exchange flows.

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