From Nothing to $4 Trillion

Written by Stu Caplan | Aug 21, 2025

The Anti-Inflation Hedge That Might Be Fueling Inflation

We’ve been hearing the pitch for well over a decade: Cryptocurrency, a scarce, decentralized store of value that central banks can’t manipulate, will serve as a firewall against fiat debasement and save us from runaway money printing.

Yet here we are in 2025 with crypto’s total market capitalization brushing up against $4 trillion—up from essentially nothing in 2009. That’s not just a price chart going up; that’s trillions of dollars in paper wealth appearing, in many cases, almost out of thin air.

The irony? An asset class built to fight inflation might be helping to create it.

The Wealth Effect—Crypto Edition

If you’ve ever watched someone’s stock portfolio double and then seen them spring for a new vacation home, you’ve seen the wealth effect in action. It’s simple economics: when people feel wealthier, they tend to spend more. That extra spending drives demand, and higher demand can push prices higher.

Now layer in crypto’s unique brand of wealth creation. The value isn’t tied to cash flow or productivity—no dividends, no rent checks, no factory output. The “value” is market sentiment, pure and simple. Tokens rise in price, holders feel richer, and suddenly those unrealized gains are translating into luxury cars, high-end dining, and renovations.

With crypto, this cycle can run fast. Markets never sleep. Price swings happen in minutes, not quarters. And when prices run, they run big—creating an instant, turbocharged wealth effect that spills directly into the real economy.

When Leverage Joins the Party

If there’s one thing markets love, it’s leverage and the crypto world is no stranger to it. Holders borrow against their tokens to fund other purchases, companies swap cash for Bitcoin on their balance sheets, and entrepreneurs tokenize future cash flows to raise capital today.

This adds a multiplier effect:

Borrowing against crypto injects liquidity without anyone selling an asset.
Corporate treasury purchases connect more traditional economic activity to the token market.
Tokenization of assets opens the door to raising capital in nontraditional ways—often with fewer restrictions than public markets.

In other words, we’ve created a parallel money machine outside the traditional banking system and it’s spinning faster than many people realize.

The Paradox: Hedge or Heater?

Crypto’s marketing pitch has always been “protection from inflation,” but if you step back and look at the short-term impact, it’s worth asking: in its current form, is it protecting us—or is it pumping up the very thing it claims to fight?

When an asset class creates trillions in perceived wealth, people spend. When they borrow against it, they create more liquidity and when that spending and liquidity hit the real economy, prices can rise. That’s the paradox.

Big Questions for the Next Phase

This isn’t an anti-crypto rant. I’m not predicting the end of Bitcoin or advising anyone to dump their holdings, but it is worth asking some bigger-picture questions as we enter this next phase of the digital asset story:

Does crypto become a shadow monetary system? If the market keeps growing, could it start playing a role similar to central bank money creation—only without the policy levers to slow it down?
How do central banks account for crypto wealth effects? The Federal Reserve looks at housing prices, stock market valuations, and consumer confidence when gauging demand pressures. Will crypto enter that list?
What happens when $4 trillion becomes $2 trillion in months? We’ve seen this before—crypto can drop hard and fast. The reverse wealth effect (when people feel poorer and stop spending) could be just as powerful.

Where This Fits in the RITE Framework

At Members’ Wealth, we think about crypto the same way we think about any other emerging asset class—through the lens of our RITE framework: Risk, Investments, Tax, and Estate.

Risk: Crypto is volatile. Beyond price swings, there’s regulatory risk, custody risk, and concentration risk. The question isn’t: “Will crypto go up or down?” It’s: “How much of my net worth am I willing to have tied to something that can move 30% in a month?”
Investments: A small allocation might make sense for some, especially if it’s part of a broader diversification strategy, but it needs to be sized appropriately, and it shouldn’t replace assets with proven track records in your core portfolio.
Tax: Gains—realized or through borrowing—have tax consequences. Selling can trigger large capital gains. Using crypto as loan collateral can sidestep a taxable event, but it adds leverage risk. Plus, tracking basis for multiple tokens and wallets can be a compliance headache.
Estate: Passing crypto to the next generation isn’t as simple as handing over a statement. You need secure custody, clear instructions, and legal coordination so heirs can access and manage it without unintended tax or legal snags.

My Take

I’m not dismissing crypto’s potential. I’ve seen life-changing gains, and I’ve had others learn hard lessons about volatility. What I am saying is this: the story isn’t just about blockchain technology, decentralization, or hedging against the Fed.

Right now, in real time, crypto is influencing spending patterns, liquidity, and potentially—even ironically—inflation, and that’s a twist worth watching. For those who hold it, the question isn’t just “Will it go up?” but “What happens to the rest of my financial picture when it does—or when it doesn’t?”

That’s where the real planning happens. Not in guessing the next price target, but in understanding how crypto fits into your broader wealth strategy, how it interacts with the rest of your assets, and what it could mean for your taxes, liquidity, and estate.

If you’ve built significant wealth in crypto—or are considering an allocation—this is the time to think holistically. The right structure can turn it from a speculative bet into a strategic asset and the wrong approach can turn a windfall into a problem.

Either way, I think we can agree on this: sometimes, the most important part of a story isn’t the headline. It’s the side effect.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.

These examples are for illustrative purposes only and do not represent actual client experiences. Individual results will vary based on personal financial circumstances and tax laws.

About the Author – Stu Caplan, CFP®

Stu Caplan is Senior Wealth Strategist at Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions.

The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of industry experience, Stu and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations.

Stu received his MBA from The Robert H. Smith School of Business at the University of Maryland and his bachelor’s degree from the Eller College of Management at the University of Arizona. Stu resides in Bucks County, PA with his wife and two sons. He’s an avid golfer and is thrilled that his boys have embraced the game. He also volunteers his time as a board member of the PKD Foundation and Abrams Hebrew Academy.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453.

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