$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse
cnbc.com
cnbc.com
It's hard to show that they really sold these coins. Certainly, the LFG transferred the coins to some different exchanges. But did they truly sell them?
If I was running a dodgy ponzi scheme and saw it collapsing catastrophically, I don't think I'd be throwing good money after bad trying to futilely patch it up. Much better to stash the remaining assets away somewhere and personally cash out later on.
Also, “In a sense, the market is going to take that as kind of bullish.” - a.k.a. the standard 'this is good for bitcoin' quote, applicable whatever the news is!
A total ponzi scam coin crashed. This IS good for Bitcoin. Bitcoin is not Luna nor is it one of the thousands of other garbage scam coins. The faster those coins are proven scams the better.
Too many people falsely equate "Bitcoin === Crypto".. or "a fan of bitcoin is a fan of all crypto".
So I'd bounce this back to you: How is Luna's Ponzi crash NOT good for bitcoin?
It pretty much is. I can open the price graph for any coin and assume the bitcoin movements are similar. Small dip in bitcoin price? Alts get destroyed. Even ethereum gets destroyed.
Same can be said about categories of companies in the stock market. e.g. SAAS companies, oil companies, etc move together..
tick tock...
BTC's max supply is capped and the release schedule of new coins is fixed and predictable. There is no possible way that trillions of new bitcoins could suddenly be created.
Fiat currency has the backing of a government. The government demands certain payments of this currency in order to own land, and also for some extra rights like mineral extraction, fishing licenses etc. Thus, as long as the government is viable and can confiscate the land of those who don't pay, there will be demand for the currency, and it will be proportional to the value the government assigns to the property and the rate of tax.
Thus, the currency is stable, because you know at the end of the day, there will always be a buyer who needs to pay their taxes.
Quant has only 12 Million Tokens. No new tokens will ever be created. It topped at $400 a piece. Now it is trading at $72. It could go down all the way to fractions of cents.
Reality doesn't matter. Perception of reality is all that matters. Likewise, Bitcoin could only ever have a 21 M supply cap and it could end up trading in fractions of cents just like the above two coins in the future.
That doesn't mean it's not a Ponzi. One can run Ponzis with a cap and fixed/predictable supply increases..
There absolutely is: fractional reserve banking. Exchanges are already operating that way. They offer loans, savings accounts and everything.
Bitcoin sucks compared to many other cryptocurrencies, still it’s the most popular one because it was the first, because people know about it, and because people know that other people know about it.
Even if you could fork Twitter and put it behind a different domain name, for example , Twutter, and you would add some functionality that everybody would like to have (let’s say an edit button), most people would still go to Twitter.
If you could sell the rights to use the name Coca-Cola or Nike, even if you had to make it clear to the customer that the new product that you sold had nothing to do what so ever with old product, the names alone would be worth a couple of fortunes.
So what’s stopping Bitcoin from crashing is the brain virus (or meme if you want) that has infected hundreds of people around the globe and made them believe that other people will know about and believe that Bitcoin is valuable.
And since Bitcoin isn’t hooked up to a doomsday device like Luna and UST was, it can’t destroy itself.
I think you undersell that point: Bitcoin has proven itself. A lot of currencies have come and crashed, had backdoors, hacks, hard forks etc.; Bitcoin is simple-ish and stable. It also the longest surviving crypto currency. So it wields a lot of trust and market power.
When you don't claim a value, you don't need a 'backstop.'
It isn't like you can reverse the mining process and get back the electricity which was used to mint your BTC or something.
The novelty was a guaranteed mint/burn mechanism across the two which was intended to maintain the peg on Terra.
As the prior poster correctly asserts, Luna was never pegged.
I think this will hold in the future as well.
Or are you rather concerned with the volatility?
Because surely bitcoin crashed more often 80% than the dollar...
So pick your poison...
> So I'd bounce this back to you: How is Luna's Ponzi crash NOT good for bitcoin?
Doesn't the first line answer the second?
To be clear, you're suggesting: "because people are uneducated about bitcoin and crypto, when one project fails they will incorrectly connect it to bitcoin. And that's bad for Bitcoin."
These events are great opportunities to educate ignorant people. > 0 such ignorant people will learn more about bitcoin and why it's not like crypto like Luna. Greater education is extremely good for Bitcoin and bad for scam coins - which rely on ignorance.
That's just my opinion, though.
Would also be nice if the only stock in the stock market was AAPL and no other shit stock with no profit.
Anything can be a store of wealth. NFTs even had their day in the sun but it's hard to stay valuable unless you are providing actual value.
So I ask, where' the value in Bitcoin. It used to be a great way to launder money, not so much anymore. It was supposed to democratize finance and allow the individual to not get screwed over by the big banks, but with the amount of rug pulls in crypto, I feel safer at Wells Fargo (and I really hate Wells Fargo).
And don't get me started on DeFi. I'd be horrified by it if I just saw one Flash Loan attack but there's so many that I'd never trust my $$$ anywhere near that.
...hey, wait... that also sounds like a ponzi.
I have USD sitting in an account waiting for that to happen, in fact.
Lucky, that one has enough vested interest from those making money they'll do an awful lot to stop it following LUNA (inc if you look at the recent depeg)
Is Luna not run off of Bitcoin?
So if Luna could function as a Ponzi scheme, why doesn't Bitcoin inherently have that same capability or function embedded into it? Or is there something preventing that from happening with Bitcoin?
Confused.
BTC's max supply is capped and the release schedule of new coins is fixed and predictable. There is no possible way that trillions of new bitcoins could suddenly be created.
But it's definitely looking like "anonymously drop a protocol and disappear" was a smart move.
All these Ethereum-based token coins seem like they're trying to answer the question "what if Bitcoin had a central banker, but it's a kid in his 20s with a CS degree?"
That's a slightly strong perspective; it is not impossible; it is merely extremely hard.
It's this single point of failure ("one" controller vs. distributed to diversify risk) that you're stating is what makes it a true Ponzi vs. Bitcoin?
We need new songs, “you just got Do Kwon’d” instead of “Mt Goxxed”
Who'd have thought that failing to operate a bitcoin exchange is a thousand times more lucrative than actually operating one!
[1] If Mark owed you a bitcoin back in 2014, you're not going to get that bitcoin back. You're going to get somewhere between ~$200 and ~$600 back. He's going to keep the other $30,000.
It's also unfortunate, because a lot of the vibe I get from crypto people I run into (more online than in-person), is survival of the cleverest, and anything is cool if you can get away with it. People I knew outside of crypto who are into it (more on the eng-side), are pretty cool, though and usually don't only trust Bitcoin and see most alt-coins as scams.
I also think the BTC-E issue is bigger and gives me reason to think Mark Karpeles wrongfully served jail time in Japan (for the reason that he served time, there could be other reasons if people like that kind of consequence).
I do not think ha actually did serve any time. "he was sentenced to 30 months in prison, suspended for four years, meaning he will serve no time unless he commits additional offenses over the next four years." according to https://en.wikipedia.org/wiki/Mark_Karpel%C3%A8s .
Any way, believe it when I see it
I mean, who would change places with him? His head has a price, and he will never be able to hide anywhere in the world or spend any of that money. He is going to live the rest of his life being watched by authorities all around the world and he will have thousands of people believing he is holding the stash.
Either way, if restitution goes as currently planned, he's going to walk away from this an incredibly wealthy man.
Individuals will keep suing him, but ~3 billion dollars can buy a lot of lawyers, and it seems unlikely that the government has anything left to prosecute him with.
Gox was fractional before Karpeles even bought it, due to this hack of bitcoin.
https://www.youtube.com/watch?v=-z9Jwp2x86o
I saw them live, but was too lost in conversation during 95% of their performance, which is a shame because they went dark not longer after that. Still, ZT was a solid part of the history back then.
And for a more relevant track for the current sentiment:
I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets.
There's probably going to be a positive bounce just because markets don't move in straight lines.
There is always the chance that something else explodes due to stress tomorrow and hits the headlines and crypto and/or stocks start melting down again (nothing is ever a sure bet), but it feels like we're closer to hitting a point of selling exhaustion and an inflection point of negative sentiment.
That's not true. The typical credit card processing fee ranges from about 1.3% to 3.5%. Average international remittance fees are about 7%. For comparison the average Bitcoin fee is about $1 right now, so 1% on a $100 transaction. So Bitcoin compares favorably to its competitors.
People aren't doing this now though.
They are buying bitcoin and holding (hodl) or they are trading that bitcoin for other crypto.
I think most people aren't using it as a currency, more so speculation
Incidentally this is why austerity in debt-laden countries is kind of a terrible idea. You're taking a broken economy and removing what little slack remains in the system. And if the economy was broken due to corruption or incompetent government, you're kind of just betting on regime change at this point, which (apart from the human toll) won't be great economically either.
isn't the prohibitive electric bill to reconcile the distributed ledger the ultimate showstopping friction?
Its digital gold thats it, its no more a store of value than antique's, rare cars, fine arts etc etc and unsurprisingly those markets can also see the bottom drop out of them for decades. Ultimately its people en masse who decide what something is worth, but big players can manipulate those markets with resources, laws, taxation, media sentiment and its easy to spook people when they value something, so dont get attached to anything if you dont want to be manipulated.
The other thing to note is, it only takes a few hundred million £ on the Asian market to get the GBP to drop against the USD in time for European markets. So there are very few entities who can cause the crypto market to fall like this. Think about that.
If US or EU inflation hit 2000% there would be global consequences. There is no reserve asset currently large enough to redenominate US denominated assets, aid payments would collapse, and currencies pegged to the dollar would collapse. Betting on BTC for such a world is reasonable, as there would be a reasonable chance your gold reserves would be become inaccessible, seized, or both. However ammunition might be a more effective financial hedge in this situation.
Because fiat volatility in inflation/rate hikes respectively (ie the NPV of a USD) completely dominates the other factors.
The volatile leg here is the fiat dollar, and everything denominated in it is whipsawing around as its value changes.
S&P has only retraced to March 2021. Nasdaq to Oct 2020. A bunch of COVID plays like Zoom, Peloton, etc only back to summer 2019 levels. That's only 3 years back.
If you look at the dot-com boom, S&P bottomed out in 2002 back to 1997 levels. That's a 5 year retracement. Currently S&P has barely gone back 14 months.
The GFC was worse - bottomed in Dec 2008 hitting 1996 levels - a 12 year retracement. I'd say going back beyond an entire economic cycle is probably actually oversold.
And there isn't any definition. And particularly in response to exogenous events the markets may decide to keep dropping even though they've dropped a lot. If markets always moved in a straight line it would be easy to make a ton of money off of them so they don't. However, if markets never moved in a straight line though it would be easy to make a ton of money off of them so every now and then they do.
And mostly I'm weighing what I'm seeing, which is that the yield curve isn't inverted yet, the broader economy is healthy and job growth is good and there's way more jobs than there are job seekers, along with no signs that something of substantial size has detonated in the economy yet (CMBS or whatever). Letting the air out of the overpriced tech stocks and venture capital also just doesn't seem large enough to start to tank the economy, larger corrections have happened during mid cycle slowdowns before. And UST-Luna is barely a pimple on the broader economy.
Right now I don't believe this is the start of the next recession, so the fact that COVID plays are back to summer-2019 levels suggests to me that a lot of work has actually gotten done in repricing.
Show me an inverted yield curve and CMBS popping or maybe Russian gas to Germany gets abruptly turned off and then I'll start expecting those longer scale kinds of retracements.
...Things have corrected SLIGHTLY from an absolutely historic bubble and you think it's OVER sold?
Meanwhile, we have significant inflation, rising interest rates, supply shocks that still haven't been sorted out and signs of economic slowdown.
Prices have been out of touch with reality for a long time. We aint anywhere near a bottom yet IMO.
That is normalized to 1 in late 2007. At the end of 2021, it was 2.53; at the end of the first quarter of this year it's at 2.37. In 1Q 2020, it was 1.80. Stock prices have been increasingly disconnected from the economy 2014-2015.
This is not true, at least not for the U.S. stock market. Market indices are still up 20-30% over pre-pandemic levels.
GOOG for instance, was making a trailing $160B per year going into COVID. Now it's making a trailing $270B per year. [1]
The S&P 500 P/E ratio is down to 20 from 25 on January 1, 2020, so the S&P 500 at least is 17% cheaper now than before COVID. [2]
And looking at mid-cap tech? Shopify is trading at a lower ticker price than at the bottom of the COVID drop on March 19, 2020 - despite having tripled their revenue since then.
A lot of companies are really cheap right now.
[1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve...
No!!!
The Fed is raising rates. That is reality. That is not an emotion. That is absolute economic fact. Inflation is high and will remain high for at least a year (maybe longer). The period from 2008 to 2022 is going to be remembered as an abnormal period when we experienced abnormally low rates. The low rates fueled speculation, and bid up certain stocks and assets.
The era of low rates is over. It is possible that you might live another 100 years and never again see a 14 year stretch where rates average as low as they did from 2008 to 2022.
Emotions? No. These are not emotions. Rising rates are a material fact that people need to adjust to.
And they've been playing this game since the 90s and the Greenspan fed did it first a blew up the housing bubble that popped in 2008. This cycle goes beyond the memories of Millennials. It just keeps getting worse every cycle.
Is it? Month over month inflation numbers are only slightly elevated, in the annualized 3% range. This isn't particularly high - the high inflation already happened, it's over.
CPI and PPI numbers both came in good. PPI of particular note, services were up 0% month over month, and commodities 1.3% for a blended 0.56% (in line with expectations). Commodities of course are likely to correct hard and fast once the geopolitical situation resolves.
The market is forward looking, so don't get stuck on a dead narrative!
> The era of low rates is over.
I'm not sure we know this either. If the hikes play out, we'll land around what, 2-3% for the fed funds rate? That's low, historically. And that's a big if, IMO, since inflation is showing signs of being quite well controlled again, and the Fed's goal isn't to achieve a specific funds rate - just low inflation and high employment. High funds rate hurts the employment goal.
It's fun to speculate but important to remember, you're just speculating. So am I. There's no certainty here, and it's pretty easy to construct a compelling counter-narrative.
All we know for sure right now is the Fed funds rate is 1%.
But it's not the 0.1% that drove money out of other asset classes (i.e. bonds) because they couldn't generate any returns.
The interest rate is currently at 1%. In the 80s it hit 20%. I expect it'll go negative in the next 20 years.
Goodness, I hope not. The amount of progress we've seen in these years has been astounding. Deep learning, SpaceX, smart phones. I felt like things had gotten stagnant, then we truly started hitting our stride.
Which is why I’m kinda shocked that the US isn’t more gung ho about immigration because as long as there’s more useful work to do, and there is, we can fuel growth with capital plus people.
Rates are rising, but the yield curve isn't inverted yet, and the stock market is unlikely to continue this losing streak straight down. It normally doesn't happen that way. Emotions right now are very negative and a lot of people are going to make bets thats are exceedingly negative and in the 3-6 month short term period other people will make money off of them.
This does not feel to me like the start of the crash, possibly not even the top, although we might go sideways until the crash.
And there will be low interest rates again.
The point of the Fed raising interest rates on the low end is to tank the economy hard enough to eliminate wage inflation. Given the overhang of jobs over jobseekers (and likely the effects of COVID death and disability on the workforce and boomers retiring) this one is likely to be exceedingly painful.
When the Fed engineers the economy tanking that means that rates will get slashed again and >10 year bonds will not budge upwards.
What it will look like when long rates go up is that wage inflation will actually take hold consistently.
And low rates already blew up the dot com bubble in 2001 and the housing bubble in 2008. Read up on the Greenspan Fed.
They're going to jack rates up, tank the economy and then go back to ZIRP again.
Short rates != Long rates. Fed doesn't control long rates.
Expect more losses.
One of the benefits of allowing shorting of stocks is that it provides liquidity even in the worst of times.
Does it seem completely inconceivable that the SPX might not reverse and touch $4766 again? Well why don't you take up a leveraged short position which will be highly profitable if the SPX doubles its current fall which you won't be forced to cover unless the SPX bounces back up again. It's free money.
Except double tops in the market happen, precisely because people decide it's all over and at this point in the market take out short bets, and then get burned when it bounces back up and destroys them. As the market in a doomed economy actually goes upwards they all get burned and squeezed which fuels the short squeeze bounce, even though it violates conventional wisdom.
Once you've destroyed all those people who think they've found the gold mine of a safe leveraged bet then the second downwards move can exceed these lows because those people are licking their wounds (but triple-tops happen as well).
To a certain extent the stock market is an optimization engine that ruins literally everyone who thinks they understand the short term direction of the market. If it didn't, you'd be able to make safe money off of it.
The fact that everyone in this thread thinks its all falling, falling, falling means it is probably going to bounce up about now for a bit (of course if that was a 100% safe thing though you could make safe money off of it so nothing is ever entirely certain -- and Russia might launch a nuke at NATO tomorrow).
Everythinig was way overbought when considering the money for those past purchases came from an accommodative Fed that flooded the economy with $9 trillion that currently sits on its balance sheet, lowered interest rates to literally 0 and the government sending out stimulus like it was candy.
All of which are either done or ending.
So I think a better way to phrase it is that the market is repricing with the new information, it isn't oversold.
https://fred.stlouisfed.org/series/WALCL
Funny how debt is ignored by big media and the short fiat rates get all the attention.
Edit: Fed balance sheet relative to GDP, 2003 to present:
To emphasize the uncertainty in your "probably", I will point out that Luna didn't bounce: https://coinmarketcap.com/currencies/terra-luna/
Cryptocurrencies in general, and shares of stocks, do not hyperinflate.
Obviously, it crashed so much, the "bottom" was anyone's guess (well.. zero is the only one that makes sense now). But there are bounces all the way down. If you drop a bouncy ball down an infinite staircase it doesn't take a straight line down.
I think it would take something like Russia launching nukes at NATO to cause the stock market to tank in a straight line though.
Maybe less extremely, Russian nat gas going to Germany being shut off overnight might do it as well.
Stocks/securities/crypto usually never go straight down unless it has become apparent that they're fundamentally worthless. I don't see that becoming common sentiment with the US economy.
More likely we're going to see a short squeeze start around now though. WSB on reddit is likely piling into the SPY heavily short, expecting the market to drop line a stone like it did at the start of the pandemic and they're dreaming of chicken tendies. They'll likely get blown out in a squeeze.
Likely, likely, probably though.
I can also predict the winner of the premiere league today based on the odds, but they still gotta play the games.
I like your optimism but we are still well above what most people would consider reasonable valuations. That said there are trillions of new dollars out there that won't want to sit on the sidelines decaying at an 8% clip forever. It will be interesting to see how it plays out.
you ain't seen nuthin' yet
Good observation. I may not be Warren Buffet, but it angers me greatly to see this kind of moronic chatter masquerading as informed opinion on finance or market dynamics.
Anything that stops a supply from overwhelming demand results in an increase in price.
Commodities traders accept the seasonality of their assets, and arent perma-bulls, with the exception of metals traders. Bitcoin inherits a mixture of stock traders and metals traders sentiment, where perma-bulls mentality of “number go up forever” is present but less warranted.
There are obvious periodic supply and demand movements in bitcoin, just like there is in oil, natural gas, and other commodities.
And what was the point of that copypasta?
Analogies compare dissimilar things in the ways that they are alike, not the ways they are not alike. The trading patterns and supply and demand pressures are the ways they are alike, whether you respect why such pressures exist or not.
Definition: Many arguments rely on an analogy between two or more objects, ideas, or situations. If the two things that are being compared aren’t really alike in the relevant respects, the analogy is a weak one, and the argument that relies on it commits the fallacy of weak analogy.
Tip: Identify what properties are important to the claim you’re making, and see whether the two things you’re comparing both share those properties.“[1]
[1]https://writingcenter.unc.edu/tips-and-tools/fallacies/
I suspect the poster you are responding to disagrees that it is a relevant comparison, since commodities, their value, and subsequently the way in which they are traded is in some way influenced by their “vital” civilizational importance.
The implication here is that crypto does not share that crucial (for the analogy) property of vital importance, and as such the trading patterns/market forces are not comparable.
In this case is it reasonable to point out that the analogy is weak, we do not have to ignore how the two candidate comparables are different if they differ in fundamental ways.
I’m sorry all crypto believers. There’s just too much chaos in crypto world for this to be anything more than a gold rush.
The Levenshtein distance from bullish to bullshit is only 3.
I'm not sure my initial reading was really incorrect, though.
Yes all weekend I had been wondering and cautious based on how much bitcoin was left to sell! Its just a commodity, supply can be faster than demand, specifically when one whale is expected to flood the market
Terra Luna rallied 500x (50,000%) off the lows. Minting many millionaires that bought that dip. The rumors were that the recovery plan involved a bunch of the bitcoin collateral. I couldn’t verify that well.
Knowing its all gone (or the selling pressure is done, whether you believe it was sold or not) is very helpful
Terra Luna resumes its crash too
...I'm finding it easier to refer to the prices here in scientific notation, and to look at the price graph in log scale. That gives you an idea of how far the price has gone.
But that very website says the 24 hour low was $0.00001675 and the current price of $.00016 is 10x higher
The reality is that the lows on specific exchanges had more zeroes than that
But other people are more willing to explain it
tl;dr people will attempt to reflate their bags; some moderate success cannot be ruled out.
The patient is alive! There may no longer be a head attached to the body; but - look! - the little finger is twitching.
A buy the dip trade fueled by unverifiable rumors of a recovery plan.
Oh yeah sure they saw their coin going to s*%t and thought “yeah let’s just throw away a couple billion dollars just so people won’t think we are scammers”. Sure. The Vatican has started a process to canonize these saints.
Terra Luna was already stupid enough, its stupid to make this part controversial because that was the purpose of this collateral, just as its stupid to not believe the bitcoin was sold after transfer to the exchanges (many people believe that its still owned, or was given to some whales to bail just them out, or the founder keeps it for himself)
https://bitcoinist.com/terra-luna-will-buy-10-billion-worth-...
https://www.bloomberg.com/news/newsletters/2022-04-19/crypto...
I haven’t followed this a lot but from what I gathered there’s not a lot of transparency around this. If so, why not?
There wont be transaction IDs after that because its not onchain
You and the community could ask for an audit by an accounting firm like Deloitte, like the rest of the business world uses, itll come out a quarter or two from now leaving us all in exactly the same spot for now. The transparency expectations make almost no sense or lack inspiration.
P.S. If anyone ever reads/replies to this comment I can predict that the answer will be: “yeah but that’s what wall street does, so what” So what, first of all it actually isn’t, but let’s assume it is: people invest in blockchains with the promise of descentralized trustless, so this means the promise was broken, because at the end of the day the whole thing is actually supposedly backed by a centralized trust-based fund (which failed horribly even so). In case people wanted to invest in centralized trust-based funds they have a myriad of other options with actual security features in them, and not just “I promised to do the right thing, cross my heart”. Now tell me something: what would you call a company that disappears with US$ 2b and promises to do the right if it wasn’t crypto?
It seems incredibly unreasonable to assume that these particular people are goodies, when everybody they are with are baddies.
Following months of outcry about the unsustainable nature of Terra Luna, Do Kwon through his foundation tried to partially collateralize the stablecoin with bitcoin, with a goal of buying up to $10bn of bitcoin. He got $3-5bn (at the time, price changed a lot), and this prolonged the confidence system for one additional month.
And then it imploded and sold the collateral, of course it was partial collateral so it failed to do anything in a bank run.
So it doesnt matter whether we get records from exchanges or not. Nothing different would happen. People want to see Do Kwon have more reasons to have charges against him, but there’s no need to attribute it to malice, everything can be explained by incompetence already.
It matters a lot. The rumor mill has it LFG directly rescued a few whales in the first sign of crisis. This is a very serious accusation I'd urge no one proclaim without definite proof.
If they concentrated their usage of the reserves to keep the peg earlier, possibly anyone selling below $1 would take an immediate loss and no noticeable depeg would even happen. The way it was handled is extremely useful information to markets and particularly to market makers.
What would it change to have that information? Afaict none of this is regulated in any regard so if that happened, would there be any impact what so ever?
I'm not saying they're applicable here - but off the top of my head, money laundering, taxes, and fraud regulations still apply to crypto (at least in the US). The moneylaundering/taxes are rather explicitly stated, the fraud regulations apply regardless of what the thing is.
Many laws and regulations that were written before cryptocurrency existed still apply to cryptocurrency.
People can't do an end-run around existing laws by wrapping crimes in cryptocurrencies and pretending laws don't apply to them.
There's no way they could've saved it.
Crypto is supposed to be an anti central bank currency.
This is the worst central bank any type of currency could ever have.
He's not stupid, he's just a predator, and just like any other predator, belongs in prison.
A Ponzi would be if Anchor used users' deposits to pay out the 20% rewards, which isn't what happened here.
Which were bought by users in a zero sum-game.
A ponzi is a zero-sum game where new entrants finance old exits. Just because the funding for the ponzi is done in a different currency doesn't mean it's not one.
You can't create a closed system that generates wealth, and when you're growth hacking with your users' money, you are running a fraud.
Would you assert that any undercollateralized currency is a Ponzi? (Seems like stretching the definition to me.) Or that any system with unsustainable rewards is a Ponzi, even if there was no expectation that they were sustainable?
Wasn't Cashberry or something like this? Russian based? Ultimately no assets behind it, so when the music stopped they couldn't redeem the values.
A common part of the scheme is to promise high returns with little to no risk.
Does there need to be malice rather than incompetence, for charges to be filed?
* Where did this foundation get $3B to buy Bitcoin?
* Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?
This brings up an exceedingly funny point: blockchains excel at making every transaction public (a property that nearly nobody actually wants) and simultaneously offering complete privacy to institutional actors.
In other words: privacy for me, but not for thee.
The whales got a bailout, while retail got market forces.
"Al amigo, todo; al enemigo, ni justicia."
Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do the same thing (and get the same privacy), but then it's just normal money laundering instead of "decentralized finance."
As in, they are keeping funds on centralized exchanges? Users can do the exact same thing if they want, not sure I get your point.
* No, there's no proof.
If this happened, we will be seeing massive PR about this. Do Kwon would become a huge symbol and become a millionaire again if he actually did that and opened his life and books to scrutiny to prove everything as much as possible.
So it could drop pretty far.
Closer to 50% tbills and cash.
All caveated with if you trust MHA Cayman auditors.
The other 50% could be anything, and likely sketchy as they are chasing yield and extremely cagey about revealing anything about their holdings.
It's funny because this is pretty trivial stuff to audit for a 3rd party, yet they only open their books to a private company of their choosing with questionable background. It's obvious what's going on. This is the biggest issue with crypto traders, they're too damn gullible as long as the news fits their agenda.
If my memory is good, they even specifically mention in the attestation that they didn't see the details (just the aggregated numbers) and they didn't check the process by which the management calculated those numbers.
So yeah, it's taking much longer than most people expect, but the issue is certain - Tether will collapse to 0 at some point.
Ferraris and Yachts
For comparison: Citibank had only 11.73% Tier 1 capital in their 2021 report: https://www.citigroup.com/citi/investor/quarterly/2021/ar20_... Couldn't find a breakout of their Tier 1, but it includes high-quality credit items as well, so actual dollars is well below 11.73%.
So in other words: SiliconAngle.com is writing clickbait and doesn't understand modern banking.
Tether does not claim to be a fractional-reserve bank. They claim that 100% of the assets are backed by US dollar cash deposits. It's their entire raison d'etre. Except no one is enforcing it. It's not even remotely the same thing as a fractional-reserve bank.
Let that sink in for a minute: Tether, by its own admission is barely solvent, so barely solvent a single not-especially-bad day would render them insolvent.
Now consider that this barely solvent state has persisted for their entire reports--they've always cited a very-barely-solvent state of their finances. Given that Tether has already admitted to lying in the past (and essentially cooking the books to mislead the public into thinking they were solvent), and that the books always seem to come out just perfectly not-quite-insolvent despite investing in very volatile assets, is it more likely that Tether has somehow found an investment strategy that just barely keeps them solvent, or that they are in fact insolvent and using every it's-technically-not-lying trick they can to get people not to realize it?
For what it's worth, as far as I understand it, Tether's Tier 1 capital isn't 3.87% but... 0.0%. Nothing Tether has produced has indicated any capital that can be raided to provide extra assets in the case that assets lose value--note that such capital isn't a part of the asset/liability ratio.
Blows my mind because stablecoins could be so easy-- hold some cash and hold some US treasuries. Pocket the interest. Become rich.
If not, they're probably not a relevant comparison to Tether.
However, why would a stablecoin put its reserved in Bitcoin; an asset that is highly correlated with the entire crypto ecosystem, and highly volatile relative to the asset against which they want to maintain a peg.
I don't understand crypto, and or how the Luna/UST works, but if you supported/buy something this should be visible, not only in vanished bitcoins, or am I mistaken?
But the backing of UST(or Luna?) should be visible in soms large/or a lot of transaction in a small time window somewhere, if they started buying/supporting it with $3B, I would think
If it propped it up long enough for insiders to dump their positions it did it’s served it’s purpose.
Though an earlier bubble could be kicked off when ethereum cuts it's supply by 90%.
with bitcoin hovering ~$30K, still seems like there's air in the bubble. a 50% drop (from $60K) is pretty normal for bitcoin. It could drop a lot more without shaking the confidence of the hodlers
Am I using the word bubble wrong? Another responded in the same way.
I mean it's now definitely a bear market, and going down, not up.
Why do you say “over”? I see BTC reaching $20k this summer and then falling to <$10k as miners fold.
The same amount of Bitcoin will be mined no matter what.
These past years the Bitcoin ASICs have been tremendously profitable, and as a result the demand for the hardware goes up, leading to huge profits for the hardware makers. These past few months have seen a drop in Bitcoin, which drops the profit for miners, but as it is still above electricity prices, only results in cheaper hardware.
If Bitcoin drops below the electricity line, you will see miners all over the world start to turn off their devices. And once that happens, block time will rise, and that will start making the entire network less trusting. This will cause a spike of people selling their coins, and with less blocks this means a packed exit. With the packed exit, you would think this would incentivize mining as transaction fees go way up, but those fees come directly from the value of the coin, so once this starts the value of the coin is going to drop heavily.
With mining profitability dropping the further this goes, the longer block times, the more the price of Bitcoin goes down. If Bitcoin goes below 10k quick enough, it won't ever see another difficulty adjustment, and the entire chain dies. The developers might chose to hard-fork and change the difficulty changes algorithm, but as we've seen with Bitcoin Cash, these changes are political and don't tend to end well.
As the bitcoin price drops , they will have more margin calls and new coins are not that profitable. You can expect lot of mining sales to happen and orders get fullfilled as selling the equipment becomes more attractive.
Some of the smaller/more leveraged ones will definitely fail at long term prices of say 20k or less .
If miners and shutting down during that time I'd expect the time between blocks to increase.
This is definitely a proving ground and only those mining operations with the most resilient strategies will survive.
Many will continue to thrive.
The future outlook on the crypto markets enters a new era towards the end of this year.
Fidelity is introducing cryptocurrency investment services to all of its 401K investors, every company 401k, across the $2.4 trillion in 401(k) assets they represent (in 2020, or more than a third of the market at the time).
They will allow individuals to allocate up to 20% of their portfolio to cryptocurrency, for those who participate.
Oh man. I'll have fun poking you next year about how embarrassingly wrong you were.
I'm definitely not sold on Bitcoin, but it tracks along with tech stocks for some reason.
Digital gold my butt.
[1] https://www.gemini.com/dollar
[2] https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6Eq...
> GUSD is an Ethereum ERC-20 token
Last time I checked (EVERY time I checked), Ethereum was still based on proof of waste.
My thoughts are the same as they've been for many years straight, on everything crypto-"currency": it's a massive scam at best; more realistically, along with everything else in the proof of waste category, somewhere on the top 10 list of things most harmful to all life on Earth.
I don't understand how anyone even tries to mis-represent it as anything else.
> So the stock market and the bond market are a positive-sum game. There are more winners than losers. Cryptocurrency starts with zero-sum. So it starts with a world where there can be no more winning than losing. We have systems like this. It’s called the horse track. It’s called the casino. Cryptocurrency investing is really provably gambling in an economic sense. And then there’s designs where those power bills have to get paid somewhere. So instead of zero-sum, it becomes deeply negative-sum.
> Effectively, then, the economic analogies are gambling and a Ponzi scheme. Because the profits that are given to the early investors are literally taken from the later investors. This is why I call the space overall, a “self-assembled” Ponzi scheme. There’s been no intent to make a Ponzi scheme. But due to its nature, that is the only thing it can be.
As I said, a massive scam would've been the best case scenario. The reality seems far worse. https://fortune.com/2021/04/20/bitcoin-mining-coal-china-env...
edit: bring forth thy downvotes, HN.
A fraction of a fraction is still a fraction. If you're going to make an argument about actual energy usage, please quote actual numbers.
> [...] as an industry, well ahead of its peers in terms of green energy usage.
Bitcoin is not an industry. An industry has a product or service. Bitcoin's "service" is subsidising greed and speculation using natural resources - at the expense of everyone else. Blockchain, as a data structure, is a solution in search of a problem. So far the only "value" I'm seeing is runaway speculation.
It does not matter which source of energy Bitcoin is using, it's fundamentally still based on the premise of proof of waste. It doesn't matter that it's "green", the same green energy could have been used to burn less coal elsewhere; or we could've avoided building the power plants to begin with. Ethereum is at least trying to move to proof of stake, although they're consistently under-delivering.
> [...] there a a very substantial number of other industries that are in orders of magnitude worse to our environment [...]
This is very true. But what is also true, is that another actor being worse doesn't justify your endeavor's own crimes. Just because your neighbor is beating their partner, doesn't mean you can kick a stray cat.
> Using electricity to separate money and state is well worth the cost to me.
And that's exactly what is wrong with proof of waste: it's worth the cost to *you*. You've never asked *me*, if it's OK for you to destroy the planet that *I* am also living on, let alone if I share your views on how noble the goal is.
Separating money and state sounds like a bold wish. https://news.ycombinator.com/item?id=29322172#29323906
Please don't take this comment as an attempt at a personal attack - I have no way of knowing your actual stake, what I'm trying to protest is the game itself.
> edit: bring forth thy downvotes, HN.
Don't worry, they're coming to both sides. I would always prefer to see arguments rather than downvotes, so thank you for taking a stance.
UST didn't even claim to be fully backed, whereas Gemini's third-party auditing accounting firm attests to GUSD being fully backed, under the scrutiny of the New York State Department Of Financial Services.
If I had to guess, people here are pretty sensitive to any crypto project being mentioned in the comments out of the blue, so that may be part of the reason for downvotes.
I do know of one way to be sure your money is FDIC insured. By putting your dollars in a bank.
Vast numbers of LUNA were minted during the collapse. There are now 6 trillion LUNA outstanding, currently valued at $0.0002246 each. Apparently the algorithm trying to support UST did so by minting LUNA.
Does someone have a timeline of the collapse? All the data should be available on blockchains.
Terra Luna and TerraUSD's algorithmic operations were all disclosed publicly and scrutinized in the open sphere
Do Kwon stated publicly why he was buying the bitcoin - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg - and Do Kwon has stated publicly now why the bitcoin sold - to repurchase Terra Luna and TerraUSD because its shitty broken product that might need to be rebought to temporarily help restore its peg
I think in a regulated market he just walks away just like all investment banks and bankers do
There are plenty of Exchange Traded Notes (ETNs) that obtusely say "this is dogshit and its going to fall to zero during a period of volatility" and then fall to zero during a period of volatility
Thats exactly what Terra Luna and TerraUSD did
all regulation would do is standardize the way the disclosure is done, really the most likely thing that comes from this is a regulator mandated additional sentence in a brokerage firm's 40 page disclaimer that you surely will read after consulting your financial advisor.
Its up to the consumer/investor, it always is.
I don't disagree that there are ETNs that work generally as you describe.
The veritable tautology in that statement would be amusing except for the sad fact that a great many ignorant investors were fleeced in this process.
I mean that's not a trivial amount by any explanation right?
If you don't understand that freedom is the most relevant part of Bitcoin/crypto, you probably also don't understand that the few good things you take for granted if life are due to the remaining residue of freedom.. and why you didn't care when slavers eliminated it.
Figure it out soon, and save yourself things even more important than wealth.