I also think the offer to buy FTX was motivated by a desire to avoid a broad crypto collapse which would hurt Binance along with everybody else. But that offer had to be withdrawn because things got so bad.
Now everybody involved is worse off than they were before, a lot of customers might lose money, and there is a pretty good chance that regulators and governments are going to get more involved in the crypto market in response.
If this was planned in advance, it was not 4D chess, it was just a really bad plan.
It seems clear from CZ's public announcement of a $2b FTT dump that their intention was to destroy FTX and Alameda. So my theory is that the LOI was a trap to put a nail in the coffin, destroying any remaining trust in FTX.
Before they were merely starting rumors; the phony acquisition attempt let them declare "we've seen the books and FTX is unsalvageable".
FTX could have just been illiquid. With a lot of loans to other crypto players who would do fine if FTX were rescued. Turns out, they weren’t. They were fundamentally insolvent.
Personally, I think they would have known the size of the hole as well, and never intended to go through with the buyout
Instead of quietly selling off their holdings over time, the CEO tweeted their intention to sell and triggered a death spiral.
Binance didn't benefit by announcing it either. The token dumped before they liquidated, and they didn't scoop up their competitor.
Fortunately, unlike 2008, the global economy doesn't depend on this stuff working.
They are related in both being cascading crises of confidence. ‘08 manifested from a novel opacity around correlation (lack of centralised counterparty reporting) from novel non-bank banks (shadow banks). This is just a three-point recursion cycle: FTX, FTT and Alameda.
it's a noise https://coinmarketcap.com/exchanges/crypto-com-exchange
it's the failure of all the suspicious exchanges for sure
It's quite possible that the public perception poison will be way worse than any collapses themselves because these players have tried so hard to associate themselves with crypto in the public eye.
- I can transact efficiently and safely without a bank account. This is currently not possible in traditional finance
- Subsequently, none of my assets are locked. I have never stored assets in an exchange, and have no need to do so.
- Exchanges can't ask daddy government to mint coins for a bailout.
Tl;dr: exchanges and banks who think they can get away with being overleveraged, doing unbacked derivatives trading, lending without locates etc. are in for a bitter surprise. Crypto can't be gamed so easily and it shows.
Even if you don't use exchanges, you are still exposed to their failure because they are major players in the market that determines the value of the cryptocurrencies. When major players in a market go bust, it's unlikely that any of the other market participants will end up unscathed.
Given that crypto value is based solely on what other people are willing to pay for it, it really could go to zero. It probably won't go all the way to zero, but I'd still expect a significant drop.
I also don't have illusions about price action. I don't invest into crypto to make a quick buck. I invest because I fundamentally oppose traditional finance.
The entire crypto market is nothing but[1] market manipulation and speculation. If that goes away your crypto will be virtually worthless.
[1] pre-empting the "but it's used for practical things in countries with crumbling economies instead of the local currency" argument: yes, but that's such a tiny portion of total market cap that it probably doesn't affect the value of your holdings by any meaningful amount.
Also good ol' fiat dollars are better than crypto for that use case in pretty much every way.
> You only use crypto to pay your rent and buy your groceries and your clothing? Your employer pays you in crypto?
Oh how I wish that was true.
I'd wager the propping was part manipulation and part speculative mania, of which the latter his been dispelled.
I'll believe the mania is over when Bitcoin reverts to pre-2017 prices and stays that way forever. Honestly I've been considering buying some because I suspect the dip will be temporary, but ultimately I'm not that foolish with my money.
there is no such thing as traditional finance, just finance.
Of course finance is an incredibly nuanced word. To quote V. Buterin:
> Finance can be viewed as a set of patterns that naturally emerge in many kinds of systems that do not attempt to prevent collusion
finance, trading, barter, humans will not allow collusion to continue unchecked. so finance being defined partly as the lack of check against collision is pure propaganda by Buterin and you are his mark. the only reason the collusion rife in the crypto space is so unchecked is because its a big casino constructed for you to play in by people like SBF, CZ, V. Buterin. The whales represent a huge cartel. The drama of the last few days is a parable of collusion, retail being tricked into gambling their life savings, retail being fed lies about how the word is and how the world is not, lies which are easy to disprove.
you are a classic retail mark, being fed and regurgitating marketing and propaganda to encourage you to play your part.
look up retail FX trading manias in Japan in the early to mid 00's as recent past as prologue.
Why is this kind of defensive retort so commonly seen in discussions about the value of cryptocurrency?
I am not defensive, I am embarrassed for you and all of the people poisoned by this antisocial propaganda, and it makes me despair for humanity.
For instance, I really like your view of finance as these emergent properties of human behaviour. My question is then: how do you propose we refer to the entities we currently have in place for trading of securities, market making, fractional banking, clearing houses, central bank issued fiat, etc? Clearly there is a difference between those "things" and what we do in DeFi, right?
So what label am I allowed to use to distinguish these entities from DeFi?
Calling something propaganda without being familiar with the source is probably the purest form of irony.
The whole idea of crypto attracts the same people as other get-rich-quick schemes. Some scammers, some earnest people. But all ultimately lacking in self control.
The throne is never empty, right? We are probably still to find out if it’s worth sitting on long term, but since that genie left the bottle, I suspect it is.
When you buy an asset from heavily leveraged market you get high risk even when you don't use leverage yourself.
In crypto, leverage exists solely because of people who aren't doing self-custody and DeFi. They brought this upon themselves.
My understanding is that the vast majority of cryptos are useless for actually paying for anything and the vast majority of businesses still don’t accept them anyway. So unless you are basically only using and holding BTC (which has a relatively small market of goods that can actually be purchased with it on a daily basis), I’m not really sure what good that crypto is doing for you other than sitting around as a speculative asset which will need to be converted via an exchange.
I don't "invest" to make money. It's a currency. I buy it to use it. I might have to hold it for 5 years, maybe 10, maybe 30, or maybe I'll die and crypto will never be successful (a sad thought but possible).
But in the meantime I'll do what I can to improve adoption. That includes working on core protocols, improving UX for non-technical users, or writing software that helps vendors with payment integration. I also make an effort to approach business and show that there is demand for crypto payments.
This is literally the only way to make crypto successful. All this price action non-sense, and people wanting to get fiat-rich is just unproductive noise to me.
You don't properly evaluate the present value of money if you are willing to trade your present money for future money at completely unknown conversion rate and adoption date.
Relative to the strategy of buying it when you could use it (which also satisfies your intents) you are practically speculating. You can also look at it like opportunity cost.
Unknown can mean many things. I'm convinced that the fair value of crypto is much, much higher. Adoption is still sluggish and small.
I believe in crypto's success, which you might call speculation.
Why are you buying crypto regularly? If you don’t care about the price, and you have no idea what the fair value is - what’s the right coin and right amount to hold?
> what’s the right coin and right amount to hold?
That's an amazing question. I have truly no idea. I'm investing based on my personal conviction.
But this opens up a really interesting discussion about game theory and prediction markets. In a zero-sum prediction market, refusing to play is pareto-optimal and an equilibrium strategy.
So you could call me an irrational actor. I'm making a first move based on personal belief, thereby giving you an opportunity to arbitrage me. I believe that the fair value is higher than it is now. If you believe differently, short me. (I'm just joking of course, but I do find your question intriguing, and is something I've been thinking about a lot)
(emphasis mine)
This seems like an incredibly bold claim to make. I would argue that there is little adoption because many have judged crypto to be of little value.
If only everyone was buying various crypto and holding it in a cold wallet for the next 300 years!.. that’s the only true usage for crypto. No insidious banks, no fiat, no regulations, just pure bits in my virtual wallet until I die.
The value of most coins is going to zero as a result of this. Crypto is going to be a frigid wasteland after this for quite a while.
But yeah, you're right, a currency nobody uses is obviously worthless. I'm attempting to drive adoption so that they CAN be exchanged for goods and services.
You are incredibly exposed to the same risk that these exchanges have.
How do you handle refunds? Converting twice? Sure, charge users for it, you'll be driven out of the market by businesses who are not scared to keep a crypto wallet liquid.
This dynamic actually exists even in much more conservative/slower moving fields like hardware manufacturing. It's a slow process
But yeah, something tells me the taxman isn't all that interested in your bitcoins.
Even if crypto catches on more than it has, I do not think everybody will want to deal with it. I am do not do any importing or exporting. Dealing with another currency just seems like wasted energy.
> I do not think everybody will want to deal with it.
The thing is, crypto should be much, MUCH easier to deal with, we just don't have mature software/UX around this. Because we're still figuring out best practices, and people are learning about this tech.
"Crypto Currency Now Accepted For All State Tax Payments" https://tax.colorado.gov/cryptocurrency
I looked at the Colorado site. I predict this will also get shut down. Basically you are paying more just so you can say, "I paid my taxes with cryptocurrency", which honestly seems stupid.
No it doesn't. Your crypto is not and will not be denominated in crypto. It's still dollars.