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Comment by Animats | Hacker News Reader

The good news is that the problems seem to be confined to the crypto sector. There are a few hedge funds and pension funds with losses, but so far, nobody in "traditional finance" seems to have huge exposure to crypto. So the real world economy keeps on running normally while the crypto sector gets flushed.

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Starting a few months ago, some major banks were issuing loans using Crypto as collateral: https://www.forbes.com/advisor/personal-loans/crypto-loans/

Glad it's falling apart now before it sucks the entire economy down with it.

I don't think we've heard the whole story about the exposure of legit orgs and businesses.

If a pension fund loses 1%, that's manageable. If it's 10%, that's a crisis for anyone expecting benefit checks every month, and possibly a much wider pool of people/orgs if some kind of rescue or bailout is required.

It’s noteworthy that this is not a coincidence (coin-incidence?) but the result of, first among others, the SEC holding steady in the face of a lot of pressure in limiting the financial system‘s exposure.

Yes. If crypto ETFs had been approved, other parts of the financial system would be crashing. The SEC rejected the EFT applications. That was close.

It's just a blip in a way. The entire global crypto market cap has gone down around $800B, roughly the same market cap that Amazon has lost recently.

The difference, of course, is that Amazon's market cap has actual assets and cash flows behind it. The liquidation value of all of crypto on the other hand is approximately $0.

You are underestimating the creative products that the finance world can create from any asset, real or imaginary.

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