This is an incredible couching of the last 9 months of cryptocurrency market behavior. Does anybody actually operate on their belief that "geopolitical factors," rather than astonishing amounts of fraud, are responsible for the current downturn?
inflation -> rising interest rates -> crypto less attractive [0] -> people ask for their deposits back -> company can't meet obligations -> company folds -> scrutiny -> fraud revealed
Is my basic model of things.
[0] from https://marginalrevolution.com/marginalrevolution/2022/11/th...: "When interest rates are very low a dollar in the far future is worth almost as much as a dollar today. Thus, in a regime of low interest-rates, crypto and other projects with (speculative) long-run payoffs could be valued highly. As interest rates rose, however, long-run speculative returns began to look much less attractive than say T-bills and money flocked out of assets in the long-run sector causing prices to plummet."
Or something like that?
Warren was just telling us about something he observed at the beach one time
Are you suggesting that crypto is to blame for inflation? how would that work?
No. The only claim is that crypto is sleeping in the bed it made, bedfellows included.
All of cryptocurrency is a risk asset. When credit and money is cheap and flowing freely, it flows into risk assets like crypto, driving up their price and forming bubbles. When rates rise and credit and money is no longer flowing freely, it flows out of risk assets into safer havens, popping the bubbles. That's what happened to crypto this year.
The collapses and fraud revelations were a consequence of that, not the cause. Blaming the macro is accurate.
Lol. Lmao, even.
"When the tide goes out you discover who's been swimming naked."
Inflation and interest rates are up - okay. But real GDP growth (in the US at least) has been positive. Why is everybody acting like unemployment is at 8%, GDP growth is sharply negative, and consumer spending is way down?
At least with crypto stuff it makes sense that these companies are losing shitloads of money but with so many companies it seems to be "we expect to be making less money next year so we are cutting staff now."
Fraud and ponzis work fine for a while, but a downturn is exactly what causes its instability to show.
So for them it's the fact that markets are down and people aren't punting crypto, rather than "we took the USD deposits, turned them into shit coins and we're insolvent" kind of thing.
I think.
The statement just came across as very roundabout: we all understand that the current downturn in cryptocurrency is driven in part by a decline in "easy money" from retail customers, which in turn is partially driven by a lot of that "easy money" outright evaporating from fraudulent schemes.
For Kraken the slowdown is less business. Crypto is down, as are equity markets, and these are highly correlated (go figure - "inflation hedge").
I'm not even sure if FTX blow up itself is bad for them. Not only is a competitor out, but also people might appreciate a regulated crypto exchange.
So I think maybe "geopolitical" is not outrageously wrong a term to use here.
Any other critiques of crypto are not affected.
> Does anybody actually operate on their belief that "geopolitical factors," rather than astonishing amounts of fraud, are responsible for the current downturn?
What people believe is such a slippery question, especially when those people are participating in or proximate to fraud. It might even be a category error. But pivoting to "operate on" moves the discussion from something unknowable to looking at observable behavior. It's along the lines of "Don't tell me what you value. Show me your budget, and I'll tell you what you value," in that it can skip over whole swathes of PR and other BS.
I love this and I'm borrowing it for sure.
Macro weighs more on crypto than geopolitics or fraud. Fraud never deterred millions from dumping savings, reputations and careers into this mess. The inflection point, for crypto, as with other risk assets, was the Fed.
Sam Bankman was clearly a smooth political operator.You don't have meeting with Gary Gensler the head of the SEC otherwise.
No, he wasn’t. This is a myth he crafted for his retail audience. He threw money around. But D.C. is filled with schmucks buying photo ops for millions of dollars.
> don't have meeting with Gary Gensler the head of the SEC otherwise
You’re saying SBF’s donations, and not his role as CEO of FTX, got him a meeting with FTX’s regulator?
where did you find that? i've not seen it (yet)
> Sam Bankman-Fried’s donations to Democrats are well documented. In an interview released Tuesday, the former FTX CEO said he similarly funded Republican campaigns—but kept it quiet.
> “All my Republican donations were dark,” SBF told crypto influencer and YouTuber Tiffany Fong, referring to political donations that aren’t publicly disclosed. “The reason was not for regulatory reasons, it’s because reporters freak the fuck out if you donate to Republicans. They’re all super liberal, and I didn’t want to have that fight.”
His co-CEO also publicly donated millions to Republican causes. https://www.opensecrets.org/outside-spending/donor_detail/20....
More fun news to come.
Bitcoin is down 63% vs 9 months ago
Just sayin
I've seen startups struggle to raise in March when less attractive competitors raised with ease in February.
Crypto is performing far worse than even the riskiest decile of the stock market. Which should surprise nobody.
If you want to go for a rodeo, there are litanies of similar success stories in penny stock and angel investing.
It seems like the pro-crypto arguments end up being circular sometimes (not from the same person but the community).
If the market is good, it's a great investment.
If the market is bad, buy the dip!
If it's unstable, remember all thos people who made money?
If it's stable, well it's a currency after all.
There are so many people who view crypto differently there's always someone there to sing it's praises. I'll still have no idea what crypto is supposed to be aside from a vehicle for fraud.
It's anonymous payment!
Great for
- avoiding sanctions
- selling drugs
- receiving blackmail payments
Those are huge markets that are completely untapped by legacy payment processors!
If that doesn't sound like a great investment opportunity!
This isn’t how numbers work.
Also, practically every asset class has a member that went to zero. The question is what fraction, and how did the others do. If you bought a basket of super-risky assets, over the past years, they went up like crypto and down less.
Huh?
> This is not true. The riskiest stocks are down thousands of %.
I mean, sure looks like you were trying to argue that crypto isn't performing worse than the riskiest decile of the stock market, which just isn't true at all.
The iShares Small Cap Growth ETF (which is a probably a decent proxy for the most volatile companies in the market) is only down 13% on the year.
Former options market maker here. Taking leveraged, directional risk with options is textbook reckless trading. That Robinhood found people to swing options and crypto is not representative of traditional finance.
What made Robinhood (originally) unique was stripping away those protections, or otherwise automating them away in a mobile app. We have lots of concrete examples of people losing their life's savings on Robinhood, in no small part because of how easy it made leveraging oneself.
Your knowledge around opening an options account is slightly outdated. They used to have net worth requirements and more legal forms. Some time around 2020 though at the beginning of the pandemic all of this was removed. It's a few clicks now at pretty much any major investment bank such as TD Ameritrade.
The only commonly traded way to lose more than you started with are futures (not available on most retail platforms) and CFDs (not legal in many markets, including the USA).
"The riskiest stocks are down thousands of %" is untrue regardless of whether that position was in regular shares or /r/WSB style 10,000 calls expiring Friday.
The vast majority of crypto advocates are true believers.