More than $70B wiped off crypto market in 24 hours as BTC drops 8% below $20K
cnbc.com
cnbc.com
How is the $70B number even helpful. Is it supposed to trigger notions of "too big to fail".
Who cares how much the Ponzi scheme has taken in. Victims want to know how much it can pay out.
The answer of course is not enough.
Singh has now flipped on SBF.
The outcome of the Ripple case is anyone's guess.
Fraud is not difficult to understand.
Crypto gains only were people imagining money into existence. This is the problem of going off the gold standard.
Actually, stocks are slightly different. Because stocks are based on an underlying real company producing real services and goods, it's worth something even if you don't sell it. This is because stocks can pay dividends or do buy backs.
Crypto does not pay dividends or do buy backs. If they do, they should be classified as a security.
No, they are not. Stocks prices are solely based on their supply and demand in the market. Products and services may play a role in the demand fro the stock, but they are not the sole determinate of price. Take AMC for example...
Shareholders can usually push back via voting, but depending on the way the company is setup they could still successfully dilute smaller shareholders.
But a stock is the ownership of a company, which produces goods and services.
>it doesn't need to be traded as such.
Only a small percentage of sellers can convert an asset into the current dollar price in every market, regardless of where the underlying is used.
This is true for every asset. Once supply outpaces demand, price moves down.
If Bitcoin would be used as a store of value instead of gold, gold can be used for other material purposes for a lower price. The same goes for real estate. A house does not have to be an investment asset or store of value. If (institutional) investors would use Bitcoin instead of housing, it could make housing affordable again. Or at least result in more fair/realistic housing market instead of the propped up market from the last few years.
Compared to gold and real estate, Bitcoin is a scarce asset that can easily be divided into small pieces. It has a liquid market and can be exchanged 24/7 anywhere in the world.
If you’re trying to sell off several tens of millions of dollars of BTC, you don’t go to an exchange - you go to an investment bank. Goldman will happily run that for you.
If all current Apple shareholders decide to get rid of Apple an inflow of 2.5 trillion is needed. The new group of shareholders will like Apple less than the current group of shareholders, so the stock would get sold at a slight discount (10% maybe). The universe of investors who are willing to buy Apple shares at a discount is enormous, so it's fine.
With crypto, not so much. The first 100bn you might be able to sell to people at a reasonable discount, but then you're out of buyers for sure. So who are the holders of the remaining 900bn worth of crypto going to sell to? How big of a discount do they need to offer to get the dollars they want? 30%? 60%? 99%?
With crypto the market cap is an illusion because when people sell crypto en masse the price will trend towards the intrinsic value (which is zero). That's what the parent means with "The money is not there. Some folks will lose. Everyone knows it."
In the event that all Apple shareholders want to sell, there will still be a market for it because Apple produces goods and will do share buy backs and give dividends. There will be a discount like you said, but the intrinsic value is there.
There is no intrinsic value in bitcoin or 99% of crypto.
It should be clear by now that the intrinsic value of Bitcoin is the USD.
Because the only practical problem it solves is to bridge USD to USD transactions as USD-BTC-USD.
The number isn't completely worthless. Most of the time, you're not thinking about liquidating the entire thing all at once. The actual total number isn't all that important, but the way it changes is informative -- it accurately captures what happens at the margins.
Crypto is weird in that the entire thing genuinely can collapse at a moment's notice. Unlike a stock, there's no real-world asset anywhere, just the consensual agreement. Even a fiat currency at least has the force of a government collecting taxes and paying wages.
The market cap is a useful number so long as nobody expects to actually realize it. When you actually could realize it, like a currency collapsing, you have to unpack the full meaning of it and realize that it's very different.
https://www.wsj.com/articles/the-programmer-at-the-center-of...
Crypto might be the future, but I can’t see any reason why it would be Bitcoin or anything else that exists currently. It’s more likely something will come along with more features later making it more useful for real transactions. Obsoleting the current coins.
Surely if bitcoin/crypto became the way/ubiquitous, it would end up having the same KYC issues?
Not knocking crypto, btw!
International transfers are certainly not instant - Wise originally innovated a cheaper and faster solution to this problem, but that crown is fast vanishing as rivals heat up their offerings (Atlantic Money, Revolut, amongst others).
BTC is a valid alternative to these options. My real gripe is the on/off-ramp between FIAT and crypto. That's where the fees are in my experience.
[1] https://www.gbm.hsbc.com/-/media/gbm/insights/images/scheme-...
The difference with Bitcoin being, wherever you are, on planet or in space with an internet connection, the same transmission rules apply.
You arent forced to jurisdiction shop or be a member of the minority of humans with the luxury of citizen friendly governance, just to transact freely. If there is one major usecase and value to BTC, its that.
Many of us send like 1000 sats (20 cents) instead of pressing the like button, which is a much better signal for posts than on social media, and lots of fun.
Jack Dorsey explained many times in the interviews that social media companies are captured by advertisers because of their dependence upon them, and talked about how they had to take a different direction of the product that he wanted because of advertisers.
So it is interesting that it is causing such panic.
In fact both SI and SiVB are in trouble because they have long duration assets and short duration liabilities.
I would happily loan money to a startup to make payroll, if that loan was 80% of the value of deposits they had in the collapsing SiVB, as long as the loan was secured with those deposits - that way I can be pretty certain I'm getting repaid, even if the startup goes bankrupt in the meantime.
SiVB's deposits are their liabilities. Their MBS portfolio is their asset, which has been hammered by rising rates. The correct haircut on that is not 20%, it's more like 90%. The stock market is betting that equity holders of SiVB are going to get wiped out.
This is a really wild thought in a high inflation environment. Not that I disagree. Equities can lose dollar value on top of the dollar itself losing value. Some portion of it has to be going back to risk-off assets that were not worthwhile in a zero-rate environment.
People have been doing that for a year now. It's not new. It didn't start happening because of SI and SVB.
1. Crypto events such as collapse of an exchange
2. Fed interest rates
3. Nasdaq (more than S&P500 and Dow).
Now this time, startups really need to make money rather than raise money every month.
> The movement of cryptocurrency prices is quite closely correlated to U.S. stock markets, in particular the tech-heavy Nasdaq
This is bad for crypto.
In order to be a good hedge, the price movement of Bitcoin should not follow stock markets like this.
The salary will still probably be like “$130k USD per year, but we send it to you in Bitcoin” and whatever the exchange rate happens to be at the day of each pay check determines how much Bitcoin they send you.
And in some ways it’s good and in some ways it’s bad.
It’s good because at the moment BTC is so volatile. It’d kind of suck if I agreed to some amount of BTC per year in salary and one month I couldn’t even afford rent just because the market rate for BTC was so bad.
But I really do hope that one day we can measure so many things in BTC directly, that I could have my pay check in Bitcoin and pay my rent and my food in Bitcoin etc, without regards for what the BTC to USD value is.
Maybe if I move to El Salvador, it could be different :thinking_face:
When the depositors all came asking for their money, Silvergate Bank would have replied: “So, we wired your 11 billion dollars to an unaudited corporation in the Bahamas. No worries, they gave us a cryptographic receipt for 11 billion virtual magic beans! I’m sure we can redeem those for you guys. Hold on, we’ll call their CEO, the man who used to produce Inspector Gadget cartoons in the 1980s… Oh, he doesn’t answer his phone? Telegram group message I guess…”
“I told you it would go to zero!!”
I’ve never seen people so passionately against something like I’ve seen with the crypto space.
Edit: In before I get a stereotypical crypto bro response with a bunch of rocket ship emojis
Edit 2: Also in before someone rants about Bitcoin’s energy use. “It uses enough electrify to power Jupiter, and has accomplished NOTHING”
And bitcoins are still here and worth relatively a lot.
(Preferably when it goes to zero.)