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.
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.
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.
https://www.wsj.com/articles/the-programmer-at-the-center-of...