Cryptocurrency mega-thread

[ash_1050]

I agree, but I wasn't saying crypto is low risk. My claim is we're close to maximum opportunity buying points for this asset class.

Yeah on that we can agree. I’ve maintained sub >$20k is the time to be buying. Took 18 months to get to that price but now people are learning that patience pays off not only in holding but also in waiting for a reasonable price to accumulate.

It seems for a lot of people their only investment is in crypto and so they get so wedded to the narrative they’re unable to view anything objectively.

 

[Evolved1]

You’re assuming tether is running out of a US jurisdiction, I suspect it may not be. Plus the SEC is already wary of it:

The SEC is now coming to terms with the Hindenburg-sized problem Tether poses to digital asset markets: VanEck’s proposed Bitcoin ETF was rejected by the securities regulator earlier this month with the regulator listing “manipulative activity involving the purported ‘stablecoin’ Tether (USDT)” as one of the reasons.

Correct me if I'm wrong here. My understanding is that tether is within reach of the SEC if they operate on US based exchanges or exchanges that allow US customers to trade in USDT.

They've faced US-based legal action which amounted to little. Your claims aren't new.

https://coinfomania.com/bitfinex-and-tether-faces-1-4-trillion-lawsuit/

 

[ash_1050]

Correct me if I'm wrong here. My understanding is that tether is within reach of the SEC if they operate on US based exchanges or exchanges that allow US customers to trade in USDT.

They've faced US-based legal action which amounted to little. Your claims aren't new.

https://coinfomania.com/bitfinex-and-tether-faces-1-4-trillion-lawsuit/

No idea where they’re based out of TBH, I’ve just given them a wide berth from day 1 and continue to remain skeptical. Is it easier to believe that they’re holding $66b in assets that have never been externally audited, or that they’ve printed USDT at will to prop up the BTC price?

It also makes absolutely no sense as an Australian investor to be holding USDT anyway due to the way our tax system works which is very different from other parts of the world.

 

[Evolved1]

What we know for sure is that tether has been under the eye of US investigators since 2017. In the meantime, their marketcap ballooned from $4B USD to over $80B USD.

Would US regulators allow that to happen if they were unbacked?





Other stablecoins have similar charts.

 

[Evolved1]

No idea where they’re based out of TBH, I’ve just given them a wide berth from day 1 and continue to remain skeptical. Is it easier to believe that they’re holding $66b in assets that have never been externally audited, or that they’ve printed USDT at will to prop up the BTC price?

It also makes absolutely no sense as an Australian investor to be holding USDT anyway due to the way our tax system works which is very different from other parts of the world.

USDT has been one of the better investments for Australians this year. Take a look at the AUDUSD chart.

Cheap software does the conversion for tax purposes.

 

[ash_1050]

Would US regulators allow that to happen if they were unbacked?

Yes, see FTX, Block-Fi Et Al.

Also using other stablecoins as your reference point doesn’t validate that USDT is legitimate at all, only that it’s increased in market share. If it were any other investment class they’d need to report external audit results annually, that they’re set up in an unregulated environment isn’t a get out clause for having no accountability.

Plenty of big crypto plays have been shown as nothing but Ponzi schemes, and plenty more will follow. USDT will be one of them.

 

[ash_1050]

USDT has been one of the better investments for Australians this year. Take a look at the AUDUSD chart.

Cheap software does the conversion for tax purposes.

I meant that you’re betting off holding it in tangible currency rather than magic sky tokens, as we pay tax on disposal of a crypto asset so it doesn’t make sense to then switch it to USDT. Why you’d then hold it in USDT, a currency that isn’t verified or substantiated in any way beggars belief. Look at Luna, look at BlockFi, go further back still and look at Bitconnect. All of them looked stable, then all of them imploded within 24 hours and everyone lost everything. Stupid, stupid, stupid to be holding USDT on the basis of ‘well it’s been around 7 years so it will be around next week as well.’

 

[Evolved1]

Yes, see FTX, Block-Fi Et Al.

Fair point, though I'll argue that Tether has been under the eye of US regulators far longer. There's a difference.

Also using other stablecoins as your reference point doesn’t validate that USDT is legitimate at all, only that it’s increased in market share.

My point is that the marketcap chart of tether is typical of other stablecoins. Whether you accept it or not, it provides some evidence that tether are legit.

If it were any other investment class they’d need to report external audit results annually, that they’re set up in an unregulated environment isn’t a get out clause for having no accountability.

Agreed. Regulation of stablecoins and exchanges is something that will be good for crypto.

Plenty of big crypto plays have been shown as nothing but Ponzi schemes, and plenty more will follow.

Hard to argue against that.

USDT will be one of them.

We'll see. I've been hearing rumors of their imminent demise for 5 years now. Their percentage of total stablecoin share continues to diminish which makes the threat of their implosion less damaging for the market as time goes by.

 

[Evolved1]

I meant that you’re betting off holding it in tangible currency rather than magic sky tokens, as we pay tax on disposal of a crypto asset so it doesn’t make sense to then switch it to USDT. Why you’d then hold it in USDT, a currency that isn’t verified or substantiated in any way beggars belief. Look at Luna, look at BlockFi, go further back still and look at Bitconnect. All of them looked stable, then all of them imploded within 24 hours and everyone lost everything. Stupid, stupid, stupid to be holding USDT on the basis of ‘well it’s been around 7 years so it will be around next week as well.’

Fair points.

 

[Zevon]

Interesting Coingeek article that outlines that Tether is likely printing non backed USDT, and that SOL is also pretty shady.

Bear in mind the article you’ve linked to is from November 2021, not 2022. Not necessarily saying that invalidates anything you’ve gone on to say about it (in fact it seems most of it absolutely still valid if not more so); just drawing it to your attention in case it escaped your notice. A year is an awfully long time in this space.

 

[BACCS]

Bought more for my long term holds today at $16,500. FOMO kicking in. I don't know about you guys, but I'm more scared of missing out than losing money at these prices.

Same, accumulating more for 2024/2025. My thought process was, are prices going to be this low a year from now? I don't think they will be, so it's a good time to start accumulating. I'm not saying prices won't go lower, but I don't think it takes a genius to work out downside is limited after 80%+ crashes already. I am also staking, so I would rather buy earlier than later and compound my returns for the next bull.

 

[BACCS]

If people are looking for a cheaper option than TradingView, Coinanalyze is free to use and seems to offer better indicators (e.g. aggregated funding rates, open interest etc). A few of the better traders I follow on CT use it in combination with TV; Coinanalyze use the TV charts anyway.

 

[Evolved1]

If people are looking for a cheaper option than TradingView, Coinanalyze is free to use and seems to offer better indicators (e.g. aggregated funding rates, open interest etc). A few of the better traders I follow on CT use it in combination with TV; Coinanalyze use the TV charts anyway.

There's another free app called cryptowatch which from memory is quite good.

 

[Del165198]

Same, accumulating more for 2024/2025. My thought process was, are prices going to be this low a year from now? I don't think they will be, so it's a good time to start accumulating. I'm not saying prices won't go lower, but I don't think it takes a genius to work out downside is limited after 80%+ crashes already. I am also staking, so I would rather buy earlier than later and compound my returns for the next bull.

Sure, makes sense, unless invisible coins actually become completely worthless, which is a distinct possibility. Then you've just thrown good money after bad.

 

[BACCS]

Sure, makes sense, unless invisible coins actually become completely worthless, which is a distinct possibility. Then you've just thrown good money after bad.

I don't understand why you are in this thread, you aren't adding anything constructive and basically just trolling at this point.

 

[HairyO]

I don't understand why you are in this thread, you aren't adding anything constructive and basically just trolling at this point.

If the thread was all roses maybe people would believe the hype.

 

[Del165198]

I don't understand why you are in this thread, you aren't adding anything constructive and basically just trolling at this point.

Because people are allowed to have opinions and if it was just a crypto shill thread that wouldn't be very balanced would it?

Public perception of cryptos is in the toilet. The blockchain technology wasn't developed to be an investment scheme, yet for 99% of crypto bros that's what they see it as, just another get rich quick scheme.

Unfortunately it's not all roses as 50% of Bitcoin holders are now in the negative, let alone all those that got screwed with Celsius, Luna and numerous other schemes that went balls up.

When a stock falls, it isn't always wise to "load up" because it's cheap. Because that stock may be on the brink of collapse.

By all means, you can do what you want, but I think the days of insane crypto booms are over.

 

[BACCS]

If the thread was all roses maybe people would believe the hype.

This thread was just people discussing genuine interests in the crypto space, with an occasional bit of technical analysis. None of us were forcing people with no interest in crypto into this thread.

It’s fairly clear that a few posters think it’s a scam/ponzi, so posting the same opinion multiple times isn’t adding anything constructive and is clogging the thread.

 

[BACCS]

Because people are allowed to have opinions and if it was just a crypto shill thread that wouldn't be very balanced would it?

Public perception of cryptos is in the toilet. The blockchain technology wasn't developed to be an investment scheme, yet for 99% of crypto bros that's what they see it as, just another get rich quick scheme.

Unfortunately it's not all roses as 50% of Bitcoin holders are now in the negative, let alone all those that got screwed with Celsius, Luna and numerous other schemes that went balls up.

When a stock falls, it isn't always wise to "load up" because it's cheap. Because that stock may be on the brink of collapse.

By all means, you can do what you want, but I think the days of insane crypto booms are over.

It’s not a crypto shill thread, it’s people with a passion discussing a topic that they enjoy. You have posted the same thing about 20 times now, your stance is clear and nobody is forcing you to change your opinion or continually read posts in this thread.

The regular posters in here are all aware of the risks and the majority of us are long term investors that actually do their due diligence and research into projects before investing. I was skeptical of lending platforms during a bear when it wasn’t just up only, so I haven’t held any funds on those platforms since the end of 2021. Similar to exchanges, I never hold funds on there for a significant period of time, but I feel for people that were caught out with FTX as barely anyone saw that coming.

People with a ‘quick rich’ mindset are those that enter again during bull runs and generally buy near the top from those that stuck around during a bear; these type of people aren’t touching crypto right now.

However, I have the occasional dabble on memecoins with small amounts that I can afford to lose, just like people heading to a casino or sports betting. These aren’t projects I think have any strong fundamentals, it’s just a bit of fun.

 

[Taylor]

As someone who doesn't own any crypto at all, I'm expecting finance to flee stock markets towards crypto if the talk of an economic downturn next year hits. Quite a few of my friends are telling me to buy while it's down to ride it back up again. Lifeboat sort of asset, like property, without the multiple of 100,000s required to enter.

 

[Del165198]

It’s not a crypto shill thread, it’s people with a passion discussing a topic that they enjoy. You have posted the same thing about 20 times now, your stance is clear and nobody is forcing you to change your opinion or continually read posts in this thread.

The regular posters in here are all aware of the risks and the majority of us are long term investors that actually do their due diligence and research into projects before investing. I was skeptical of lending platforms during a bear when it wasn’t just up only, so I haven’t held any funds on those platforms since the end of 2021. Similar to exchanges, I never hold funds on there for a significant period of time, but I feel for people that were caught out with FTX as barely anyone saw that coming.

People with a ‘quick rich’ mindset are those that enter again during bull runs and generally buy near the top from those that stuck around during a bear; these type of people aren’t touching crypto right now.

However, I have the occasional dabble on memecoins with small amounts that I can afford to lose, just like people heading to a casino or sports betting. These aren’t projects I think have any strong fundamentals, it’s just a bit of fun.

Fair enough.

 

[The Dice Man]

As someone who doesn't own any crypto at all, I'm expecting finance to flee stock markets towards crypto if the talk of an economic downturn next year hits. Quite a few of my friends are telling me to buy while it's down to ride it back up again. Lifeboat sort of asset, like property, without the multiple of 100,000s required to enter.

What types are these friends, crypto heads or traditional finance or ...?

 

[Taylor]

What types are these friends, crypto heads or traditional finance or ...?

Regular guys, I didn't know they had money in crypto until they started telling me about it.

One of them is a full on crypto head though. High level engineer, day trades the stuff and makes a couple of hundred grand a year doing it. That's too involved for me.

 

[Kram]

Crypto crash bears all the hallmarks of classic non-bank financial crisis...​

---

a day ago
Print Wire


Christopher Joye
Coolabah Capital







The crypto crash has been fascinating to watch and bears the hallmarks of a standard non-bank financial crisis that inevitably arises every time there is a liquidity shock. Unfortunately, it is likely to get worse.
For years this column resisted the temptation to write about the crypto craze. There is no point expressing opinions on things you don’t understand. The spell was broken last December around bitcoin’s $US69,000 peak with a warning of an impending implosion triggered by much bigger interest rate increases than the market was expecting. The warning was reiterated with gusto in January when this column argued that crypto would become the next tulip bulb bubble to burst.
This negativity was founded on several observations. The first was that crypto is just a form of non-bank finance situated outside the regulated world. A “stablecoin”, for example, takes in your savings, pretends it is riskless and then invests that money in risky assets (eg, other cryptocurrencies), earning a return on those assets. That is a classic banking activity. Indeed, crypto was conceived as an alternative to the traditional banking system that it explicitly sought to disintermediate.
I knew loads of super-smart folks who were crypto junkies, some of whom had deep financial expertise. But I could not find anyone who really believed in crypto and who was an expert on banking systems, their history, and the web of explicit and implicit government guarantees and central bank liquidity support that ensure banks (as opposed to non-banks) can survive economic and liquidity shocks.
History shows that almost all non-banks die during liquidity crises precisely because the asset/liability mismatches that are the basis of their business models become untenable when there is a run on their funding. There is no central bank or government support to bail them out because they exist outside the prudential regulatory net that is designed to save banks during such times. Think Aussie, RAMS and Wizard during the GFC in Australia, or Lehman Brothers in the US.
And that is exactly what many crypto businesses, including exchanges and stablecoins, face right now: a failure of trust that has precipitated a run on their liquidity. It is no different to a bank run wherein droves of depositors desperately seek to withdraw cash because they fear the bank will blow up.

Key differences​

There are, however, important differences between banks and non-banks. In the case of a bank, all the loans it makes with depositors’ money are subject to extreme scrutiny from a highly motivated, empowered and invasive prudential regulator, combined with regular public reporting of key financial risks. Global investors in any listed bank’s equity and debt securities furnish another layer of relentless surveillance.
Non-banks, including many crypto concerns such as exchanges and coins, have almost no regulation and/or scrutiny. And they tend to be murky private businesses, run by anonymous individuals, often located in dubious jurisdictions, that are protected from the reporting demands of public market enterprises.
Any asset/liability mismatch, where a bank or non-bank borrows short-term money from savers and uses that cash to make long-term loans, embeds enormous solvency and liquidity risks. Over centuries of experience, we have learnt that during downturns banks often go bust. Governments created “central banks” with the power to print unlimited money to in turn provide banks with infinite liquidity to ride out these shocks.
During the GFC we discovered that banks required even stronger support. Governments introduced explicit public guarantees of the banks’ biggest and most flighty source of funding – deposits. They further moved to explicitly guarantee their second-largest source of funds – senior bonds. Many countries were even forced to inject cash into their banks in exchange for ownership stakes.
Over decades of doing due diligence on both banks and non-banks, I’ve consistently found the commercial differences to be striking. Banks live in fear of political, regulatory and investor (debt and equity) oversight and normally allocate vast resources to their customer management, credit assessment, risk management and reporting processes. Non-banks, in contrast, tend to be more myopic, writing as many loans as possible to maximise their assets. Coolabah has yet to find a non-bank with remotely comparable risk management capabilities and controls to Australia’s biggest banks.

Utopian belief​

The crypto crisis has been especially unusual because it has been infused with an emotive and utopian sense that these businesses were going to revolutionise, and ultimately disintermediate, the traditional financial (or “tradfi”) world. These were not just innovative and high-growth firms – they purported to provide people with a new way of life that was a threat to the old oligarchy by existing beyond the reach of governments and their stultifying regulatory controls.
Almost all crypto enthusiasts will wax lyrical about the anonymity, privacy and security afforded by crypto beyond the power of government. Crypto thus held out hope of becoming a new medium for organising our lives in a libertarian digital world without external interference.
But because almost every crypto activity relied critically on some form of trust – including the vital assumption that our savings would be secure and safe – they were predictably doomed for failure in the event of any crisis of trust, which is what a liquidity shock is.
Only two days ago a friend who is a crypto junkie had to cancel a meeting because he was desperately withdrawing $800,000 of personal savings from all his crypto exchanges and returning it to the unalloyed safety of traditional bank deposits.
Most of what we see today in the crypto universe will die. There will surely be some residual winners, and there are doubtless some impressive technological innovations that will sustain. But anything of serious value will likely be absorbed by the traditional banking system. The dominant digital currencies of the future will be those issued and guaranteed by nation states.
So where does that leave bitcoin? As this column argued last year, bitcoin has not become a medium of exchange, is not a stable store of wealth and is the opposite of an effective inflation hedge. All these Ponzi messages have been destroyed by the passage of time.

A place to hide money​

This leaves one final use case, which was outlined to me last weekend by a bitcoin “maxi” – that bitcoin is a uniquely “seizure-resistant” asset. Put differently, bitcoin is a place to hide money beyond the aegis of government or other nefarious actors. This seizure-resistant quality is 100 per cent predicated on the security of the encryption technology used to mine bitcoin.
And this is where the narrative once again stumbles. Nobody knows who Satoshi Nakamoto, the person (or persons) who authored the first mysterious bitcoin white paper in 2008, and who devised the first blockchain database, actually is. Language analysis of Nakamoto’s writing comprehensively suggests that he/they wrote in both British and American English, either because Satoshi was a group of people, or one person pretending to be many people.
Bizarrely, Satoshi has also never touched his/their bitcoin wallet, which is today worth about $US18 billion, implying that his/their motives are not financial despite the rationale for creating bitcoin being monetary purity. It just makes no sense.
Significantly, the hashing algorithm used to protect the security of bitcoin, called Sha-256, was created in 2001 by the National Security Agency in the US, which is the world’s centre of excellence for cryptography.
The NSA’s sole reason for being is breaking encryption to steal global secrets: it has zero incentive to release encryption technology, like Sha-256, that the world can use to hide from the NSA’s surveillance. That would destroy its core mission.
Every single bitcoin expert I know acknowledges that bitcoin and the blockchain used to produce it could eventually be insecure. Examples include the possibility of a “51 per cent attack” on a blockchain by an entity that controls more than 50 per cent of the network’s mining hash rate, which would give them control of all bitcoin transactions.
A 51 per cent attack requires either a very large, but not impossible, investment in computing power or some disruptive competitive advantage in processing power beyond currently known technology.
The original 2008 bitcoin white paper, entitled a “peer-to-peer electronic cash system”, marketed its chief benefit as the ability to enable “online payments to be sent directly from one party to another without going through a financial institution”.
If you were an intelligence agency in 2008 watching non-democratic states and criminal actors clamouring to find anonymous payment systems to launder or hide money, it would make enormous sense to facilitate the development of digital currencies like bitcoin that you could ultimately control in the event of major power conflict between states.
We saw in the Russia/Ukraine conflict that the Russians immediately leant on crypto to protect their wealth outside the Western liberal-democratic controlled financial system.
My own view is there is no way the NSA would release the Sha-256 technology that protects bitcoin if it could not access it. The Chinese know this, which may be why they have banned bitcoin. And the day the world discovers that bitcoin is insecure is the day it is worth precisely nothing.

Crypto crash bears all the hallmarks of classic non-bank financial crisis...

The crypto crash has been fascinating to watch and bears the hallmarks of a standard non-bank financial crisis that inevitably arises every time there is a liquidity shock. Unfortunately, it is likely to get worse. For years this column resisted the temptation to write about the crypto craze...

www.livewiremarkets.com

 

[BACCS]

Despite Boasting Of Big Profits, FTX And Alameda Lost $3.7 Billion Before 2022

How on earth did an exchange the size of FTX and a trading firm with access to FTX trading data manage to lose $3.7B during an up only 2021? The 2022 losses make sense as they got greedy on leverage and the market tanked, but even bog average traders could make money in 2021.