
Bitcoin, Ether Sink as ‘Sense of Panic’ Grips Crypto Investors - mancerayder
https://www.bloomberg.com/news/articles/2018-08-14/bitcoin-sinks-below-6-000-as-almost-everything-crypto-tumbles
======
dandare
> “Most cryptocurrencies have been overvalued for a very long time,” said
> Samson Mow, chief strategy officer at blockchain developer Blockstream Corp.

This reminds me of the "Not Even Wrong" attribute of String Theory. How can
something be overvalued, if it's only value is derived from the price people
are willing to pay for it?

~~~
bunderbunder
> How can something be overvalued, if it's only value is derived from the
> price people are willing to pay for it?

Usually when someone's saying something is overvalued, what they mean is that
they think there is good reason to believe that what people are willing to pay
for it now is significantly more than what they think people will be willing
to pay for it at some undefined point in the future. Or, in a nutshell, that
they think it's a fad.

I think it's generally a fairly safe bet to assume that, when there's a buying
rush on something, the market price will end up being quite a bit higher than
what it will be once things start to stabilize. That's a fairly intuitive
implication of supply and demand, and I think the only real way around it is
if there's some other force that's constantly working to push the price up.
For example, the price of land tends to appreciate because the supply of land
is approximately constant, but the number of people who want land is always
growing.

Bitcoin _maybe_ has that with its deflationary design. But a counterweight to
that feature is that nobody really needs Bitcoin for anything. So, like land,
the supply is pinned, but, unlike land, it's entirely possible for demand to
plummet all the way to zero.

~~~
JumpCrisscross
> _Usually when someone 's saying something is overvalued, what they mean is
> that they think there is good reason to believe that what people are willing
> to pay for it now is significantly more than what they think people will be
> willing to pay for it at some undefined point in the future_

This is a mis-understanding of the term "value," at least in the context of
investing. Value is the benefit you receive from holding an asset. If you buy
an undervalued bond, the interest and maturity should pay you more than the
price you paid for it. Same with stocks and dividends, derivatives and cash
flows, _et cetera_.

Currencies _seem_ like an exception until you consider how FX traders make
money. Currencies give you access to borrowing and lending in their respective
economies. Their relative values are enforced by market factors like the carry
trade. Bitcoin doesn't have this because, like gold, it does not natively
support interest rates.

~~~
jaredklewis
Honest question: what about stocks that pay no dividends but appreciate? It
seems like they provide no value to the holder until sold.

~~~
bunderbunder
They hold some minimum value in that common stock holders are entitled to a
share of the liquidation value of the company, should it go under.

That said, they're (usually, at least) in line behind bond holders, and most
companies are trading a high multiple of their liquidation value these days,
and companies tend to take on a lot of debt right before they go under, so to
a reasonable approximation, the amount of that value that a common stock
holder can expect to see is 0.

------
1ba9115454
Bitcoin and other crypto currencies are very volatile.

Seeing a 5% movement in the market and giving it a title 'Sense of Panic' is
not really great journalism in my opinion.

~~~
radarsat1
Indeed, I get so confused when seeing headlines like this, then I log into my
kraken account (I only have like $100 worth of bitcoins but it's fun) to see
what's up, and I see a graph like this
[https://i.imgur.com/kVW7XYx.png](https://i.imgur.com/kVW7XYx.png) which
basically just shows that it's "plummeted" back to the same level it was a
month ago, which it was at for two months.. I don't see a reason to sell.

I originally bought bitcoin when they were $12, so when I see the articles
about how much value it's losing my reaction is just kind of... well, it's
still 100x higher than it was 5 years ago, and 10x than 2 years ago..

Anyways if you look at the global trend
[https://i.imgur.com/1w1X5bN.png](https://i.imgur.com/1w1X5bN.png) I would say
that the rate of falling from its ridiculous speculative high last year is
decreasing, so maybe it's flattening out for a while..

~~~
adventured
The argument is that Bitcoin is still in a lower lows, lower highs move. That
a sustainable bottom has not been put in yet, rather than that it's just
bouncing around a bit. I.e. this move will breach below $5,774 and continue
further down.

------
krig
"Still, anyone expecting Bitcoin to provide a haven from turbulence in global
markets will have been disappointed."

No judgment on the future of cryptocurrencies (I'm not prescient), but
wouldn't you have to be incredibly naive to think that bitcoin or ethereum
would be stable, either in the long or short term? If nothing else, this is a
space that is so new that a lot of countries haven't even had time to figure
out how to legislate around it.

~~~
Nursie
It had been one of the cryptocurrency promoters' talking points for some time.

BTC and Ether were supposed to be a store of value, and some pointed to
research that showed a lack of correlation between general market movements
and valuations in the cryptocurrency space, arguing that this made it a good
hedge.

The extreme volatility would seem to count against that idea though.

~~~
dlubarov
The volatility isn't a problem if crypto is a small part of a diversified
portfolio, though. In theory, if a portfolio has many small investments in
volatile but uncorrelated assets, the overall portfolio won't be volatile. I
haven't done any empirical analysis, but I wouldn't be surprised if investing
1-2% of a portfolio in crypto actually reduced its risk.

------
madeuptempacct
"Bitcoin could be on the verge of breaking through as a mainstream currency.
At least that’s the goal of a startup that is soon to be launched by one of
the most powerful players on Wall Street, with backing from some of America’s
leading companies.

This morning Intercontinental Exchange—the trading colossus that owns the New
York Stock Exchange and other global marketplaces—announced that it is forming
a new company called Bakkt. The new venture, which is expected to launch in
November, will offer a federally regulated market for Bitcoin. With the
creation of Bakkt, ICE aims to transform Bitcoin into a trusted global
currency with broad usage."

[http://fortune.com/longform/nyse-owner-bitcoin-exchange-
star...](http://fortune.com/longform/nyse-owner-bitcoin-exchange-startup/)

So, you guys really think this doesn't matter? A bit one-sided imo.

~~~
tw04
>Bakkt plans to offer a full package combining a major CFTC-regulated exchange
with CFTC-regulated clearing and custody, pending the approval from the
commission and other regulators.

I think that they're about the 4th "major player" to announce they're going to
introduce a regulated exchange. And every other time it's been "pending
regulator approval". And every other time the regulators told them to pound
sand. Besides the fact they run the NYSE, what's changed? The US has
absolutely no incentive to hand over controls of their monetary policy, and I
see no reason why they'd be anymore eager to approve this.

~~~
JumpCrisscross
> _The US has absolutely no incentive to hand over controls of their monetary
> policy_

The regulators who approve these proposals have nothing to do with monetary
policy. Their concern is with the breathtaking volume of scams in the space.

~~~
tCfD
Given that one of the fundamental objectives of the cryptocurrency movement is
to devolve the power of monetary policy, issuance and supply leverage from the
state to various 'decentralized' (weasel word of this century) groups, and
thereby deprive the state of its power of taxation, I would think it in the
interest of these regulators to pass the word along to those who do control
monetary policy.

~~~
JumpCrisscross
> _one of the fundamental objectives of the cryptocurrency movement is to
> devolve the power of monetary policy_

Nobody at FINRA or the SEC cares about the power of monetary policy. The
former being an industry group, it is actually somewhat _in favor_ of letting
banks sell Bitcoin (and related derivatives) to their clients. The people at
the Federal Reserve, who actually control monetary policy, are mostly ignoring
all this.

~~~
SI_Rob
Are FINRA truly 'regulators' (with access to state enforcement apparatus) or
just a professional standards-setting body of license gatekeepers?

~~~
JumpCrisscross
> _Are FINRA truly 'regulators' (with access to state enforcement apparatus)_

Pretty much. FINRA writes rules that everyone in the industry has to follow.
When you work in securities, you agree to hand FINRA arbitration power over a
lot of things. They can fine you and bar you from the industry. They can't
press criminal charges, but neither can the SEC.

------
r32a_
Another day another Bitcoin obituary.

Surely these articles are click baits at this point.

~~~
jobigoud
> fell as much as 6.2 percent to $5,887, the lowest level since June

The lowest level since June? 2018? That's a few weeks ago... Why is this even
a news?

------
eiurafhlfie
One more bitcoin bubble poppin'.

Does HN think it's the last one, or will the pattern repeat in a few years
again?

~~~
guildenstern
The question to ask is where will the money come from? The last bubble was all
over TV, it was a constant part of the news cycle and everybody knows somebody
who bought at least some crypto currency based on promises of wild riches.
Most of those people have lost at least some (or even most) of the money they
“invested”. When the layman has already been burned, where can money come
from?

People often make the mistakes more than once so perhaps there’s room for “
_this time_ it’s different!” but I’m not convinced. I don’t see the crypto
market ever exceeding the previous all time high.

There’s certainly room for individual cryptocurrency projects to succeed from
their own merit as projects that happen to be crypto currencies so I don’t
think _all_ crypto currencies are dead forever but crypto as a growth market
almost certainly is.

~~~
0x4f3759df
I expect the money will come from Wall Street once adequate custodial /
regulatory framework is in place.

~~~
anotheramala
Wall Street wants to trust it's money to miners in China? The whole mining
concept is ridiculous, but they have probably done stupider things so it could
happen.

~~~
JumpCrisscross
> _Wall Street wants to trust it 's money to miners in China?_

No, but it will happily take a commission selling you a Bitcoin or Bitcoin
derivative.

------
rashomon
As someone who does have a large investment in it. I'm genuinely happy that's
happening.

Way too much marketing + pump-n-dumpness occurring for anyone to make some
real solutions out of the blockchain. Maybe now that the fervor has resided,
the quiet minds can get to work.

~~~
wyldfire
Ha, this post seems to mark the "this is good for bitcoin" meme.

------
394549
Good. Serves them right for making the layman more likely to associate
"crpyto" with get-rich-quick schemes rather than important privacy-protecting
technology.

~~~
Barrin92
I never understood the privacy point either. crypto technology to me seems
like the opposite of privacy respecting. The entire ledger is public, so all
my transactions are public and traceable through history. If someone ever
figures out which wallet belongs to me, I'm done for, which is a horrible
single point of failure.

The same thing for smart contracts really, by advertising them as doing away
with trust and middlemen and calling it a feature, they are demanding that key
parts of transactions are made public, traceable and constantly measured.

All of it seems to me panopticon like rather than focused on privacy. It has
obfuscated the only good thing (the identity of the person I buy from, which I
care about), and made transparent all the bad things (my and their personal
history)

------
at-fates-hands
I'm still waiting for the environmentalists to start going after the miners
who seek out cheap energy and then gobble up tons of it just mine their
crypto:

[https://www.politico.com/magazine/story/2018/03/09/bitcoin-m...](https://www.politico.com/magazine/story/2018/03/09/bitcoin-
mining-energy-prices-smalltown-feature-217230)

 _Today, a half-megawatt mine, Miehe says, “is nothing.” The commercial miners
now pouring into the valley are building sites with tens of thousands of
servers and electrical loads of as much as 30 megawatts, or enough to power a
neighborhood of 13,000 homes. And in the arms race that cryptocurrency mining
has become, even these operations will soon be considered small-scale._

That is INSANE.

~~~
nonbel
>"That is INSANE."

Is it? What have you compared that to?

At least some people like bitcoin/etc, who likes the new reddit layout that
requires transferring 60x more data than necessary (using HN is an example of
an environmentally friendly text-based site) just to track all their users
clicks and mouse movements?

[https://news.ycombinator.com/item?id=17671695](https://news.ycombinator.com/item?id=17671695)

~~~
onion2k
_What have you compared that to?_

The utility of using half a megawatt of power for something else would be a
reasonable comparison. That's the power required for ~300 average sized homes.
That sounds like a lot to me.

~~~
nonbel
>"That sounds like a lot to me."

It sounds like a lot because you are adding up energy used by many, many
people all around the world. Lots of things "sound like a lot" when you do
that.

Why not do the same calculation for a few other things that people enjoy
(gaming, porn, cat pics, posting to facebook/twitter, bars/drinking, holiday
decorations, lawncare, etc)?

All those activities are totally unnecessary wastes of energy.

------
ArtWomb
Could be tied into "$usd strength" narrative. As historically there has been a
correlation between EM currency market weakness and crypto flight to safety.
Such was the case with Greece and Spain. But now with Turkey, South Africa,
and others seeing 5% moves per day. That correlation seems to be broken in
favor of the Almighty Dollar. Be careful out there. August volatility can be
especially fraught in illiquid markets as traders are away from their desks
and out on the beaches in East Hampton ;)

------
crunchlibrarian
The sooner all this nonsense ends the better, too many people have already
been scammed for waayyyyy too much money.

And I personally know five or six people who are trying to start their own
coins around <insert any noun> and "make billions". They all seem to think
their coin will replace all currencies and commodities forever.

It's the perfect fictional scam for our fictional times.

~~~
XorNot
Also GPU prices going down would be great.

~~~
crunchlibrarian
I completely forgot about that, I've been sitting on a 970 for years now, I
stopped checking prices for video cards early last year and haven't even
thought about it in months.

It's quite bizarre to effectively be unable to upgrade your computer for a
year or two. I had forgotten how regular that process was for me.

~~~
Nursie
AFAICT graphics card prices are dipping a little right now, but at least part
of that is fairly strong anticipation of nvidia announcing a new generation in
a few days. Guess we'll see....

~~~
theandrewbailey
Nvidia announced/launched next gen Quadros yesterday. Gamescom is next week,
and Nvidia is holding some "gaming celebration" there.

[https://www.nasdaq.com/press-release/nvidia-unveils-
quadro-r...](https://www.nasdaq.com/press-release/nvidia-unveils-quadro-rtx-
worlds-first-raytracing-gpu-20180813-00977)

[https://www.nvidia.com/en-us/geforce/news/geforce-gaming-
cel...](https://www.nvidia.com/en-us/geforce/news/geforce-gaming-celebration-
gamescom-2018/)

------
sillysaurus3
Time to buy.

Every time an article like this comes out, crypto shoots up shortly after.
It's like a perfect negative signal.

And how could it be otherwise? The worst time to buy is when everyone else is
buying.

~~~
briatx
> The worst time to buy is when everyone else is buying.

It's also when everyone is selling. Nothing says this can't go lower.

------
LargeWu
s/investors/speculators/

~~~
xutopia
How does an investor invest if he doesn't speculate?

~~~
LargeWu
Typically when you think of "investment", you are exchanging resources
(typically money) for some sort of increased or improved production capacity.
For example, buying a new truck so you can increase delivery capacity, or
buying a new machine so you can produce more things faster.

Speculation, which is a very, very, very high percentage of all crypto
transactions, is merely buying some asset with the intent of selling it later
at a higher price. There's a name for this, the "Greater Fool Theory", which
is so called because you hope somebody else will buy at a higher price and you
won't be the fool holding it when the price declines.

It should be noted that buying stocks on the open market is more akin to
speculation than investment, although historically it has provided fairly
reliable returns in the aggregate over the long term. It also has the effect
of providing liquidity for original investors, so that they can take their
gains and invest again elsewhere, which is a trait crypto doesn't necessarily
share.

