
Bitcoin Fall Extends to 25% as Fears of Crackdown Linger - rayuela
https://www.bloomberg.com/news/articles/2018-01-16/cryptocurrencies-resume-slide-as-bitcoin-tumbles-to-december-low
======
vthallam
The last time China explicitly banned Bitcoin, it dropped by around 45% to
around $6000. It went on to $20K from there.

But what's different this time is that there are first time investors in
millions who joined in the last 2 months. They didn't read the white paper,
they didn't invest in technology, they invested for the monster returns. So I
think there will be a more sell off this time before it rebounds back to $13K+
or may be the 1000th time is the charm and the bubble actually gets burst.

~~~
komali2
I love bitcoin and cryptocurrency as potential solutions to problems with gov-
controlled currencies (I've used crypto to buy drugs, for example). But I'm
still confused why people refer to purchasing currency as an "investment."
Obviously the rates are going up now, but doesn't everyone expect them to just
come back down? I don't convert my USD to Yen and call it an "investment."

~~~
Jtsummers
Well, there is actual forex investing (speculating). For instance, the value
of the USD versus the Argentine Peso (ARS) is something I track (my girlfriend
lives there and long term I would consider moving there, current plan is for
her to move here). The USD to ARS conversion is increasingly favorable for the
USD, the buying power of ARS hasn't dropped significantly (in country) but the
USD is worth more ARS now than 1.5 years ago (1USD:15ARS then versus
1USD:18ARS today). Someone who had currency in ARS at the time, and converted
it to the USD, could see significant returns on that investment (assuming
reasonable exchange fees). Almost 20% gains, that matches the US stock
increases over this past year.

It is speculation, however, as you generally don't have the same sort of
insight into currency movements as you will into stock movements and
commodities in general. Someone watching the Brexit vote in summer 2016 would
have made a decent return on ARS had they moved it to the USD before the vote
and back after (changed from 1USD:13ARS to 1USD:15ARS practically overnight).
But that is speculation and requires watching global and national scale events
to predict.

~~~
philipov
I believe strongly that the word 'invest' should be used to distinguish one's
activities from speculation, rather than be a superclass of it. Discourse is
poisoned when people promote semantic overlap and create ambiguity, rather
than using words to create meaningful distinctions.

Investing is what you do when you're not merely speculating on short-term
returns, but are instead focused on long-term value creation. It is right to
call it currency speculation, because instead of investing capital to create
sustainable growth in something, you're just skimming the fluctuations using
massive leverage.

~~~
lsaferite
Unless you are part of an IPO or are buying newly issued stock you are also
speculating on stocks when you buy them.

Note: Not a finance person, just a personal opinion.

~~~
philipov
In practice, it may not be possible to neatly classify any particular
financial decision as being purely investment or purely speculation. This only
increases the need to have these words mean clearly different things so that
we may use them to analyze the different aspects of the ambiguous world in
which we find ourselves. Blurring the meaning of the words effectively robs
people of the ability to reason about their circumstances, and it is no wonder
that many people feel invested in creating such confusion.

~~~
brucephillips
The impossibility of separating the two concepts necessitates two different
words for those concepts?

That's a contradiction.

~~~
philipov
The concepts are easy to separate: Investment is symbiotic, Speculation is
parasitic. Having clear concepts is more important when the real-world
examples are complicated.

~~~
brucephillips
How is speculation parasitic?

~~~
philipov
Speculators seek to extract alpha without regard to the overall health of the
instrument. Shorting is just as good as going long, so far as you make a
profit.

~~~
brucephillips
That doesn't mean they're parasitic. To show they're parasitic, you'd have to
describe how they _hurt_ the company.

Regardless, what defines speculation is not parasitism, it's uncertainty. And
there's uncertainty in any investment as well. That's why there's no clear
line between the two.

~~~
philipov
I disagree. I have made a clear delineation in the semantic content of my
definitions, while you continue to attempt to confuse the issue.

~~~
brucephillips
I mean, the definitions aren't yours to make. These words exist in the
dictionary.

~~~
philipov
Writers of dictionaries are archaeologists of language. They do not prescribe
the meaning of words like a programmer or mathematician. Their definitions are
posterior to language. The definitions are in fact mine to make, provided they
result in successful communication with people who have adopted similar
definitions.

Go read my original post again. I am advocating against ambiguity in language,
as this serves to obscure analysis. You are clearly happy to obliterate
distinction, however, and have made no attempt at a positive argument why it
is beneficial to discourse.

Language is a constant negotiation about the meaning of words, and I have made
my position clear.

~~~
brucephillips
I'll bow out here, but I'll just point out that this is a great example of how
one's adherence to their ideas makes rational conversation impossible.

We can only communicate to the extent that we agree on the definitions of
words, so for you to invent your own definitions, which contradict how other
people use the word, as codified in dictionaries, then there's zero hope of
reaching shared understanding.

It would be absurd for me to claim that "the sky is brown", the later argue
that I was right all along because I'm defining "brown" to be "blue".

~~~
philipov
I will simply point out that at every opportunity, I have been upfront about
what definitions I am adopting and the distinctions I am attempting to make,
while you have done nothing but dissemble and create ambiguity, without
offering a positive program of your own. I will leave it up to other readers
to make their own conclusions.

~~~
brucephillips
If I say "the sky is brown", am I being up front that I'm defining "brown" to
be the color of the sky?

~~~
bduerst
This comment thread has been one of the weirdest internet arguments on the
semantics of a word that I've seen in a while.

~~~
imcoconut
only on HN.

------
ErikAugust
The whole Tethers thing scares me the most:

[https://twitter.com/Bitfinexed/status/953398351889944576](https://twitter.com/Bitfinexed/status/953398351889944576)

There's $5B worth.

~~~
trhway
Tether performs public service of "quantitative easing" :)

~~~
cies
When the demand for USDT shrinks, will they also do quantative uneasing? As in
buying back USDTs to the extend the value of one USDT cannot drop below $1? I
do not think they will, because I do not think they can...

~~~
buildawesome
Essentially, this is what interest rates and the bond market is for.

~~~
cies
Please explain. I think you are not aware of what USDT (Tether) is, but that's
just my quick judgement.

------
sytelus
I have been trying to figure out eventual equilibrium price of BitCoin and
here is one approach:

Due to wealth inequality, we assume that majority of the crypto investment
would be from ultra-rich. It might become quite normal for them to invest 1%
of their wealth in crypto for uncorrelated diversification. In a way this is
very similar to buying art which probably doesn't have much utility except
among other wealthy people as socially agreed upon store of value. These folks
have estimated wealth of $10T so that puts market cap contribution from them
to $1T. Let's assume same amount comes from non-ultra-rich investors. So we
can estimate btc market cap to $2T. This puts reasonable _eventual upper bound
value_ of 1 btc to $95,000. This eventual value might never be reached however
because all 21M coins never be mined, not all wealthy people might do this,
and also other coins will fragment the market. May be 3/4 discount is
reasonable at this point to accommodate these factors which might put the
value to $25K at this point. This is obviously assuming no black swan events
like countries making it illegal or some other virtual currency tech doesn't
become popular.

~~~
flick
That doesn't make any sense. Using this logic you could argue that basically
_anything_ should have an eventual market cap of ~$1 trillion.

~~~
dunkmaster
He's merely talking about upper bound. Which is probably true.

------
panarky
Animal spirits

 _Even apart from the instability due to speculation, there is the instability
due to the characteristic of human nature that a large proportion of our
positive activities depend on spontaneous optimism rather than mathematical
expectations, whether moral or hedonistic or economic.

Most, probably, of our decisions to do something positive, the full
consequences of which will be drawn out over many days to come, can only be
taken as the result of animal spirits—a spontaneous urge to action rather than
inaction, and not as the outcome of a weighted average of quantitative
benefits multiplied by quantitative probabilities._

[https://en.wikipedia.org/wiki/Animal_spirits_(Keynes)](https://en.wikipedia.org/wiki/Animal_spirits_\(Keynes\))

~~~
trhway
or in other words the "exploration" part of the "exploration vs. exploitation"

------
paulpauper
This is what happens when you have high correlation and low exchange liquidity
. All it takes is 150 coins sold ($1.5 million) to make it fall 1000 points,
and then the other exchanges and coins mirror this. If the major exchanges
were consolidated there would be much less volatility.
[http://https://greyenlightenment.com/why-bitcoin-is-so-
volat...](http://https://greyenlightenment.com/why-bitcoin-is-so-volatile/)

~~~
dangero
Other exchanges will not mirror this--arbitrage will occur

~~~
matwood
> arbitrage will occur

It already is occurring.

------
beached_whale
I cannot wait for video cards to flood the market and become reasonably priced
again

~~~
Royalaid
That's because of ETH not BTC

~~~
beached_whale
If it becomes fully enforced and illegal in China, I assumed that is a lot of
hardware that won't be used for mining any longer

------
donquichotte
In January 2017, Bitcoin dropped from 1176$ to 755$ (35%). Today, it's still
10 times higher than last year.

~~~
dahdum
Fun chart from Reddit today:

[https://i.redd.it/dnlduddb5ha01.jpg](https://i.redd.it/dnlduddb5ha01.jpg)

~~~
pishpash
Yeah, nice use of log chart there.

~~~
dahdum
It's difficult to graph that period of time and still capture the drawbacks
without a log chart.

If someone misreads the chart as linear the current drop would be terrifying
though, with no previous precedence.

------
vadansky
I bought $200 worth of bitcoin years ago that I cashed out at 7k when it was
around 19k$. Now I'm thinking I should cash back in incase it rebounds
strongly again. I guess I should be happy with my free money and not get
greedy.

~~~
bargl
Buy $200 again and you haven't lost anything :-)

~~~
fredoliveira
Considering the profits he can buy $6,800 — not $200 — and be even.

~~~
ozim
Nope, because $6800 are actual money that he can lose now.

Just like you go to casino with $5 play all night up to $2 million, then lose
all go back home and tell your wife you only lost $5 so it was not that bad.

------
KasianFranks
Time to buy. Down from what price since January? Cryptocurrency is a long term
play from a software and financial engineering vantage. It also continues to
irritate the hell out of banks (bank accounts are being closed and restricted
from exchange transfers, including coinbase) and general investors. It's not
liquid enough yet, creates no need for middle men and Bitcoin itself is now
being manipulated by futures contracts based on supply being increased
artificially.

~~~
semi-extrinsic
Yes, but what? Ripple's seen maybe the biggest loss, but it's not clear that
part of its loss isn't due to decreasing confidence in the underlying, which
is bad if you want to BTFD. Same can be said for many others.

Though if you look at todays charts e.g. in ETH, it's clear someone's probably
made good money intraday buying dips.

~~~
cableshaft
Ripple will bounce back up (maybe not back up to $3 anytime soon, but I'm
pretty sure it will go back up). A lot of people that got out are just trying
to time the bottom as well as they can. I'm tempted to buy more myself. Part
of me wants to wait to see if it drops more, part of me thinks I should just
get in instead of trying to time the market and missing the opportunity.

~~~
semi-extrinsic
Why so sure? It seems to have gone up based on the news that Japanese banks
were getting involved, but then it turns out they likely won't use the actual
coins, just the tech?

~~~
cableshaft
Just based on the general patterns and trends, and that it seems to be the
favored coin of the banking world, at least so far. But I very well could be
wrong. Someone can be very confident and very wrong.

But as a general rule I'm conservative with how much I put into these things,
just a small amount each month. I can afford to be very confident and very
wrong about Ripple.

------
jedberg
If the threat of regulation drops it 25%, that's not a very good store of
value or medium of exchange.

~~~
paulpauper
Compared to some currencies, it is. Brazil Real has lost 80% of its value
relative to the dollar since 2013. I think this is overdone considered the
last time Korea threatened regulation it only fell 10%.

~~~
hikarudo
USD quoted in BRL achieved a minimum of around 1.96 BRL in 2013. Currently it
is 3.23 BRL. So the Brazilian Real has lost 40% of its value relative to the
dollar, not 80%.

------
Leader2light
BTC is still above 10K. Think about that for a while. I remember 500 like it
was yesterday. This drop is nothing. Except for those poor idiots who took at
loans to buy at 19K

~~~
tomjakubowski
honest question: do you believe there's a price point where it's /not/ stupid
to go into debt to invest in cryptocurrencies?

~~~
seba_dos1
Going into dept to speculate doesn't really seem like the best idea regardless
of the price.

~~~
jjkk0101
It surely does, depending on the interest rate and risk.

------
acomjean
I see bitcoin ads all the time. Including a "Bitcoin IRA" (Individual
Retirement Account) and "See what the experts say the next BitCoin is".
Marketed at laypeople. They're definitely marketing the heck out it (they
being brokers I guess), because its not really that easy to figure out.

~~~
aarongolliver
I've been getting a lot of "This is the 'penny stock' of bitcoin!" ads.

------
kondro
And as the Asia market of retail investors cashes out to spend money on their
families for Lunar New Year.

------
seba_dos1
Looks like a typical January in crypto.

~~~
iamdave
I'm glad to see someone mentioning this. This has happened the last four years
straight, the Ides of January, followed by a massive bullish run.

------
m3kw9
So let me get this straight. Gold can be compared to bitcoins in terms of
scarcity and and store of value. But bitcoin itself is in practical term a
proof of concept technology that is only useful when applied properly in
another block chain. While gold actually has great uses. Can i say if you are
investing in bitcoin, you are basically investing in equivalent a scarce
physical paper with not a whole lot of use?

~~~
nkkollaw
Comparing gold with Bitcoin is weird. People invest in gold because its values
is very stable, obviously Bitcoin's isn't :-)

~~~
brucephillips
Gold is highly volatile.

~~~
cies
Volatility only exists in comparison.

BTC and Gold in one graph:
[http://static5.businessinsider.com/image/59975b50f1a85079738...](http://static5.businessinsider.com/image/59975b50f1a85079738b54e0/bitcoin-
is-more-valuable-than-gold--but-nowhere-near-as-stable.jpg)

I'd say in this comparison gold is the stable option.

~~~
brucephillips
No, it doesn't. Volatility is defined in terms of an asset's past prices, not
in terms of other assets.

~~~
cies
Ok. I stand corrected. But what I meant to say is, that labeling something as
"very volatile" only works in comparison.

------
m3kw9
It doesn’t help that every news organization in the world is talking about
bitcoin and even worse, some of these people are predicting $100,000 price
tags. Who wouldn’t want a 6x return from the peak?

~~~
ngsayjoe
$100,000? No, James Altucher is predicting $1 million / Bitcoin!!!
[https://www.cnbc.com/2017/11/29/james-altucher-predicts-
bitc...](https://www.cnbc.com/2017/11/29/james-altucher-predicts-bitcoin-will-
reach-1-million-by-2020.html)

------
matt_wulfeck
Easy come.

------
trumpeta
I wonder if this is a reverse P&D by the Chinese gov

------
paulpauper
The last time South Korea hinted at banning it the price only fell to $13k .
No one knows what is going to happen or when.

Just happy I sold some around $18-19k

~~~
adamnemecek
The backlash was enormous tho.

------
matte_black
I bought $15000 last year in Litecoin when it reached the 300s. Debating if I
should sell off now and get out with at least half of my money. Looks like
this crypto frenzy is coming to an end.

~~~
Mc_Big_G
Buy high, sell low is not a sound investment strategy. Just hold and cash out
when it gets back to 300 if you can't stomach the crypto world.

~~~
matte_black
This was not investment, it was speculation. I doubt Litecoin will ever go
back to the 300s at this point. The crypto bubble might be popping.

------
sidhuko
I wonder why Ripple isn't getting more coverage... I told my father to cash
out last week. Ashamed he didn't as he would of made his win and could
reinvest at $1.10 again.

------
aussieguy1234
Still waiting for tulips to recover back to the January 1637 price.

~~~
averagewall
Why not gold? It's doing fine. When do you expect that bubble will burst?

------
droopyEyelids
I wonder if governments would take even more drastic measures if currency
weakness was driving people into crypto. The US made owning gold illegal in
the past.

~~~
brucephillips
Really? When?

~~~
blang
[https://en.wikipedia.org/wiki/Executive_Order_6102](https://en.wikipedia.org/wiki/Executive_Order_6102)

~~~
joering2
This keeps coming back to HN. What the order ban is actually hoarding the
gold. Since each dollar was backed by physical gold, people that hoard
physical gold were limiting government with ability to move currency and
relese it as soon as needed. Obviously taking us off gold standard fixed the
problem (by making US an insolvent nation btw)

~~~
dragontamer
"Hoarding gold" was defined as having more than 6-ounces of gold (roughly
$6500 in 2018 USD)

Which basically means gold was dead as an exchange medium after EO 6102. It
was illegal to have more than $6500 (today's money) worth of gold / 5-ounces
or so, so transactions would have to be way smaller than that!!

In 1930s money, 5-ounces of gold was just $100.

------
tyingq
Interested in what someone with deep Bitcoin experience thinks the bottom is
this time, before it starts to rebound...and why.

Edit: Yes! Ggm's request below too.

~~~
jraines
this is a TA based idea, so please know I'm presenting it neutrally with full
knowledge that TA is anathema to this crowd: volume profile at the various
price points suggests somewhere in the 5k range. You can talk yourself into
higher ones, lots of experienced people expect 8k, but to me the "clear"
support is closer to 5k. Who knows, though; I don't claim to.

~~~
tyingq
Appreciate it. Not betting on the situation, just morbidly curious.

------
austenallred
The suicide prevention hotline is pinned to the top of cryptocurrency
subreddits because the price of bitcoin is where it was at the beginning of
last month. Think about that for a minute.

When we really have a bear market people are going to lose their minds.

~~~
olivermarks
Naive speculators are buying cryptocurrencies on their credit cards without
understanding the volatility
[https://www.bloomberg.com/news/articles/2018-01-11/bitcoin-b...](https://www.bloomberg.com/news/articles/2018-01-11/bitcoin-
buyers-turn-to-credit-cards-as-fomo-breeds-risk-taking)

~~~
JumpCrisscross
> _Naive speculators_

The problem with this characterization is when enough people lose their shirts
on leveraged crypto purchases, a problem of individual finances becomes one of
collective policy. I'd be careful with dismissing the problem as one contained
to the stupid.

There was a thread on the front page, earlier, where multiple commentators
were equated the odds of a massive and permanent Bitcoin crash with that of a
meteor impacting the earth [1]. Multiple people honestly could not imagine how
Bitcoin could possibly become absolutely worthless. These are otherwise-
reasonable people who, through a combination of misinformation and FOMO, got
involved in something over their heads.

Korea may be at the point where a 50% sustained drawdown plunges a significant
fraction of the population into hardship. That, in turn, could trigger a
recession. In case it needs to be said, now is not a good time for the Seoul
to plunge into a financial and political crisis.

I've gone from finding this Bitcoin fascinating, to being cautiously weary, to
being outright dismissive, to becoming worried about systemic risks.

[1]
[https://news.ycombinator.com/item?id=16160346](https://news.ycombinator.com/item?id=16160346)

~~~
stcredzero
_I 'd be careful with dismissing the problem as one contained to the stupid._

The subtle genius of the truly stupid, is their unstoppable penchant for
making their problems yours as well!

~~~
spookthesunset
See also: the 2016 US election result and the aftermath that continues to this
day.

------
mtgx
When the media is at peak FUD, you know it's time to buy, just like when it's
at peak hype, you know it's time to sell.

~~~
oelmekki
Wait for the "bitcoin is dead" articles ;) There's still room, anyway, it only
retraced at 0.5 of 2017 rally.

------
kinnth
I always think there will only ever be 21 million bitcoins in existence ever.
Ever. So what do you think is a fair price for that?

~~~
jhwang5
You know miners can just make one software update and change that right?

~~~
nickporter
They'd be mining an altcoin because those blocks would be rejected by the
network.

~~~
jhwang5
Yeah of course but what makes you think the other branch survives? No
guarantees there.

------
blondie9x
All I can say is, finally.

------
mdb333
the real test comes when folks try to withdrawl their fiat...

~~~
GenericsMotors
Just browse [http://reddit.com/r/coinbase](http://reddit.com/r/coinbase) from
the last few months, and you'll get a good idea of what's to come...

------
elmar
Hope we don't see headlines like this one

Atlanta massacre: Broker shoots 12 dead as stock market falls (1999)

[https://www.independent.co.uk/news/atlanta-massacre-
broker-s...](https://www.independent.co.uk/news/atlanta-massacre-broker-
shoots-12-dead-as-stock-market-falls-1109415.html)

Atlanta Day Trader shooting 10 years later (2009)
[https://www.youtube.com/watch?v=Ko3l8BuFsVk](https://www.youtube.com/watch?v=Ko3l8BuFsVk)

~~~
kolinko
So don't republish them, as it encourages copycats.

~~~
elmar
> So don't republish them, as it encourages copycats.

I understand your point, but I think that remembering the past can serve as a
warning.

"Those who cannot remember the past are condemned to repeat it."

I was trading in 1999 and remember very well this story and many other similar
that happened on the 00's and it's been guideline ever-since for me, to always
evaluate your limits and check your sanity.

------
Theodores
I am amazed at the losses given the investment advice that I was given all of
two days ago from a 'bitcoin bore'. I was told to invest all I could afford in
various coins buying one coin so I could then buy the others. I would have
lost 30% of my money in the last 24 hours on the coins needed for the other
transactions, then in those hot coins I would have lost 45% in 24 hours on one
and 44% in 24 hours on the other.

[https://coinmarketcap.com/all/views/all/](https://coinmarketcap.com/all/views/all/)

So said 'bitcoin bore' spent $500 on these coins and shared the advice, there
was no warning that these things could depreciate in value given, just put
what you can on these coins. So simple!

So from my point of anecdata, that is a wrap, we're toast here, this bubble is
truly popping. Sure there will still be people playing musical chairs for a
while but I think we are there in terms of the mania reaching the required
level of craziness for some sanity to take over. Crypto is not the new cool
when everyone knows someone that got scammed.

My friend who gave me the advice has not told me of the losses, that is part
of the deception.

~~~
adamnemecek
Welcome to investing?

~~~
jacquesm
Speculation. Investing is something different entirely, just like the lottery
is different than owning a chunk of a business.

~~~
brucephillips
Eh, there's no hard line between the two.

~~~
jacquesm
No, but there are extremes that can be easily labeled as such and this one is
clearly speculation, not investing.

------
Firebrand
The crypto market keeps going further down because every day there’s hundreds
of articles of "news" reports going with some some doomsday promoting theme.
Just today some scientific report claiming bots were responsible for bitcoin's
rise from $150-$1000, and now the media is taking advantage of everyone’s fear
of a rising China by claiming the PRC will start freezing bank accounts, etc.

Everyone is being played. If you’ve been paying attention to the news for the
past two years know how easy it is to put out fake news articles. You know
that fake news has been used to alter perceptions and maybe mess with
elections. This is no different. Dropping false news reports to mess with
market prices to cause market swings for profit is straight out of the
textbook.

There is quite a lot money at play, and you'd be naive to think that all the
random articles popping up on HN today are intended to do anything other than
instill further panic and sell-offs. Do yourself and everyone a favor, start
spreading awareness of the fake news about crypto! I kinda like this community
and I would hate HN to lose to what is an egregious and coordinated effort to
induce panic and destroy the crypto market.

~~~
stanleydrew
> Everyone is being played.

How do we know that you're not also playing us, just from the opposite side?

