
Bitcoin and cryptocurrency prices have fallen sharply over the last few days - lossolo
https://www.forbes.com/sites/billybambrough/2020/03/12/the-real-reason-behind-bitcoin-ethereum-ripples-xrp-and-litecoins-50-billion-crash/
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unhashable
It's a common misconception that Bitcoin is a safe haven. It's not. Not even
Gold is a safe haven during a liquidity crisis. In sharp downturns, cash is
king.

Think of Bitcoin and Gold as call options on the entire global monetary
system. If Govs become insolvent, Bitcoin and Gold is there. If the masses
lose faith in central banks, Bitcoin and Gold is there. If central banks
debase currencies too quickly, Bitcoin and Gold is there. That is the staying
power of scarcity via well known stock to flow ratios.

I'm glad Bitcoin is not inversely correlated to equities, because that would
mean Bitcoin went _down_ in an equities uptrend. Being non-correlated is
superior: Bitcoin marches to it's own drum.

All this being said: cash is king in times of uncertainty. Bitcoin is a
speculative bet that "money without masters" will become an essential part of
the future monetary system. We're a long way from that still.

Advice in good times and bad: maintain a deep safety net and don't get too
nuts with debt or leverage.

~~~
glofish
bitcoin is not really "there" the same way as gold is.

The whole point of gold is that it is a tangible asset. You can hold gold in
your pocket or under your mattress and it costs nothing to store it. You can't
prove you have bitcoin if you don't have internet access for example. You
can't have bitcoin if miners don't run their nodes. Basically, you are
depending on a resource in faraway lands to let you "own" what you have. What
kind of asset is that?

~~~
unhashable
This is another misconception.

Gold can be held, yes. It also is expensive to verify, transport, and protect.
This has proved problematic for holders of the past. A paper system had to be
built on top of Gold, which severely diluted the value proposition as gold was
confiscated and stockpiled centrally. Practically speaking, very few
individuals hold gold and the utility of doing so is limited when you consider
how liquidity in the gold market functions.

Bitcoin is a different beast. You hold the cryptographic keys (like a
password) which let you move Bitcoin to someone else’s address (under their
password). You don’t trust anyone: Bitcoin is verified by math, not humans. It
is tangible in the same way that owning google.com is tangible (and unarguably
valuable). Bits and bytes exist on a global network and only you can move
them.

When compared to Gold, Bitcoin is interesting because it is highly
transportable, easily divisible, and censorship resistant. Consider this:
Bitcoin let’s you store $1T USD of dollars in your head, transport it anywhere
in the world, and there’s not a single thing anyone else can do about it.

~~~
kaikai
You don't have to transport a heavy metal, instead all you have to do is
ensure an electrical grid, fully functional internet access, and a distributed
network of other people! I'm not sure that's any easier than carry around
metal :P

~~~
unhashable
I see: you’re concerned with a future where the concept of an internet ceases
to exist? I’m afraid money will be the least of our problems then.

~~~
glofish
for me, it not so unthinkable that you could have intermittent access to the
internet (out days at a time), or that some parts of the internet would not be
accessible for extended periods of time

for you it seems that must equate the end of the world where it doesn't matter
anyway.

~~~
unhashable
This is an interesting scenario worth thinking through.

If Bitcoin is forced to go split-brain temporarily, the network could
coordinate to rejoin after the fact. Or, it could stay split in two.

Regardless, infighting over which network was “the real Bitcoin” would ensue.
See Bitcoin Cash and friends.

~~~
sparkie
A "rejoin" isn't really possible. People who spent money on the "wrong" chain
will simply have to live with the fact that their money is lost on the "right"
chain, although it will probably not be an overnight thing. The two forks
could exist for a long time after the split simultaneously, and many merchants
may accept either form of payment. There will even be arbitrage between the
two chains as profit can be made.

Ultimately, one chain will come to dominate the other, and the ones who fight
hardest for it to be their chain will probably find they're on the wrong one.
That's because people on the right chain will not need to fight about it.
They'll just be running their software as they've been doing till now, and it
will pick the correct chain for them. The ones screaming "you need to download
a new client" will proceed in destroying their own reputations.

~~~
unhashable
So which is more likely: severe debasement of USD or the devolving of the
global internet (ala an increase of firewall-ism by nation states)?

~~~
gerikson
In my opinion: the latter.

~~~
unhashable
You think the internet is going to be compartmentalized before USD is
devalued?

Fed is printing $4T this week!

~~~
unhashable
Update: Fed just committed to unlimited liquidity injections through money
creation. USD debasement is now a guarantee.

Welcome to the new normal.

[https://twitter.com/apompliano/status/1238463895095869440?s=...](https://twitter.com/apompliano/status/1238463895095869440?s=21)

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ErikAugust
One of the supposed benefits of holding cryptocurrency that has been peddled
is that it is a strong hedge against a down turn in traditional securities.
Here we have a new, real data point to the contrary.

~~~
Ididntdothis
Since almost nobody is using Bitcoin to pay for things it’s just a giant
speculative thing. It’s not a safe haven.

~~~
flashman
People are using bitcoin to pay for cash, and vice versa. Besides drugs,
that's its primary purpose.

~~~
tehlike
What's the payment volume ;)

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zionic
I have to say, the crypto market's strong ties to traditional finance in this
crash surprise me. I understand selling off stock because of expected
corporate losses, I don't understand mass conversions to FIAT especially when
"print more money" seems to be the fed's response to this.

~~~
majormajor
My take on the selloff is people looking for liquid cash. Very similar to
stockpiling home supplies. People are looking for stuff they can use or trade
in the very short term because they don't know how bad it would get. It's a
lot harder to do that today with crypto.

I haven't seen anyone with strong reason to believe that companies are gonna
be that much worse off a year from now than they were a month ago, or for the
four years after that, so I don't see a reason to sell stocks based on
expected company performance anymore than to sell crypto - but in the short
term, everyone's stockpiling immediate goods.

~~~
isk517
I wouldn't be surprised if there was significant amount of sell off occurring
because people are looking to start stockpiling home supplies. I've known more
than a few conspiracy minded people that collect crypto currencies due to a
belief that it will be a safe haven in the event of a government collapse, and
the current Corona virus panic is probably causing a lot of them to realize
that all of the bitcoin in the world may not be enough to get you a single
roll of toilet paper if that time ever came.

------
csomar
I actively trade crypto. Today's crash was due (from what I'm seeing) to a
massive Bitmex contract liquidation (probably in the $100m-300m range). The
market, with panic, couldn't get the price in sync across all exchanges. At
some point the difference between two exchanges is close to $1000/btc. Very
profitable if you know what you are doing. You can AMA.

~~~
OGWhales
I saw that the large majority today was lost on longs, with shorts being much
less active. Do you believe it’s likely that the crash was intentional with
the large exchanges pushing the price down on various exchanges to make money
off the leveraged longs? Obviously panic plays into this as well.

I’m not one to get involved in any type of trading personally, as I don’t
trust myself, so this is outside of my space. Please excuse and correct me if
I misused any terminology or don’t understand stuff. Some of my family is
heavily invested in crypto, so I like to know what is going on.

Anyway, does my assessment sound accurate to you? I would love to see you
expand on this.

~~~
csomar
> I saw that the large majority today was lost on longs, with shorts being
> much less active.

Given that Futures now have the most open interest, I'd say the long/short
ratio is practically equal these days in Bitcoin land.

> Do you believe it’s likely that the crash was intentional with the large
> exchanges pushing the price down on various exchanges to make money off the
> leveraged longs?

No. Only bad traders will say that! I don't think there is any kind of price
meddling from the exchanges themselves. Any exchange that does that will end
up burning to the ground eventually (and there were exchanges that did that).
The reason is, a single exchange will unlikely be able to move the price to
the sought after direction. Given that trading is distributed through multiple
exchanges that are in different jurisdiction, I can hardly see them colluding
to manipulate the price.

> Some of my family is heavily invested in crypto, so I like to know what is
> going on.

God help them.

~~~
OGWhales
Do you really not see what bitfinex is doing?… it’s almost painfully obvious
they are manipulating the market.

------
jaltekruse
I still assume it is possible and likely that something like cryptocurrency
will eventually become incredibly valuable, but I see that happening only when
technical and social hurdles are overcome to make it as widespread and
scalable as the current credit card system for everyday transactions.
Unfortunately for current cryptocurrencies, they just don't have what it takes
to compete with decades of trust to get everyone to put their daily spending
money in them, that is what will make a future system valuable. The current
role they play as a speculative investment seems quite silly to me, literally
they only thing they are good for is transactions, if you can't do that
effectively I don't see value in the tokens at all.

Imagine if someone started a stock exchange and listed a single stock, their
own, the stock for the exchange itself, and no one else's. While you can buy
some things with bitcoin or ethereum, it's nowhere near widespread, so that
really seems to be effectively what it functions as for now, which looks very
bizarre on its face. Unfortunately for the people who do want to get rich, if
there is an eventual winner in crypto, their rise will probably look something
like what we see now, limited buy in from speculators followed by some
inflection point, so it's entirely possible buying this dip of ethereum or
some other coin might be the right thing, but I'm just not sure any of them
are ready yet. Even with SegWit and other stuff happening in bitcoin, it just
isn't clear to me that becoming a cash or credit card replacement system is
even the goal anymore, which seems like they are just riding on their first
mover advantage to prop up the value more than anything at this point.

Note: reposting this from the stock trading halt discussion after its parent
appears to have been deleted.

~~~
gwbas1c
> I still assume it is possible and likely that something like cryptocurrency
> will eventually become incredibly valuable

Probably, but whatever it is, it won't be Bitcoin and some magic software
updates won't make your Bitcoins turn into whatever cryptocurrency-ish thing
wins.

The other thing to remember is that cash doesn't appreciate in value. (In the
US, we typically have 4% inflation every year.) If a cryptocurrency is going
to work for day-to-day commerce, its value needs to be rather steady. (Either
low inflation or low deflation.) This means you can't just stick a bunch of
cryptocurrency in your wallet and expect it to make you rich overnight.

(Note: We don't have a lot of experience with deflation as "normal" in modern
economies, so if crypocurrency comes with low deflation, like we have low
inflation, we'll all have to adjust our expectations with money.)

~~~
jaltekruse
Absolutely agree, if you can't represent some of your resources in it and have
any idea if you'll be able to spend it somewhere near at the value you put in
at, there's just no incentive to use it as a means of exchange. Kinda makes
tether seem like a good idea if I wasn't so worried it's a ponzi scheme.

------
ackbar03
I've been trying to avoid looking at my bitcoin portfolio lol. I agree the
volatility in its price makes it far from ideal as an alternative currency.
That being said what keeps me invested (a relatively small portion) is looking
at places like Venezuela and a few other pockets of areas where the monetary
system has collapsed or undergone hyper-inflation, bitcoin is being used as a
means of exchange, albeit still rather limited. That goes to show the proof of
concept works. Hence I think there is somewhat of a chance that there could be
a more widespread use case for it, especially as the ecb and possibly the fed
start flooding the markets with liquidity again.

~~~
webninja
I hold a small amount of it and BSV as a hedge against the Fed flooding the
market with liquidity too. Emphasis on small amount.

Crypto usually rallies when the Fed undergoes extensive QE for a long period
of time but the current popular crypto’s have flaws.

------
jiveturkey
> Last Saturday, ahead of the traditional market rout caused by Opec,
> PlusToken scammers moved a little over $100 million worth of bitcoin to so-
> called mixers, designed to disguise the origin and destination of the coins.

> The fraudsters may have then sold off the bitcoins, causing prices to fall
> as supply flooded the market, according to Singhal.

May have? Is this anything more than pure speculation? I mean, I am a very,
very big fan of using time to correlate events ("what changed"), so the mixing
is certainly a signal, but how good of a signal? Why highlight PlusToken vs
bitcoin holders en masse wanting to get cash out thanks to the market
downturn?

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m3kw9
Crypto crashing at a time like this is actually tell me its true colors

~~~
OGWhales
That the crypto market is largely controlled by the exchanges?

------
sna1l
Bitcoin market is like the regular equities market...without the halting
capabilities

~~~
adventured
> Bitcoin market is like the regular equities market

No it's not. The Bitcoin market is the exact opposite: it's unnecessary and of
little consequential tangible value to the real economy. The regular equity
markets have a large share of the productive output of nations behind them,
including the employment and taxation that goes with that. Companies that
actually produce goods and services. In many cases goods and services that
people and other businesses have to purchase or otherwise heavily depend on.

None of that is true about Bitcoin. It could disappear tomorrow and other than
the lost capital trapped in it, it wouldn't matter in a meaningful way; and it
wouldn't matter at all to the average person. The masses of people do not need
it, they do not depend on it. Government revenue does not depend on it. The
lives of billions of people do not depend on it.

Now, for comparison, shut down the top five farm tractor manufacturing
companies. Shut down Airbus and Boeing. Shut down Walmart, Costco, Target, and
Amazon. Shut down every dental office. Shut down every auto manufacturing
company and witness the industrial effects including unemployment. Close every
power plant. Shut down the telecom companies and every media company. Shut
down every publicly traded energy company. Close every publicly traded bank
and financial firm. Close every publicly traded agricultural company including
the major food producers.

Compare that to Bitcoin vanishing tomorrow. _By comparison_ , it would have
zero consequence, it would not matter at all in any grand scheme of things.

~~~
gwbas1c
> It could disappear tomorrow and other than the lost capital trapped in it,
> it wouldn't matter in a meaningful way; and it wouldn't matter at all to the
> average person.

That's because Bitcoin is a zero-sum game. No value is created or lost, it's
basically just a big game of poker.

~~~
backupcavalry
This. Stocks can still generate dividends. The only way you 're making money
from Bitcoin investments is if some other sucker buys it off you for more than
you spent.

------
d-d
It will be interesting seeing how cryptocurrency performs during and after
worldwide panic surrounding the coronavirus, the fed printing a trillion USD
and so forth.

I was astonished when Bitcoin rose above $30 so calling it a "crash" at $6,000
might be somewhat accurate short-term, but anything over $0.00 for randomized
bits on a hard drive will always seem bananas to me.

~~~
JTon
Europeans of old thought the same when they saw the Chinese using paper money
as a medium of exchange :) I do understand your point though

------
vidanay
Wait...aren't crypto currencies supposed to be the favored monetary instrument
during times of crises?

~~~
darawk
It depends on the nature of the crisis. In a monetary crisis, yes, probably.
But this is a bit different than that.

~~~
ppf
If there is any correlation between current events and bitcoin price, then we
have both a monetary and an existential crisis happening. What other crises
would bitcoin be useful in?

~~~
darawk
Purely as an asset Bitcoin is _probably_ a good hedge against inflation of the
dollar. If you expect high inflation, owning Bitcoin is probably a reasonable
way to protect against that.

------
shiado
I have made a large amount of money trading cryptocurrency over the years.
This correlation is spurious at best. These stories are so wrong it is
hilarious. The price action of crypto is unlike any other market. What we have
seen over the last month is massive legs down caused by whales flooding the
market at specific times. These bart patterns are so obvious I can't believe
people can't draw these incredibly easy to see conclusions. Crypto is pure
manipulation. This coronavirus panic happens to coincide with a period right
before the block reward halving where it is in the interest of miners to drop
the price as much as possible as to make the mining operations of competitors
infeasible leaving them with a larger slice of the mining pool.

~~~
sparkie
Ok, this is completely silly. No miners have the luxury of the price dropping,
as it could make all of them insolvent. They depend on Bitcoin's exchange rate
increasing so that the revenue generated from the block reward exceeds the
cost of electricity to run the miners. They're not working large enough profit
margins to take such risks.

It's non-workable anyway. If any miner has to drop out of the race, they still
have an inventory of mining equipment to auction off. The highest bidder is
simply going to put that equipment to reuse immediately, so there will be no
meaningful reduction in overall hash rate. Any miner who attempted to cause
the price of bitcoin to slump has simply shot themselves in the foot.

If the dollar cost of Bitcoin does not continue to increase sufficiently over
time, Bitcoin is dead and _every_ businessman who took out loans to buy mining
equipment is going to default.

~~~
shiado
Long term large scale miners with massive reserves of BTC (you could literally
get 50BTC for ten minutes of CPU mining on your laptop when BTC started) can
crash the price on a whim with a small percentage of their reserves due to the
lack of volume in the BTC market in combination with the liquidations from
ridiculous amounts of leverage people are using in crypto (binance and bitmex
are >100x to unqualified investors) which causes accelerated declines when the
price drops even slightly. They can use this as a short term strategy to force
miners with less profitable operations (higher electricity costs, worse
equipment) to liquidate their coins at a lower price and cease mining
temporarily allowing the more profitable miners to enjoy less competition and
the ability to buy the coins at a reduced price. Even if the operation starts
up again after the market pumps the superior miner has increased their
proportion of coins allowing them to swing the market even greater, and sell
coins to get better equipment (the newest bitmain miners), and the bagholders
who bought the worse equipment or have more expensive electricity naively set
themselves up for failure. The entire crypto space relies on long term pumping
and dumping as well as short term "barting" to liquidate leveraged traders. I
didn't even mention bitmain patent fuckery and the likely collusion of key
players with the BTC devs to purposely not scale BTC to increase transaction
fees which benefits miners. The whole thing is a disgusting mess and I don't
touch it anymore. Do not fuck with cryptocurrency. It is entirely bought and
paid for.

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3fe9a03ccd14ca5
It’s amazing that _anybody_ believed these cryptos were any kind of hedge
against the market. It was pure speculation. Always was.

~~~
notyourday
I believe you mean gambling, not speculation.

------
mrlala
Hopefully this starts to kill the notion that crypto is some magical thing
that people should gamble with.

If it can't go up during a global crisis or EVEN be resilient.. then it's
proven it's just a house of cards.

Crypto technology itself has value, but not in most of it's current forms as
some magical gambling currency/asset.

------
hurricanetc
There is zero value in crypto as a currency with this kind of volatility. It
would be equivalent to trying to buy coffee at Starbucks with shares of Boeing
stock.

------
strin
The fact that Bitcoin is marketed as the “new gold” is a double-edged sword.
Because of the hype, it’s too volatile to become gold.

------
edf13
Some of this could be you can’t spend crypto to buy food in a crisis... cash
is still king.

When everything gets locked down cash is what you need

~~~
SuoDuanDao
Funnily enough, farmer's markets are some of the few places I've seen 'crypto
accepted' signs in my city.

------
thefounder
Bitcoin is so 2009...how do we still have news about it? Are there people
still waiting for an "exit"?

------
econcon
Where is all this cash going? If stock is down, crypto is down. Where is all
cash?

~~~
0x1221
It's in cash.

------
iamaelephant
People still talk about Bitcoin as though it's a real market and not
completely manipulated by a handful of key players? Ok then.

~~~
dntbnmpls
That's true of the stock market and every other market. For stocks, a bunch of
market makers of major financial firms set the "market" for these stocks. The
same for forex, commodities, you name it.

------
elorant
I hope this whole madness will come to an end so that GPU prices will start
deflating.

~~~
netsharc
(Pick an appropriate meme template)

GPU prices goes down...

As China is shut down and can't make mew GPUs.

Linus Tech Tips has a good video what the shutdown affects: it suppliers of
suppliers are slowed down due to quarantine, then they're in trouble too:
[https://www.youtube.com/watch?v=SPoPwrQwm_g](https://www.youtube.com/watch?v=SPoPwrQwm_g)

------
shadowprofile77
All of the crypto fans and hardcore fanatics kept saying it: "Bitcoin is
digital gold don't you know? It's what's going to shoot to the moon as all
that terrible icky fiat collapses in a major crisis! You just wait and see"..

Well here we are. certified 100% organic Unfolding Global Pandemic and the
cute bonus of teetering on the brink of a global recession. And what does
Bitcoin do with all the rest of its cousins?...... It simply shits the bed.

This was your shining moment crypto, and so far you've turned out even worse
than the stock market.

