Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Bitcoin Crash?

Bitcoin and Nasdaq Comp are said to be correlated now. Looks like Bitcoin crashed - look at today + recent days.
https://stockcharts.com/h-sc/ui?s=$BTCUSD&p=D&b=5&g=0&id=p03818639492

Comments

  • edited May 9
    Then there's this...

    https://www.cnbc.com/2022/05/09/what-is-terrausd-ust-and-how-does-it-affect-bitcoin.html

    https://www.fastcompany.com/90750443/as-crypto-crashes-terra-usd-wobbles-shaking-the-foundations-of-algorithmic-stablecoins?partner=rss

    NB: 'algorthmic' stablecoins like this are worse than playing with fire, imho -- and should NEVER become a 'reserve' currency considered a 'stablecoin'. At least the stablecoin I hold, GUSD, is backed 1:1 with (monthly) audited dollars held at banks like State Street, isn't 'algorithmic' funny money. and the exchange (Gemini) is transparently regulated by NYS and others.

    Edit: Tonight I closed out a mid-5-figures position in GUSD that was being lent out to institutions at 6.9%. Reason? Not sure if Genesis (the lender that Gemini works with for its Earn program) is lending to any of the institutions involved w/the TerraUSD fiasco, which could snowball rapidly. Once things settle, I'll move the $$ back into Earn, but ... better safe than sorry. Return OF capital is more important right now than return OF capital, especially when it's being loaned out.

    "If you're the first one out the door, that's not panic."
    - Dick Tuld, from 'Margin Call'
  • El Salvador buys the Bitcoin dip.

    Link
  • edited May 9
    Look at $UPST 400--> 45
  • Fun times for all, but really fun times in certain parts of cryptoland...
  • Yesterday Bitcoin dipped momentarily below $30,000 but have rebounded off that low this morning. COIN is following a similar pattern but may be 2x volatility. This is a good sign because the stocks, especially Nasdaq Comp, are correlated with cryptos. The US pre-markets are also showing modest bounce too. But this is just 1 day.
  • Yesterday Bitcoin dipped momentarily below $30,000 but have rebounded off that low this morning. COIN is following a similar pattern but may be 2x volatility. This is a good sign because the stocks, especially Nasdaq Comp, are correlated with cryptos. The US pre-markets are also showing modest bounce too. But this is just 1 day.

    The bounces have not been sustained in recent weeks. So I don't trust today's mild bounce, either.
  • I don't know. But CME May 2022 Bitcoin contract high was $60,093 on 11/29/21 & low overnight was $29,700. That is 50%+ retracement & then a strong bounce. Worth keeping an eye on the bounce and any low-retest. https://www.cmegroup.com/
  • I don't know. But CME May 2022 Bitcoin contract high was $60,093 on 11/29/21 & low overnight was $29,700. That is 50%+ retracement & then a strong bounce. Worth keeping an eye on the bounce and any low-retest. https://www.cmegroup.com/

    Good points -- though I was referring more to the equities bounce. TBH I don't regularly follow crypto since I don't trade it.
  • edited May 10
    Sue Keenan, a late night commentator on Bloomberg TV, compared the drop in crypto to the recent stock market selloff - implying they were somehow related and both expected to behave in similar fashion. That doesn’t make sense to me. Isn’t Bitcoin supposed to be a currency with a stable value? Whereas stock markets are expected to move up and down reflecting the health and profitability of businesses at different times in the business cycle. One is a currency. The other is assuredly not.

    I don’t pay much attention to Bitcoin, but did come across a good article today in the WSJ. Sounds like
    it lost about half its value in short order. Ouch!
  • edited May 11
    Schwab's Liz Ann Sonders has posted a chart of the correlation between Bitcoin and SP500 on Twitter. My guess is that the correlation is even higher for Nasdaq Comp. So, whether one has Bitcoin/cryptos or not, it is worthwhile keeping an eye on them - that is speculation supreme and that is what is disappearing from the market lately. https://twitter.com/LizAnnSonders/status/1523977333971034115/photo/1

    image
  • hank said:

    Sue Keenan, a late night commentator on Bloomberg TV, compared the drop in crypto to the recent stock market selloff - implying they were somehow related and both expected to behave in similar fashion. That doesn’t make sense to me. Isn’t Bitcoin supposed to be a currency with a stable value? Whereas stock markets are expected to move up and down reflecting the health and profitability of businesses at different times in the business cycle. One is a currency. The other is assuredly not.

    I don’t pay much attention to Bitcoin, but did come across a good article today in the WSJ. Sounds like
    it lost about half its value in short order. Ouch!

    Some cryptocurrencies are intended to be 'stable' as in 'stablecoins' -- things like GUSD and others that are 1:1 pegged to a dollar and are always worth $1 and/or might fluctuate by a thousandth of a cent either way. By contrast, BTC is not pegged to anything and moves like anything else you might trade --- eg stocks or futures, so its value fluctuates and can fluctuate wildly. And don't get me started on the 'algorithmicly-pegged' (read: VERY FUNNY MONEY) cryptocurrencies masquerading as stablecoins ... those indeed are vaporware-based weapons of financial destruction as we're seeing with the TerraUSD/Luna s**tstorm this week.

    If I was bored, I'd consider trading Bitcoin/BTC versus playing with forex. But I'm not bored, so I don't.

  • edited May 11
    Private guarantees for current stablecoins are only as good as their guarantors (until the next run). Wait for the US CBDC for real guarantees (there are some around already, digital-yuan, etc).
  • edited May 11

    Private guarantees for current stablecoins are only as good as their guarantors (until the next run). Wait for the US CBDC for real guarantees (there are some around already, digital-yuan, etc).

    Sure. But I still put greater faith in those coins (esp if they're regularly audited and regulated)[1] than those based/pegged to algorithms, insane cross-currency complexity, or needing the good will of the currency's single 'founder' to keep injecting money to try and prop it up during periods of volatility. (Though that model has worked for the USG since the GFC, but that's another story...but then again, the USG has borders, a military, and tax base while TerraUSD/Luna/Anchor does not.)

    [1] I still consider crypto risk levels to be akin to junk bonds or futures contracts. So YMMV and caveat emptor, obviously.
  • Bitcoin crash continues....

    Stablecoins are anything but "stable". First there was one that sank, now there is another that broke the buck. Private guarantees are not limitless. People didn't learn anything from pre-Fed and pre-FDIC experiences with dollar and bank runs.

    Coinbase/COIN bankruptcy rumors were just that. Social-media nitpicked on the new boilerplate language required by the SEC. No surprise - as that would apply to banks without FDIC insurance and brokerages without SIPC insurance.
  • Happy to see the not-insignificant amount of crypto I lent out has been returned to my account and now sits in USD intact. Not that the Terra fiasco directly impacted me, but I'm out of the arena until things settle down. Counterparty risk and all that.

    Reassuring start to the weekend!
  • edited May 13
    Re: @yogiebearbull “Coinbase/COIN bankruptcy rumors were just that. Social-media nitpicked on the new boilerplate language required by the SEC. No surprise - as that would apply to banks without FDIC insurance and brokerages without SIPC insurance”… Agreed.

    CFO of Coinbase did a nice job explaining on Squawk Box this am. Every individuals assets are recorded and kept on separate ledgers. The disclaimer info that the media was focused on was just standard legalize that they feel is needed because of the unknown of what a judge may rule. There’s not a lot of case law on crypto. But would a judge really rule against all of the individual holders? Not likely. Because they are not held in custody accounts like Institutions… they are not as protected but… it also means that individuals have less restrictions in trading and moving funds around. Wish I had the link. She did a good job explaining it. Here’s a Barron’s story highlighting the risk.

    Barrons https://bit.ly/3MdoOAE
  • BoA compares crypto-crash to 2000 dot. com bubble burst and 2008 GFC.
    https://finance.yahoo.com/news/crypto-crash-rivals-both-internet-145746083.html
  • edited May 17
    Following are edited excerpts from a column today by Paul Krugman.
    Last week TerraUSD, a stablecoin — a system that was supposed to perform a lot like a conventional bank account but was backed only by a cryptocurrency called Luna — collapsed. Luna lost 97 percent of its value over the course of just 24 hours, apparently destroying some investors’ life savings.

    The event shook the crypto world in general, but the truth is that this world was looking pretty shaky even before the Terra disaster. Bitcoin, the original cryptocurrency, peaked last November and has since declined by more than 50 percent.

    We’ve all heard of them, but what exactly are cryptocurrencies? Many people — including, I fear, many people who have invested in them — probably still don’t fully understand them. Saying that they’re digital assets doesn’t really get at it. My bank account, which I mainly reach online, is also a digital asset, for all practical purposes.

    What’s distinctive about cryptocurrencies is how ownership is established. I own the money in my bank account because the law says I do, and the bank enforces that legal claim by requiring, one way or another, that I prove that I am, in fact, me. Ownership of a crypto asset is established through what’s known as the blockchain, an encrypted (hence the name) digital record of all previous transfers of ownership that supposedly obviates the need for an external party, such as a bank, to validate a claim.

    In the past, cryptocurrencies kept going up by attracting an ever-growing range of investors. Crypto was once held by a small clique that often had the feel of a cult, motivated in part by a combination of libertarian ideology and fascination with the clever use of technology. Over time, rising crypto prices drew in large numbers of additional investors and some big Wall Street money.

    And in the past year or so, crypto marketing has gone really mainstream, with endorsements from celebrities — including Matt Damon, Kim Kardashian and Mike Tyson — not to mention political figures like Mayor Eric Adams of New York and the (unsuccessful) Republican Senate candidate Josh Mandel, who declared his intention to make Ohio “pro-God, pro-family, pro-Bitcoin.” Given all this, it’s hard to see who else there might be to recruit into crypto investing.

    In any case, as we look forward, the value of cryptocurrencies will have to rest on their underlying economic uses, which are …

    Well, that’s just the thing. I’ve heard many discussions in which crypto supporters have been asked exactly what economic role crypto can play that isn’t more easily and cheaply achieved through other means — debit cards, Venmo, etc. Other than illegal transactions, in which crypto may sometimes offer anonymity, I have yet to hear a coherent answer.

    As it is, cryptocurrencies play almost no role in economic transactions other than speculation in crypto markets themselves. And if your answer is “give it time,” you should bear in mind that Bitcoin has been around since 2009, which makes it ancient by tech standards; Apple introduced the iPad in 2010. If crypto was going to replace conventional money as a medium of exchange — a means of payment — surely we should have seen some signs of that happening by now. Just try paying for your groceries or other everyday goods using Bitcoin. It’s nearly impossible.

    And I have a fundamental question: OK, I buy a couple of "cryptocoins", thus converting standard issue "money" into an electronic record-keeping environment. So what exactly is supposed to make this magic cryptocurrency increase in value other than a ponzi-scheme dependent upon ever increasing numbers of new "investors"?

Sign In or Register to comment.