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Anyone regularly follow cryptocurrency and have an idea on where it's headed. Bitcoin down over 10K this week, it sort looks like mass liquidation at this point. Where it settles will be interesting to see. Any thoughts?

Stage Analysis posted below today:

"Some crypto breadth stats
81 of the 149 crypto coins listed on stockcharts had a drop of more than -20% today
24 had a drop of more than -30% today
4 had a drop of more than -40% today"

If I may add a question, why is bitcoin tracking down with the general stock market? What is the connection from an economic or human behavior point of view?

The final nail in the coffin might be high energy prices. It's hard to imagine a more wasteful use ''mining'' nothing from nothing.

Good ridddence to it all.

@sky The narrative is as institutional investors have come in, they trade crypto like a risk on tech asset.

My guess it can probably drop another 30% (so 20k-ish landing point). But that’s a total guess.

chenda wrote: ↑

Thu May 12, 2022 3:02 am

The final nail in the coffin might be high energy prices. It's hard to imagine a more wasteful use ''mining'' nothing from nothing.

Good ridddence to it all.

It is probably less wastefull, than any other way of enforcing a value reserve. btc disapearing would be quite a bad new, wether you own any or not.
only people that would profit of btc disapearing are those controlling other value reserve.

Without a comment on BTC being "good" most of economy is "waste" if one assume the value wanted would otherwise exist anyway.

Police is waste when people could just not do crimes

It just seems a very frivolous use of energy given the current circumstances.

The less money we send to murderers and rapists the better.

I hold no crypto.

Since we are talking about an unregulated financial instrument, heavily marketed to naive retail investors, I have a hard time celebrating the drop. Yeah, there are speculators. There are miners. But there are also average people making their best effort to build financial security. Losing so hard, so quickly is devastating. I feel for them.

I do hope market conditions accelerate the push from proof of work to proof of stake.

Scott 2 wrote: ↑

Thu May 12, 2022 8:47 am

But there are also average people making their best effort to build financial security. Losing so hard, so quickly is devastating. I feel for them.

So do I. As they say, letting children play with knives never ends well.

@Chenda
Have you considered how much less energy consumption and environmental destruction btc contributes to than any other economic system at securing property rights? Compare it to the US military. Also consider that it needs to be extremely cheap energy to compete, meaning it’ll be energy sources far from cities that are typically wasted electricity due to the cost of transporting electricity and that it consumes a far larger amount of renewables than is expected.

The fed tightening interest rates coupled with the Luna-Ust attack contributed to this capitulation. Prices down is a good thing in this case. Clears out the garbage. Creates fascinating studies. Humbles. Gives opportunity to buy cheaper. Transactions are cheaper. Risk tolerance tested.

Network hasn’t been down once since the value overflow bug prior to the first halving for btc and has been honest since the maker dao hack for eth. Both are foundational to secure digital property rights.

Expect a lot of scams to die over the next few years. I’m holding just btc, eth, and under 1% in alts at this point. Praying for 10k btc. We’ll see if I’m lucky enough to get it.

Humanofearth wrote: ↑

Thu May 12, 2022 11:23 am

@Chenda
Have you considered how much less energy consumption and environmental destruction btc contributes to than any other economic system at securing property rights? Compare it to the US military.

We will still need to enforce ownership of real property through physical force. Cryptocurrency, even more than standard fiat money, is as intrinsically worthless as a banknote or coinage.

chenda wrote: ↑

Thu May 12, 2022 12:09 pm

We will still need to enforce ownership of real property through physical force. Cryptocurrency, even more than standard fiat money, is as intrinsically worthless as a banknote or coinage.

People born after 1990: internet, fish, water, swim in?

Just from a historical perspective, currencies have been rare && had zero intrinsic value. This is because the purpose of currency is to trade. Therefore, it can't have utility-value because if it did, it would be used up, and that creates a cost on the currency. As such, currency is an intersubjective convention: "Do you believe that the other person you want to trade with will take your currency?" They more likely will insofar they believe the same thing you do (that they too can find another person for the next trade). This social belief comprises the full value of a currency.

The question going forward is what is the water that we swim in. Fiat credit swims in the waters of nation states and banks. Crypto swims in the waters of hi-tech chips and electricity. Gold swims in the waters of being pretty and shiny.

btc is a currency that no one can forbid you to transfer. This is a huge value proposition. Your bank account only relies on your bank. Your cash only rely on the state that enforce it. (and those both instituion have a huge energy usage). BTC doesn't rely on any of it. It is an asset that no single actor could separate you from.
This is the best currency that was ever available to humans.
It allows you to move your money to a place where the physical property you'll buy is safe.
People that bought bitcoin still have their bitcoin, they still "own" the same fraction of the network, if they bought because they think this network has value, they lost nothing, if they bought because they expected to sell at a higher value without thinking the network had any value, they lost their money to greed. (they could still keep it, unless they overleveraged... this should be strongly advised against in school, but some people like to lend money to people that don't understand what it means)

Right, money is just make-believe, a convenient fantasy to enable trade. Kinda clever really.

I mentioned on another thread that crypto is rather like bearer bonds, and will probably go the same way soon. There was some story of a basement which got flooded somewhere and destroyed bearer bonds nominally worth $90 billion or something. Of course it was all worthless, as the companies had long since disappeared or the bonds had been rendered unlawful.

Though I suspect electronic money will replace physical cash very soon. I can't remember the last time I used coins to buy anything.

Jean wrote: ↑

Thu May 12, 2022 12:49 pm

btc is a currency that no one can forbid you to transfer.

But what worth is it, if no one (or limited amount of persons) are interested to have it and exchange it like a currency?
I mean, I understand it might have some advantages over other currency, but those advantages doesn't mean automatically it becomes (in all circumstances) a better currency as it also has its disadvantages?

@Jean and @Rube are both hitting on something I've been wondering for a few months. Can financial innovation be part of the value of cryptocurrencies? It's certainly part of why we use currencies to begin with. It moves away from the problems with the barter system. How much value do smart contracts or cryptographically securing transactions add if any?

Cryptocurrency feels a lot like 19th century money. Bank runs and systemic crashes used to occur on a regular basis. What is surprising to me is not the crash due to a clever raid but that more runs/systemic interaction events have not occurred. The past does not repeat but it does rhyme with the future.

Can we stop using the misnomer “cryptocurrency” already? A currency needs to be a stable store of value, which crypto clearly is not. It’s considered a disaster when USD loses 8% of its value in a year, but when a flagship crypto “currency” like Bitcoin loses 20% in a week no one bats an eye. No fiat currency in the world is as volatile as these crypto “currencies.”

Let’s just call it what it is: a speculative asset, much like gold, the only difference being that gold bugs are honest that they’re speculating on gold rising in price, not trying to sell it as an alternative currency. Promoting crypto as an alternative to fiat is like selling rare model cars as an environmentally friendly alternative to gas automotives because the model cars don’t emit any emissions. Sure, the model car may have value and won’t trash the planet, but can you actually use it to drive to the grocery store?

To address the post above about the energy-burning US military backing dollar stability, even if the US military disappeared overnight and the dollar, euro, and the yuan became locked in a struggle to be the global reserve currency, each of those currencies would still be far less volatile than Bitcoin, because they’re backed by governments that actually know what the hell they’re doing.

“Cryptocurrency” is just a marketing term used to dupe the hoi polloi and entice amateur investors, hence why crypto is often called (accurately imo) a Ponzi scheme.

chenda wrote: I can't remember the last time I used coins to buy anything.

The fifth graders I am teaching can't identify U.S. coins or their value. So, world of the near future will probably have to have automatic change dispensers for the rare cash bearing customer at corner convenience mart.

7Wannabe5 wrote: ↑

Fri May 13, 2022 6:15 am

The fifth graders I am teaching can't identify U.S. coins or their value.

Some Europeans in some European countries haven't used cash for years. OTOH, do these fifth graders have credit cards or do they just never pay for anything themselves?