Bitcoin Fall Extends to 25% as Fears of Crackdown Linger • Hacker News Board

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#121

Post by josephg » Tue, Jan 16, 2018, 11:12 PM UTC

vthallam wrote: post #108

komali2 wrote: post #94

Earlier quoted context omitted.

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."

You would call it an investment, if the USD-YEN prices are so volatile and give you 1000X profit in 6 months. Again, this all goes back to whether Bitcoin is a store of value or a medium of exchange. By now it's very clear, it can't be medium of exchange.

People keep saying that, but the lightning network is in testing at the moment and when it gets widely deployed we should start seeing near zero transaction fees on the bitcoin network.

You can say what you want about the philosophy of that - the lightning network will add yet another group of people who collectively have an outsized control over the network. But if the scaling issues get addressed I don't see any reason why it couldn't work as a currency. And it looks like they are being (slowly) addressed.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#122

Post by slindz » Tue, Jan 16, 2018, 11:12 PM UTC

komali2 wrote: post #94

vthallam wrote: post #7

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…

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."

Well, the circulation limit/deflationary part is pretty key to that. How many dollars/yen/what-have-you are printed every year leaving your existing dollars/yen/what-have-you with less buying power?

Thinking the world will flock to a fixed pool of frictionless digital exchange does not seem insane to me. I'm talking about the ones you can transact for less than a penny (BCH), not the old guard (BTC).

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#123

Post by colemannugent » Tue, Jan 16, 2018, 11:13 PM UTC

spookthesunset wrote: post #64

dahdum wrote: post #56

Earlier quoted context omitted.

Fun chart from Reddit today: https://i.redd.it/dnlduddb5ha01.jpg

I love that it is a classic bitcoin log chart designed to hide the massive volatility of bitcoin. The financial prowess of the average bitcoin "investor" never ceases to amaze. As they say, a sucker is born every minute and a fool and their money are soon parted...

>classic bitcoin log chart designed to hide the massive volatility of bitcoin

No, it's not designed to hide volatility, it's designed to show a quick overview of the long term changes of Bitcoin. Logarithmic scales are incredibly useful when you have very fast rate of change. Look at a linear chart of Bitcoin over the same range, it's not very useful.

You can quickly see from this chart that Bitcoin is still on a massive tear, though the annotations are a bit cheeky.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#124

Post by joosters » Tue, Jan 16, 2018, 11:13 PM UTC

bdcravens wrote: post #35

austenallred wrote: post #19

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.

> The suicide prevention hotline is pinned to the top of cryptocurrency subreddits Which ones? I checked r/bitcoin, r/btc, r/ethereum, r/litecoin, r/bitcoinmarkets. Only one I saw with it was r/cryptocurrency

r/buttcoin, one of the sanest cryptocurrency subreddits out there in this blockchain madness.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#125

Post by gruez » Tue, Jan 16, 2018, 11:13 PM UTC

bdcravens wrote: post #35

austenallred wrote: post #19

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.

> The suicide prevention hotline is pinned to the top of cryptocurrency subreddits Which ones? I checked r/bitcoin, r/btc, r/ethereum, r/litecoin, r/bitcoinmarkets. Only one I saw with it was r/cryptocurrency

it's a rumor/meme. supposedly during the last crash, r/bitcoin had the suicide hotline pinned, but i wasn't able to confirm that on archive.org either.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#126

Post by JumpCrisscross » Tue, Jan 16, 2018, 11:13 PM UTC

justrobert wrote: post #102

JumpCrisscross wrote: post #73

Earlier quoted context omitted.

> Something like 2M of 51M people have any crypto there, and only a small fraction would be overextended significantly How do you know that? For traditional securities, we have margin and prudential lending rules. These systems aren't perfect. But they incorporate lessons from crises past. One of those lessons is about how system risk can grow exponentially unexpectedly quickly.

Except almost anyone get get authorization to sell naked puts in the US market. Margin only handles the expected volatility of an instrument, not the tail risk.

> almost anyone get get authorization to sell naked puts in the US market

Your broker is on the hook if you default. This means collateral requirements and risk limits. For example, see TD Ameritrade's rules [1]. These rules are filed with and reviewed by various regulators.

> Margin only handles the expected volatility of an instrument, not the tail risk

This sentence doesn't make sense.

The Federal Reserve's Regulation T limits initial margin to 50% [2]. If you have $10 of cash, you can't buy more than $20 of securities. This limits your losses to twice your principal, which margin lenders are supposed to ensure you can afford (via suitability checks).

This rule is part of why brokers won't accept deposits from credit cards. It's also why they ask you for information on your net worth, income, et cetera. There are further controls in place to make it difficult to e.g. take out a line on your home and use it to buy securities. None of these safeguards exist with cryptos.

[1] https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD... page 11

[2] https://en.wikipedia.org/wiki/Regulation_T

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#127

Post by dangero » Tue, Jan 16, 2018, 11:14 PM UTC

paulpauper wrote: post #63

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...

Other exchanges will not mirror this--arbitrage will occur

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#128

Post by mtgx » Tue, Jan 16, 2018, 11:14 PM UTC

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.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#129

Post by dahdum » Tue, Jan 16, 2018, 11:14 PM UTC

pishpash wrote: post #61

dahdum wrote: post #56

Earlier quoted context omitted.

Fun chart from Reddit today: https://i.redd.it/dnlduddb5ha01.jpg

Yeah, nice use of log chart there.

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.

Re: Bitcoin Fall Extends to 25% as Fears of Crackdown Linger

#130

Post by perseusprime11 » Tue, Jan 16, 2018, 11:15 PM UTC

agorabinary wrote: post #101

perseusprime11 wrote: post #24

Earlier quoted context omitted.

What’s also different is few individuals/entities in South Korea and elsewhere are responsible for driving the value upstream. Anything that is manipulated does not last long. As somebody wise (Buffet) once said this will have a bad ending.

This is naive of Buffet when his only evidence of a "bad ending" is the existence of a massive rally. The entire near-future automated economy depends on programmable money. There is literally nothing interesting happening in FinTech right now apart from the crypto space.

“entire near-future automated economy depends on programmable money”

It also depends on banks and states signing up to that vision. We have seen zero adoption on that front. On top of that, it still does not explain the hundreds of alt coins.