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Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

nytimes.com

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Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#241

Post by JumpCrisscross »

cup-of-tea wrote: post #217
kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

> Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. That's what modern banking is. 95% of money in use is created by the private banks themselves.

> 95% of money in use is created by the private banks themselves

Through a highly-regulated process. We haven't had a bank run on regulated deposits since the FDIC came into being.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#244

Post by qyv »

FireBeyond wrote: post #133
craigc wrote: post #49

Earlier quoted context omitted.

That is not strong evidence that they are not backed by USD. That is strong suspicion. > Lack of transparency does not necessarily indicate fraud https://blog.bitmex.com/tether/

Then they are doing a REALLY bad job at managing their presence, because "Transparency" is one of their hallmarks: https://wallet.tether.to/transparency ... supposedly. Those are very specific numbers to be touting without anything supporting them.

People will simply look the other way on this as long as it benefits their worldview. Once things go south the cries will be "Tether lied to us, how could we have known?"

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#245

Post by craigc »

tomkarlo wrote: post #236
craigc wrote: post #181

Earlier quoted context omitted.

I wrote a bit about my opinion in a reddit thread a while back. It is here if you are interested, but a fair warning it will probably be quite an unpopular opinion with the hacker news crowd: https://www.reddit.com/r/BitcoinMarkets/comments/7xq7mp/comm...

The problem isn't that it's unpopular, it doesn't seem (from the post) like you have some kind of underlying economic or financial principle supporting your argument. * why would it have an inverse relationship with other assets? It's not a short. It's still valued based on purchase price vs sale price, adjusted for risk. If risk has risen and nothing has changed about purchase or sale price, why would it rise? * if…

Well can we at least agree that no one knows with absolute certainty what will happen to Bitcoin and other crypto currencies during the next recession?

The reason I believe it will be inversely related is because it is still a relatively new market whose market cap is minuscule compared to other established markets.

During a recession people will naturally look for other places to put their money and gold will be the obvious choice. Bitcoin has all the same properties as gold except it is cheaper to acquire (fees), cheaper to store, has a fixed mining rate (with gold more supply is created when the price increases which drives the price back down), and has only 1% of gold’s market cap. The way I see it, it would be silly not to at least hedge a small amount of money into BTC/crypto.

The other economics reason is pure supply and demand. The supply of Bitcoin is shrinking every day as more people decide to hold it long term. Many more get lost or stolen. Every couple years the block rewards get cut in half as well.

All of that said, the rise and fall in the last year has definitely shaken the public’s confidence so it may take a long time before new money starts flowing into it. All of my timelines are years down the road. (10-20 years)

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#246

Post by kadenshep »

galaxyLogic wrote: post #71
albertwang wrote: post #2

Link to the research paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066 From the abstract: Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top crypto…

What if most BitCoin owners know that buying Tether this way is a way to bump up Bitcoin. Therefore they decide to do their part. They don't need to agree on anything with anybody they just understand this is THE way to bump up the price of BitCoin. Is it still a conspiracy?

Yeah, in the same way people might understand how MLM's work but don't need to explicitly agree to take part in the less savory aspects of why it might be lucrative. You can understand the game and play it with other actors without any set of well defined rules, as long as you're all working towards relatively the same outcome and you all have the same assets that need to be treated in a particular way to get that outcome ("I'll get mine").

But, I don't think that's sufficient to explain what's been happening in cryptocurrency markets. There's a reason analogous regulations exist in Real (TM) trading. As it stands, it's too easy for bigger (or sufficiently pocketed) entities to manipulate the markets. There's no way to stop them, no way to REALLY track them, and there's every reason for them to do it as long as people keep buying into these coins/exchanges.

I'd wager that people who don't think this is happening are blindlingly optimistic about what's going on.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#247

Post by usefulcat »

Bucephalus355 wrote: post #134
john_moscow wrote: post #122

Earlier quoted context omitted.

I'd say there's a simpler explanation. Bitcoin has a limited predictable supply, so its price is mostly a function of the demand. And demand correlates with expectations, that typically follow the hype cycle [0]. I'm not sure how much someone managed to single-handedly manipulate the price, but the plain old human psychology, FOMO and the positive feedback loop for media writing about bitcoin demand definitely played…

Whenever some kind of good has a truly limited supply, that can fuel the most massive of bubbles by making the “bubble” look rational at first. The bubble hides itself under the guise of being about “supply and demand”. The one thing that leaps to mind is the Japanese real estate speculation in the 1980’s. Everyone claimed, very logically, that Japan is a mountainous island with very limited space, so real estate wou…

As I understand it, for a variety of reasons, the value of a home tends to fall much more rapidly over time in Japan compared to the US. This probably means that if you're going to get a loan to buy a house in Japan, it's probably going to be for a lot less (relatively) and/or for a shorter period of time than you could generally get in the US, which will put significant downward pressure on home prices (again, as compared to the US).

Put another way, the more people are spending razing and rebuilding on a given supply of land, the less they'll be able to spend on the land itself.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#248

Post by [deleted] »

galaxyLogic wrote: post #71
albertwang wrote: post #2

Link to the research paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066 From the abstract: Using algorithms to analyze the blockchain data, we find that purchases with Tether are timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top crypto…

What if most BitCoin owners know that buying Tether this way is a way to bump up Bitcoin. Therefore they decide to do their part. They don't need to agree on anything with anybody they just understand this is THE way to bump up the price of BitCoin. Is it still a conspiracy?

[deleted]

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#249

Post by pshin45 »

thousandautumns wrote: post #225
pshin45 wrote: post #163

Earlier quoted context omitted.

Bitcoin's absolute power consumption isn't at a critical level yet — Bitcoin consumes as much power globally as a single large power plant, and roughly 10% of the world's data centers. However, I agree that its rapid and consistent growth rate is concerning and can't be ignored. It's an area I'm really interested in and have been reading a lot about, because most of the news and "analysis" of the issue on both sides…

> Bitcoin consumes as much power globally as a single large power plant, and roughly 10% of the world's data centers Well first of all, according to your own blog post, it is not as much power as a single large power plant, but as much power as the single largest power plant in the entire US. And thats just an estimate. It potentially uses twice that amount. And 10% of the power of all the worlds data centers is abso…

I think your point about US power plants is a nitpick – The largest power plants in the world are not located in the US, and either way my point still stands because it's meant to be a rough approximation.

Unlike data centers where electricity consumption is directly correlated with internet usage, Bitcoin's electricity consumption is instead directly correlated with its price (which attracts more miners), and is very indirectly correlated with the number of users or transactions.

It's very possible that Bitcoin could be adopted by a significant (e.g. 10% or more) percentage of the world population even as its price remains fairly consistent, which would mean its total electricity consumption would remain fairly consistent as well.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#250

Post by RachelF »

joe_the_user wrote: post #210
kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. Creating money by printing is not a new thing. Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. It is one very standard old thing. That by itself doesn't prove bitcoin i…

Indeed, a cynic would say Bitfinex were just copying the Fed's QE.

Creating tether out of nothing to buy bitcoin is similar to the Fed creating dollars by QE to prop up asset prices.

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