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The Bit Short: Inside Crypto’s Doomsday Machine

crypto-anonymous-2021.medium.com

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Re: The Bit Short: Inside Crypto’s Doomsday Machine

#21

Post by leppr »

alcio wrote: post #19
leppr wrote: post #13

Earlier quoted context omitted.

Yes, three other markets accounting for a total of... $4 million daily volume. That's less than many random Uniswap tokens, and could consist entirely of some minimal market making. I've done stablecoin market making myself, it's not very profitable but the low inventory risk makes it attractive, as the ratio always trends back to 1:1.

USDT-USD markets are indeed marginal. however, implied USDT price using BTC as a cross shows USDT is valued pretty much at parity with the dollar by the market: https://www.tradingview.com/symbols/spread/BINANCE%3ABTCUSDT...

Yes, and that parity is precisely the thesis behind the author's contrarian short position.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#22

Post by nmlnn »

leppr wrote: post #13
nmlnn wrote: post #9

Uh.. one little problem with this kid's analysis. There are multiple USDT/USD markets ( https://www.tradingview.com/symbols/USDTUSD/ )

Yes, three other markets accounting for a total of... $4 million daily volume. That's less than many random Uniswap tokens, and could consist entirely of some minimal market making. I've done stablecoin market making myself, it's not very profitable but the low inventory risk makes it attractive, as the ratio always trends back to 1:1.

If people want to short bitcoin or tether, they should do so. However, I don't really get all the internet whining. If they're right they'll make a lot of money. I don't buy these concerned citizen FUD posts though, they reek of manipulation. If there's one thing I've learned over the last 25 years it's.. don't trust random people on the internet.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#23

Post by quickthrower2 »

comboy wrote: post #10
leppr wrote: post #8

Earlier quoted context omitted.

Did you read the article? The author doesn't concluse that Bitcoin in itself is bad, they simply realized by themselves that most of the dollar value increase was caused by Tether, and they fear Tether eventually going down might be a black swan event causing prices to tumble. But 1 BTC = 1 BTC, yes.

Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.

If tether is pumping BTC then it’ll stop pumping BTC when it’s taken away. Weak hands will fold and then there will be a crash

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#24

Post by dannyw »

comboy wrote: post #6

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more…

Tether is lovely for many people, because there are many entry points without AML/KYC.

This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value.

Of course, there is the calculated risk of Tether being seized, but that's part of doing business.

Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebellion of the state itself.

Go to a bitcoin meetup that's a few drinks in, and ask how many people pay taxes ;)

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#25

Post by maxbond »

comboy wrote: post #10
leppr wrote: post #8

Earlier quoted context omitted.

Did you read the article? The author doesn't concluse that Bitcoin in itself is bad, they simply realized by themselves that most of the dollar value increase was caused by Tether, and they fear Tether eventually going down might be a black swan event causing prices to tumble. But 1 BTC = 1 BTC, yes.

Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.

Tether will almost certainly collapse, and then you'll have a lot of bitcoin chasing very few dollars. There is likely to be a stampede for dollars, which becomes a vicious cycle deflating the price of Bitcoin - the liquidity is consumed (Bitfinex is printing Tether because there aren't enough dollars to go around at unbanked exchanges, afterall) at the same time the downward volatility dramatically increases the perception of Bitcoin's risk; market makers start heading for the door; the cost of liquidity becomes massive.

There's some magic number for the price of Bitcoin, and it's hard to say what it is, where the miners start to lose money. If it stays too cheap for too long, it puts pressure on the miners to either switch to other coins or get out of the game entirely.

Things could get very bad, very quick. The only reason I don't have a bearish position in Bitcoin is that I can't find a counterparty that a.) I can afford at my account size (eg not CME) and b.) that I'm confident will still be around after this crash.

Stay cautious. Happy trading.

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#26

Post by leppr »

nmlnn wrote: post #22
leppr wrote: post #13

Earlier quoted context omitted.

Yes, three other markets accounting for a total of... $4 million daily volume. That's less than many random Uniswap tokens, and could consist entirely of some minimal market making. I've done stablecoin market making myself, it's not very profitable but the low inventory risk makes it attractive, as the ratio always trends back to 1:1.

If people want to short bitcoin or tether, they should do so. However, I don't really get all the internet whining. If they're right they'll make a lot of money. I don't buy these concerned citizen FUD posts though, they reek of manipulation. If there's one thing I've learned over the last 25 years it's.. don't trust random people on the internet.

Taking a position and then publicizing the position and the thesis behind it is standard procedure everywhere in finance. It's a way of accelerating pricing-in of the information.

You can indeed just short an artificially inflated asset, but if the sham is only revealed long after you're insolvent, you lose your money.

BTW, your bull case for Bitcoin wasn't built from trusting random people on the internet?

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#28

Post by comboy »

quickthrower2 wrote: post #23
comboy wrote: post #10

Earlier quoted context omitted.

Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.

If tether is pumping BTC then it’ll stop pumping BTC when it’s taken away. Weak hands will fold and then there will be a crash

OK, yes, that's a fair point. But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC.

Also we've been there (mtgox's willy etc). I don't think bitcoin will be much less volatile any time soon. https://www.youtube.com/watch?v=XbZ8zDpX2Mg

Re: The Bit Short: Inside Crypto’s Doomsday Machine

#29

Post by notahacker »

comboy wrote: post #6

I don't get it. tether sucks. If you hold tether it may turn into air. But your bitcoin is still bitcoin. Also, when tether is going down wouldn't you want to sell it thus creating pressure in btc/tether market and value of of tether/btc going up? It's always been clear to me that USD/BTC and USDT/BTC are two different markets. USDT is just another cryptocurrency. Many of them were scams and disappeared and many more…

Bitcoin is supposed to be a store of value, is it not? If most of this 'value' stored turns out not to be real, the implications for the price of Bitcoin are not good. If the value of USDT falls to nothing then USDT holders trying desperately to offload aren't going to create much demand for BTC, compared with what was being created when new USDT supposedly worth a dollar entered the system every day. And if the price of BTC falls, it isn't a very good store of value any more so people who have traded legitimately earned wealth for BTC have an even stronger incentive to sell. If 70% of gold's daily trading volume was down to orders based on fake gold securities, it would also be a very bad time to hold gold (but at least if you took a big enough loss you'd find someone that wanted it for reasons other than their belief about its ability to hold value)

It amazes me how Bitcoiners scream 'hyperinflation' every time the Fed prints more money (with the goal of increasing prices by 2% annually) and yet struggle to understand the relationship between Tether printing dollar-denominated crypto-purchasing vouchers (with the goal of increasing crypto prices by as much as possible) and the supposed dollar price of BTC

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