Crypto crash deepens, stocks slip • Hacker News Board

Re: Crypto crash deepens, stocks slip

#511

Post by garmaine » Wed, May 19, 2021, 5:53 PM UTC

kllrnohj wrote: post #26

jmacd wrote: post #11

As an outside observer, who has no crypto holdings at all, but is very deeply invested in the public stock market with a heavy weight on technology stocks... this doesn't look like a crash to me at all. It just looks like some steam being let off and old investors cash out and new investors get more comfortable with how much and where to invest. I consider crypto currency as it is to be an elaborate Ponzi scheme (per…

Bitcoin & Ether are both down -40% from a week to a month ago. Both of those are, in theory, large enough that investors "letting off some steam" shouldn't move them that much. If $SPY dropped 40% we'd all call it a crash. This isn't that different. Also unlike the stock market, crypto is under the delusion of being a viable currency. If USD or Euro dropped even 20% we'd start questioning if it's a recession, much le…

If you 40% crash is back to where you were a week or a month ago, it is the rise not the crash that was anomalous.

Re: Crypto crash deepens, stocks slip

#512

Post by AlexandrB » Wed, May 19, 2021, 5:53 PM UTC

coolspot wrote: post #501

krrrh wrote: post #263

Earlier quoted context omitted.

The move to stablecoins instead of cash is a reflection of major exchanges not being able to maintain banking relationships.

Also tax avoidance. My friend exchanged all his ETH to DAI at the top, doesn’t have to report that to IRS.

As someone else on here pointed out, the IRS would consider this selling ETH and buying an equivalent value in DAI. Selling the ETH is taxable as capital gains. Whether the IRS catches your friend or not is a different matter.

Re: Crypto crash deepens, stocks slip

#513

Post by tastyfreeze » Wed, May 19, 2021, 5:55 PM UTC

marcusverus wrote: post #375

vmception wrote: post #358

Earlier quoted context omitted.

USDC, DAI, USDT are all used more than ever, orders of magnitude more People dont have to talk about them as currencies because they just work No different than cellular reception in an underground subway, you dont have to think about it anymore

> USDC, DAI, USDT are all used more than ever, orders of magnitude more Even these cryptos aren't being used as currencies per se. They're popular, sure, but they're popular because A) they allow traders to move funds between crypto 'investments' without converting to fiat (i.e. without triggering cap gains), and B) They allow investors to "avoid market volatility" (but in a manner far riskier than fiat, given that e…

Like-kind exchange doesn't apply to cryptocurrencies. Exchanging BTC for a stablecoin does trigger capital gains as does selling a stablecoin for fiat. In the BTC-USDC scenario it is a little trickier to calculate the basis in USD but capital gains taxes still apply.

Re: Crypto crash deepens, stocks slip

#514

Post by SavantIdiot » Wed, May 19, 2021, 5:58 PM UTC

acdha wrote: post #156

icoder wrote: post #115

Earlier quoted context omitted.

It's a bit more nuanced isn't it (or am I mistaken)? All you see in the ledgers is the (hopefully single use) addresses the money is sent to, plus all addresses that come after it. There's not much in the system itself that links people / organisations to addresses, right? You'll have to get that information from outside the system: you know yourself, and maybe the receiver as a person, but where it then ends up requ…

The problem is that it's global and irrevocable: mistakes and intentional linkages act as a ratchet increasingly deanonymizing the network over time. If it started to have real usage, you'd quickly see the equivalent of the credit card / scoring companies, Google, etc. paying merchants for transaction details and building a web of user information.

Ooof. That is a great second-order observation: agencies profiling you and making lifer harder or easier based on your blockchain history. Not like this is new, as you point out, just even more difficult to expunge: there's no "blockchain" to expunge your blockchain habits! (yet??? I think I have a new startup idea for blockchain ... /bangsheadagainstwall/)

Re: Crypto crash deepens, stocks slip

#515

Post by delecti » Wed, May 19, 2021, 5:58 PM UTC

ramijames wrote: post #218

bronzeage wrote: post #192

Earlier quoted context omitted.

It's not a Ponzi scheme because in ponzi scheme you deliberately use late investors money to pay early investors. What happens in cryptocurrency is fake-exchange scheme. Tether is a fake currency printed in unlimited way by bitfinex which is also an exchange. By pretending tethers are real dollars you create the appearance of a stronger market for cryptocurrency than actually exists. It all rests on increasing the nu…

Except that during crashes like this one, what you see is everyone moving their crypto holdings to stablecoins. The intent is to wait things out and then buy back in and profit during the next cycle.

"Everyone" can't move from crypto. One person has to buy for another to sell.

Re: Crypto crash deepens, stocks slip

#516

Post by erosenbe0 » Wed, May 19, 2021, 5:59 PM UTC

nostrademons wrote: post #391

marcusverus wrote: post #375

Earlier quoted context omitted.

> USDC, DAI, USDT are all used more than ever, orders of magnitude more Even these cryptos aren't being used as currencies per se. They're popular, sure, but they're popular because A) they allow traders to move funds between crypto 'investments' without converting to fiat (i.e. without triggering cap gains), and B) They allow investors to "avoid market volatility" (but in a manner far riskier than fiat, given that e…

If the trader is being honest, converting cryptocurrencies to stablecoins is a taxable event triggering capital gains. The IRS considers any exchange of one cryptocurrency for another to be a sale of a capital asset and purchase of another.

Yes. They are assets and you must pay tax every time you swap them or even use them to make a purchase. It's like making a purchase with Apple stock or swapping Apple stock for Google stock. Pay tax.

Re: Crypto crash deepens, stocks slip

#517

Post by tastyfreeze » Wed, May 19, 2021, 5:59 PM UTC

redisman wrote: post #368

kllrnohj wrote: post #26

Earlier quoted context omitted.

Bitcoin & Ether are both down -40% from a week to a month ago. Both of those are, in theory, large enough that investors "letting off some steam" shouldn't move them that much. If $SPY dropped 40% we'd all call it a crash. This isn't that different. Also unlike the stock market, crypto is under the delusion of being a viable currency. If USD or Euro dropped even 20% we'd start questioning if it's a recession, much le…

Look at the full chart for 2021 though. Crypto went completely bonkers for no apparent reason this year so a correction isn't too surprising.

I can think of about $9 trillion reasons that crypto markets, and other financials, are going bonkers.

Re: Crypto crash deepens, stocks slip

#518

Post by remolacha » Wed, May 19, 2021, 6:00 PM UTC

pradn wrote: post #292

kllrnohj wrote: post #26

Earlier quoted context omitted.

Bitcoin & Ether are both down -40% from a week to a month ago. Both of those are, in theory, large enough that investors "letting off some steam" shouldn't move them that much. If $SPY dropped 40% we'd all call it a crash. This isn't that different. Also unlike the stock market, crypto is under the delusion of being a viable currency. If USD or Euro dropped even 20% we'd start questioning if it's a recession, much le…

It doesn't seem like anyone believes cryptos are supposed to be currencies any more. All the talk around them is around them being a new, exciting, and potentially very lucrative investment class. If you go to Coinbase's front page, you see that you can buy and sell them, like you can with Robinhood. It's not trying to be a PayPal. The currency-ness does serve an important purpose. It helps bring in investment for th…

Not all crypto assets are crypto currencies. Many DeFi tokens (ex. UNI, SUSHI, AAVE) govern projects with real cash flows and are poised to become more like equities on the blockchain

Re: Crypto crash deepens, stocks slip

#519

Post by AlexandrB » Wed, May 19, 2021, 6:00 PM UTC

ulzeraj wrote: post #202

greg7mdp wrote: post #75

Earlier quoted context omitted.

Ethereum will solve both issues, removing miners and the energy use by moving to Proof of Stake at the end on this year, and increasing the transaction throughput by 100x factors with level 2 solutions.

How does PoS solves anything when people will just stake on exchanges so that it literally replicates the current financial system with central banks and permissioned cartels? How new PoS coins will be generated and distributed? The stock has to be generated somehow right? How does this not resemble a central bank? This is an honest question. It looks like PoS is a full circle towards the same centralized system we h…

The history of cryptocurrency seems to be the re-discovery of why the global economy is structured the way it is from first principles.

Re: Crypto crash deepens, stocks slip

#520

Post by SuoDuanDao » Wed, May 19, 2021, 6:00 PM UTC

mahogany wrote: post #242

hexedpackets wrote: post #181

Earlier quoted context omitted.

10% annual is not huge at all, it would actually be on the lower end of a year that had positive gains. 10% average is what you should expect for the SP500 - and that tends to be driven by lumps, years with returns >20%. 50% is high from a historical perspective but there are plausible explanations for why it's not absurd.

I remember 7% being the historic average that all the classic investing books said. I think it's after adjusting for inflation and dividends. How are you calculating 10%?

By my understanding, 7% is average for any given year. Average for a year with positive gains would have to be quite a bit more to balance out even the occasional negative year.