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$3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

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Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#231

Post by sfblah »

jliptzin wrote: post #186
lumost wrote: post #129

Earlier quoted context omitted.

The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?

I never understood the argument why crypto was a good store of value. Sure, it’s an ingenious new transactional system, making global payments mostly frictionless, etc, but that’s true whether the value of 1 Bitcoin is $1 or $50,000. If everyone’s just converting back to fiat anyway, only keeping enough BTC transiently to settle transactions, why hold it long term?

That’s not totally true. The value of a Bitcoin does relate to how much effort miners put in. So, $1 might be low enough to allow some sort of attack on the network.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#232

Post by nickff »

jliptzin wrote: post #186
lumost wrote: post #129

Earlier quoted context omitted.

The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?

I never understood the argument why crypto was a good store of value. Sure, it’s an ingenious new transactional system, making global payments mostly frictionless, etc, but that’s true whether the value of 1 Bitcoin is $1 or $50,000. If everyone’s just converting back to fiat anyway, only keeping enough BTC transiently to settle transactions, why hold it long term?

If the transient use of a cryptocurrency is increasing, the demand for it will be, and the price will follow. If the price is increasing fast enough, it could be worth holding. The same is true of any money or asset used for payments/settling debts (like gold or silver).

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#233

Post by bpt3 »

jpmattia wrote: post #112
bpt3 wrote: post #99

Earlier quoted context omitted.

Did Citibank claim that its value was one-to-one backed with U.S. dollar reserves until they were caught not doing so? If not, they're probably not a relevant comparison to Tether.

> Did Citibank claim that its value was one-to-one backed with U.S. dollar reserves until they were caught not doing so? If not, they're probably not a relevant comparison to Tether. I'm not getting what you're saying here: They should make good on their initial message from several years ago? They should now keep all assets in dollars and not earn interest?

> They should make good on their initial message from several years ago?

Yes.

> They should now keep all assets in dollars and not earn interest?

Since that was how they initially generated interest in the asset, yes.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#234

Post by thehappypm »

eric_cc wrote: post #206
pirate787 wrote: post #203

Earlier quoted context omitted.

No assets though-- the only thing backing bitcoin are "greater fools"

Same fiat paper currency.

Not really. You get to keep your property if you pay fiat to your local government every year. That is backstopping its value.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#235

Post by this_user »

joosters wrote: post #4

"Sold" It's hard to show that they really sold these coins. Certainly, the LFG transferred the coins to some different exchanges. But did they truly sell them? If I was running a dodgy ponzi scheme and saw it collapsing catastrophically, I don't think I'd be throwing good money after bad trying to futilely patch it up. Much better to stash the remaining assets away somewhere and personally cash out later on. Also, “I…

There certainly seemed to be a lot of selling pressure on BTC at the time that pushed the price below $30k that has since abated. It is not implausible that this had something to do with LFG's supposed activities.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#236

Post by eric_cc »

NovemberWhiskey wrote: post #152
eric_cc wrote: post #130

Earlier quoted context omitted.

> it is merely extremely hard. Care to elaborate how it could be done? Even if it were to happen, which it could not, the chain would fork from the moment before the hack and continue on without the hack.

Change to Bitcoin Core; hard fork; majority of miners and nodes move to new fork. The only reason we're not calling "Bitcoin Cash" by the name "Bitcoin" is that the last part didn't happen, right?

Consensus. Why would the majority people adopt broken bitcoin?

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#237

Post by meetups323 »

jliptzin wrote: post #186
lumost wrote: post #129

Earlier quoted context omitted.

The fact that crypto is correlated with tech stock valuations should be raising eyebrows. Flash back a few years and the hypothesis that bitcoin would hedge inflation/fiat depreciation was standard. If BTC is correlated with equities, why not just hold productive equities?

I never understood the argument why crypto was a good store of value. Sure, it’s an ingenious new transactional system, making global payments mostly frictionless, etc, but that’s true whether the value of 1 Bitcoin is $1 or $50,000. If everyone’s just converting back to fiat anyway, only keeping enough BTC transiently to settle transactions, why hold it long term?

This is why IMO blockchains should be designed to be inflationary. On one hand it just makes sense that as more compute is added transactions should be able to process faster and tokens should be minted more rapidly, such that by "mining" you are producing real value (allowing the chain to process more transactions per second and more people to acquire tokens), on the other very few people use crypto for anything besides speculation so such a coin would never be widely adopted.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#238

Post by everybodyknows »

300bps wrote: post #188
lamontcg wrote: post #108

Earlier quoted context omitted.

> “In a sense, the market is going to take that as kind of bullish.” I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. There's probably going to be a positive bounce just because markets don't move in straight lines. There is always the chance that something else explodes due to stress tomorrow and hits the headlines and crypto and/or stocks start m…

I mean everything is a bit oversold right now Everythinig was way overbought when considering the money for those past purchases came from an accommodative Fed that flooded the economy with $9 trillion that currently sits on its balance sheet, lowered interest rates to literally 0 and the government sending out stimulus like it was candy. All of which are either done or ending. So I think a better way to phrase it is…

Hmm, it does seem the balance sheet has reached a plateau, but the curve only rounded to it around March:

https://fred.stlouisfed.org/series/WALCL

Funny how debt is ignored by big media and the short fiat rates get all the attention.

Edit: Fed balance sheet relative to GDP, 2003 to present:

https://fred.stlouisfed.org/graph/?g=Pvii

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#239

Post by mountainofdeath »

dfdaffg423rag wrote: post #111
jpmattia wrote: post #81

Earlier quoted context omitted.

> Only 3.87% of Tether was backed by dollars For comparison: Citibank had only 11.73% Tier 1 capital in their 2021 report: https://www.citigroup.com/citi/investor/quarterly/2021/ar20_... Couldn't find a breakout of their Tier 1, but it includes high-quality credit items as well, so actual dollars is well below 11.73%. So in other words: SiliconAngle.com is writing clickbait and doesn't understand modern banking.

I don't think anyone's going around using shares of Citibank stock as currency, are they? Because that's one of the many criteria that need to be true for that comparison to make any sense. Blows my mind because stablecoins could be so easy-- hold some cash and hold some US treasuries. Pocket the interest. Become rich.

Money Market funds already do this and the collapse of money market funds is usually a harbinger of worse things to come. Money market funds are non-FDIC insured places to park short term cash, typically backed by some combination of AAA commercial paper, municipal bonds and various vintages of T-Bills. Some also are exclusively holding California and New York City bonds and are are totally tax free. Money market funds can do things like suspending redemption in case of a panic to let things settle.

The idea behind USDC is to collateralize it 1:1 like a money market fund provided the underlying bonds hold. Tether is doing fractional reserve banking but has no central bank to act as a lender of last resort. Even then, banks pay into the FDIC which retains reserves itself like any other insurance.

Tether works as long as the money flowing in >= money flowing out.

A severe run on Tether would dry up liquidity very quickly.

Re: $3B in Bitcoin was sold in a last-ditch attempt to save UST from collapse

#240

Post by newguynewphone »

dayvid wrote: post #184
vkou wrote: post #121

Earlier quoted context omitted.

Just as a reminder about how Mt Gox played out - it looks like all the people who lost money on it will receive 1:1 fiat-denominated compensation for their losses, Mark Karpeles won't serve a day in prison, and is likely to walk away with ~3 billion worth of BTC[1]. Who'd have thought that failing to operate a bitcoin exchange is a thousand times more lucrative than actually operating one! [1] If Mark owed you a bitc…

Edit: Looked deeper into it. It's a really weird story, where it looks like they got hacked ( https://www.theguardian.com/technology/2017/jul/27/russian-c... ), he tried to fake financial data to make it look like they had money, and he got caught. In the end, he's making more money off of lying and the original investors are screwed. That's really lame. It's also unfortunate, because a lot of the vibe I get from cry…

Every crypto nut I have interacted with, will call you all sort of derogatory terms if you don't agree that web3 is the future and if a scam happens on any exchange, its because the user were stupid to trust them. Zero accountability for the scammers and fraudsters, it's always the "stupid" users fault.
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