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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

#301

Post by dstroot »

lumost wrote: post #129
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…

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?

Eyebrows raised. What this is showing is that both tech stocks and crypto were being propped up by the same investors/behavior (speculation) and are highly correlated. I thought this was a good test regarding crypto being a “store or value” since inflation devalues fiat currency, one hypothesis was crypto would rise with market turmoil and high inflation as “digital gold”. I guess that hypothesis was incorrect.

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

#302

Post by wonnage »

meetups323 wrote: post #237
jliptzin wrote: post #186

Earlier quoted context omitted.

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 bes…

I think this is why the fiat system is inflationary (low level inflation is seen as healthy). Assuming that productive projects exist, you never want lack of capital to be the reason that they're not done. The free market is never going to perfectly allocate capital, therefore there should be some extra money in the system to allow for errors. The errors would cause inflation (money supply increased, but productive output did not), but this is better than being overly cautious.

Incidentally this is why austerity in debt-laden countries is kind of a terrible idea. You're taking a broken economy and removing what little slack remains in the system. And if the economy was broken due to corruption or incompetent government, you're kind of just betting on regime change at this point, which (apart from the human toll) won't be great economically either.

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

#303

Post by seoaeu »

dlubarov wrote: post #182
vkou wrote: post #103

Earlier quoted context omitted.

> funded by some of the initial LUNA tokens. Which were bought by users in a zero sum-game. A ponzi is a zero-sum game where new entrants finance old exits. Just because the funding for the ponzi is done in a different currency doesn't mean it's not one. You can't create a closed system that generates wealth, and when you're growth hacking with your users' money, you are running a fraud.

Anchor protocol always retained the full amount of each UST deposit, plus additional rewards (whose funding was external to Anchor), so clearly Anchor is not a Ponzi, as I thought you were implying originally. Would you assert that any undercollateralized currency is a Ponzi? (Seems like stretching the definition to me.) Or that any system with unsustainable rewards is a Ponzi, even if there was no expectation that t…

The details of the protocol are just obfuscation. The 10,000 ft view is that people converted USD to tokens so they could earn 20% interest. As the dust settles, we can see the outcome looks exactly like a Ponzi:

(1) The folks running the scheme walked away with a couple billion dollars

(2) Those who cashed out early got back their original investment plus interest

(3) Everyone else lost all/most of their investment

Notably, all the extra money received by groups (1) and (2) came from (3).

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

#304

Post by twox2 »

dstroot wrote: post #301
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?

Eyebrows raised. What this is showing is that both tech stocks and crypto were being propped up by the same investors/behavior (speculation) and are highly correlated. I thought this was a good test regarding crypto being a “store or value” since inflation devalues fiat currency, one hypothesis was crypto would rise with market turmoil and high inflation as “digital gold”. I guess that hypothesis was incorrect.

IMO, this hypothesis hasn't been adequately tested. By all accounts inflation is bad, but not THAT bad. However, I'm sure Bitcoin and most Cryptocurrency is looking pretty stable with respect to Venezuela's 2,00,00% inflation. Bitcoin as a hedge against economic turmoil requires real economic turmoil.

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

#305

Post by overtonwhy »

eric_cc wrote: post #90
snovv_crash wrote: post #76

Earlier quoted context omitted.

Tell me, what assets exactly are backing BTC which stop it from crashing just like Luna?

LUNA minted trillions of brand new tokens within the span of a day or so rendering the token worthless. This is due to the way LUNA was tied to the algorithmic stablecoin UST. It was a true ponzi. BTC's max supply is capped and the release schedule of new coins is fixed and predictable. There is no possible way that trillions of new bitcoins could suddenly be created.

If a majority of the miner pool decides to make a change the change is made. That's how decentralized concensus works right?

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

#306

Post by Terry_Roll »

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?

> I never understood the argument why crypto was a good store of value.

Its digital gold thats it, its no more a store of value than antique's, rare cars, fine arts etc etc and unsurprisingly those markets can also see the bottom drop out of them for decades. Ultimately its people en masse who decide what something is worth, but big players can manipulate those markets with resources, laws, taxation, media sentiment and its easy to spook people when they value something, so dont get attached to anything if you dont want to be manipulated.

The other thing to note is, it only takes a few hundred million £ on the Asian market to get the GBP to drop against the USD in time for European markets. So there are very few entities who can cause the crypto market to fall like this. Think about that.

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

#307

Post by fullstop »

paulpauper wrote: post #149
latchkey wrote: post #2

I'm kind of amazed that the Bitcoin price wasn't affected more given this event as well as the larger macro events with the stock markets, Fed and inflation.

it dropped 20% over the past week and keeps falling now.

Netflix has dropped 45% over the last month, Amazon 27%, TSLA 27%, Disney 17%, BTCUSD 26%.

I'm definitely not sold on Bitcoin, but it tracks along with tech stocks for some reason.

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

#308

Post by seoaeu »

Traster wrote: post #60
folli wrote: post #34

Earlier quoted context omitted.

* From Crypto Bros putting cash in Luna, hoping it will reach the moon, as the name implies. The foundation bought BTC as hedge in case Luna/Terra goes haywire. * No, there's no proof.

That's where it gets incredibly funny. They persuaded everyone that UST was worth $10Bn dollars and then went and bought $3Bn of BTC with the profits. At which point the obvious question is "Hey - isn't this asset by definition worth $3Bn"? And the answer is "Oh, no, by the time it drops from $10Bn to $7Bn we've burned all our collateral and it's worth 0".

The even funnier aspect is that that instead of trying to stabilize the token or just liquidating all UST at 30¢ on the dollar, the creators decided to abscond with all the collateral and leave UST holders with nothing

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

#309

Post by seoaeu »

Traster wrote: post #58
quasse wrote: post #7

I am extremely out of the loop on the latest crypto developments / schemes, but * Where did this foundation get $3B to buy Bitcoin? * Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?

On the second point, to be fair you can look at the UST graph and see that someone did indeed burn a tonne of Luna to support UST. It's probably impossible to really prove that every penny went to supporting it, and it's probably impossible/unlikely that Do Kwon really bankrupted himself for this, but at the very least we can say someone decided they were going down with the ship and set a lot of money on fire. Diffi…

Burning Luna (which can be created out of thin air) and burning USD/Bitcoin are entirely different things.

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

#310

Post by onlyrealcuzzo »

scoopertrooper wrote: post #264
celestialcheese wrote: post #143

Earlier quoted context omitted.

That's a bit old - https://tether.to/en/transparency/#reports Closer to 50% tbills and cash. All caveated with if you trust MHA Cayman auditors. The other 50% could be anything, and likely sketchy as they are chasing yield and extremely cagey about revealing anything about their holdings.

They only promise that their treasure bills "have a maturity of less than 90 days". That won't help them much if there is a run on the Tether bank.

Why wouldn't it?

IIUC, Tbills have been quite liquid since the mid 1980s...

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