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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

#311

Post by jjtheblunt »

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?

> mostly frictionless

isn't the prohibitive electric bill to reconcile the distributed ledger the ultimate showstopping friction?

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

#312

Post by lumost »

twox2 wrote: post #304
dstroot wrote: post #301

Earlier quoted context omitted.

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.

A Venezuelan could also own dollar/euro denominated assets or commodities. BTC would need to be better and more stable than those for someone to view it as an effective hedge.

If US or EU inflation hit 2000% there would be global consequences. There is no reserve asset currently large enough to redenominate US denominated assets, aid payments would collapse, and currencies pegged to the dollar would collapse. Betting on BTC for such a world is reasonable, as there would be a reasonable chance your gold reserves would be become inaccessible, seized, or both. However ammunition might be a more effective financial hedge in this situation.

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

#314

Post by codehalo »

snovv_crash wrote: post #226
matheusmoreira wrote: post #172

Earlier quoted context omitted.

How much BTC exists in the blockchain is ultimately irrelevant. What matters is the amount of BTC actively circulating. If you deposit 1 BTC on Binance, then I can get your BTC in the form of a loan. I can even withdraw your BTC. Meanwhile, Binance records still say you have 1 BTC, they even allow you to trade with it. So there's really 2 BTC in circulation. That BTC is duplicated, it's in multiple places simultaneou…

And of course, the music keeps playing as long as Binance has liquidity.

Still doesn't have anything to do with Bitcoin, or the bitcoin supply.

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

#315

Post by mcguire »

izzydata wrote: post #210
Enginerrrd wrote: post #171

Earlier quoted context omitted.

>I mean everything is a bit oversold right now on negative emotions, both in the crypto space and in the stock markets. ...Things have corrected SLIGHTLY from an absolutely historic bubble and you think it's OVER sold? Meanwhile, we have significant inflation, rising interest rates, supply shocks that still haven't been sorted out and signs of economic slowdown. Prices have been out of touch with reality for a long t…

Stock prices are back around where they were before the pandemic. It may have already been overvalued at that time, but perhaps it is a level of overvalue that people are comfortable with as we were already there before the system got flooded with money.

Wilshire 5000 / US GDP: https://fred.stlouisfed.org/graph/?g=qLC

That is normalized to 1 in late 2007. At the end of 2021, it was 2.53; at the end of the first quarter of this year it's at 2.37. In 1Q 2020, it was 1.80. Stock prices have been increasingly disconnected from the economy 2014-2015.

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

#316

Post by Traster »

seoaeu wrote: post #309
Traster wrote: post #58

Earlier quoted context omitted.

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.

The point is that UST had significant rallies- that indicates a massive effort to support it that failed.

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

#317

Post by once_inc »

rollcat wrote: post #225
sakopov wrote: post #194

What's everyone's thoughts on Gemini dollar? Gemini claims [1] that GUSD is FDIC insured up to $250K and audited [2] by a third party called BMP [3]. I also remember reading that Gemini is used by a number of IRA custodians, so I'd assume that they're pretty heavily regulated. [1] https://www.gemini.com/dollar [2] https://assets.ctfassets.net/jg6lo9a2ukvr/VOtyB4tBb0G4FVt6Eq... [3] https://www.bpm.com/

From [1]: > GUSD is an Ethereum ERC-20 token Last time I checked (EVERY time I checked), Ethereum was still based on proof of waste. My thoughts are the same as they've been for many years straight, on everything crypto-"currency": it's a massive scam at best; more realistically, along with everything else in the proof of waste category, somewhere on the top 10 list of things most harmful to all life on Earth. I don'…

I agree on your points about Ethereum and all alt-coins. Bitcoin is another matter though, because it has the majority hash rate. Please note that bitcoin mining is a fraction of a fraction of all energy use in the world, and as an industry, well ahead of its peers in terms of green energy usage. Using electricity is not a problem; carbon emission are, and there a a very substantial number of other industries that are in orders of magnitude worse to our environment (among which is gold mining, clothes dying and disposable plastics). Using electricity to separate money and state is well worth the cost to me.

edit: bring forth thy downvotes, HN.

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

#318

Post by twofornone »

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?

It's a shame, a couple years ago BTC was anticorrelated with markets. Then institutional investors started playing and since then crypto largely just tracks the markets. I wonder, where do these investors park their cash when they sell holdings during downturns?

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

#319

Post by stickfigure »

seoaeu wrote: post #276
eric_cc wrote: post #205

Earlier quoted context omitted.

> Luna crashed because people lost trust in it. No. It crashed because trillions of tokens were created rendering each token worthless.

You have it backwards. The trillions of tokens were created because people lost trust in it. Specifically, the loss of trust instigated the price drop from $1 to ~98¢. That's what started the collapse. Only afterwards did the "death spiral" of minting of more tokens, which degraded trust, which decreased the price, which drove more minting, etc. happen

There were two coins involved; the overprinting of Luna corresponded with lost confidence in UST. The obvious conclusion is that "algorithmic" stablecoins are bullshit.

Whatever fate lies ahead for Bitcoin, it doesn't have this particular weakness. It's not "leveraged" in the same way as Luna/UST.

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

#320

Post by [deleted] »

jpmattia wrote: post #164
JumpCrisscross wrote: post #141

Earlier quoted context omitted.

> Only banks should have that privilege? Yes, in exchange for the privilege of money creation you need tight regulations and public disclosures. Banking left unregulated turns into this mess time and time again. You'd think people would be more disciplined about betting private money creators. But they aren't. They never are. Particularly not when their neighbor is showing orders of magnitudes of paper gains. This wa…

> Banking left unregulated turns into this mess time and time again. And yet, regulated banking also turns into a mess time and time again.

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