This doesn't have a whole lot to do with crypto really. The entities discussed in the article are all traditional investment funds who made some risky bets.
In what was that risky bet?
Three Arrows Capital has defaulted on a loan worth more than $670M
191–200 of 295 posts
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#192I always have mixed feelings when someone is warned about the riskiness / foolishness / stupidity of a course of action, and then suffers for it. On the one hand, there's a certain satisfaction or Schadenfreude in the sense of vindication. And it's pleasant to feel like my own wisdom or self-control has been validated. OTOH, I know that everyone has limited wisdom / self-control / intelligence, including me. So it se…
Hot take: It’s fine when it happens to extreme hubris with paper wealth. It is not fine when it was someone unsophisticated chasing the herd who lost a meager sum that was meaningful to them. Comedy vs tragedy. Same thing with Archegos (Bill Hwang) and their rapid failure. It’s the hubris that makes it fun to poke fun, the sun blastin’ Icarus’ wings clean off. (no crypto exposure)
> Hot take: It’s fine when it happens to extreme hubris with paper wealth. It is not fine when it was someone unsophisticated chasing the herd who lost a meager sum that was meaningful to them. Comedy vs tragedy.
I think this is overlooking why people are engaging in these types of investments to begin with: they're greedy speculators who got caught up in a get rich quick scheme. They don't know what this tech is, why it is or isn't useful, or how it works. They don't know what the investment risks are and don't make any attempt at mitigating risk. They don't seek expert assistance. Instead of doing basic research to make informed decisions, they see dollar signs and yolo with their life savings. I don't feel bad for them in the same way that I don't feel bad for people who fall for 419 scams. If you participate in get rich quick schemes that you don't understand, there is a high probability of getting owned. This exact same collapse in value happened only 5 years ago, how could people be caught flat footed twice?
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#193For anyone else enjoying the crypto meltdown, might I suggest the subreddit /r/buttcoin? It's quite enjoyable. https://old.reddit.com/r/Buttcoin/
theyve been telling us crypto has been melting down and bursting and dying for a many years, its still here. my bet is that itll still be here in ten years and theyll still be posting on buttcoin.
seems much more interesting to explore, hack, risk, and learn by playing with crypto, id much rather to that than post "bitcoin ded" for a decade.
prices go up and down, culture persists.
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#194I really don’t understand the business model of making massive fiat loans to “firms” to buy bitcoin. If crypto goes up, you get a small amount of interest. If crypto goes down, you lose everything. What? Lol. Just spend a fraction of the sum on bitcoin and do something safe with the rest. What was the plan? Edit: I guess when someone has “20 billion dollars” a 700mm loan doesn’t seem like a big risk.
There's probably enough collateral involved that they come out ok either way. In other words you'd secure the loan against some bitcoin you already have that's maybe worth 2x what you're borrowing. So now you're holding 3x that amount. Ideally bitcoin goes up, you sell, then repay the loan and take profits.
If btc drops too much, you need to dump your coins and repay the loan.
My guess anyway.
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#195> Prominent crypto hedge fund Three Arrows Capital has defaulted on a loan worth more than $670 million. Digital asset brokerage Voyager Digital issued a notice on Monday morning, stating that the fund failed to repay a loan of $350 million in the U.S. dollar-pegged stablecoin, USDC, and 15,250 bitcoin, worth about $323 million at today’s prices. In other words, the $670 million that 3AC defaulted on was ~50:50 USDC…
> How does a person convinced that bitcoin exchange is headed to $2.5 million take out a loan of 15K bitcoin if he actually thinks he'll be paying back it back at a higher exchange rate?
Part of being in crypto involves suspending disbelief, even your own.
There's also the famous saying "It is difficult to get a man to understand something when his salary depends on his not understanding it". In this case, you don't build a following in crypto by being bearish, ever. It's all about kumbayah and spreading positive vibes in the "community"
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#196Earlier quoted context omitted.
I think it’s a strange part of human psychology to ignore objective reality and double down to complete ruin. It seems remarkably common and with corporate power being so concentrated at the top it seems rather easy for these situations to happen.
Yes, it’s the throwing good money after bad problem. I think there’s a real name for it, “sunk cost” fallacy maybe?
I'm thinking "lender of last resort"
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#197Earlier quoted context omitted.
> I'm excluding individuals getting rich as that can happen due to gambling, etc. The tools that allow that stuff to occur onchain are pretty phenomenal. Bridges, farms, yield aggregators, yield optimizers, AMMs, the rapid evolution of standardized classes in the codebases (really was a mess before OpenZeppelin). It is capital formation and that is valuable for many people, a lot of capital formation improvements in…
I doubt your claim about stablecoins like Tether will age very well.
The problem with his argument about stablecoins is he didn't actually mention Tether, he just said whatever isn't failing. So basically after Tether fails the goal posts are moved and now all the stablecoins that haven't failed yet are held up as an example of success.
Speaking of Tether, it's lost 25% of its market cap since May.
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#198[dead]
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#199This doesn't have a whole lot to do with crypto really. The entities discussed in the article are all traditional investment funds who made some risky bets.
That’s like saying that banks making risky bets on CDOs in 2008 had nothing to do with housing
Re: Three Arrows Capital has defaulted on a loan worth more than $670M
#200I really don’t understand the business model of making massive fiat loans to “firms” to buy bitcoin. If crypto goes up, you get a small amount of interest. If crypto goes down, you lose everything. What? Lol. Just spend a fraction of the sum on bitcoin and do something safe with the rest. What was the plan? Edit: I guess when someone has “20 billion dollars” a 700mm loan doesn’t seem like a big risk.
A better firm would have performed better, regardless of what happens to crypto. Short selling should be a part of any sophisticated strategy. But this firm bet the farm on the price going up. I thought hedge funds were smarter than that, bit apparently not this one.