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Three Arrows Capital has defaulted on a loan worth more than $670M

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Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#271

Post by jahmed »

joseph8th wrote: post #204
zeven7 wrote: post #96

Earlier quoted context omitted.

I'm fascinated that some kind of place like this existed. I've only lived in large cities and the picture I've gotten of small towns from trips and media hasn't prepared me for the idea of a whole community that collectively buys into a get rich quick scheme.

Oh boy, have I got a story for you. Around 1999, my hometown (pop. ~600) fell for a conman. Like, the actual Town government, and almost everyone in it. Pudgy, balding, middle-aged white dude breezed into town and seduced the owner of one of the motels. She kicks her husband out and starts taking Conman to town board meetings, etc. Eventually divorced husband. Guy claims to be Hollywood connected, a wealthy promoter…

Should have just bought a monorail.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#272

Post by ceejayoz »

datavirtue wrote: post #156
arcticbull wrote: post #10

Earlier quoted context omitted.

All that 'ngmi' culture is coming home to roost. This isn't a bunch of kind old grandmothers getting suckered in by Madoff.

I'm seriously waiting for my grandmother to tell me about how her broker just got her into crypto.

A bunch of Canadian pensioners are in precisely that scenario: https://www.theglobeandmail.com/business/commentary/article-...

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#273

Post by seanhunter »

JumpCrisscross wrote: post #174
adrr wrote: post #140

Earlier quoted context omitted.

UK is talking about backstopping the stable coins is an example of influence. I assume they are referring to Tether which hasn't completed an audit. https://www.cnbc.com/2022/05/31/uk-plans-new-safeguards-for-...

> UK is talking about backstopping the stable coins London’s talking about regulating and ringfencing them. Not backstopping.

Yes exactly. Having a regulatory regime to resolve a failure and minimise contagion (which is one of the things they're talking about) makes sense and cases like this 3AC one show why. It's not about protecting crypto participants, it's about reducing the damage to the system overall and impact to non-crypto participants caught in the blast radius when something central fails.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#274

Post by jnordwick »

randomhodler84 wrote: post #183
secondcoming wrote: post #175

Earlier quoted context omitted.

That's not the full story. A company's share price drops when it pays a dividend - because it now has less money. So when a company makes money its share price does go up. SharePrice = CompanyValue / NumberOfShares Now it's true that trading activity can affect the share price too, for example a short squeeze. But this is due to market taking advantage of a desperate buyer rather than anything to do with the company'…

I think it is the full story. Company performance is the driver, but it doesn’t set the price. It not right to say it’s irrelevant, it is, but the most important thing is what the market is willing to pay. The dividend price drops occurs only because the market believe this and reduces the price of their orders. It’s driven by the market responding to the loss of cash, the fact the cash was spent cannot impact share…

> It not right to say it’s irrelevant, it is, but the most important thing is what the market is willing to pay

That's what he's saying, just he's a step ahead of you. Why is the market willing to pay that much? Because that is what they see the company being worth in the future. Repeated studies consistently the correlation between stock price and future returns to investors when adjusted for other factors that might shift value away from the investor (eg, bad governance, risk, etc). There is no predictor that is better (this is important part - its comparisons against other indicators when trying to predict the future - bc predicting the future is kind of difficult).

> Additionally, I think your equation is wrong.

market cap is forward looking. balance sheet value is backwards looking. market cap is also a guess on how much is returned to investors and not taken by other factors - legal, illegal, intended, or unintended.

Viewing the market as irrational is essentially an anti-science stance - its religious. There is no way to prove that belief wrong because people just keep saying its being irrational when it disagrees with their valuation.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#275

Post by dropnerd »

mirntyfirty wrote: post #36
015a wrote: post #30

> As of Friday, Voyager said it had approximately $137 million in U.S. dollars and owned crypto assets. > Last week, Alameda (FTX founder Sam Bankman-Fried’s quantitative trading firm) committed $500 million in financing to Voyager Digital, a crypto brokerage. Voyager has already pulled $75 million from that line of credit. Am I misunderstanding something, or: what kind of mismanagement could possibly lead to loans b…

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.

most crypto trading firms have been rewarded for this behavior over the last few years, so the lesson is hard to unlearn

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#276

Post by dropnerd »

graeme wrote: post #199
woah wrote: post #176

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.

That’s like saying that banks making risky bets on CDOs in 2008 had nothing to do with housing

i think what they're trying to say is that these firms just look like traditional trading firms, not like defi. opaque backroom billion dollar handshakes go wrong, contagion spreads, ltcm/2008 style.

main difference- there's no government bailout coming.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#277

Post by dropnerd »

LatteLazy wrote: post #35

I am confused: The only logical reason to borrow BTC is if you think it will go down. If Three Arrow really thought BTC was headed to 2.5m a coin, then they could never sell/spend the coins they borrowed, as the price of buying back to repay the loan would be too high. So logically they must have been shorting BTC. And if they were shorting BTC, they should have made ~30% profit in the last few months right? So what…

3ac probably made 3 bad trades:

- long ust/luna

- long gbtc, short btc

- long steth, short eth

will focus on last two trades in this comment.

gbtc is like a bond that eventually pays out as btc when regulatory approval comes.

steth is like a bond that eventually pays out as eth a few months post-merge.

but in the aftermath of the luna/ust crisis and general crypto bear, there was a flight to safety (gbtc is less liquid than btc, steth is less liquid than eth), causing the gbtc/btc and steth/eth spreads to widen instead of narrow, and 3ac was caught out of position.

tldr: they probably profited some from short btc but lost more on long gbtc.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#278

Post by dropnerd »

christopherbalz wrote: post #132

Not your keys, not your coins.

defi/spot is in a much healthier place than cefi.

when you're hodling, there's nothing that can liquidate you.

when you're using a defi protocol, you capture all the upside for the risk you're taking.

when you're using a cefi "bank", the bank keeps some of the spread when they're up, and goes insolvent when they're down. heads they win tails you lose.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#279

Post by rufusroflpunch »

xwolfi wrote: post #267
ursuscamp wrote: post #162

I'm sure this doesn't apply to many here here, but: Do not trust leverage-trading crypto banks. Do not trade on leverage. These systems just recreate our current system of debt-based money that will inevitably collapse when the easy money dries up. If you believe Bitcoin has a future like I do, then buy some Bitcoin and hold it in cold storage for a long time, or try to jumpstart a circular economy where you use Bitc…

Notice that this guy used the lexical domain of religious belief. Not even trying to explain why, just "if you believe, come to my church".

This is a goofy response. Belief isn’t a religious word. I could write an entire treatise on Bitcoin in my comment, but no one would read it, and besides that, the audience of my comment are people already convinced of its value.

Re: Three Arrows Capital has defaulted on a loan worth more than $670M

#280

Post by kayamon »

Rebelgecko wrote: post #80
idiotsecant wrote: post #66

Earlier quoted context omitted.

This isn't necessarily true. A lot of people have held crypto since you could purchase it for single digit American dollars because they believe in the fundamental tenants of crypto - permissionless world financial exchange where the levers and dials of the economic systems are not controlled by world governments.

If they believed in crypto as a unit of financial exchange, wouldn't they be actually using it for transactions instead of going full-HODL?

The moment Target start accepting Bitcoin/Lightning payments, yes, I'll be buying all my groceries via that thank you.
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