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Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

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Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#71

Post by mirntyfirty »

shuntress wrote: post #69

Is this mostly caused by people coming to grips with the fact that "crypto" is entirely speculative with no actual value? "TradFi" at least has a real floor because "real" money (as in: currency that can be exchanged for goods and services) and "real" investments (as in: shares of companies that provide goods/services) do actually exist. Even if significant portions of the market are driven by speculation. Are we rea…

To me it seems that way. With the bond market being so low, it seemed as though there was a lot of cash looking for some sort of outlet. All that was necessary was misleading hype and marketing.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#72

Post by xeromal »

logicchains wrote: post #28
charles_kaw wrote: post #22

Earlier quoted context omitted.

Unfortunately, large defi institutions have been advertising to retail investors. Many of whom have not just had a haircut, but their whole head shaved. Government regulation of retail finance is a feature, not a bug.

>Government regulation of retail finance is a feature, not a bug. It's not a bug unless you believe adults should be treated like children and not be able to take the risks they desire or face the consequences of those risks. Anyone investing in DeFi should absolutely have known the risks; it doesn't justify giving the government even more power over people's finances.

I definitely see where you're coming from regarding allowing adults to make their own mistakes, but that's the point of regulation. This isn't an entirely free market.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#73

Post by pessimizer »

gst wrote: post #41
UncleMeat wrote: post #37

Earlier quoted context omitted.

The concern is propagation. If margin calls blow up individual organizations or institutions, that's bad but not a fundamental threat. The issue is that things are connected.

But it's only an issues for other connected entities when they are using risky business practices themselves. A stablecoin that backs its assets in the currency that the stablecoin issues (for example a USD-based stablecoin that is backed by US treasuries) won't be affected by any disruption in the market. An exchange that is fully backed and does not allow margin trading won't be affected either. Regular holders who…

The process by which you create a bubble is when you create mechanisms to ship risk as far away from the people who are knowledgeable about it as possible.

The core might all be completely self-deluded or intentional scammers, but the second-degree people who invested/loaned to them intended to some degree to take a bit less risk than being directly involved in the scam, the third-degree people who rely on the second-degree people thought they were allowing a little innovation instead of missing out by playing it too safe, the fourth-degree people aren't even aware that they're invested in the core scam or delusion at all, and make fun of it online. There's a fifth-degree of people who have no idea that whether they eat depends on the scam (because the fourth-degree was a municipal bond issue, the city is now drowning in liabilities, so they had to cut food banks.)

edit: The most recent crypto peak was largely fueled by a ton of normies who put their retirements into something that has gone down somewhere between 40% and 70% in value since they bought it. Other people depend on those people.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#74

Post by shuntress »

clpm4j wrote: post #70
shuntress wrote: post #69

Is this mostly caused by people coming to grips with the fact that "crypto" is entirely speculative with no actual value? "TradFi" at least has a real floor because "real" money (as in: currency that can be exchanged for goods and services) and "real" investments (as in: shares of companies that provide goods/services) do actually exist. Even if significant portions of the market are driven by speculation. Are we rea…

As long as people have a way to potentially get rich with little to no 'real work', they won't stop.

Sure. Speculation certainly will continue and real money will continue to change hands.

But are we at least done pretending that crypto currency (at least, as it exists now) will ever have any practical purpose beyond being a fungible entity upon which gamblers speculate?

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#75

Post by ouid »

chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

What follows is loose speculation, but I do not think the equilibrium price of a single bitcoin after a crash is any more likely to be $100 than $1. This is due to the anatomy of a bubble.

A belief in the long term value of cryptocurrency is very tightly correlated with ones current cryptocurrency position. The demand curve, then, for cryptocurrency, is extremely steep, and the "buy pressure" for cryptocurrency will not increase tremendously with falling prices, since the people who would generally be willing to buy at these reduced prices, have just lost their life savings.

Likewise, even the poeple who think that crypto is valuable long term know that you can't pay your taxes in it. If people don't believe that it's worth anything, then it isn't. They all know that the price falling could indicate that right this second is the most your cryptocurrency will ever be worth. The more the price drops, the more likely this is to be the case, and the more likely I am to sell. If the sell pressure is greater than the buy presssure at some price, then it is very likely to be the case at every lower price, resulting in catastrophic collapse.

This inversion event is more likely the longer the asset has remained in bubble status, since the optimism proportion of the inflated asset is strictly increasing with price.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#76

Post by lizknope »

mccorrinall wrote: post #59
abiro wrote: post #52

Earlier quoted context omitted.

> Tehter has lent money to almost all these firms Do you have a source for this?

https://assets.ctfassets.net/vyse88cgwfbl/1np5dpcwuHrWJ4AgUg... The points you're looking for: > Secured Loans (none to affiliated entities) $3,149,732,368 > Other Investments (including digital tokens) $4,959,634,446

Your link is to an attestation, not an audit, and it was performed by a company in the Cayman Islands that changed its name and is still under investigation by the United Kingdom government

https://www.coindesk.com/markets/2022/01/26/tethers-new-acco...

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#77

Post by sgt101 »

chollida1 wrote: post #32
dcolkitt wrote: post #18

Earlier quoted context omitted.

> Crypto has tried to solve this by strict liquidation rules that tend to make things worse by turning firms into forced sellers This is literally how traditional finance works as well. If you have a leveraged position at a futures or options exchange, you absolutely will be liquidated as soon as your position gets close to being in the red. I 100% guarantee you that the CME or Goldman will not let you "ride things o…

Not really true, collateral is decided at the end of the day and not mid day. You aren't liquidated immediately the moment your needs more liquidity. We wait till the end of the day short of absolute emergencies. I know Amaranth well being in Canada and Calgary specifically at the time:) And for tradfi a typical hedge fund gets a call and is told to post more collateral and they make real efforts to allow the fund to…

>Not really true, collateral is decided at the end of the day and not mid day.

Ho ho ho - no it's decided as soon as your lender things that it needs to liquidate you, and if it does it will know that you're not going to be able to go to court to fight afterwards.

A lot of nasty scenes start with someone on a phone shouting "you can't do that for another 2 hours".

Yup. Yup we can.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#78

Post by CapmCrackaWaka »

shuntress wrote: post #69

Is this mostly caused by people coming to grips with the fact that "crypto" is entirely speculative with no actual value? "TradFi" at least has a real floor because "real" money (as in: currency that can be exchanged for goods and services) and "real" investments (as in: shares of companies that provide goods/services) do actually exist. Even if significant portions of the market are driven by speculation. Are we rea…

The physicality of an underlying asset isn’t what makes people trade stocks, commodities, options or anything else. If you’re day trading soybean futures, it’s not the ideal of soybeans that wakes you up in the morning. It’s the money you could make. Bitcoin is a unique speculative asset because it’s value is based entirely on human interest, nothing else. I think crypto is here to stay as a speculative asset class. Where it’s long term price goes, I have no idea.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#79

Post by sgt101 »

lizknope wrote: post #76
mccorrinall wrote: post #59

Earlier quoted context omitted.

https://assets.ctfassets.net/vyse88cgwfbl/1np5dpcwuHrWJ4AgUg... The points you're looking for: > Secured Loans (none to affiliated entities) $3,149,732,368 > Other Investments (including digital tokens) $4,959,634,446

Your link is to an attestation, not an audit, and it was performed by a company in the Cayman Islands that changed its name and is still under investigation by the United Kingdom government https://www.coindesk.com/markets/2022/01/26/tethers-new-acco...

Hopefully you can link to Tether's audit?

???

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#80

Post by vishnugupta »

chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

  Take increasing risks in search for higher yield? Check
  Leveraged trading to ratchet up profits? Check
  Margin called when the risky bet doesn't pay off? Check
  Counter party risk? Check
  Contagion + domino effect? Check
  Fire sale of decent quality assets putting down pressure on its prices thus hurting the whole ecosystem? Check
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