5 ms·

> Bear in mind that this is bitcoin It's still a market, so market logic should apply. > get rich quick with bitcoin I see the same shit with real estate. >

> Bear in mind that this is bitcoin It's still a market, so market logic should apply. > get rich quick with bitcoin I see the same shit with real estate. > sufficient people buying tethers at face value It's a market. Smart money can sell tethers. When there's information that all market participants know, the market price should reflect that information.

empath75 9y ago
Markets are wrong all the time. See the dotcom crash, the 2008 crash, etc.
- Cyberdog 9y ago
  So a crash is a market being wrong?
  - rsynnott 9y ago
    To a large extent, yes, often. See the dot-com bubble, for instance.
  - nerfhammer 9y ago
    A crash is a market realizing it had been wrong about something, yes. Or, a "crash" as defined a dramatic plunge rather than a downturn over time is usually some kind of feedback loop where prices falling creates expectations that prices will drop even further and so on, often if the market is mostly driven by greater-fool-theory herd behavior.
Analemma_ 9y ago
> It's still a market, so market logic should apply. How many levels of deranged libertarianism are you on? The market never makes mistakes? > I see the same shit with real estate. Right, and the real estate market spectacularly imploded and took the global economy down with it when it turned out the market was wrong. Is that your point? > When there's information that all market participants know, the market price should reflect that information. It should, but it empirically does not. "The market can remain irrational longer than you can remain solvent" - i.e., smart investors know that you don't bet against a bubble, even if you're 100% right that it is a bubble, unless you have very deep pockets, because you can't know how long it will continue to grow (and thus how much money you'll lose) before it pops. Even if you know it's a bubble, the rational thing to do is to ride with it, make as much many as you can and try to get out at the right time. Hence bubbles can exist and grow even if every participant knows what's going on.
ncallaway 9y ago
> I see the same shit with real estate. And that, famously, _never_ crashed.
- ataturk 9y ago
  The problem with RE is not the values fell, it was that leverage was used to purchase properties as investments and when the underyling investments lost value, there was no reason to pay on the underwater mortgages. The bond explosion was an even bigger problem, magnified by huge leverage and shoddy ratings work.
- panarky 9y ago
  Housing prices didn't crash after many years of vastly disproportionate negative sentiment. Housing prices crashed after most of the negative voices capitulated and bought into the speculative fervor, until there were no more buyers. Today, nearly everyone's gut instinct is that cryptocurrencies are scams, frauds, bubbles, Ponzis and tulips. Popular sentiment has been negative for years. How will this thing unravel before the majority capitulates?
  - s17n 9y ago
    Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. I don't think there's a similar scenario with bitcoin. On the other hand, a large secular demand will always exist for housing. The same is not true for bitcoin.
    - panarky 9y ago
      > Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. For completeness, "housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt and couldn't sell to someone else for more than they paid" That italicized part is what caused the downward spiral, and that's the part that's relevant to Tethers and cryptocurrencies. Most people with worries about escalating real estate prices had capitulated and bought in before the crash. With no more buyers, the self-reinforcing cycle went into reverse. With cryptocurrency, the vast majority of wealthy people already think it's a scam, bubble, Ponzi or fraud. Unclear how a bubble can form when most people think it's a bubble.
rsynnott 9y ago
> Smart money can sell tethers I don’t think that many people are really holding onto tethers all that much; who has tethers to sell? Bitfinex itself?
- b1daly 9y ago
  Current issuance of tethers is ~$850m, according to the story told by Tether/Bitfinex, these should be held mostly by users. There’s no reason for exchanges to hold (unless they were buying for their own account).
  - rsynnott 9y ago
    Presumably when redeemed for money they go back to tether/bitfinex?
komali2 9y ago
Why are markets inherently "smart?" And why is a crash not the market being "wrong?" What even is the market? If it's the people in it, and they're smart, why did they buy subprime loan investment instruments and nuke the housing market and lose all their money?
- magpi3 9y ago
  > What even is the market? A democracy where people vote with their money. Since their is significant risk involved, said people are assumed to do at least some due diligence/research before placing their "votes." And for that reason people have confidence that markets are right/smart, because why would so many intelligent people put themselves at enormous risk by placing their confidence in a bad investment? Of course if the original investors get rich, eventually this leads to ignorant people (i.e. people who have not done their research) jumping in and the smart market becomes something else. I know I am oversimplifying
  - komali2 9y ago
    Is it really the mindset in the current decade that those that "vote with their money" put any more consideration into their decisions than those that "vote with their vote?" AKA very little whatsoever? I only ask because most of what I've been reading has assumed the market is irrational.
divbyzer0 9y ago
The market can stay irrational a lot longer than you or I can stay solvent.

empath75 9y ago

Markets are wrong all the time. See the dotcom crash, the 2008 crash, etc.

Cyberdog 9y ago
So a crash is a market being wrong?
- rsynnott 9y ago
  To a large extent, yes, often. See the dot-com bubble, for instance.
- nerfhammer 9y ago
  A crash is a market realizing it had been wrong about something, yes. Or, a "crash" as defined a dramatic plunge rather than a downturn over time is usually some kind of feedback loop where prices falling creates expectations that prices will drop even further and so on, often if the market is mostly driven by greater-fool-theory herd behavior.

Analemma_ 9y ago

> It's still a market, so market logic should apply. How many levels of deranged libertarianism are you on? The market never makes mistakes? > I see the same shit with real estate. Right, and the real estate market spectacularly imploded and took the global economy down with it when it turned out the market was wrong. Is that your point? > When there's information that all market participants know, the market price should reflect that information. It should, but it empirically does not. "The market can remain irrational longer than you can remain solvent" - i.e., smart investors know that you don't bet against a bubble, even if you're 100% right that it is a bubble, unless you have very deep pockets, because you can't know how long it will continue to grow (and thus how much money you'll lose) before it pops. Even if you know it's a bubble, the rational thing to do is to ride with it, make as much many as you can and try to get out at the right time. Hence bubbles can exist and grow even if every participant knows what's going on.

ncallaway 9y ago

> I see the same shit with real estate. And that, famously, _never_ crashed.

ataturk 9y ago
The problem with RE is not the values fell, it was that leverage was used to purchase properties as investments and when the underyling investments lost value, there was no reason to pay on the underwater mortgages. The bond explosion was an even bigger problem, magnified by huge leverage and shoddy ratings work.
panarky 9y ago
Housing prices didn't crash after many years of vastly disproportionate negative sentiment. Housing prices crashed after most of the negative voices capitulated and bought into the speculative fervor, until there were no more buyers. Today, nearly everyone's gut instinct is that cryptocurrencies are scams, frauds, bubbles, Ponzis and tulips. Popular sentiment has been negative for years. How will this thing unravel before the majority capitulates?
- s17n 9y ago
  Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. I don't think there's a similar scenario with bitcoin. On the other hand, a large secular demand will always exist for housing. The same is not true for bitcoin.
  - panarky 9y ago
    > Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. For completeness, "housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt and couldn't sell to someone else for more than they paid" That italicized part is what caused the downward spiral, and that's the part that's relevant to Tethers and cryptocurrencies. Most people with worries about escalating real estate prices had capitulated and bought in before the crash. With no more buyers, the self-reinforcing cycle went into reverse. With cryptocurrency, the vast majority of wealthy people already think it's a scam, bubble, Ponzi or fraud. Unclear how a bubble can form when most people think it's a bubble.

rsynnott 9y ago

> Smart money can sell tethers I don’t think that many people are really holding onto tethers all that much; who has tethers to sell? Bitfinex itself?

b1daly 9y ago
Current issuance of tethers is ~$850m, according to the story told by Tether/Bitfinex, these should be held mostly by users. There’s no reason for exchanges to hold (unless they were buying for their own account).
- rsynnott 9y ago
  Presumably when redeemed for money they go back to tether/bitfinex?

komali2 9y ago

Why are markets inherently "smart?" And why is a crash not the market being "wrong?" What even is the market? If it's the people in it, and they're smart, why did they buy subprime loan investment instruments and nuke the housing market and lose all their money?

magpi3 9y ago
> What even is the market? A democracy where people vote with their money. Since their is significant risk involved, said people are assumed to do at least some due diligence/research before placing their "votes." And for that reason people have confidence that markets are right/smart, because why would so many intelligent people put themselves at enormous risk by placing their confidence in a bad investment? Of course if the original investors get rich, eventually this leads to ignorant people (i.e. people who have not done their research) jumping in and the smart market becomes something else. I know I am oversimplifying
- komali2 9y ago
  Is it really the mindset in the current decade that those that "vote with their money" put any more consideration into their decisions than those that "vote with their vote?" AKA very little whatsoever? I only ask because most of what I've been reading has assumed the market is irrational.

divbyzer0 9y ago

The market can stay irrational a lot longer than you or I can stay solvent.