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Tom Lee Predicts Cyrptocurrency Market Outflow to Fiat Currency Before Tax Day

44 points by AltcoinReport 9y ago

AltcoinReport 9y ago
Due to the massive amount of capital gains taxes owed on crypto, Tom Lee believes there will be a sell off in order to pay these taxes. Following tax day, he believes Bitcoin will find footing again.
- abbieseide 9y ago
  A decrease of $20 for every $1 pulled from the market seems a little steep...
  - charleslmunger 9y ago
    Not if the entire market cap is based on wash trading, HODL, and speculation.
  - User23 9y ago
    Or maybe it's not steep enough. A forced-sell situation doesn't leave much pricing power. The classical Roman fire-sale is the archetypical case. Also I'm sure many taxpayers will elect not to pay the capital gains before tax day, deciding instead to ride out interest and penalties in favor for being able to sell at a higher price. This could get interesting. I would love to see an after the fact analysis that deduces the relative market power of buyers and sellers from the transaction history.
    - smacktoward 9y ago
      For those who don't get the reference to "the classical Roman fire-sale": https://en.wikipedia.org/wiki/History_of_firefighting#Rome https://en.wikipedia.org/wiki/History_of_firefighting#Rome > The first ever Roman fire brigade of which we have any substantial history was created by Marcus Licinius Crassus... One of his most lucrative schemes took advantage of the fact that Rome had no fire department. Crassus filled this void by creating his own brigade—500 men strong—which rushed to burning buildings at the first cry of alarm. Upon arriving at the scene, however, the fire fighters did nothing while their employer bargained over the price of their services with the distressed property owner. If Crassus could not negotiate a satisfactory price, his men simply let the structure burn to the ground, after which he offered to purchase it for a fraction of its value. Through this and other schemes, Crassus became one of the richest men in Rome. He used this fortune to amass substantial political power, eventually rising to the peak of power in the Roman system by joining the First Triumvirate (https://en.wikipedia.org/wiki/First_Triumvirate https://en.wikipedia.org/wiki/First_Triumvirate) with Pompey the Great and and ambitious young go-getter named Julius Caesar.
  - csomar 9y ago
    That would drop the whole crypto market cap to $50bn from the current $250bn.
  - Mtinie 9y ago
    I agree. It's suspect because the numbers don't add up. From the article: " [...]Tom Lee notes that U.S. households owe an estimated twenty five billion dollars in capital gains taxes due to crypto gains." Total market capitalization of all cryptocurrencies, as of 12:18PM EST on April 6, 2018 is $248,821,531,204. According to Mr. Lee, each $1 taken from the market will result in a $22.50 decrease in aggregated market value (avg. of his estimated range, "$20 - $25"). 25B * $22.50 = $562.5B He's suggesting that the price impact on cryptocurrencies required to pay for capital gains is going to be double the current market capitalization? Am I misinterpreting the statement he made? The alternative explanation I can come up with is if the statement was poorly formed and what he was really talking about was $25B in investment income will need to be reported and the appropriate short-term or long-term tax rates would need to be applied. Rough, back of napkin estimation, assuming an even distribution between short-term and long-term capital gains tax rates--which isn't going to be accurate, but I don't have a better way to estimate for this analysis--would be: Short-term: $12.5B * 28%[1] = $3.5B Long-term: $12.5B * 15%[2] = $1.875B Total Estimated Taxes Due: $5.375B Estimated impact on total market capitalization: 5.375B * $22.50 = $121B That would leave $127B in the market, or if evenly distributed over all tokens, all prices would be half of their current values after April 15 (e.g. today's $6.6k BTC would be $3.3k BTC). That doesn't sound right, either. Am I totally off-base for both interpretations? --- [1] Making an educated guess about the "typical" cryptocurrency investors' income bracket, but without actual numbers I'm open to this estimate being higher than reality. [2] https://www.fool.com/retirement/2016/12/11/long-term-capital-gains-tax-rates-in-2017.aspx https://www.fool.com/retirement/2016/12/11/long-term-capital...
    - abbieseide 9y ago
      I think Lee is predicting a 50% market adjustment because each fiat dollar added into the cryptocurrency market increases market cap by $22.50 because of speculation and other factors. It doesn't seem too crazy if you consider the volatile swings cryptos have had. Along with that, we dont know what to expect with this much money in potential sell offs because you can't expect investors to use other cash to pay taxes. They will just sell more crypto.
  - statguy 9y ago
    He probably meant "decrease of $20 for every $1B pulled from the market"
- jandrese 9y ago
  Won't the capital gains only be owned when people try to convert to fiat currency in the first place? If you're leaving your stuff in cryptocoin form I don't think you would pay capital gains. So this is only a problem for the people cashing out, and if they've cashed out then they should have the cash to cover their tax bill. And this assumes they didn't cash out to the Cayman Islands account. Probably not a lot of capital gains will be reported to the IRS this year for cryptocoin related profits.
  - gzu 9y ago
    Crypto gains are taxed on each exchange whether that be btc-eth or btc-fiat or [altcoin]-[altcoin]. That’s what’s so bad because some didn’t withdraw fiat to pay for gains.
  - ska 9y ago
    "If you're leaving your stuff in cryptocoin form I don't think you would pay capital gains." Note this is only true if you hold onto particular coins. If you exchange some bitcoin for etherium, for example, you will realize capital gains or losses. This has nothing specifically to do with cryptocoins, the same thing would happen to you if you bough silver, say, and then exchanged it for gold. Your latter point is straightforward tax evasion and will be caught or not in much the same ways as other forms.
    - jandrese 9y ago
      I'm just saying that cryptocoins attract the kind of people who would try to evade taxes.
  - lsc 9y ago
    https://www.bizfilings.com/toolkit/research-topics/managing-your-taxes/federal-taxes/irs-cautions-bartering-transactions-are-taxable-transactions https://www.bizfilings.com/toolkit/research-topics/managing-... What I'm saying is that trading btc for ltc is barter- and it is taxible.
    - tlarkworthy 9y ago
- lavezzi 9y ago
  I think he is wrong, this is more likely to happen next year.
  - charlesdm 9y ago
    So, how high do you think things will go then?
xur17 9y ago
I am really curious where he's getting the $25 billion in capital gains figure from the report, and what percentage of gains it assumes people realized.
simias 9y ago
I'm not familiar with this person so I followed the link to his previous prediction of BTC reaching "$25,000 by the end of 2018" from January: https://altcoinreport.co/tom-lee-predicts-bitcoin-price/ https://altcoinreport.co/tom-lee-predicts-bitcoin-price/ > “We expect bitcoin’s major low to be $9,000, and we would be aggressive buyers around that level … We view this $9,000 as the biggest buying opportunity in 2018.” BTC is currently trading at about $6,500. At this point I'd sooner believe cartomancers when it comes to cryptocurrency market predictions, the market is too irrational and easily manipulated to make these types of predictions IMO. Might as well try to guess the outcome of tonight's lottery.
- trophycase 9y ago
  Or they are just bad at predicting it
ttul 9y ago
I’m sure altcoinreport.co is as reputable as, say, the Wall Street Journal
- bitxbitxbitcoin 9y ago
  Maybe in a few decades if it's still around. I'm sure they're hopeful of that at least :).
cvaidya1986 9y ago
Why would people wait till Tax day to sell in order to pay taxes?
- chrisa 9y ago
  Many people probably don't know how much taxes they have to pay until right before tax day (because they haven't done their taxes yet). Especially with something like cryptocurrency, where actually calculating your true tax can be really complicated (if you have a lot of trades, are trading alt coins for alt coins, etc).
- neaden 9y ago
  Presumably if you think BC is going to go continually up you want to wait until the last minute to sell.
  - charlesdm 9y ago
    Get rich or die trying?
debatem1 9y ago
Minor typo but can someone fix the title? Cryptocurrency is misspelled as Cyrptocurrency.
_0ffh 9y ago
How come the wording? Cryptocurrencies are inherently no less fiat currencies than government mandated ones.
- SideburnsOfDoom 9y ago
  That's a good question, and I too would like to know why people consider Cryptocurrencies to be "not fiat" ? Currencies either have value from 1) Being made of a commodity (e.g. gold coin) or exchangeable for the commodity. 2) Because someone says so. This is "Fiat". Usually this is a government, not not necessarily so. See "company scrip" for another example. Lack of an issuing government does not magically create a backing commodity.
  - lilactown 9y ago
    Because I can't actually buy anything with them, outside of a few niche markets.
    - SideburnsOfDoom 9y ago
      I'm not following? Being unable to use a banknote (e.g. a 2008 Zimbabwe 1 Trillion Dollars Banknote) doesn't make it any less Fiat - no commodity has appeared; it makes it low-quality fiat money.
    - someguy9888 9y ago
      Haha. Aside from the things I can buy with it, I can't buy anything with it!
      - lilactown 9y ago
        Just because I can exchange Chuck-E-Cheese coins or WoW gold for certain specific goods and/or services doesn't make them fiat.
        SideburnsOfDoom 9y ago
personlurking 9y ago
Someone used a throwaway account to share their recent personal experience on this matter at /personalfinance, titled "I just discovered that I owe the IRS $50k that I don't have, because I traded in cryptos." Original: https://www.reddit.com/r/personalfinance/comments/84huks/i_just_discovered_that_i_owe_the_irs_50k_that_i/ https://www.reddit.com/r/personalfinance/comments/84huks/i_j... Update: https://www.reddit.com/r/personalfinance/comments/89ipyu/update_i_just_discovered_that_i_owe_the_irs_50k/ https://www.reddit.com/r/personalfinance/comments/89ipyu/upd... They removed the story inside their update, but Google cached it: https://i.imgur.com/0DspXDr.png https://i.imgur.com/0DspXDr.png
- antisthenes 9y ago
  That makes NO sense at all and I continue to be surprised at the fundamental misunderstanding of the US tax system by techies (it's really not that complicated for individuals). You pay tax on the GAINS, not on the value of the trade. If he owes the IRS $50k, it means he has a realized gain of ~$333,000. Where did that money go? The only possibility here is that he took $330,000 and reinvested ALL of it into 'altcoins' just before the end of the year and is still holding them. Sorry, but that has bullshit written all over it (throwaway account, too)
  - Mtinie 9y ago
    Anecdotally, it's my understanding that rolling all gains forward isn't an uncommon practice for non-professional traders -- especially during bull markets.
  - spurcell93 9y ago
    It doesn't necessarily have BS written all over it - in fact, I think there are MANY people who got left holding the bag with alts.
  - charlesdm 9y ago
    Depends. If he's in a high tax state and it was all short term capital gains, then those gains are taxable as income. If he didn't keep the tax money separate and the market tanks 80% (which it did) he'd end up with losses that can't be offset because you can't carry losses backwards, only forward.
sowbug 9y ago
This happened in 2000. 1999 was a heck of a year for amateur daytraders.
jaycroft 9y ago
A couple related observations: 1) With the dramatic rise and then fall of the Nasdaq back in 2001, with similar timing (peak right around New Years Day [0]), and a similar amount of new and uninformed market participants (online day trading just beginning to become a thing), could some of the early 2001 market performance be due to a similar dynamic? Noob traders make bank in 2000, log in to H&R block, start doing their taxes, and then have an oh shit moment when they come to the question about "have you bought or sold any stocks this year?" 2) Stock trading happened through United States institutions. Much of crypto trading does not. Many people may have started with $1k in Binance or Bitfinex, and seen that go up by more than a multiple of 10. Many of those people, I feel, are likely to accidentally commit a felony this year by failing to report their foreign account holdings because they are similarly unaware of the consequences of having money outside their down the street bank. FBAR is a real thing, people face serious fines (at least up to 10k for any infringement, 10k plus half your offshore assets and potential jail time if willfully [1]). [0]http://futures.tradingcharts.com/historical/ND/2001/0/continuous.html http://futures.tradingcharts.com/historical/ND/2001/0/contin... [1]https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar https://www.irs.gov/businesses/small-businesses-self-employe...
- lavezzi 9y ago
  "The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted."
- cityhall 9y ago
  I've made this same prediction before. In 2001 it was driven by people owing AMT from option exercises in addition to day trading. We got tax paperwork from our brokers though - I'm not sure how many crypto traders will even realize they owe taxes. The crypto market is less dependent on the US but it may also be priced at the margins and unable to absorb a big selloff.

44 points by AltcoinReport 9y ago

Due to the massive amount of capital gains taxes owed on crypto, Tom Lee believes there will be a sell off in order to pay these taxes. Following tax day, he believes Bitcoin will find footing again.

abbieseide 9y ago
A decrease of $20 for every $1 pulled from the market seems a little steep...
- charleslmunger 9y ago
  Not if the entire market cap is based on wash trading, HODL, and speculation.
- User23 9y ago
  Or maybe it's not steep enough. A forced-sell situation doesn't leave much pricing power. The classical Roman fire-sale is the archetypical case. Also I'm sure many taxpayers will elect not to pay the capital gains before tax day, deciding instead to ride out interest and penalties in favor for being able to sell at a higher price. This could get interesting. I would love to see an after the fact analysis that deduces the relative market power of buyers and sellers from the transaction history.
  - smacktoward 9y ago
    For those who don't get the reference to "the classical Roman fire-sale": https://en.wikipedia.org/wiki/History_of_firefighting#Rome https://en.wikipedia.org/wiki/History_of_firefighting#Rome > The first ever Roman fire brigade of which we have any substantial history was created by Marcus Licinius Crassus... One of his most lucrative schemes took advantage of the fact that Rome had no fire department. Crassus filled this void by creating his own brigade—500 men strong—which rushed to burning buildings at the first cry of alarm. Upon arriving at the scene, however, the fire fighters did nothing while their employer bargained over the price of their services with the distressed property owner. If Crassus could not negotiate a satisfactory price, his men simply let the structure burn to the ground, after which he offered to purchase it for a fraction of its value. Through this and other schemes, Crassus became one of the richest men in Rome. He used this fortune to amass substantial political power, eventually rising to the peak of power in the Roman system by joining the First Triumvirate (https://en.wikipedia.org/wiki/First_Triumvirate https://en.wikipedia.org/wiki/First_Triumvirate) with Pompey the Great and and ambitious young go-getter named Julius Caesar.
- csomar 9y ago
  That would drop the whole crypto market cap to $50bn from the current $250bn.
- Mtinie 9y ago
  I agree. It's suspect because the numbers don't add up. From the article: " [...]Tom Lee notes that U.S. households owe an estimated twenty five billion dollars in capital gains taxes due to crypto gains." Total market capitalization of all cryptocurrencies, as of 12:18PM EST on April 6, 2018 is $248,821,531,204. According to Mr. Lee, each $1 taken from the market will result in a $22.50 decrease in aggregated market value (avg. of his estimated range, "$20 - $25"). 25B * $22.50 = $562.5B He's suggesting that the price impact on cryptocurrencies required to pay for capital gains is going to be double the current market capitalization? Am I misinterpreting the statement he made? The alternative explanation I can come up with is if the statement was poorly formed and what he was really talking about was $25B in investment income will need to be reported and the appropriate short-term or long-term tax rates would need to be applied. Rough, back of napkin estimation, assuming an even distribution between short-term and long-term capital gains tax rates--which isn't going to be accurate, but I don't have a better way to estimate for this analysis--would be: Short-term: $12.5B * 28%[1] = $3.5B Long-term: $12.5B * 15%[2] = $1.875B Total Estimated Taxes Due: $5.375B Estimated impact on total market capitalization: 5.375B * $22.50 = $121B That would leave $127B in the market, or if evenly distributed over all tokens, all prices would be half of their current values after April 15 (e.g. today's $6.6k BTC would be $3.3k BTC). That doesn't sound right, either. Am I totally off-base for both interpretations? --- [1] Making an educated guess about the "typical" cryptocurrency investors' income bracket, but without actual numbers I'm open to this estimate being higher than reality. [2] https://www.fool.com/retirement/2016/12/11/long-term-capital-gains-tax-rates-in-2017.aspx https://www.fool.com/retirement/2016/12/11/long-term-capital...
  - abbieseide 9y ago
    I think Lee is predicting a 50% market adjustment because each fiat dollar added into the cryptocurrency market increases market cap by $22.50 because of speculation and other factors. It doesn't seem too crazy if you consider the volatile swings cryptos have had. Along with that, we dont know what to expect with this much money in potential sell offs because you can't expect investors to use other cash to pay taxes. They will just sell more crypto.
- statguy 9y ago
  He probably meant "decrease of $20 for every $1B pulled from the market"
jandrese 9y ago
Won't the capital gains only be owned when people try to convert to fiat currency in the first place? If you're leaving your stuff in cryptocoin form I don't think you would pay capital gains. So this is only a problem for the people cashing out, and if they've cashed out then they should have the cash to cover their tax bill. And this assumes they didn't cash out to the Cayman Islands account. Probably not a lot of capital gains will be reported to the IRS this year for cryptocoin related profits.
- gzu 9y ago
  Crypto gains are taxed on each exchange whether that be btc-eth or btc-fiat or [altcoin]-[altcoin]. That’s what’s so bad because some didn’t withdraw fiat to pay for gains.
- ska 9y ago
  "If you're leaving your stuff in cryptocoin form I don't think you would pay capital gains." Note this is only true if you hold onto particular coins. If you exchange some bitcoin for etherium, for example, you will realize capital gains or losses. This has nothing specifically to do with cryptocoins, the same thing would happen to you if you bough silver, say, and then exchanged it for gold. Your latter point is straightforward tax evasion and will be caught or not in much the same ways as other forms.
  - jandrese 9y ago
    I'm just saying that cryptocoins attract the kind of people who would try to evade taxes.
- lsc 9y ago
  https://www.bizfilings.com/toolkit/research-topics/managing-your-taxes/federal-taxes/irs-cautions-bartering-transactions-are-taxable-transactions https://www.bizfilings.com/toolkit/research-topics/managing-... What I'm saying is that trading btc for ltc is barter- and it is taxible.
  - tlarkworthy 9y ago
lavezzi 9y ago
I think he is wrong, this is more likely to happen next year.
- charlesdm 9y ago
  So, how high do you think things will go then?

xur17 9y ago

I am really curious where he's getting the $25 billion in capital gains figure from the report, and what percentage of gains it assumes people realized.

simias 9y ago

I'm not familiar with this person so I followed the link to his previous prediction of BTC reaching "$25,000 by the end of 2018" from January: https://altcoinreport.co/tom-lee-predicts-bitcoin-price/ https://altcoinreport.co/tom-lee-predicts-bitcoin-price/ > “We expect bitcoin’s major low to be $9,000, and we would be aggressive buyers around that level … We view this $9,000 as the biggest buying opportunity in 2018.” BTC is currently trading at about $6,500. At this point I'd sooner believe cartomancers when it comes to cryptocurrency market predictions, the market is too irrational and easily manipulated to make these types of predictions IMO. Might as well try to guess the outcome of tonight's lottery.

trophycase 9y ago
Or they are just bad at predicting it

ttul 9y ago

I’m sure altcoinreport.co is as reputable as, say, the Wall Street Journal

bitxbitxbitcoin 9y ago
Maybe in a few decades if it's still around. I'm sure they're hopeful of that at least :).

cvaidya1986 9y ago

Why would people wait till Tax day to sell in order to pay taxes?

chrisa 9y ago
Many people probably don't know how much taxes they have to pay until right before tax day (because they haven't done their taxes yet). Especially with something like cryptocurrency, where actually calculating your true tax can be really complicated (if you have a lot of trades, are trading alt coins for alt coins, etc).
neaden 9y ago
Presumably if you think BC is going to go continually up you want to wait until the last minute to sell.
- charlesdm 9y ago
  Get rich or die trying?

debatem1 9y ago

Minor typo but can someone fix the title? Cryptocurrency is misspelled as Cyrptocurrency.

_0ffh 9y ago

How come the wording? Cryptocurrencies are inherently no less fiat currencies than government mandated ones.

SideburnsOfDoom 9y ago
That's a good question, and I too would like to know why people consider Cryptocurrencies to be "not fiat" ? Currencies either have value from 1) Being made of a commodity (e.g. gold coin) or exchangeable for the commodity. 2) Because someone says so. This is "Fiat". Usually this is a government, not not necessarily so. See "company scrip" for another example. Lack of an issuing government does not magically create a backing commodity.
- lilactown 9y ago
  Because I can't actually buy anything with them, outside of a few niche markets.
  - SideburnsOfDoom 9y ago
    I'm not following? Being unable to use a banknote (e.g. a 2008 Zimbabwe 1 Trillion Dollars Banknote) doesn't make it any less Fiat - no commodity has appeared; it makes it low-quality fiat money.
  - someguy9888 9y ago
    Haha. Aside from the things I can buy with it, I can't buy anything with it!
    - lilactown 9y ago
      Just because I can exchange Chuck-E-Cheese coins or WoW gold for certain specific goods and/or services doesn't make them fiat.
      - SideburnsOfDoom 9y ago

personlurking 9y ago

Someone used a throwaway account to share their recent personal experience on this matter at /personalfinance, titled "I just discovered that I owe the IRS $50k that I don't have, because I traded in cryptos." Original: https://www.reddit.com/r/personalfinance/comments/84huks/i_just_discovered_that_i_owe_the_irs_50k_that_i/ https://www.reddit.com/r/personalfinance/comments/84huks/i_j... Update: https://www.reddit.com/r/personalfinance/comments/89ipyu/update_i_just_discovered_that_i_owe_the_irs_50k/ https://www.reddit.com/r/personalfinance/comments/89ipyu/upd... They removed the story inside their update, but Google cached it: https://i.imgur.com/0DspXDr.png https://i.imgur.com/0DspXDr.png

antisthenes 9y ago
That makes NO sense at all and I continue to be surprised at the fundamental misunderstanding of the US tax system by techies (it's really not that complicated for individuals). You pay tax on the GAINS, not on the value of the trade. If he owes the IRS $50k, it means he has a realized gain of ~$333,000. Where did that money go? The only possibility here is that he took $330,000 and reinvested ALL of it into 'altcoins' just before the end of the year and is still holding them. Sorry, but that has bullshit written all over it (throwaway account, too)
- Mtinie 9y ago
  Anecdotally, it's my understanding that rolling all gains forward isn't an uncommon practice for non-professional traders -- especially during bull markets.
- spurcell93 9y ago
  It doesn't necessarily have BS written all over it - in fact, I think there are MANY people who got left holding the bag with alts.
- charlesdm 9y ago
  Depends. If he's in a high tax state and it was all short term capital gains, then those gains are taxable as income. If he didn't keep the tax money separate and the market tanks 80% (which it did) he'd end up with losses that can't be offset because you can't carry losses backwards, only forward.

sowbug 9y ago

This happened in 2000. 1999 was a heck of a year for amateur daytraders.

jaycroft 9y ago

A couple related observations: 1) With the dramatic rise and then fall of the Nasdaq back in 2001, with similar timing (peak right around New Years Day [0]), and a similar amount of new and uninformed market participants (online day trading just beginning to become a thing), could some of the early 2001 market performance be due to a similar dynamic? Noob traders make bank in 2000, log in to H&R block, start doing their taxes, and then have an oh shit moment when they come to the question about "have you bought or sold any stocks this year?" 2) Stock trading happened through United States institutions. Much of crypto trading does not. Many people may have started with $1k in Binance or Bitfinex, and seen that go up by more than a multiple of 10. Many of those people, I feel, are likely to accidentally commit a felony this year by failing to report their foreign account holdings because they are similarly unaware of the consequences of having money outside their down the street bank. FBAR is a real thing, people face serious fines (at least up to 10k for any infringement, 10k plus half your offshore assets and potential jail time if willfully [1]). [0]http://futures.tradingcharts.com/historical/ND/2001/0/continuous.html http://futures.tradingcharts.com/historical/ND/2001/0/contin... [1]https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar https://www.irs.gov/businesses/small-businesses-self-employe...

lavezzi 9y ago
"The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted."
cityhall 9y ago
I've made this same prediction before. In 2001 it was driven by people owing AMT from option exercises in addition to day trading. We got tax paperwork from our brokers though - I'm not sure how many crypto traders will even realize they owe taxes. The crypto market is less dependent on the US but it may also be priced at the margins and unable to absorb a big selloff.