23 ms·

As an outside observer, who has no crypto holdings at all, but is very deeply invested in the public stock market with a heavy weight on technology stocks... th

by jmacd 5y ago

As an outside observer, who has no crypto holdings at all, but is very deeply invested in the public stock market with a heavy weight on technology stocks... this doesn't look like a crash to me at all. It just looks like some steam being let off and old investors cash out and new investors get more comfortable with how much and where to invest. I consider crypto currency as it is to be an elaborate Ponzi scheme (personal view), but even with that cynicism nothing about this dip looks unhealthy to me. (I have views on what ultimately happens, but I will hold back on that)

bogota 5y ago
You can criticize crypto currency’s for a lot but I still have never seen a good argument for it being a ponzi scheme. Can someone further this argument to one that wouldn't cover every investment asset?
- lapetitejort 5y ago
  Dividends and voting rights, off the top of my head. That's not universal to every stock, but fairly common.
  - tim333 5y ago
    What about art? Also no divs and voting rights and similar economics but seldom called a ponzi scheme.
- Theodores 5y ago
  Abductive reasoning: https://en.wikipedia.org/wiki/Duck_test https://en.wikipedia.org/wiki/Duck_test So you have the non-existent assets, bag holding, difficulty getting out and the promise of above average returns. If I put my money into my saving account then I can get out at a clearly stated time, there is no expectation apart from very little interest and I am reasonably sure that the government will bail out the bank if the bank fails. In between there are a spectrum of investment options, property is a good investment asset and you actually have a property made from things like bricks and glass as the 'store of wealth'. Yes it might be difficult to get out if there is a property crash. But it is not a ponzi scheme even if it has some characteristics of one.
  - celticninja 5y ago
    But you can get out of bitcoin at any time by selling it so it fails that test.
    - andrewaylett 5y ago
      But selling Bitcoin is _exactly_ an older investor being paid out by a newer investor. IMO it's Bitcoin in combination with Tether that's the actual Ponzi. Unfortunately unlikely to unwind until and unless people start needing to redeem Tether rather than selling it on.
      - 35fbe7d3d5b9 5y ago
        > IMO it's Bitcoin in combination with Tether that's the actual Ponzi. Bingo. The problem is, the big players have no interest in unwinding the scheme. As long as exchanges can wash trade USDT:BTC to drive the inflow of retail investment, things keep going. What'll be interesting is if BTC continues to fall. I think the low $30k is a support level; if it crashes below that, I bet we're going to see more outflow from undercapitalized exchanges and things will adjust hard.
        inter_netuser 5y ago
        undercapitalized exchanges? you think they are running on fractional reserve?
        celticninja 5y ago
        That is pretty much the accusation against tether. Most exchanges use it, so rather than the exchanges being knowingly undercapitalized, they are by virtue of using tether. Which is supposed to be 1=1 backed with the $. Which it isnt, and it is not clear how backed it actually is.
        inter_netuser 5y ago
- notahacker 5y ago
  If no speculators want to pay you for your stock, you'd have a stake in a stream of future profits or asset sales that company made simply from hanging onto it. If no speculators are interested in your bonds, the issuer is obliged to pay you coupon payments until it matures simply because you hang onto it. If nobody speculated on your property, there's a lot you can do with the land whilst hanging onto it. Even a dubious investment propped up by a lot of marketing hype like gold can make shiny things. With Bitcoin, you have a cryptographic string. You can't make anything with it, it's not interesting to look at, it doesn't pay dividends or coupons and you almost certainly don't have any debt denominated in it. The only reason to hold it is the hope someone else will buy it from you for a greater price in future, and the only reason to believe they might want to do that is a claim that it's a "store of value" based entirely on the profits earlier holders made selling it to new ones. It may not literally be a Ponzi scheme, but the dynamics are the same.
  - vekker 5y ago
    This discussion has no value if you were the only one participating. Facebook has no value if there are no "friends" to interact with. My point is, the same kind of network effects that make social media valuable, are also inherent to cryptocurrencies like BTC. Metcalfe's law applies. Just like fiat currencies, actually. So yes, new entrants are obviously important to achieve an increase in value (and therefore, price). But does that necessarily make it a Ponzi scheme? I don't think so, because a Ponzi is fraud, a scam, by definition. It needs to be done with the malicious intent of stealing the money of new entrants. That's not the case here. Of course new entrants might be convinced by speculators seeking profit to buy in when BTC is actually highly overvalued, but, the same applies to any other investment really (look at what's happening to TSLA).
    - notahacker 5y ago
      It's not the "same kind of network effects" though. It'd be the same kind of network effects if the only reason people had Facebook (or telecoms) accounts is because they thought someone else might buy their account off them for more money. And if a social network came along with that value proposition - "sure, it doesn't actually do anything but the fact I sold some to this other sucker at a higher price than I bought it proves it's a store of value" - nobody would hesitate to call it a pyramid scheme.
JohnJamesRambo 5y ago
And I consider the current stock market and money printing the greatest ponzi propagated in the history of mankind. That’s why I crypto.
Stubb 5y ago
Crypto isn't a Ponzi scheme. A Ponzi scheme is form of fraud where funds from recent investors are used to pay (fictitious) profits to earlier investors. Say the ringleader claims a 10% profit. An early investor had deposited $100 and wants their $100. The ringleader had blown that investor's $100 on coke and hookers and gives him $110 from new investors. Crypto is more accurately a pyramid scheme. But then so are precious metals and fiat currency.
- coldcode 5y ago
  But at least gold has some inherent value, crypto is just math that is worth whatever the buyers/sellers think it should be. Stock in a company that stays in business will never go to zero as the company always has some value due to having revenue, but crypto has no real world floor (though unlikely to actually get to zero since someone will always buy).
  - inter_netuser 5y ago
    Gold's monetary premium dwarfs its industrial value. Something like 90%+ is purely monetary usage.
    - onemoresoop 5y ago
      And that consists of taking gold out of the ground and putting it back under the ground - in vaults and adding an extra dash on paper. That's a lot of energy expenditure with destruction of the environment as well (cyanide is still used in gold mining). What we need is a more efficient digital currency and stores of value. Gold is not the answer either.
      - inter_netuser 5y ago
        Yes. That currency/store of value is Bitcoin. No cyanides, no blown up mountains, and can be powered by clean energy. Everyone thinks it will boil the oceans, for some reason. If renewables cannot provide power - then we have to either improve renewables, or accept that nuclear is the answer and move on.
zpeti 5y ago
My personal take: There might well be ponzi schemes on top of the bitcoin infrastructure, but the technology behind bitcoin is not a ponzi scheme. It might well be that a lot of people are crazed over it and want to buy bitcoin and push up the price, but that's because there is something here with cryptocurrency. It definitely is a new way of accounting, and it could potentially be a hedge against the fiat system. There's a lot of IFs, but I still think it is revolutionary technology that may well revolutionise things in 5-10 or 50 years, who knows.
- Retric 5y ago
  At the purely technical level, Bitcoin’s current transactions per minute heavily limit it’s utility. The original goal was solving micro transactions which crypto coins could do, they just need to scale to ~100 Billion transactions a day +/- orders of magnitude. Unfortunately, miners benefit from the current artificial limitations. Which demonstrates an inherent issue with crypto currency, miners and users have very different goals yet only miners get a vote.
  - greg7mdp 5y ago
    Ethereum will solve both issues, removing miners and the energy use by moving to Proof of Stake at the end on this year, and increasing the transaction throughput by 100x factors with level 2 solutions.
    - ulzeraj 5y ago
      How does PoS solves anything when people will just stake on exchanges so that it literally replicates the current financial system with central banks and permissioned cartels? How new PoS coins will be generated and distributed? The stock has to be generated somehow right? How does this not resemble a central bank? This is an honest question. It looks like PoS is a full circle towards the same centralized system we have today. Please correct me if I'm wrong.
      - AlexandrB 5y ago
kllrnohj 5y ago
Bitcoin & Ether are both down -40% from a week to a month ago. Both of those are, in theory, large enough that investors "letting off some steam" shouldn't move them that much. If $SPY dropped 40% we'd all call it a crash. This isn't that different. Also unlike the stock market, crypto is under the delusion of being a viable currency. If USD or Euro dropped even 20% we'd start questioning if it's a recession, much less 40%.
- tadzik_ 5y ago
  > If $SPY dropped 40% we'd all call it a crash. This isn't that different If $SPY was 40% up since last month, would that be normal? ETH is still currently higher than its value from April 19th. Cryptocurrency market is extremely volatile. This isn't that far from normal.
  - cromka 5y ago
    > Cryptocurrency market is extremely volatile. This isn't that far from normal. I think you inadvertently confirm OPs point. Cryptocurrencies with their volatility cannot replace regular currencies.
    - intotheabyss 5y ago
      Cryptocurrency is a misnomer. Most cryptos aren't trying to be currencies in the traditional sense. For example, RAI is a stablecoin on Ethereum that's not pegged to any fiat currencies. You can think of RAI as a stable form of ETH.
      - echelon 5y ago
        What does that even mean?
        intotheabyss 5y ago
        It means that ETH which is a decentralized cryptocurrency can be used as a collateral for an algorithmic stablecoin called RAI that adjusts its price based on the price of ETH from a Uniswap price feed and a PID controller and arbitrage. To mint RAI you need to deposit ETH. The goal of RAI is to create a stablecoin which dampens the price movements of ETH over long periods of time.
paulpauper 5y ago
30% decline in a day is a crash by any definition
- deleted 5y ago
  [deleted]
- onemoresoop 5y ago
  If it bounces back within the same day is it still considered a crash? It seems like BTC is now down by around 7 percent and recovering somewhat. When it starts growing again the amnesia will take over with a general euphoria and the cycles continue. I've been following cryptos for a while now and this doesn't seem like something extremely uncommon.
unyttigfjelltol 5y ago
It's worse than a Ponzi. Crypto lost its marginal USD buyers, which were victims of ransomware extortion schemes. The correlation now is exposed for everyone to see.
thefounder 5y ago
You may find out that the stocks you hold dear will crash just as bitcoin. If you think bitcoin is a ponzy scheme think about the stock market as well. The stocks(most of them) are not traded on roi anymore. Long gone is that period.
loeg 5y ago
Totally agree. The S&P500 is at the lowest it's been ... since one week ago (quite literally: May 12). And before that, April. A 1.5% decline isn't a crash.
- paulpauper 5y ago
  yup. why do so many people in personal finance recommend index funds? because being down 1.5% in a week sure beats being down 30% in a day
  - onemoresoop 5y ago
    But when other vehicles give you 2x in a week while the index a mere .5% the angle changes. It really depends on what the appetite for risk really is.
    - paulpauper 5y ago
      bitcoin never went up 2x in a week except before 2013 . bitcoin hardly done much since jan 2018.
      - onemoresoop 5y ago
        BTC was was 10k last fall. It grew 6x till a month ago. That is 6x. Now after the drop it's still 4x from that 10k figure. I didn't claim it doubled in a week, other coins with a smaller cap did and not one or two, a whole lot of them. Lots of people made fortunes of this hype. Sure, a lot of people also lost a lot and that makes volatile markets very dangerous if you don't know what you're doing.
inter_netuser 5y ago
What happens ultimately? Regulated out of existance? Attacked and destroyed by the NSA? Banned?
tippytippytango 5y ago
Stocks are a big Ponzi scheme too. Most people buying stocks aren’t interested in buying cash flow like stocks were meant to provide. People want capital gains. You only get capital gains when there’s a greater fool. I’m not against owning stocks. I’m just as concentrated as you. But, let’s not confuse luck and genius. We are just hoping to be the one that gets out before the music stops.
- eldaisfish 5y ago
  Please don’t “both sides” this. Stocks are not a Ponzi scheme because funds from early investors are not flowing to fresh investors. There is the actual value created by a company together with its future prospects and assets that combine to determine a stock price. Crypto meanwhile has the backing of whom and what assets?
  - intotheabyss 5y ago
    That's strange. I own crypto assets that are also capital assets and I receive fees based on transaction volumes and loans. Seems like there's real value there.
  - broighbrobroigh 5y ago
    Actual value is a true Scotsman.
jasonlaramburu 5y ago
I wonder what % of our Economic stimulus was used to buy crypto, and how much of that money has simply disappeared over the past 24 hours.
- distances 5y ago
  It wouldn't disappear, money is just changing hands. Bitcoin doesn't add or destroy any value, it's just a speculative way of zero-sum trade. When you buy bitcoin, someone else gets your money.
  - jasonlaramburu 5y ago
    Except it's not zero sum. It's turning out to be one of the most leveraged assets out there. If I borrow money (or print tether) to buy BTC at $50k and then the price drops to $35k that money is gone.
    - inter_netuser 5y ago
      tether as absolved of all charges, and is under continuous monitoring and audit by NY AG - who would love to jail to advance their careers. Imagine how impressive "jailed 100 BILLION dollar fraudsters" sounds on the resume. Nope, not a fraud. Print, lol. They are just a prime money market fund, setup exactly the same way the funds your parents kept in their 401k. Surprise, commercial banks that lend to you, like mortgage or car lease are actually creating money out of thin air. Unlike tether which is fully backed.
      - jasonlaramburu 5y ago
        >Surprise, commercial banks that lend to you, like mortgage or car lease are actually creating money out of thin air. Unlike tether which is fully backed. In the US commercial banks are required to maintain a certain % of cash reserves relative to all deposits. They are also FDIC insured. Tether is neither insured nor required to maintain any reserves. Their recent filings show that less than 3% of tethers are actually backed by cash, and the bulk of tether is backed by anonymous 'commercial paper,' aka IOUs. Tether also declined to disclose the credit rating of this commercial paper, or who the counter-parties are. Once the BTC world stops trying to hide, obfuscate or otherwise cover for bad actors it will be possible to create meaningful financial innovations that scale.
ericwooley 5y ago
Read up on what a ponzi scheme actually is. https://www.investopedia.com/terms/p/ponzischeme.asp#:~:text=A%20Ponzi%20scheme%20is%20a%20fraudulent%20investing%20scam%20which%20generates,to%20pay%20the%20earlier%20backers https://www.investopedia.com/terms/p/ponzischeme.asp#:~:text.... I'm so tired of people saying crypto is a ponzi scheme. Maybe you think it's nonsense, or a bad investment, but it is not a ponzi scheme. > A Ponzi scheme is an investment fraud in which clients are promised a large profit at little to no risk. Companies that engage in a Ponzi scheme focus all of their energy into attracting new clients to make investments. This new income is used to pay original investors their returns, marked as a profit from a legitimate transaction.
- sadfasf122 5y ago
  Exactly. You might think crypto is worthless or a fad or whatever. But it is by definition not a "ponzi scheme" or "scam".
- sashimi-houdini 5y ago
  Naturally occurring Ponzi scheme is the term of art: https://openknowledge.worldbank.org/handle/10986/19358 https://openknowledge.worldbank.org/handle/10986/19358
- imtringued 5y ago
  Well, it's not a ponzi scheme. It's a MLM/pyramid style scheme. The idea over the long term is that there are more future investors than past investors and therefore there will be more money in the future than in the past. However, returns only last until growth limits have been reached. The problem is that everyone who buys Bitcoin wants those gains but they are exclusionary/rivalrous by definition.
  - trompetenaccoun 5y ago
    By that definition any stock that doesn't pay a dividend is a pyramid scheme. Of course, if you believe it has no value whatsoever, then anything can be seen as a pyramid scheme.
bronzeage 5y ago
It's not a Ponzi scheme because in ponzi scheme you deliberately use late investors money to pay early investors. What happens in cryptocurrency is fake-exchange scheme. Tether is a fake currency printed in unlimited way by bitfinex which is also an exchange. By pretending tethers are real dollars you create the appearance of a stronger market for cryptocurrency than actually exists. It all rests on increasing the number of tether in circulation. It will fail when there is a run-on-the-bank on tether.
- ramijames 5y ago
  Except that during crashes like this one, what you see is everyone moving their crypto holdings to stablecoins. The intent is to wait things out and then buy back in and profit during the next cycle.
  - celticninja 5y ago
    They move to stable coins because most of those exchanges do not have dollar trading, rather you have to have a stablecoin as a middleman between fiat and crypto.
  - krrrh 5y ago
    The move to stablecoins instead of cash is a reflection of major exchanges not being able to maintain banking relationships.
    - coolspot 5y ago
      Also tax avoidance. My friend exchanged all his ETH to DAI at the top, doesn’t have to report that to IRS.
      - AlexandrB 5y ago
        As someone else on here pointed out, the IRS would consider this selling ETH and buying an equivalent value in DAI. Selling the ETH is taxable as capital gains. Whether the IRS catches your friend or not is a different matter.
pilingual 5y ago
Thank you for the disinterested take! It's refreshing to see this as a top comment when so often I see "Crypto makes me sick" which offers zero information and doesn't belong on HN. A few points to the repetitive comments I keep seeing: 1. Bitcoin is not a Ponzi scheme. Various cryptocurrencies operate in such a manner, but Bitcoin and Ethereum have value propositions: settlement and programmable money respectively. Crucially, these projects are still in a growth phase. More projects are being built on Bitcoin (e.g. Avanti Bank) and Ethereum (e.g. Uniswap) and more institutions like Tesla, MassMutual, and Square have a position in it. Banking institutions are working on supporting Bitcoin. 2. Bitcoin pricing is on a log scale. Dropping to $36k from $50k is not a concern on this scale. If it drops below $10k, there might be some nervousness but Bitcoin's fluctuations have almost never deviated significantly in its 11 year history. 3. Bitcoin is not a currency. How do we know? You can't price the components of a Big Mac in Bitcoin. Again, it is in a growth phase which is what people like Taleb don't understand. When you can price a Big Mac in Bitcoin then maybe it is in some form a currency (not directly, but perhaps indirectly using Lightning or another L2). 4. A lot of smart people are invested in crypto: a16z, USV, Paradigm. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic. It's like coming in and starting to discuss how L1 cache works when you aren't a computer engineer or don't have an active day-to-day interest in the matter. Why waste people's time with your vacuous comments? It's like some kind of therapy. "Crypto sucks!" Reinforcing feel-good Circle-upvote is all it is.
- Nursie 5y ago
  > I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic This in itself is a meme - "All criticism is ignorance!" Bitcoin is not a ponzi or a pyramid scheme, that's true, but it has aspects of both, with its declining emission and stacked rewards for early adopters. And Bitcoin is for settlement now is it? That's interesting, and a massive deviation from its original intent (see the white paper) as well as all the other purposes it's been ascribed over the years. The truth is that bitcoin is an instrument of speculation. Little else.
cjohnson318 5y ago
Honest question: why do you think it's a Ponzi scheme? In the energy sector, when a well doesn't perform well enough to cover its costs, exploration companies try to get more money from their investors to drill another well that will "totally put them back in the black". I don't see this kind of dynamic in BTC. Full disclosure: I don't own any crypto myself, I'm just "crypto-curious".
suifbwish 5y ago
Bill Gates is getting divorced. I think that is bigger news than Elon Musk not accepting crypto for Tesla’s
- onemoresoop 5y ago
  Bill Gates divorcing is not as big of a story as Bill Gates' connection to Epstein coming out recently. In my eyes he dropped more than the cryptos did
  - suifbwish 5y ago
    Wait please tell me more on this. This is news
    - onemoresoop 5y ago
      Just google/duckduckgo "Bill Gates Epstein"
thorwasdfasdf 5y ago
if crypto is a ponzi scheme, then isn't cash also a ponzi scheme? cash can become just as worthless, when no one believes in it anymore, just ask zimbabwae. personally, if i'm going to be in a ponzi scheme, at the very least I want something with a limited supply. Also, what other option do we have for store of value? Equities are way overvalued beyond reason. Fixed income/cash are becoming worthless very quickly. real estate is hard, very hard (just ask anyone that's bought in the last year). What else is there? put everything in gold?(the supply there is manipulated). yes, crypto has some environmental cost. but, there's huge need for store of value. if you've been working your entire life and have 200K stored up. Losing 10K per year to inflation, year after year is not acceptable.
- codyb 5y ago
  How're you getting to 5% loss YoY due to inflation? Estimates on inflation for the USD rarely top 3% for years during the last few decades [0]. Certainly there might be an uptick this year but extrapolating that to "You'll lose 10k a year if you just hold 200k" doesn't really make sense. And certainly you'd hold that money in index funds which have pretty decent returns or even bonds which don't pay out so much these days but have some returns I believe. https://www.macrotrends.net/2497/historical-inflation-rate-by-year https://www.macrotrends.net/2497/historical-inflation-rate-b...
  - thorwasdfasdf 5y ago
    For the last 20 years: - case shiller shows housing has gone up 4% every year on average - Big mac index also 4% per year for the last 20 years - Gas (tax was not inflation adjusted, so gas prices appear to be only 2.5%) but the underlying cost is going up faster than that. - cars, one of the lowest inflation categories according to the CPI (real actual inflation is 2.7% for the last 20 years)-> pick your favorite car and see for yourself. those quality adjustments aren't worth nearly what the cpi boys say they are. So, we've already got 3-4% inflation for the last 20 years. Now with the official CPI almost 2% higher than last year, it means real inflation is probably 2% higher as well. 3% + 2% = 5% Treasuries are at about 1 - 2% and unless you hold the actual treasury, you're taking a pretty big risk if you're going into the TLT right now with very little upside gain. European bonds are negative. The highest yielding bonds, aka junk bonds are returning 3-5% but those will dip nearly as hard as stocks when things get ugly (look at the last two crashes 2020, 2018), so you might as well hold stocks. Stocks are at record high valuations according to the warren buffet indicator.
throwaway894345 5y ago
> I consider crypto currency as it is to be an elaborate Ponzi scheme (personal view) Off topic, but as someone with very little understanding of economics and no stake in cryptocurrency, I don't understand where "legitimate currency" ends and "Ponzi scheme" begins. I get that a Ponzi scheme is one which produces little or no value, and the majority of "earnings" are just wealth redistribution from the bottom of the "pyramid" to the top (and yes, I understand that pyramid schemes and ponzi schemes are different); however, I don't understand what legitimate value ordinary currency produces. Can anyone help me understand?
- imtringued 5y ago
  >I don't understand what legitimate value ordinary currency produces. You can exchange your local government currency for services and goods. With Bitcoin you first have to convert them into a local government currency and then buy services and goods. This only works because those local government currencies exist in the first place. I'll pull this out of nowhere and say that 95% of the value of Bitcoin is derived from government currencies by that I mean the reason Bitcoin is valuable is that you can exchange it for government currencies. The other 5% are services and products that you can purchase with Bitcoin directly. That portion needs to grow if Bitcoin wants to become a "legitimate currency" but if everyone abuses the currency by hoarding it and doing nothing with it then it might as well not exist.
  - throwaway894345 5y ago
    > You can exchange your local government currency for services and goods. With Bitcoin you first have to convert them into a local government currency and then buy services and goods. This only works because those local government currencies exist in the first place. I'll pull this out of nowhere and say that 95% of the value of Bitcoin is derived from government currencies by that I mean the reason Bitcoin is valuable is that you can exchange it for government currencies. So to be clear, bitcoin becomes "legitimate" when some critical mass of vendors accept it? This seems to imply that once the ponzi scheme becomes big enough it becomes legitimate (provided of course that we accept that btc is a ponzi scheme), which feels counterintuitive?
MR4D 5y ago
A stock market crash is usually defined as a drop > 10 %. We've just seen a 20% (or worse) drop in cryptos in a single 24 hour period. So to me, calling this a "crash" makes perfect sense. Will it come back? Yes, but it's still a crash.
Grim-444 5y ago
For context: - The stock market crash of 1929 was a ~25% crash - The dot com bubble crash was also roughly a ~25% drop - The 2008 market crash was a roughly 20-30% drop Various coins have now lost 10-30% of their value in the course of a couple of days. But it's just steam being let off? No big deal? Business as usual? If the same thing happened to the actual markets it would be another historic event.
- zild3d 5y ago
  For additional context though: BTC price was $9426 a year ago today. It's down 30-40% on a month view, but up 400% on a year view The stock market 4Xing in a year would be quite historic
  - b0ner_t0ner 5y ago
    > It's down 30-40% on a month view, but up 400% on a year view When in doubt, zoom out.
- deleted 5y ago
  [deleted]
chewz 5y ago
I agree (and I am also Btc-neutral). This looks more like rapid forced positions liquidation then crypto crahs - as it spilled over to other recent hedge funds favourites (like CO2 ETS). Another Archegos perhaps?
paulpan 5y ago
Conspiracy theories aside, one thing to keep in mind is that cryptocurrency market is largely unregulated. This means that it can be and does get manipulated by the major players (aka "whales"). The likes of Goldman Sachs, hedge funds, etc. are still able to manipulate the fiat and equity markets despite all the regulation - just imagine what happens on the unregulated cryptocurrency end. An example is that Coinbase was fined a couple of months ago for wash trading: https://www.cftc.gov/PressRoom/PressReleases/8369-21 https://www.cftc.gov/PressRoom/PressReleases/8369-21 It looks like prices for Bitcoin and Ethereum have rebounded from the low this morning by 20%+. So this was perhaps a flash crash, though the cryptocurrency market is always highly volatile.
diabeticApe 5y ago
While i agree that this is not really a crash as much as a long overdue correction, i have to respectfully disagree with your point about cryptos being little more than a ponzi scheme. Unfortunately the ones that have been getting most attention (Bitcoin, Doge, Ether) have been a poor representation of what the crypto space has been brewing thse past couple of years. I would highly recommend looking into DeFi projects such as AAVE or maybe a better representation of whats possible with Smart contracta on Cardano or Solana. There are a lot of "shitcoins" but there are also a few innovative gems that are going to make a major difference over the next decade imo.
- devmunchies 5y ago
  > whats possible with Smart contracts on Cardano nothing? (yet)
Animats 5y ago
This doesn't look like a crash to me at all. Yes, this just looks like normal volatility. The price of Bitcoin is still 4x what it was a year ago. The DJIA is down to where it was last month. Big deal. That's more driven by macroeconomic policy and the real world.
cm2187 5y ago
As far as I can tell, the Fed is still pumping cash, so I agree that it's unlikely we see a large stock selloff. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
stjohnswarts 5y ago
You're not really going out on a limb here. It has happened multiple times before. The numbers are bigger but the pattern is the same.

by jmacd 5y ago

bogota 5y ago

You can criticize crypto currency’s for a lot but I still have never seen a good argument for it being a ponzi scheme. Can someone further this argument to one that wouldn't cover every investment asset?

lapetitejort 5y ago
Dividends and voting rights, off the top of my head. That's not universal to every stock, but fairly common.
- tim333 5y ago
  What about art? Also no divs and voting rights and similar economics but seldom called a ponzi scheme.
Theodores 5y ago
Abductive reasoning: https://en.wikipedia.org/wiki/Duck_test https://en.wikipedia.org/wiki/Duck_test So you have the non-existent assets, bag holding, difficulty getting out and the promise of above average returns. If I put my money into my saving account then I can get out at a clearly stated time, there is no expectation apart from very little interest and I am reasonably sure that the government will bail out the bank if the bank fails. In between there are a spectrum of investment options, property is a good investment asset and you actually have a property made from things like bricks and glass as the 'store of wealth'. Yes it might be difficult to get out if there is a property crash. But it is not a ponzi scheme even if it has some characteristics of one.
- celticninja 5y ago
  But you can get out of bitcoin at any time by selling it so it fails that test.
  - andrewaylett 5y ago
    But selling Bitcoin is _exactly_ an older investor being paid out by a newer investor. IMO it's Bitcoin in combination with Tether that's the actual Ponzi. Unfortunately unlikely to unwind until and unless people start needing to redeem Tether rather than selling it on.
    - 35fbe7d3d5b9 5y ago
      > IMO it's Bitcoin in combination with Tether that's the actual Ponzi. Bingo. The problem is, the big players have no interest in unwinding the scheme. As long as exchanges can wash trade USDT:BTC to drive the inflow of retail investment, things keep going. What'll be interesting is if BTC continues to fall. I think the low $30k is a support level; if it crashes below that, I bet we're going to see more outflow from undercapitalized exchanges and things will adjust hard.
      - inter_netuser 5y ago
        undercapitalized exchanges? you think they are running on fractional reserve?
        celticninja 5y ago
        That is pretty much the accusation against tether. Most exchanges use it, so rather than the exchanges being knowingly undercapitalized, they are by virtue of using tether. Which is supposed to be 1=1 backed with the $. Which it isnt, and it is not clear how backed it actually is.
        inter_netuser 5y ago
notahacker 5y ago
If no speculators want to pay you for your stock, you'd have a stake in a stream of future profits or asset sales that company made simply from hanging onto it. If no speculators are interested in your bonds, the issuer is obliged to pay you coupon payments until it matures simply because you hang onto it. If nobody speculated on your property, there's a lot you can do with the land whilst hanging onto it. Even a dubious investment propped up by a lot of marketing hype like gold can make shiny things. With Bitcoin, you have a cryptographic string. You can't make anything with it, it's not interesting to look at, it doesn't pay dividends or coupons and you almost certainly don't have any debt denominated in it. The only reason to hold it is the hope someone else will buy it from you for a greater price in future, and the only reason to believe they might want to do that is a claim that it's a "store of value" based entirely on the profits earlier holders made selling it to new ones. It may not literally be a Ponzi scheme, but the dynamics are the same.
- vekker 5y ago
  This discussion has no value if you were the only one participating. Facebook has no value if there are no "friends" to interact with. My point is, the same kind of network effects that make social media valuable, are also inherent to cryptocurrencies like BTC. Metcalfe's law applies. Just like fiat currencies, actually. So yes, new entrants are obviously important to achieve an increase in value (and therefore, price). But does that necessarily make it a Ponzi scheme? I don't think so, because a Ponzi is fraud, a scam, by definition. It needs to be done with the malicious intent of stealing the money of new entrants. That's not the case here. Of course new entrants might be convinced by speculators seeking profit to buy in when BTC is actually highly overvalued, but, the same applies to any other investment really (look at what's happening to TSLA).
  - notahacker 5y ago
    It's not the "same kind of network effects" though. It'd be the same kind of network effects if the only reason people had Facebook (or telecoms) accounts is because they thought someone else might buy their account off them for more money. And if a social network came along with that value proposition - "sure, it doesn't actually do anything but the fact I sold some to this other sucker at a higher price than I bought it proves it's a store of value" - nobody would hesitate to call it a pyramid scheme.

JohnJamesRambo 5y ago

And I consider the current stock market and money printing the greatest ponzi propagated in the history of mankind. That’s why I crypto.

Stubb 5y ago

Crypto isn't a Ponzi scheme. A Ponzi scheme is form of fraud where funds from recent investors are used to pay (fictitious) profits to earlier investors. Say the ringleader claims a 10% profit. An early investor had deposited $100 and wants their $100. The ringleader had blown that investor's $100 on coke and hookers and gives him $110 from new investors. Crypto is more accurately a pyramid scheme. But then so are precious metals and fiat currency.

coldcode 5y ago
But at least gold has some inherent value, crypto is just math that is worth whatever the buyers/sellers think it should be. Stock in a company that stays in business will never go to zero as the company always has some value due to having revenue, but crypto has no real world floor (though unlikely to actually get to zero since someone will always buy).
- inter_netuser 5y ago
  Gold's monetary premium dwarfs its industrial value. Something like 90%+ is purely monetary usage.
  - onemoresoop 5y ago
    And that consists of taking gold out of the ground and putting it back under the ground - in vaults and adding an extra dash on paper. That's a lot of energy expenditure with destruction of the environment as well (cyanide is still used in gold mining). What we need is a more efficient digital currency and stores of value. Gold is not the answer either.
    - inter_netuser 5y ago
      Yes. That currency/store of value is Bitcoin. No cyanides, no blown up mountains, and can be powered by clean energy. Everyone thinks it will boil the oceans, for some reason. If renewables cannot provide power - then we have to either improve renewables, or accept that nuclear is the answer and move on.

zpeti 5y ago

My personal take: There might well be ponzi schemes on top of the bitcoin infrastructure, but the technology behind bitcoin is not a ponzi scheme. It might well be that a lot of people are crazed over it and want to buy bitcoin and push up the price, but that's because there is something here with cryptocurrency. It definitely is a new way of accounting, and it could potentially be a hedge against the fiat system. There's a lot of IFs, but I still think it is revolutionary technology that may well revolutionise things in 5-10 or 50 years, who knows.

Retric 5y ago
At the purely technical level, Bitcoin’s current transactions per minute heavily limit it’s utility. The original goal was solving micro transactions which crypto coins could do, they just need to scale to ~100 Billion transactions a day +/- orders of magnitude. Unfortunately, miners benefit from the current artificial limitations. Which demonstrates an inherent issue with crypto currency, miners and users have very different goals yet only miners get a vote.
- greg7mdp 5y ago
  Ethereum will solve both issues, removing miners and the energy use by moving to Proof of Stake at the end on this year, and increasing the transaction throughput by 100x factors with level 2 solutions.
  - ulzeraj 5y ago
    How does PoS solves anything when people will just stake on exchanges so that it literally replicates the current financial system with central banks and permissioned cartels? How new PoS coins will be generated and distributed? The stock has to be generated somehow right? How does this not resemble a central bank? This is an honest question. It looks like PoS is a full circle towards the same centralized system we have today. Please correct me if I'm wrong.
    - AlexandrB 5y ago

kllrnohj 5y ago

Bitcoin & Ether are both down -40% from a week to a month ago. Both of those are, in theory, large enough that investors "letting off some steam" shouldn't move them that much. If $SPY dropped 40% we'd all call it a crash. This isn't that different. Also unlike the stock market, crypto is under the delusion of being a viable currency. If USD or Euro dropped even 20% we'd start questioning if it's a recession, much less 40%.

tadzik_ 5y ago
> If $SPY dropped 40% we'd all call it a crash. This isn't that different If $SPY was 40% up since last month, would that be normal? ETH is still currently higher than its value from April 19th. Cryptocurrency market is extremely volatile. This isn't that far from normal.
- cromka 5y ago
  > Cryptocurrency market is extremely volatile. This isn't that far from normal. I think you inadvertently confirm OPs point. Cryptocurrencies with their volatility cannot replace regular currencies.
  - intotheabyss 5y ago
    Cryptocurrency is a misnomer. Most cryptos aren't trying to be currencies in the traditional sense. For example, RAI is a stablecoin on Ethereum that's not pegged to any fiat currencies. You can think of RAI as a stable form of ETH.
    - echelon 5y ago
      What does that even mean?
      - intotheabyss 5y ago
        It means that ETH which is a decentralized cryptocurrency can be used as a collateral for an algorithmic stablecoin called RAI that adjusts its price based on the price of ETH from a Uniswap price feed and a PID controller and arbitrage. To mint RAI you need to deposit ETH. The goal of RAI is to create a stablecoin which dampens the price movements of ETH over long periods of time.

paulpauper 5y ago

30% decline in a day is a crash by any definition

deleted 5y ago
[deleted]
onemoresoop 5y ago
If it bounces back within the same day is it still considered a crash? It seems like BTC is now down by around 7 percent and recovering somewhat. When it starts growing again the amnesia will take over with a general euphoria and the cycles continue. I've been following cryptos for a while now and this doesn't seem like something extremely uncommon.

unyttigfjelltol 5y ago

It's worse than a Ponzi. Crypto lost its marginal USD buyers, which were victims of ransomware extortion schemes. The correlation now is exposed for everyone to see.

thefounder 5y ago

You may find out that the stocks you hold dear will crash just as bitcoin. If you think bitcoin is a ponzy scheme think about the stock market as well. The stocks(most of them) are not traded on roi anymore. Long gone is that period.

loeg 5y ago

Totally agree. The S&P500 is at the lowest it's been ... since one week ago (quite literally: May 12). And before that, April. A 1.5% decline isn't a crash.

paulpauper 5y ago
yup. why do so many people in personal finance recommend index funds? because being down 1.5% in a week sure beats being down 30% in a day
- onemoresoop 5y ago
  But when other vehicles give you 2x in a week while the index a mere .5% the angle changes. It really depends on what the appetite for risk really is.
  - paulpauper 5y ago
    bitcoin never went up 2x in a week except before 2013 . bitcoin hardly done much since jan 2018.
    - onemoresoop 5y ago
      BTC was was 10k last fall. It grew 6x till a month ago. That is 6x. Now after the drop it's still 4x from that 10k figure. I didn't claim it doubled in a week, other coins with a smaller cap did and not one or two, a whole lot of them. Lots of people made fortunes of this hype. Sure, a lot of people also lost a lot and that makes volatile markets very dangerous if you don't know what you're doing.

inter_netuser 5y ago

What happens ultimately? Regulated out of existance? Attacked and destroyed by the NSA? Banned?

tippytippytango 5y ago

Stocks are a big Ponzi scheme too. Most people buying stocks aren’t interested in buying cash flow like stocks were meant to provide. People want capital gains. You only get capital gains when there’s a greater fool. I’m not against owning stocks. I’m just as concentrated as you. But, let’s not confuse luck and genius. We are just hoping to be the one that gets out before the music stops.

eldaisfish 5y ago
Please don’t “both sides” this. Stocks are not a Ponzi scheme because funds from early investors are not flowing to fresh investors. There is the actual value created by a company together with its future prospects and assets that combine to determine a stock price. Crypto meanwhile has the backing of whom and what assets?
- intotheabyss 5y ago
  That's strange. I own crypto assets that are also capital assets and I receive fees based on transaction volumes and loans. Seems like there's real value there.
- broighbrobroigh 5y ago
  Actual value is a true Scotsman.

jasonlaramburu 5y ago

I wonder what % of our Economic stimulus was used to buy crypto, and how much of that money has simply disappeared over the past 24 hours.

distances 5y ago
It wouldn't disappear, money is just changing hands. Bitcoin doesn't add or destroy any value, it's just a speculative way of zero-sum trade. When you buy bitcoin, someone else gets your money.
- jasonlaramburu 5y ago
  Except it's not zero sum. It's turning out to be one of the most leveraged assets out there. If I borrow money (or print tether) to buy BTC at $50k and then the price drops to $35k that money is gone.
  - inter_netuser 5y ago
    tether as absolved of all charges, and is under continuous monitoring and audit by NY AG - who would love to jail to advance their careers. Imagine how impressive "jailed 100 BILLION dollar fraudsters" sounds on the resume. Nope, not a fraud. Print, lol. They are just a prime money market fund, setup exactly the same way the funds your parents kept in their 401k. Surprise, commercial banks that lend to you, like mortgage or car lease are actually creating money out of thin air. Unlike tether which is fully backed.
    - jasonlaramburu 5y ago
      >Surprise, commercial banks that lend to you, like mortgage or car lease are actually creating money out of thin air. Unlike tether which is fully backed. In the US commercial banks are required to maintain a certain % of cash reserves relative to all deposits. They are also FDIC insured. Tether is neither insured nor required to maintain any reserves. Their recent filings show that less than 3% of tethers are actually backed by cash, and the bulk of tether is backed by anonymous 'commercial paper,' aka IOUs. Tether also declined to disclose the credit rating of this commercial paper, or who the counter-parties are. Once the BTC world stops trying to hide, obfuscate or otherwise cover for bad actors it will be possible to create meaningful financial innovations that scale.

ericwooley 5y ago

Read up on what a ponzi scheme actually is. https://www.investopedia.com/terms/p/ponzischeme.asp#:~:text=A%20Ponzi%20scheme%20is%20a%20fraudulent%20investing%20scam%20which%20generates,to%20pay%20the%20earlier%20backers https://www.investopedia.com/terms/p/ponzischeme.asp#:~:text.... I'm so tired of people saying crypto is a ponzi scheme. Maybe you think it's nonsense, or a bad investment, but it is not a ponzi scheme. > A Ponzi scheme is an investment fraud in which clients are promised a large profit at little to no risk. Companies that engage in a Ponzi scheme focus all of their energy into attracting new clients to make investments. This new income is used to pay original investors their returns, marked as a profit from a legitimate transaction.

sadfasf122 5y ago
Exactly. You might think crypto is worthless or a fad or whatever. But it is by definition not a "ponzi scheme" or "scam".
sashimi-houdini 5y ago
Naturally occurring Ponzi scheme is the term of art: https://openknowledge.worldbank.org/handle/10986/19358 https://openknowledge.worldbank.org/handle/10986/19358
imtringued 5y ago
Well, it's not a ponzi scheme. It's a MLM/pyramid style scheme. The idea over the long term is that there are more future investors than past investors and therefore there will be more money in the future than in the past. However, returns only last until growth limits have been reached. The problem is that everyone who buys Bitcoin wants those gains but they are exclusionary/rivalrous by definition.
- trompetenaccoun 5y ago
  By that definition any stock that doesn't pay a dividend is a pyramid scheme. Of course, if you believe it has no value whatsoever, then anything can be seen as a pyramid scheme.

bronzeage 5y ago

It's not a Ponzi scheme because in ponzi scheme you deliberately use late investors money to pay early investors. What happens in cryptocurrency is fake-exchange scheme. Tether is a fake currency printed in unlimited way by bitfinex which is also an exchange. By pretending tethers are real dollars you create the appearance of a stronger market for cryptocurrency than actually exists. It all rests on increasing the number of tether in circulation. It will fail when there is a run-on-the-bank on tether.

ramijames 5y ago
Except that during crashes like this one, what you see is everyone moving their crypto holdings to stablecoins. The intent is to wait things out and then buy back in and profit during the next cycle.
- celticninja 5y ago
  They move to stable coins because most of those exchanges do not have dollar trading, rather you have to have a stablecoin as a middleman between fiat and crypto.
- krrrh 5y ago
  The move to stablecoins instead of cash is a reflection of major exchanges not being able to maintain banking relationships.
  - coolspot 5y ago
    Also tax avoidance. My friend exchanged all his ETH to DAI at the top, doesn’t have to report that to IRS.
    - AlexandrB 5y ago
      As someone else on here pointed out, the IRS would consider this selling ETH and buying an equivalent value in DAI. Selling the ETH is taxable as capital gains. Whether the IRS catches your friend or not is a different matter.

pilingual 5y ago

Thank you for the disinterested take! It's refreshing to see this as a top comment when so often I see "Crypto makes me sick" which offers zero information and doesn't belong on HN. A few points to the repetitive comments I keep seeing: 1. Bitcoin is not a Ponzi scheme. Various cryptocurrencies operate in such a manner, but Bitcoin and Ethereum have value propositions: settlement and programmable money respectively. Crucially, these projects are still in a growth phase. More projects are being built on Bitcoin (e.g. Avanti Bank) and Ethereum (e.g. Uniswap) and more institutions like Tesla, MassMutual, and Square have a position in it. Banking institutions are working on supporting Bitcoin. 2. Bitcoin pricing is on a log scale. Dropping to $36k from $50k is not a concern on this scale. If it drops below $10k, there might be some nervousness but Bitcoin's fluctuations have almost never deviated significantly in its 11 year history. 3. Bitcoin is not a currency. How do we know? You can't price the components of a Big Mac in Bitcoin. Again, it is in a growth phase which is what people like Taleb don't understand. When you can price a Big Mac in Bitcoin then maybe it is in some form a currency (not directly, but perhaps indirectly using Lightning or another L2). 4. A lot of smart people are invested in crypto: a16z, USV, Paradigm. These aren't greedy VCs -- it's their job to make returns for institutional investors who are often pension funds or charitable endowments, so if it a "Ponzi" then they are fools. I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic. It's like coming in and starting to discuss how L1 cache works when you aren't a computer engineer or don't have an active day-to-day interest in the matter. Why waste people's time with your vacuous comments? It's like some kind of therapy. "Crypto sucks!" Reinforcing feel-good Circle-upvote is all it is.

Nursie 5y ago
> I do not understand how every time cryptocurrency comes up armchair HN users come along and comment when they, very apparently, have almost no understanding of the topic This in itself is a meme - "All criticism is ignorance!" Bitcoin is not a ponzi or a pyramid scheme, that's true, but it has aspects of both, with its declining emission and stacked rewards for early adopters. And Bitcoin is for settlement now is it? That's interesting, and a massive deviation from its original intent (see the white paper) as well as all the other purposes it's been ascribed over the years. The truth is that bitcoin is an instrument of speculation. Little else.

cjohnson318 5y ago

Honest question: why do you think it's a Ponzi scheme? In the energy sector, when a well doesn't perform well enough to cover its costs, exploration companies try to get more money from their investors to drill another well that will "totally put them back in the black". I don't see this kind of dynamic in BTC. Full disclosure: I don't own any crypto myself, I'm just "crypto-curious".

suifbwish 5y ago

Bill Gates is getting divorced. I think that is bigger news than Elon Musk not accepting crypto for Tesla’s

onemoresoop 5y ago
Bill Gates divorcing is not as big of a story as Bill Gates' connection to Epstein coming out recently. In my eyes he dropped more than the cryptos did
- suifbwish 5y ago
  Wait please tell me more on this. This is news
  - onemoresoop 5y ago
    Just google/duckduckgo "Bill Gates Epstein"

thorwasdfasdf 5y ago

if crypto is a ponzi scheme, then isn't cash also a ponzi scheme? cash can become just as worthless, when no one believes in it anymore, just ask zimbabwae. personally, if i'm going to be in a ponzi scheme, at the very least I want something with a limited supply. Also, what other option do we have for store of value? Equities are way overvalued beyond reason. Fixed income/cash are becoming worthless very quickly. real estate is hard, very hard (just ask anyone that's bought in the last year). What else is there? put everything in gold?(the supply there is manipulated). yes, crypto has some environmental cost. but, there's huge need for store of value. if you've been working your entire life and have 200K stored up. Losing 10K per year to inflation, year after year is not acceptable.

codyb 5y ago
How're you getting to 5% loss YoY due to inflation? Estimates on inflation for the USD rarely top 3% for years during the last few decades [0]. Certainly there might be an uptick this year but extrapolating that to "You'll lose 10k a year if you just hold 200k" doesn't really make sense. And certainly you'd hold that money in index funds which have pretty decent returns or even bonds which don't pay out so much these days but have some returns I believe. https://www.macrotrends.net/2497/historical-inflation-rate-by-year https://www.macrotrends.net/2497/historical-inflation-rate-b...
- thorwasdfasdf 5y ago
  For the last 20 years: - case shiller shows housing has gone up 4% every year on average - Big mac index also 4% per year for the last 20 years - Gas (tax was not inflation adjusted, so gas prices appear to be only 2.5%) but the underlying cost is going up faster than that. - cars, one of the lowest inflation categories according to the CPI (real actual inflation is 2.7% for the last 20 years)-> pick your favorite car and see for yourself. those quality adjustments aren't worth nearly what the cpi boys say they are. So, we've already got 3-4% inflation for the last 20 years. Now with the official CPI almost 2% higher than last year, it means real inflation is probably 2% higher as well. 3% + 2% = 5% Treasuries are at about 1 - 2% and unless you hold the actual treasury, you're taking a pretty big risk if you're going into the TLT right now with very little upside gain. European bonds are negative. The highest yielding bonds, aka junk bonds are returning 3-5% but those will dip nearly as hard as stocks when things get ugly (look at the last two crashes 2020, 2018), so you might as well hold stocks. Stocks are at record high valuations according to the warren buffet indicator.

throwaway894345 5y ago

> I consider crypto currency as it is to be an elaborate Ponzi scheme (personal view) Off topic, but as someone with very little understanding of economics and no stake in cryptocurrency, I don't understand where "legitimate currency" ends and "Ponzi scheme" begins. I get that a Ponzi scheme is one which produces little or no value, and the majority of "earnings" are just wealth redistribution from the bottom of the "pyramid" to the top (and yes, I understand that pyramid schemes and ponzi schemes are different); however, I don't understand what legitimate value ordinary currency produces. Can anyone help me understand?

imtringued 5y ago
>I don't understand what legitimate value ordinary currency produces. You can exchange your local government currency for services and goods. With Bitcoin you first have to convert them into a local government currency and then buy services and goods. This only works because those local government currencies exist in the first place. I'll pull this out of nowhere and say that 95% of the value of Bitcoin is derived from government currencies by that I mean the reason Bitcoin is valuable is that you can exchange it for government currencies. The other 5% are services and products that you can purchase with Bitcoin directly. That portion needs to grow if Bitcoin wants to become a "legitimate currency" but if everyone abuses the currency by hoarding it and doing nothing with it then it might as well not exist.
- throwaway894345 5y ago
  > You can exchange your local government currency for services and goods. With Bitcoin you first have to convert them into a local government currency and then buy services and goods. This only works because those local government currencies exist in the first place. I'll pull this out of nowhere and say that 95% of the value of Bitcoin is derived from government currencies by that I mean the reason Bitcoin is valuable is that you can exchange it for government currencies. So to be clear, bitcoin becomes "legitimate" when some critical mass of vendors accept it? This seems to imply that once the ponzi scheme becomes big enough it becomes legitimate (provided of course that we accept that btc is a ponzi scheme), which feels counterintuitive?

MR4D 5y ago

A stock market crash is usually defined as a drop > 10 %. We've just seen a 20% (or worse) drop in cryptos in a single 24 hour period. So to me, calling this a "crash" makes perfect sense. Will it come back? Yes, but it's still a crash.

Grim-444 5y ago

For context: - The stock market crash of 1929 was a ~25% crash - The dot com bubble crash was also roughly a ~25% drop - The 2008 market crash was a roughly 20-30% drop Various coins have now lost 10-30% of their value in the course of a couple of days. But it's just steam being let off? No big deal? Business as usual? If the same thing happened to the actual markets it would be another historic event.

zild3d 5y ago
For additional context though: BTC price was $9426 a year ago today. It's down 30-40% on a month view, but up 400% on a year view The stock market 4Xing in a year would be quite historic
- b0ner_t0ner 5y ago
  > It's down 30-40% on a month view, but up 400% on a year view When in doubt, zoom out.
deleted 5y ago
[deleted]

chewz 5y ago

I agree (and I am also Btc-neutral). This looks more like rapid forced positions liquidation then crypto crahs - as it spilled over to other recent hedge funds favourites (like CO2 ETS). Another Archegos perhaps?

paulpan 5y ago

Conspiracy theories aside, one thing to keep in mind is that cryptocurrency market is largely unregulated. This means that it can be and does get manipulated by the major players (aka "whales"). The likes of Goldman Sachs, hedge funds, etc. are still able to manipulate the fiat and equity markets despite all the regulation - just imagine what happens on the unregulated cryptocurrency end. An example is that Coinbase was fined a couple of months ago for wash trading: https://www.cftc.gov/PressRoom/PressReleases/8369-21 https://www.cftc.gov/PressRoom/PressReleases/8369-21 It looks like prices for Bitcoin and Ethereum have rebounded from the low this morning by 20%+. So this was perhaps a flash crash, though the cryptocurrency market is always highly volatile.

diabeticApe 5y ago

While i agree that this is not really a crash as much as a long overdue correction, i have to respectfully disagree with your point about cryptos being little more than a ponzi scheme. Unfortunately the ones that have been getting most attention (Bitcoin, Doge, Ether) have been a poor representation of what the crypto space has been brewing thse past couple of years. I would highly recommend looking into DeFi projects such as AAVE or maybe a better representation of whats possible with Smart contracta on Cardano or Solana. There are a lot of "shitcoins" but there are also a few innovative gems that are going to make a major difference over the next decade imo.

devmunchies 5y ago
> whats possible with Smart contracts on Cardano nothing? (yet)

Animats 5y ago

This doesn't look like a crash to me at all. Yes, this just looks like normal volatility. The price of Bitcoin is still 4x what it was a year ago. The DJIA is down to where it was last month. Big deal. That's more driven by macroeconomic policy and the real world.

cm2187 5y ago

As far as I can tell, the Fed is still pumping cash, so I agree that it's unlikely we see a large stock selloff. https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

stjohnswarts 5y ago

You're not really going out on a limb here. It has happened multiple times before. The numbers are bigger but the pattern is the same.