5 ms·

When btc becomes overleveraged, we simply see a -25% flashcrash. They happen every couple months.

dnautics 5y ago
Maybe. I'm just an armchair economist. I don't have quantitative evidence, but you can imagine that the overall degree of leveraging can affect the local-in-time price dynamics and push them into a phase change from a flash crash regime to a `bigger problems` regime. The saving grace to date has been that Bitcoin is a fundamentally financialization-resistant technology, but it still lives in and interacts with the real world, which is financialized. That has crept in. Things feel different this time (and there is good reason to believe it could be so), is all I'm saying. When in the past the cute phrase was, "I knew when to pull out because my shoeshine boy was giving me advice" maybe now it's, "I knew when to pull out because George Soros is in" (as an indicator of leverage participation)
- ISL 5y ago
  I'm qualitatively in agreement -- I had day-traded bitcoin many years ago and sold off my last small holdings over the weekend. I had a forcing function that made the sale timely, but $62k/BTC was close-enough to my ~$100k/BTC target that it seemed silly to try to squeak out the remaining ~50% gain given the downside risk. It is strange no longer holding any cryptocurrency, but it is harder to see the future of crypto, as an investment, now than it was back at $30. Blockchains are here to stay and the underlying technology is proven, but as a fraction of M1, it is harder to know where the prices might go and which crypto will emerge as the ultimate winner. Alternatively, if crypto is to go through a "First they ignore you, then they laugh at you, then they fight you, then you win" experience, I believe we're just beginning the "then they fight you" stage, which may be challenging for investors. Over all of this is my feeling that, looking with a logarithmic perspective (the only way one should view Bitcoin), there is now a lot more distance for prices, especially of any one currency, to fall than there is for prices to rise. I asked myself the perpetual question, "If markets were to close for the next five years, would I be happier holding BTC or USD at the present price?" The answer was no longer emphatically BTC.
  - dnautics 5y ago
    Should disclose my broader views: I would not be surprised if we saw BTC 100k, soon. I am more optimistic now than I ever was that there is an endgame where BTC (or something) is some sort of international reserve currency, but I still think the likelihood is low. I am hoping for an economic system that stops stealing from the poor to give to the rich (I think taxation is about as effective way to redistribute wealth as a band-aid is to stop the bleed of a severe hemmhorage), and Bitcoin could have been (and may still be, with low likelihood) that. Generally pessimistic on "Blockchain tech" that isn't a cryptocurrency, unless a private postgres table with a progressively hashed column is a "Blockchain". Congrats on getting out in the money. I am not far behind you, let's see if I wind up okay or wind up pulling a Newton
    - ISL 5y ago
      I'm pretty agreed on the latter point -- I do expect that we'll see real regulatory pushback, especially in the US, if the dollar's status as a reserve-currency is ever in question.
    - imtringued 5y ago
      Bitcoin just creates a new class of rich people. It's still the using same mechanisms but it is happening faster. Asset has no holding fee and gets more expensive? People speculate with it at the expense of those who will have to acquire it later (the poor).
      - dnautics 5y ago
        I'm not arguing to abolish rich people, I'm just saying we should stop stealing from the poor.
        anthonygd 5y ago
        In what way are you saying we steal from the poor? How does bitcoin steal less?
rapsey 5y ago
-25% flash crash when there is a minor economic event (if even that). What happens when there is a major 2008 style economic event? What happens when billions in BTC need to be sold in a day because a large entity needs to cover their margin call? Crypto has no floor.
- graeme 5y ago
  Coinbase has the most active USD trading against BTC. Total volume runs from $300 million to about $1 billion. And that’s both buying and selling, it isn’t liquidation. So yes, good question indeed. $27 million in selling is expected to drop the price by 2% says Coinmarketcap https://coinmarketcap.com/exchanges/coinbase-exchange/ https://coinmarketcap.com/exchanges/coinbase-exchange/
  - singularity2001 5y ago
    Is that before or after the 95% wash trade ratio?
- solarkraft 5y ago
  We saw that in March of 2020, didn’t we? It crashed along with everything else.
  - rapsey 5y ago
    Yep crypto is not at all independent from the stock market. Too many hedge funds are playing in it.
  - mattalex 5y ago
    The crash at the beginning of last year wasn't as dramatic as people think it was. Most of the actual damage was caused by people overreacting to what could happen, which caused a lot of damage itself. (ie. car manufacturers cancelling chip orders because they thought the won't need it). The real economic crash is still in our future. (For example, when debt protection measures stop and people become homeless or default on their debt)

Maybe. I'm just an armchair economist. I don't have quantitative evidence, but you can imagine that the overall degree of leveraging can affect the local-in-time price dynamics and push them into a phase change from a flash crash regime to a `bigger problems` regime. The saving grace to date has been that Bitcoin is a fundamentally financialization-resistant technology, but it still lives in and interacts with the real world, which is financialized. That has crept in. Things feel different this time (and there is good reason to believe it could be so), is all I'm saying. When in the past the cute phrase was, "I knew when to pull out because my shoeshine boy was giving me advice" maybe now it's, "I knew when to pull out because George Soros is in" (as an indicator of leverage participation)

ISL 5y ago
I'm qualitatively in agreement -- I had day-traded bitcoin many years ago and sold off my last small holdings over the weekend. I had a forcing function that made the sale timely, but $62k/BTC was close-enough to my ~$100k/BTC target that it seemed silly to try to squeak out the remaining ~50% gain given the downside risk. It is strange no longer holding any cryptocurrency, but it is harder to see the future of crypto, as an investment, now than it was back at $30. Blockchains are here to stay and the underlying technology is proven, but as a fraction of M1, it is harder to know where the prices might go and which crypto will emerge as the ultimate winner. Alternatively, if crypto is to go through a "First they ignore you, then they laugh at you, then they fight you, then you win" experience, I believe we're just beginning the "then they fight you" stage, which may be challenging for investors. Over all of this is my feeling that, looking with a logarithmic perspective (the only way one should view Bitcoin), there is now a lot more distance for prices, especially of any one currency, to fall than there is for prices to rise. I asked myself the perpetual question, "If markets were to close for the next five years, would I be happier holding BTC or USD at the present price?" The answer was no longer emphatically BTC.
- dnautics 5y ago
  Should disclose my broader views: I would not be surprised if we saw BTC 100k, soon. I am more optimistic now than I ever was that there is an endgame where BTC (or something) is some sort of international reserve currency, but I still think the likelihood is low. I am hoping for an economic system that stops stealing from the poor to give to the rich (I think taxation is about as effective way to redistribute wealth as a band-aid is to stop the bleed of a severe hemmhorage), and Bitcoin could have been (and may still be, with low likelihood) that. Generally pessimistic on "Blockchain tech" that isn't a cryptocurrency, unless a private postgres table with a progressively hashed column is a "Blockchain". Congrats on getting out in the money. I am not far behind you, let's see if I wind up okay or wind up pulling a Newton
  - ISL 5y ago
    I'm pretty agreed on the latter point -- I do expect that we'll see real regulatory pushback, especially in the US, if the dollar's status as a reserve-currency is ever in question.
  - imtringued 5y ago
    Bitcoin just creates a new class of rich people. It's still the using same mechanisms but it is happening faster. Asset has no holding fee and gets more expensive? People speculate with it at the expense of those who will have to acquire it later (the poor).
    - dnautics 5y ago
      I'm not arguing to abolish rich people, I'm just saying we should stop stealing from the poor.
      - anthonygd 5y ago
        In what way are you saying we steal from the poor? How does bitcoin steal less?

rapsey 5y ago

-25% flash crash when there is a minor economic event (if even that). What happens when there is a major 2008 style economic event? What happens when billions in BTC need to be sold in a day because a large entity needs to cover their margin call? Crypto has no floor.

graeme 5y ago
Coinbase has the most active USD trading against BTC. Total volume runs from $300 million to about $1 billion. And that’s both buying and selling, it isn’t liquidation. So yes, good question indeed. $27 million in selling is expected to drop the price by 2% says Coinmarketcap https://coinmarketcap.com/exchanges/coinbase-exchange/ https://coinmarketcap.com/exchanges/coinbase-exchange/
- singularity2001 5y ago
  Is that before or after the 95% wash trade ratio?
solarkraft 5y ago
We saw that in March of 2020, didn’t we? It crashed along with everything else.
- rapsey 5y ago
  Yep crypto is not at all independent from the stock market. Too many hedge funds are playing in it.
- mattalex 5y ago
  The crash at the beginning of last year wasn't as dramatic as people think it was. Most of the actual damage was caused by people overreacting to what could happen, which caused a lot of damage itself. (ie. car manufacturers cancelling chip orders because they thought the won't need it). The real economic crash is still in our future. (For example, when debt protection measures stop and people become homeless or default on their debt)