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Ive heard conflicting viewpoints on the current crypto crash. Some say that this is different than the rest, and that crypto has already reached it’s all time m

Ive heard conflicting viewpoints on the current crypto crash. Some say that this is different than the rest, and that crypto has already reached it’s all time max, whereas others say that this is just another pullback before an even larger bull run. With crypto, it is so hard to know what it’s actual value should be, since unlike a stock there are no earnings and thus you can’t look at the P/E ratio to determine its pricing. I’m curious to hear what you guys think—-and how you determine the value of crypto.

deleted 4y ago
[deleted]
bestnameever 4y ago
> I’m curious to hear what you guys think—-and how you determine the value of crypto. The value at any point in time is determined on the exchanges. I think a better question is what changes the value, creates the volatility, and so forth.
- datashaman 4y ago
  Buy and sell pressure.
- mellavora 4y ago
  No, the clearing price is determined by the exchanges. The value is the net benefit (including future benefit) that it provides. McDonalds creates value by providing convenient and consistent hamburgers, and entry-level jobs. Bitcoin, I've been told, creates value by allowing easy transfer of funds. Thus the value of Bitcoin should be based on how Bitcoin transaction costs and externalities (lack of regulation is both a plus and a minus) stack up against other money transfer systems.
vages 4y ago
When I had crypto assets, I came upon this article about “Greater fool theory” https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory It made me sell all my crypto (luckily at a profit), and I have not looked back.
- Jistern 4y ago
  Yup. You nailed it. It's a fad which which most buyers and sellers use as a means to engage in gambling.
  - p0d 4y ago
    Agreed. My friend said to me, "do you believe in cryptocurrency?" I thought to myself no, and sold it. I can see now my motivation was greed and fomo. Neither of which are values I live my life by.
    - Jistern 4y ago
- nightski 4y ago
  So you basically don't invest in anything because that theory can be applied to any asset.
  - GeneralMayhem 4y ago
    Most assets are, at least in theory, backed by something that can turn a true profit in an efficient market. Anything that's based on capital-intensive resource extraction can pay a dividend on the profit from that capital. Anything that's based on real estate will go up in price as population increases. Anything that's manufactured or based on IP can pay a dividend based on the value delta between inputs and outputs. In general, anything that turns a raw material of some sort into a more refined product (be it iron ore into steel, steel into machines, or electrons into advertisements) is adding economic value into the system. By doing that work, the total net wealth of humanity increases. The economy is positive-sum, and so investing in anything that's correlated with the economy as a whole should be worthwhile. Bitcoin doesn't work that way. Trading Bitcoin isn't adding to the total net worth of humanity. Mining Bitcoin arguably could be, because the ability to make transactions has some value, but the practical value of those transactions is less than the value of the electricity, computer hardware, and pollution that go into making them. Speculating on Bitcoin does nothing productive; it's zero sum. Net-zero systems are nearly indistinguishable from gambling unless you have insider information.
puranjay 4y ago
Honestly, no way to tell at this point. Low interest rate and QE enabled all sorts of funny money shenanigans. Like startups raising billions with no real revenue and wildly unprofitable unit economics. Crypto benefited greatlyfrom this low interest regime too. If you had to borrow money at 8% interest, you wouldn't be as callous with it. Crypto has only existed in this funny money monetary environment. Good chance it all collapses if interest rates are too high by the time of the next BTC halvening (iirc around mid 2024) and there aren't enough bids to perpetuate the "next cycle will be bigger than the last" pattern. But at the same time, its also true that the awful central bank management that prompted the creation of BTC is also at its peak awfulness right now. So really, wait and watch.
Jistern 4y ago
As I learned from a quotation which is attributed to Mark Cuban, so-called “cyptocurrencies” are collectibles like baseball cards, rare postage stamps, and French impressionist paintings. Fundamentally they're all fads. None of them have any significant inherent value. Typically two types of people purchase them: either avid collectors or speculators. Don't gamble. It's not a productive use of your time. It's also a vice. Spend your time doing something that is valuable and productive. Don't fritter it away or one day you will probably regret it.
- Ekaros 4y ago
  And now some of them have entered to fractional ownership... Meaning some people are there for speculation not even some type of ownership of collection... Or at least I think very few would think owning part of card stored somewhere is collecting... Really asking question does this make sense at all.
- BurningPenguin 4y ago
  I think you're confusing a Crypto with NFTs. One is virtual money, the other is virtual certificates.
  - Jistern 4y ago
  - deleted 4y ago
    [deleted]
  - netsharc 4y ago
    I have a collection of broken pens on my desk... in theory I could also use them as units of currencies, I just have to find a sucker^W person willing to accept them as such...
    - BurningPenguin 4y ago
junofan 4y ago
It’s fairly obvious that a compelling regulatory framework and standardization around security tokens will emerge in some jurisdiction. Custodians of tangible assets will offer listing services. Standardization, regulation, and features like fractionalization and composability will allow organized markets to form with more participants, better risk management, and increased liquidity for things like private equity and alternative investments. Price will follow underlying asset plus some risk premium minus some liquidity premium. Networks that secure these assets will have token prices that follow transaction fees and the value capturable by choosing transaction ordering.
beefield 4y ago
> With crypto, it is so hard to know what it’s actual value should be, since unlike a stock there are no earnings Your second part there gives a very good hint to your problem in the first part. Of course, in some sense there is some value in facilitating child porn and other illegal activities and some value in burning fossil fuels for mining (the value may be positive or negative). I am still pretty confident that if you just round "actual value" to zero - and use the possible error to keep you away from shorting the market - that is in the long run the valuation that gives you the best quality of life.

deleted 4y ago

[deleted]

bestnameever 4y ago

> I’m curious to hear what you guys think—-and how you determine the value of crypto. The value at any point in time is determined on the exchanges. I think a better question is what changes the value, creates the volatility, and so forth.

datashaman 4y ago
Buy and sell pressure.
mellavora 4y ago
No, the clearing price is determined by the exchanges. The value is the net benefit (including future benefit) that it provides. McDonalds creates value by providing convenient and consistent hamburgers, and entry-level jobs. Bitcoin, I've been told, creates value by allowing easy transfer of funds. Thus the value of Bitcoin should be based on how Bitcoin transaction costs and externalities (lack of regulation is both a plus and a minus) stack up against other money transfer systems.

vages 4y ago

When I had crypto assets, I came upon this article about “Greater fool theory” https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory It made me sell all my crypto (luckily at a profit), and I have not looked back.

Jistern 4y ago
Yup. You nailed it. It's a fad which which most buyers and sellers use as a means to engage in gambling.
- p0d 4y ago
  Agreed. My friend said to me, "do you believe in cryptocurrency?" I thought to myself no, and sold it. I can see now my motivation was greed and fomo. Neither of which are values I live my life by.
  - Jistern 4y ago
nightski 4y ago
So you basically don't invest in anything because that theory can be applied to any asset.
- GeneralMayhem 4y ago
  Most assets are, at least in theory, backed by something that can turn a true profit in an efficient market. Anything that's based on capital-intensive resource extraction can pay a dividend on the profit from that capital. Anything that's based on real estate will go up in price as population increases. Anything that's manufactured or based on IP can pay a dividend based on the value delta between inputs and outputs. In general, anything that turns a raw material of some sort into a more refined product (be it iron ore into steel, steel into machines, or electrons into advertisements) is adding economic value into the system. By doing that work, the total net wealth of humanity increases. The economy is positive-sum, and so investing in anything that's correlated with the economy as a whole should be worthwhile. Bitcoin doesn't work that way. Trading Bitcoin isn't adding to the total net worth of humanity. Mining Bitcoin arguably could be, because the ability to make transactions has some value, but the practical value of those transactions is less than the value of the electricity, computer hardware, and pollution that go into making them. Speculating on Bitcoin does nothing productive; it's zero sum. Net-zero systems are nearly indistinguishable from gambling unless you have insider information.

puranjay 4y ago

Honestly, no way to tell at this point. Low interest rate and QE enabled all sorts of funny money shenanigans. Like startups raising billions with no real revenue and wildly unprofitable unit economics. Crypto benefited greatlyfrom this low interest regime too. If you had to borrow money at 8% interest, you wouldn't be as callous with it. Crypto has only existed in this funny money monetary environment. Good chance it all collapses if interest rates are too high by the time of the next BTC halvening (iirc around mid 2024) and there aren't enough bids to perpetuate the "next cycle will be bigger than the last" pattern. But at the same time, its also true that the awful central bank management that prompted the creation of BTC is also at its peak awfulness right now. So really, wait and watch.

Jistern 4y ago

As I learned from a quotation which is attributed to Mark Cuban, so-called “cyptocurrencies” are collectibles like baseball cards, rare postage stamps, and French impressionist paintings. Fundamentally they're all fads. None of them have any significant inherent value. Typically two types of people purchase them: either avid collectors or speculators. Don't gamble. It's not a productive use of your time. It's also a vice. Spend your time doing something that is valuable and productive. Don't fritter it away or one day you will probably regret it.

Ekaros 4y ago
And now some of them have entered to fractional ownership... Meaning some people are there for speculation not even some type of ownership of collection... Or at least I think very few would think owning part of card stored somewhere is collecting... Really asking question does this make sense at all.
BurningPenguin 4y ago
I think you're confusing a Crypto with NFTs. One is virtual money, the other is virtual certificates.
- Jistern 4y ago
- deleted 4y ago
  [deleted]
- netsharc 4y ago
  I have a collection of broken pens on my desk... in theory I could also use them as units of currencies, I just have to find a sucker^W person willing to accept them as such...
  - BurningPenguin 4y ago

junofan 4y ago

It’s fairly obvious that a compelling regulatory framework and standardization around security tokens will emerge in some jurisdiction. Custodians of tangible assets will offer listing services. Standardization, regulation, and features like fractionalization and composability will allow organized markets to form with more participants, better risk management, and increased liquidity for things like private equity and alternative investments. Price will follow underlying asset plus some risk premium minus some liquidity premium. Networks that secure these assets will have token prices that follow transaction fees and the value capturable by choosing transaction ordering.

beefield 4y ago

> With crypto, it is so hard to know what it’s actual value should be, since unlike a stock there are no earnings Your second part there gives a very good hint to your problem in the first part. Of course, in some sense there is some value in facilitating child porn and other illegal activities and some value in burning fossil fuels for mining (the value may be positive or negative). I am still pretty confident that if you just round "actual value" to zero - and use the possible error to keep you away from shorting the market - that is in the long run the valuation that gives you the best quality of life.