8 ms·

Bitcoin’s nosedive through the $20k mark is a Minsky Moment for crypto

84 points by Pigalowda 4y ago

pvg 4y ago
Also at https://news.ycombinator.com/item?id=31792818 https://news.ycombinator.com/item?id=31792818
Pigalowda 4y ago
Minsky Moment refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. Minsky Moment is named after economist Hyman Minsky and defines the point in time where the sudden decline in market sentiment inevitably leads to a market crash.
- labrador 4y ago
  https://www.economist.com/schools-brief/2016/07/30/minskys-moment https://www.economist.com/schools-brief/2016/07/30/minskys-m...
mgamache 4y ago
We'll see, but the HODLers are not selling (AFAIK). A lot of this latest deep pullback was driven by over-leverage and margin calls on BTC backed DeFi (like Celsius). The margin calls on staking tokens in particular are a new factor adding to volatility. https://www.coindesk.com/markets/2022/06/14/staked-ether-becomes-focus-of-crypto-stress-from-celsius-to-three-arrows/ https://www.coindesk.com/markets/2022/06/14/staked-ether-bec... https://cryptoslate.com/blockfi-liquidates-major-counterparty-after-it-fails-to-meet-margin-call/ https://cryptoslate.com/blockfi-liquidates-major-counterpart...
- 3np 4y ago
  Indeed. Anyone who did their research was already expecting the high likelihood of several years of prices being down 80~90% and either already sold or are expecting things to go up again in x years. I'm both surprised and disappointed in the businesses who should have known better than to already be underwater.
  - justapassenger 4y ago
    It’s EXTREMELY different to talk about possibility of your investment in highly speculative asset going down, vs actually experiencing it and seeing your money disappear.
    - mgamache 4y ago
      Yes, that's why the term 'Diamond Hands' is used by the hard core.
- deleted 4y ago
  [deleted]
- cperciva 4y ago
  We'll see, but the HODLers are not selling (AFAIK) This seems like a "no true Scotsman" statement. If someone sells then by definition they're not a HODLer any more, no matter how much they espoused those views in the past.
  - cowtools 4y ago
    This comment put a huge grin on my face. "Tautologically, holders will never sell!"
  - tyrfing 4y ago
    It's tautological, but mostly from poor construction. The crashes like this have a lot of forced selling, both from margin calls and LP/depositor redemptions. Two factors contributing to this are algorithmic leverage (DeFi and otherwise), and the combination of high volatility and decent liquidity meaning mark-to-market is both very easy and very painful. "HODLer" as a term is not clearly defined, but usually refers to the sort of off-exchange spot position that allows ignoring moves like this. High-uncertainty events like country bans and network attacks drive people like that to sell, but this current crash is basically purely liquidity related and in line with similar assets. Selling is driven mostly by short-term expectations, not long-term viability.
  - deleted 4y ago
    [deleted]
  - mgamache 4y ago
    HODLers are not defined by an external source. They are self-defined. It's like saying 'Catholics are leaving the Church'. And you say: 'Well if they leave the church they aren't Catholics". That doesn't make sense. The phase 'leaving the church' still has meaning and we know what it means.
spamizbad 4y ago
I don't think Bitcoin is going to $0 any time soon, but I do think the pool of "greater fools" has likely shrunk significantly and that's going to make climbing out of these dips tougher. Also, if there is a major recession on the horizon, tons of small-time cryptocurrency investors are going to be liquidating their positions just to get some form of cash to roll in. With that said, there's probably enough HODLers who can just trade it among themselves for the foreseeable future to keep the price from completely tanking. But this will make crypto less accessible to outsiders.
- cormacrelf 4y ago
  If a company’s stock is in free fall, it won’t usually trade that far below its earnings. People wont sell a stock that’s expected to earn them money for much below that amount unless they think the company will collapse before those earnings come back. There is probably a similar point for Bitcoin, where the price actually matches the demand for its utility as a currency. AFAIK it never got that popular for that purpose, so I think the theoretical floor is extremely low. We’re watching it rapidly lose the value driven by demand for speculating on it.
  - chillacy 4y ago
    I assume you mean book value? Since most stocks trade for far less earnings, we have an a tire concept of revenue multiples to account for that.
    - cormacrelf 4y ago
      Yes. I was simplifying, in some circumstances stock price drops go down to the bare net asset value. Companies have assets and liabilities, and the shares shouldn’t drop much below the net value of those assets because even if they declare bankruptcy, the shareholders get the proceeds of liquidation after the creditors. You expect a distribution of those funds, and so shares don’t drop to zero unless a company is deep in debt. When earnings projections are inflated and then drop back to earth, or some economic news means the projections are no longer good, then shares drop to an estimate of that base asset value + the new, lower earnings potential. That’s your typical stock price drop story. Because Bitcoin is not a company publishing reliable earnings reports etc, everyone is currently guessing at the amount of value attributable to the utility demand value I was referring to, compared to the speculative value. If people tell you they know where the bottom is, they are probably completely bullshitting based on analysis equivalent to drawing lines on the stock chart in MS Paint.
hristov 4y ago
Can any economists here (hopefully ones that have read the works of Mr. Minsky) opine on whether there are some more precise definitions of "Minsky moment"? Is there an objective way to determine whether this is a Minsky moment without being able to look at the future?
- jnordwick 4y ago
  worked as a quant, dev, and trader. there is no objective way to even prove it in the future, let alone now. It isn't in the realm of science.
melling 4y ago
“If negative momentum continues, she said, she sees the next support at $13,900, based on her analysis.” Why is this a support level?
- malshe 4y ago
  Pretty sure this is based on technical analysis. No fundamentals are involved here so there’s no economic reason for the support level.
  - mekster 4y ago
    Those TA is nothing but bullshit. Everytime it hits that "support level", they talk about the next one, like, ever since breaching $50k and they don't account for anything but Bitcoin's activity and not the bigger picture that is the global economy. People who believe in those crappy local analysis were made to hodl thinking that line may hold, till they realize they're way under and forced to sell.
    - lamp987 4y ago
      TA works because enough people believe it works. Its a self-fullfilling prophecy. It doesnt matter that there is no technical or mathematical reasons for it to be true.
jnordwick 4y ago
The concept of speculation run rampant that then everybody sees the truth and runs hard the other way in the marketplace is a myth. The idea that the best weighing machine ever devised is so far off for so long and then just magically turns around on a dime - that so many smart investors we all deluded - that is a crackpot idea. This is usually pushed by someone with an opposing view (who strangely enough didn't have the conviction to bet the other way) and is just a roundabout way of them patting themselves on the back for finally realizing what he could see so clearly from beginning (and still hasn't make money on the reversal). Something happened to push this hard. We might not know what it is for a generation, but there is a logical reason. Constantly reducing a supply to allow pressure from the value it gets from demand makes it highly volatile (prices are intersection of the value of the currency and value of the item - and BTC's deflationary stance basically starts adding 0s to the front of the price 0.1 goes to 0.01 and now currency and demand swings are 10x greater). constant large swings make it a shitty currency - so over time is will fail. Now, if only these other cryptofxs can get their shit together and shot with the constantly deflating things - yes it make the knownothings come running for a piece, but overall it will fail. Please no Keynes quotes about irrationality. It is something he pulled out of his ass that isn't provable or disprovable. It makes a great soundbite and a terrible argument.
- ldjkfkdsjnv 4y ago
  Theres no secret about what happened. The government printed money and it caused worthless assets to sky rocket. Then they pulled the money away. Thats it. Theres nothing here.
  - toomuchtodo 4y ago
    This is somewhat reductionist. Yes, some "worthless" assets were inflated such as crypto. But so were "real" (or rather, those with a cashflow or some sort of tangible underlying value) assets like real estate, equities, etc. It seems straightforward that crypto is suffering from flight to safer assets and fear around the expected recessionary pressures, as well as no greater fools due to a combination of rising rates and broad sentiment.
  - 4y ago
endisneigh 4y ago
HODL is dumb. Even if you like bitcoin you could’ve cashed out and repurchased. The entire philosophy can be reduced to: if you think it’s going to go up, buy more, otherwise sell.
- nemo44x 4y ago
  Indeed. But 2 issues: 1) Taxes. When you sell you will owe taxes (considering you’re selling at a profit). At best you’re probably looking at ~23% + whatever state taxes you’re in. So, you may need to sell right before the asset drops a considerable amount. Hard to time. 2) You can’t predict. It’s easy to look back. But you don’t know at the time. Saying that, there’s pretty well defined practices on selling a bit and holding a bit.
  - endisneigh 4y ago
    You only owe taxes on gains, so 1 is irrelevant unless you never, ever will sell in which case price drops are irrelevant to begin with as well. 2. It’s not about prediction. Its about taking gains.
    - CaptainNegative 4y ago
      Taxes are on gains, but they are far from irrelevant when comparing buy-and-hold strategies with those involving many transactions. An x% tax effectively reduces net profits by x% every time you sell, meaning that it eats into the compounding rate (at the buy-sell interval), which is fundamentally different from eating into your "simple" profit as it effectively would for buy-and-hold. To give some concrete numbers, imagine you want to invest $1000 for 10 years with 10% APY with gains taxed at 20%. Buy-and-hold nets you $1000 * 1.1^10 = $2594 pre-tax, and $2594 - (2594-1000)*.2 = $2275 post-tax. Cashing out and immediately buying back in every year nets you the smaller $1000 * 1.08^10 = $2159 post-tax.
      - endisneigh 4y ago
        What you’re saying isn’t relevant because the HODL philosophy is that you believe bitcoin will moon, therefore you can buy all dips and cash out inevitably when it moons.
gst 4y ago
In 2020 and 2021 Bitcoin went from less than $10k to $60k in a couple of months. Now it did basically the same but in the opposite direction, except that we're currently at $18k instead of $10k. I wouldn't buy at either price, but to me Bitcoin at the current $18k looks like a much more promising investment than a couple of months ago when it was $60k. Not only based on the price, but also based on the fact that a lot of players with risky business models are driven out of the market. For comparison: If you invested on Jan 1 2020 into an S&P 500 index fund you increased your investment by 18% (based on the total-return index version of S&P 500 which includes dividends). If you invested the same amount in Bitcoin you more than doubled your investment and are still at +150% of your initial investment. I'm not saying that Bitcoin is necessarily a good investment in the future, but based on the large volatility in the past the current decrease in value doesn't really look concerning to me.
- endisneigh 4y ago
  Why do people compare spy with bitcoin? You could say GME blows BTC out of the water for instance.
  - gst 4y ago
    Because a well diversified portfolio is a good comparison/reference for individual investments. A better choice than S&P 500 would probably be the FTSE Global All Cap Index.
    - endisneigh 4y ago
      Why pick Jan 1 2020 instead of using the YTD? Seems arbitrary to suit your agenda, whatever it is. Might as well use Jan 1 2021
      - gst 4y ago
        Anything after Jan 1 2020 is probably not a good comparison due to the Covid-related market volatility. Anything before could also make sense (personally I have a long term target so I care more about longer time ranges), but would be even more in favor of Bitcoin.
UkrainianJew 4y ago
(sigh), the markets will get shredded on Monday. These days BTC highly correlates with SPX, both reflecting general investor optimism rather than any underlying economic parameters. Edit: s/Monday/Tuesday/ [0] [0] https://www.nasdaq.com/market-activity/2022-stock-market-holiday-calendar https://www.nasdaq.com/market-activity/2022-stock-market-hol...
- icedchai 4y ago
  US markets are closed on Monday.
dvt 4y ago
> Bitcoin believer Yves Lamoureux of Lamoureux & Co., though, thinks ‘bitcoin is fine I mean, of course BTC is fine. It's a speculative asset. It can go up/down/sideways and it's still going to be fine. There are most likely some applications of crypto w.r.t. provenance, distributed DRM, and cross-ecosystem trading, but everyone and their mom knows that (for the time being) crypto is a volatile, speculative asset. Sure, some weirdos traded BTC like "digital gold" most rational agents traded it like an option or a future.
Geee 4y ago
This crash doesn't really have anything to do with bitcoin itself. Volatility is not a feature of bitcoin, but a feature of the market which trades bitcoin. This volatility is a result of market participants investing with huge leverages and taking too much risk. It's a weird market. People tend to be bullish on long term which makes them overtly bullish on short term. There needs to be some kind of adjustment in behavior, which could happen with time. Less volatility would make bitcoin more useful as money and therefore more valuable. So, the market should learn to control the volatility if the goal is to increase its value in long term.
- ShamelessC 4y ago
  You're aware that you're about two sentences away from realizing that cryptocurrency needs to be highly regulated, to the point that it no longer has any unique benefits over fiat, right?
  - Geee 4y ago
    No, I'm not saying that. I don't think regulations would help at all.
    - ShamelessC 4y ago
      So convincing. /s
zarzavat 4y ago
We’re on what, the 4th major crash now (depending on how you count them). I’m always surprised that people are still surprised by it. Bitcoin crashes, it will linger around some low price level for a while, then at some point there will be another bubble and the cycle begins afresh. Many of the alts and other random crypto assets are toast though.
- endisneigh 4y ago
  Bitcoin has never been in a bear market.
- justapassenger 4y ago
  Peoples greed, and others readiness to exploit that never changes.
- IvyMike 4y ago
  In the past, there have always been people new to bitcoin joining in. But my god, this year we had a crypto superbowl; it's hard to imagine that there is a large untapped population remaining.
  - ephbit 4y ago
    Most people might have heard about Bitcoin by now. But how many people have actually bought Bitcoin? Maybe several million .. 50-100 worldwide? IMO it all depends upon how inflation of the major currencies develops. If we see sustained high inflation at the current level then there might be hundreds of millions of people around the world, who could become interested in Bitcoin.
- kevingadd 4y ago
  Is it a safe assumption that we'll see a 5th and a 6th crash? Isn't it always possible the current one will be the last?
  - Gigachad 4y ago
    Past performance is not an indication of future performance. If we knew this was the last peak the value would be nothing. If we knew it wasn’t, the value never would have crashed. It’s all priced in. Ultimately bitcoin has close to zero in fundamentals so it could crash all the way to zero and that’s it.
csours 4y ago
Is there a point at which it's not worth the electricity to keep bitcoin going?
- lxgr 4y ago
  Theoretically, a single Raspberry Pi can run the entire blockchain without breaking a sweat (difficulty bomb aside), if that‘s all the aggregate demand for new coins and transaction fees can withstand.
- cowtools 4y ago
  Bitcoin would continue to operate even if miners used no electricity. The real question is whether or not the network can function with no block reward (solely off fees)
Pigalowda 4y ago
Post got hit with controversy penalty. Controversy In order to prevent flamewars on Hacker News, articles with "too many" comments will get heavily penalized as "controversial". In the published code, the contro-factor function kicks in for any post with more than 20 comments and more comments than upvotes. Such an article is scaled by (votes/comments)^2. However, the actual formula is different - it is active for any post with more comments than upvotes and at least 40 comments. Based on empirical data, I suspect the exponent is 3, rather than 2 but haven't proven this. The controversy penalty can have a sudden and catastrophic effect on an article's ranking, causing an article to be ranked highly one minute and vanish when it hits 40 comments. If you've wondered why a popular article suddenly vanishes from the front page, controversy is a likely cause. http://www.righto.com/2013/11/how-hacker-news-ranking-really-works.html?m=1 http://www.righto.com/2013/11/how-hacker-news-ranking-really...
- cperciva 4y ago
  The article being flagged can also make it disappear very quickly.
- lamp987 4y ago
  thats a really stupid function
Canada 4y ago
Let's call this one a Mashinsky moment

84 points by Pigalowda 4y ago

pvg 4y ago

Also at https://news.ycombinator.com/item?id=31792818 https://news.ycombinator.com/item?id=31792818

Minsky Moment refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. Minsky Moment is named after economist Hyman Minsky and defines the point in time where the sudden decline in market sentiment inevitably leads to a market crash.

labrador 4y ago
https://www.economist.com/schools-brief/2016/07/30/minskys-moment https://www.economist.com/schools-brief/2016/07/30/minskys-m...

mgamache 4y ago

We'll see, but the HODLers are not selling (AFAIK). A lot of this latest deep pullback was driven by over-leverage and margin calls on BTC backed DeFi (like Celsius). The margin calls on staking tokens in particular are a new factor adding to volatility. https://www.coindesk.com/markets/2022/06/14/staked-ether-becomes-focus-of-crypto-stress-from-celsius-to-three-arrows/ https://www.coindesk.com/markets/2022/06/14/staked-ether-bec... https://cryptoslate.com/blockfi-liquidates-major-counterparty-after-it-fails-to-meet-margin-call/ https://cryptoslate.com/blockfi-liquidates-major-counterpart...

3np 4y ago
Indeed. Anyone who did their research was already expecting the high likelihood of several years of prices being down 80~90% and either already sold or are expecting things to go up again in x years. I'm both surprised and disappointed in the businesses who should have known better than to already be underwater.
- justapassenger 4y ago
  It’s EXTREMELY different to talk about possibility of your investment in highly speculative asset going down, vs actually experiencing it and seeing your money disappear.
  - mgamache 4y ago
    Yes, that's why the term 'Diamond Hands' is used by the hard core.
deleted 4y ago
[deleted]
cperciva 4y ago
We'll see, but the HODLers are not selling (AFAIK) This seems like a "no true Scotsman" statement. If someone sells then by definition they're not a HODLer any more, no matter how much they espoused those views in the past.
- cowtools 4y ago
  This comment put a huge grin on my face. "Tautologically, holders will never sell!"
- tyrfing 4y ago
  It's tautological, but mostly from poor construction. The crashes like this have a lot of forced selling, both from margin calls and LP/depositor redemptions. Two factors contributing to this are algorithmic leverage (DeFi and otherwise), and the combination of high volatility and decent liquidity meaning mark-to-market is both very easy and very painful. "HODLer" as a term is not clearly defined, but usually refers to the sort of off-exchange spot position that allows ignoring moves like this. High-uncertainty events like country bans and network attacks drive people like that to sell, but this current crash is basically purely liquidity related and in line with similar assets. Selling is driven mostly by short-term expectations, not long-term viability.
- deleted 4y ago
  [deleted]
- mgamache 4y ago
  HODLers are not defined by an external source. They are self-defined. It's like saying 'Catholics are leaving the Church'. And you say: 'Well if they leave the church they aren't Catholics". That doesn't make sense. The phase 'leaving the church' still has meaning and we know what it means.

spamizbad 4y ago

I don't think Bitcoin is going to $0 any time soon, but I do think the pool of "greater fools" has likely shrunk significantly and that's going to make climbing out of these dips tougher. Also, if there is a major recession on the horizon, tons of small-time cryptocurrency investors are going to be liquidating their positions just to get some form of cash to roll in. With that said, there's probably enough HODLers who can just trade it among themselves for the foreseeable future to keep the price from completely tanking. But this will make crypto less accessible to outsiders.

cormacrelf 4y ago
If a company’s stock is in free fall, it won’t usually trade that far below its earnings. People wont sell a stock that’s expected to earn them money for much below that amount unless they think the company will collapse before those earnings come back. There is probably a similar point for Bitcoin, where the price actually matches the demand for its utility as a currency. AFAIK it never got that popular for that purpose, so I think the theoretical floor is extremely low. We’re watching it rapidly lose the value driven by demand for speculating on it.
- chillacy 4y ago
  I assume you mean book value? Since most stocks trade for far less earnings, we have an a tire concept of revenue multiples to account for that.
  - cormacrelf 4y ago
    Yes. I was simplifying, in some circumstances stock price drops go down to the bare net asset value. Companies have assets and liabilities, and the shares shouldn’t drop much below the net value of those assets because even if they declare bankruptcy, the shareholders get the proceeds of liquidation after the creditors. You expect a distribution of those funds, and so shares don’t drop to zero unless a company is deep in debt. When earnings projections are inflated and then drop back to earth, or some economic news means the projections are no longer good, then shares drop to an estimate of that base asset value + the new, lower earnings potential. That’s your typical stock price drop story. Because Bitcoin is not a company publishing reliable earnings reports etc, everyone is currently guessing at the amount of value attributable to the utility demand value I was referring to, compared to the speculative value. If people tell you they know where the bottom is, they are probably completely bullshitting based on analysis equivalent to drawing lines on the stock chart in MS Paint.

hristov 4y ago

Can any economists here (hopefully ones that have read the works of Mr. Minsky) opine on whether there are some more precise definitions of "Minsky moment"? Is there an objective way to determine whether this is a Minsky moment without being able to look at the future?

jnordwick 4y ago
worked as a quant, dev, and trader. there is no objective way to even prove it in the future, let alone now. It isn't in the realm of science.

melling 4y ago

“If negative momentum continues, she said, she sees the next support at $13,900, based on her analysis.” Why is this a support level?

malshe 4y ago
Pretty sure this is based on technical analysis. No fundamentals are involved here so there’s no economic reason for the support level.
- mekster 4y ago
  Those TA is nothing but bullshit. Everytime it hits that "support level", they talk about the next one, like, ever since breaching $50k and they don't account for anything but Bitcoin's activity and not the bigger picture that is the global economy. People who believe in those crappy local analysis were made to hodl thinking that line may hold, till they realize they're way under and forced to sell.
  - lamp987 4y ago
    TA works because enough people believe it works. Its a self-fullfilling prophecy. It doesnt matter that there is no technical or mathematical reasons for it to be true.

jnordwick 4y ago

The concept of speculation run rampant that then everybody sees the truth and runs hard the other way in the marketplace is a myth. The idea that the best weighing machine ever devised is so far off for so long and then just magically turns around on a dime - that so many smart investors we all deluded - that is a crackpot idea. This is usually pushed by someone with an opposing view (who strangely enough didn't have the conviction to bet the other way) and is just a roundabout way of them patting themselves on the back for finally realizing what he could see so clearly from beginning (and still hasn't make money on the reversal). Something happened to push this hard. We might not know what it is for a generation, but there is a logical reason. Constantly reducing a supply to allow pressure from the value it gets from demand makes it highly volatile (prices are intersection of the value of the currency and value of the item - and BTC's deflationary stance basically starts adding 0s to the front of the price 0.1 goes to 0.01 and now currency and demand swings are 10x greater). constant large swings make it a shitty currency - so over time is will fail. Now, if only these other cryptofxs can get their shit together and shot with the constantly deflating things - yes it make the knownothings come running for a piece, but overall it will fail. Please no Keynes quotes about irrationality. It is something he pulled out of his ass that isn't provable or disprovable. It makes a great soundbite and a terrible argument.

ldjkfkdsjnv 4y ago
Theres no secret about what happened. The government printed money and it caused worthless assets to sky rocket. Then they pulled the money away. Thats it. Theres nothing here.
- toomuchtodo 4y ago
  This is somewhat reductionist. Yes, some "worthless" assets were inflated such as crypto. But so were "real" (or rather, those with a cashflow or some sort of tangible underlying value) assets like real estate, equities, etc. It seems straightforward that crypto is suffering from flight to safer assets and fear around the expected recessionary pressures, as well as no greater fools due to a combination of rising rates and broad sentiment.
- 4y ago

endisneigh 4y ago

HODL is dumb. Even if you like bitcoin you could’ve cashed out and repurchased. The entire philosophy can be reduced to: if you think it’s going to go up, buy more, otherwise sell.

nemo44x 4y ago
Indeed. But 2 issues: 1) Taxes. When you sell you will owe taxes (considering you’re selling at a profit). At best you’re probably looking at ~23% + whatever state taxes you’re in. So, you may need to sell right before the asset drops a considerable amount. Hard to time. 2) You can’t predict. It’s easy to look back. But you don’t know at the time. Saying that, there’s pretty well defined practices on selling a bit and holding a bit.
- endisneigh 4y ago
  You only owe taxes on gains, so 1 is irrelevant unless you never, ever will sell in which case price drops are irrelevant to begin with as well. 2. It’s not about prediction. Its about taking gains.
  - CaptainNegative 4y ago
    Taxes are on gains, but they are far from irrelevant when comparing buy-and-hold strategies with those involving many transactions. An x% tax effectively reduces net profits by x% every time you sell, meaning that it eats into the compounding rate (at the buy-sell interval), which is fundamentally different from eating into your "simple" profit as it effectively would for buy-and-hold. To give some concrete numbers, imagine you want to invest $1000 for 10 years with 10% APY with gains taxed at 20%. Buy-and-hold nets you $1000 * 1.1^10 = $2594 pre-tax, and $2594 - (2594-1000)*.2 = $2275 post-tax. Cashing out and immediately buying back in every year nets you the smaller $1000 * 1.08^10 = $2159 post-tax.
    - endisneigh 4y ago
      What you’re saying isn’t relevant because the HODL philosophy is that you believe bitcoin will moon, therefore you can buy all dips and cash out inevitably when it moons.

gst 4y ago

In 2020 and 2021 Bitcoin went from less than $10k to $60k in a couple of months. Now it did basically the same but in the opposite direction, except that we're currently at $18k instead of $10k. I wouldn't buy at either price, but to me Bitcoin at the current $18k looks like a much more promising investment than a couple of months ago when it was $60k. Not only based on the price, but also based on the fact that a lot of players with risky business models are driven out of the market. For comparison: If you invested on Jan 1 2020 into an S&P 500 index fund you increased your investment by 18% (based on the total-return index version of S&P 500 which includes dividends). If you invested the same amount in Bitcoin you more than doubled your investment and are still at +150% of your initial investment. I'm not saying that Bitcoin is necessarily a good investment in the future, but based on the large volatility in the past the current decrease in value doesn't really look concerning to me.

endisneigh 4y ago
Why do people compare spy with bitcoin? You could say GME blows BTC out of the water for instance.
- gst 4y ago
  Because a well diversified portfolio is a good comparison/reference for individual investments. A better choice than S&P 500 would probably be the FTSE Global All Cap Index.
  - endisneigh 4y ago
    Why pick Jan 1 2020 instead of using the YTD? Seems arbitrary to suit your agenda, whatever it is. Might as well use Jan 1 2021
    - gst 4y ago
      Anything after Jan 1 2020 is probably not a good comparison due to the Covid-related market volatility. Anything before could also make sense (personally I have a long term target so I care more about longer time ranges), but would be even more in favor of Bitcoin.

UkrainianJew 4y ago

(sigh), the markets will get shredded on Monday. These days BTC highly correlates with SPX, both reflecting general investor optimism rather than any underlying economic parameters. Edit: s/Monday/Tuesday/ [0] [0] https://www.nasdaq.com/market-activity/2022-stock-market-holiday-calendar https://www.nasdaq.com/market-activity/2022-stock-market-hol...

icedchai 4y ago
US markets are closed on Monday.

dvt 4y ago

> Bitcoin believer Yves Lamoureux of Lamoureux & Co., though, thinks ‘bitcoin is fine I mean, of course BTC is fine. It's a speculative asset. It can go up/down/sideways and it's still going to be fine. There are most likely some applications of crypto w.r.t. provenance, distributed DRM, and cross-ecosystem trading, but everyone and their mom knows that (for the time being) crypto is a volatile, speculative asset. Sure, some weirdos traded BTC like "digital gold" most rational agents traded it like an option or a future.

Geee 4y ago

This crash doesn't really have anything to do with bitcoin itself. Volatility is not a feature of bitcoin, but a feature of the market which trades bitcoin. This volatility is a result of market participants investing with huge leverages and taking too much risk. It's a weird market. People tend to be bullish on long term which makes them overtly bullish on short term. There needs to be some kind of adjustment in behavior, which could happen with time. Less volatility would make bitcoin more useful as money and therefore more valuable. So, the market should learn to control the volatility if the goal is to increase its value in long term.

ShamelessC 4y ago
You're aware that you're about two sentences away from realizing that cryptocurrency needs to be highly regulated, to the point that it no longer has any unique benefits over fiat, right?
- Geee 4y ago
  No, I'm not saying that. I don't think regulations would help at all.
  - ShamelessC 4y ago
    So convincing. /s

zarzavat 4y ago

We’re on what, the 4th major crash now (depending on how you count them). I’m always surprised that people are still surprised by it. Bitcoin crashes, it will linger around some low price level for a while, then at some point there will be another bubble and the cycle begins afresh. Many of the alts and other random crypto assets are toast though.

endisneigh 4y ago
Bitcoin has never been in a bear market.
justapassenger 4y ago
Peoples greed, and others readiness to exploit that never changes.
IvyMike 4y ago
In the past, there have always been people new to bitcoin joining in. But my god, this year we had a crypto superbowl; it's hard to imagine that there is a large untapped population remaining.
- ephbit 4y ago
  Most people might have heard about Bitcoin by now. But how many people have actually bought Bitcoin? Maybe several million .. 50-100 worldwide? IMO it all depends upon how inflation of the major currencies develops. If we see sustained high inflation at the current level then there might be hundreds of millions of people around the world, who could become interested in Bitcoin.
kevingadd 4y ago
Is it a safe assumption that we'll see a 5th and a 6th crash? Isn't it always possible the current one will be the last?
- Gigachad 4y ago
  Past performance is not an indication of future performance. If we knew this was the last peak the value would be nothing. If we knew it wasn’t, the value never would have crashed. It’s all priced in. Ultimately bitcoin has close to zero in fundamentals so it could crash all the way to zero and that’s it.

csours 4y ago

Is there a point at which it's not worth the electricity to keep bitcoin going?

lxgr 4y ago
Theoretically, a single Raspberry Pi can run the entire blockchain without breaking a sweat (difficulty bomb aside), if that‘s all the aggregate demand for new coins and transaction fees can withstand.
cowtools 4y ago
Bitcoin would continue to operate even if miners used no electricity. The real question is whether or not the network can function with no block reward (solely off fees)

Pigalowda 4y ago

Post got hit with controversy penalty. Controversy In order to prevent flamewars on Hacker News, articles with "too many" comments will get heavily penalized as "controversial". In the published code, the contro-factor function kicks in for any post with more than 20 comments and more comments than upvotes. Such an article is scaled by (votes/comments)^2. However, the actual formula is different - it is active for any post with more comments than upvotes and at least 40 comments. Based on empirical data, I suspect the exponent is 3, rather than 2 but haven't proven this. The controversy penalty can have a sudden and catastrophic effect on an article's ranking, causing an article to be ranked highly one minute and vanish when it hits 40 comments. If you've wondered why a popular article suddenly vanishes from the front page, controversy is a likely cause. http://www.righto.com/2013/11/how-hacker-news-ranking-really-works.html?m=1 http://www.righto.com/2013/11/how-hacker-news-ranking-really...

cperciva 4y ago
The article being flagged can also make it disappear very quickly.
lamp987 4y ago
thats a really stupid function

Canada 4y ago

Let's call this one a Mashinsky moment