5 ms·

The warning bells should be going off in the entire crypto sector right now. If you have money in crypto, I'd strongly recommend going off-exchange

esotericimpl 4y ago
slaw 4y ago
I recommend going off all crypto, not only on exchange.
- rapsey 4y ago
  Crypto has really only lived in a zero interest rate policy world and it is shitting the bed majorly now when rates are going up. It is likely far from the bottom.
  - endorphine 4y ago
    Why do you believe that is the case? How is this hypothesis explained?
    - rapsey 4y ago
      Crypto very much follows the stock market. Interest rates are inversely correlated to stock market performance. After 2008 the stock market went into the longest bull run in history which has now reversed this year. Stock market is down and crypto is collapsing because it is the wild west. There are for sure going to be multiple exchange collapses not just FTX.
      - andruby 4y ago
        > Crypto very much follows the stock market. Is that based on observing a correlation between both or is there an underlying hypothesis/theory/mechanism why crypto follows the stock market? I'm genuinely curious, not trying to imply this isn't the case.
        tome 4y ago
        I assume the hypothesis is that people threw cheap money into both. Now cheap money is over, people are withdrawing from both.
        rapsey 4y ago
        Both. It follows it observably and the reason it does is because with low interest rates there is an excess of capital. Money is too cheap so it flows into speculative asset classes like stocks and crypto.
    - mshron 4y ago
      Higher interest rates mean that investors can earn money by buying bonds, which are lower risk. Riskier investments (stocks, real estate, cryptocurrencies) are less attractive to investors as a result, unless they can provide even more return to compensate for the risk, which is unlikely.
      - isolli 4y ago
        The can provide more return by becoming cheaper first ;)
    - bparsons 4y ago
      It is only an attractive investment when the world is awash with excess fiat currency.
      - TheOtherHobbes 4y ago
        Which is when you get bubbles of all kinds. Because with a bit of painting snd decorating - and wishful thinking, of which there is always plenty - you can make almost any bubble look like a safe profitable investment. Then the tide goes out and everyone says "How could this have happened?" Again. It's all suspiciously faith-based and aggressively anti-realistic.
    - jerf 4y ago
      It is important to separate goals from results. It is a goal of crypto to be an independent medium of exchange, free from governments and to some extent the rest of the economy, and perhaps even someday become the basis of the economy itself. That does not mean it has done these things. It does not mean it has failed these things either, because goals frankly don't mean much. This is in one of my favorite classes of wisdom, "things that sound obvious when I say them but observably by their actions most people aren't thinking this way." Do not be too quick to say to yourself "oh, yes, jerf I know that goals aren't results", because, again, by their actions many people observably do not have this as clear in their head when they are planning and acting as they may think. As for the results of crypto, it is certainly clear that crypto is a haven for scams, pyramid schemes, and pump-and-dumps. That also on its own does not disqualify it; I think there's more in crypto proportionally than the US dollar but all fiat currencies have also had scams, pyramid schemes, and pump-and-dumps denominated in them. It is much less clear that crypto has attained its listed goals; there is non-zero evidence that they are in play, but it is also very mixed evidence and you can find plenty of evidence to the contrary of all the things I list. Crypto has largely existed in a regime with 0% interest, as was mentioned. It is a very viable theory that despite the goals of crypto of being an independent currency, that it is in fact a derivative of existing fiat currency. As for the evidence, there is the fact that it is acting exactly like a very leveraged fiat derivative would be acting when money stops being free, which doesn't necessarily perfectly logically prove the case but is strong evidence. Perhaps someday crypto will be independent but it isn't putting on a very convincing show of it right now. Instead it's looking an awfully lot like the most leveraged fiat currency derivative there is out there at the moment, or at least the most leveraged one us normals can see.
    - alasdair_ 4y ago
      Crypto is highly correlated with equities and is sensitive to interest rates in the exact opposite way than you'd expect for something that is supposed to be inflation-proof. As a simple example: BTC stopped dropping and actually rose $1000 on Thursday when the CPI numbers came out indicating that inflation grew less than expected last month. This shouldn't happen if crypto was actually an inflation hedge. Instead, almost all of crypto's value is speculation-based and so when the supply of money is more expensive (i.e. higher interest rates), the value of crypto assets in USD tends to decline and vice versa when interest rates are predicted to be lower (or not rise as much as expected).
    - fortuna86 4y ago
      Crypto was a play thing for people with too much money that didn't know what to do with it. The money dries up, the only use case for crypto (gambling) disappears.
  - tootie 4y ago
    Is it? There's no reserve rate on the books but there's still a natural interest rate. And I'd estimate that for something like Bitcoin it's sky high. That's how it produced massive returns with no equity or assets. When Bitcoin was first launched, economists said the mining and splitting algorithm would be massively deflationary and that seems to have come true.
    - JumpCrisscross 4y ago
      > would be massively deflationary and that seems to have come true Bitcoin makes Argentina and Venezuela look like bastions of hard money. It’s lost purchasing power, i.e. inflated, at an astronomical rate.
      - isolli 4y ago
        It depends on the observation window, really. Bitcoin is deflationary in the sense that there is a maximum amount of BTC that will ever be mined. So, all else equal, the price of bitcoin should go up relative to other assets as the economy grows (and the stock of bitcoin does not). Of course, it might implode along the way, and there are plenty of wild swings on the way up (which what we've seen so far).
      - tootie 4y ago
        In the past year, yes. I'm talking about the bull run years. It's well below it's peak but still trading around $16k when it was worth $0 15 years ago.
      - qnr 4y ago
        This is blatantly untrue. Venezuelan bolivar has lost 100% of its value (within a rounding error) - current exchange rate is something like 800 trillion of old bolivars to USD. Argentine peso is doing somewhat better than bitcoin this year, only losing 40%, but you don't have to go far back for it to become much, much worse. In the entire history of bitcoin there are very few periods when you'd come out on top holding argentine pesos rather than bitcoins.
- chinathrow 4y ago
  I recommend going off and not going in on crypto, everywhere, anytime. It's what I told peers asking me about this crypto thing for years.
throwup 4y ago
Not your keys, not your cheese. It's sad how many people have to learn this the hard way.
- chitowneats 4y ago
  Also not your cheese if you bought BTC any time in the last few years. Without the exchanges, and especially without investor confidence, the days of wild speculation are ending. The price is going to continue to fall and everyone with BTC in their personal wallets gets to take a haircut too.
  - nicbou 4y ago
    It's still your cheese if no one wants to buy it. It's arguably even more yours.
    - chitowneats 4y ago
      Cheese typically refers to money. Cryptocurrency isn't money.
      - nicbou 4y ago
        It's money, just like the Zimbabwean dollar
        chitowneats 4y ago
        Fair comparison. Can't be used as toilet paper in a pinch though.
FollowingTheDao 4y ago
- warinukraine 4y ago
  > Bitcoin's intrinsic value is exchange fraud. That's a really funny and clever take.
- Zaskoda 4y ago
  Hacker news is one of those places I love to visit because of the insightful and informative perspectives on issues of technology and culture... that is, until the topic has anything to do with Bitcoin.
warinukraine 4y ago
Take your magic beans off-exchange, because otherwise someone might steal them.
thepasswordis 4y ago
While I agree with you generally, it's a bit absurd to compare these bizarre degen exchanges with something like coinbase.
jmull 4y ago
Why wouldn't you get out of any/all crypto you can right now? If you're bullish on crypto's long-term prospects you can always buy back in after the crash. There will be a new "ground floor". (I would suggest no one do that... just saying, even if you believe whole-hog in the future of crypto, now's the time to sell any way you can.)
dredmorbius 4y ago
And this will be how the cryptocurrency / DeFi world learns another concept of regulated banks: bank run.

esotericimpl 4y ago

slaw 4y ago

I recommend going off all crypto, not only on exchange.

rapsey 4y ago
Crypto has really only lived in a zero interest rate policy world and it is shitting the bed majorly now when rates are going up. It is likely far from the bottom.
- endorphine 4y ago
  Why do you believe that is the case? How is this hypothesis explained?
  - rapsey 4y ago
    Crypto very much follows the stock market. Interest rates are inversely correlated to stock market performance. After 2008 the stock market went into the longest bull run in history which has now reversed this year. Stock market is down and crypto is collapsing because it is the wild west. There are for sure going to be multiple exchange collapses not just FTX.
    - andruby 4y ago
      > Crypto very much follows the stock market. Is that based on observing a correlation between both or is there an underlying hypothesis/theory/mechanism why crypto follows the stock market? I'm genuinely curious, not trying to imply this isn't the case.
      - tome 4y ago
        I assume the hypothesis is that people threw cheap money into both. Now cheap money is over, people are withdrawing from both.
      - rapsey 4y ago
        Both. It follows it observably and the reason it does is because with low interest rates there is an excess of capital. Money is too cheap so it flows into speculative asset classes like stocks and crypto.
  - mshron 4y ago
    Higher interest rates mean that investors can earn money by buying bonds, which are lower risk. Riskier investments (stocks, real estate, cryptocurrencies) are less attractive to investors as a result, unless they can provide even more return to compensate for the risk, which is unlikely.
    - isolli 4y ago
      The can provide more return by becoming cheaper first ;)
  - bparsons 4y ago
    It is only an attractive investment when the world is awash with excess fiat currency.
    - TheOtherHobbes 4y ago
      Which is when you get bubbles of all kinds. Because with a bit of painting snd decorating - and wishful thinking, of which there is always plenty - you can make almost any bubble look like a safe profitable investment. Then the tide goes out and everyone says "How could this have happened?" Again. It's all suspiciously faith-based and aggressively anti-realistic.
  - jerf 4y ago
    It is important to separate goals from results. It is a goal of crypto to be an independent medium of exchange, free from governments and to some extent the rest of the economy, and perhaps even someday become the basis of the economy itself. That does not mean it has done these things. It does not mean it has failed these things either, because goals frankly don't mean much. This is in one of my favorite classes of wisdom, "things that sound obvious when I say them but observably by their actions most people aren't thinking this way." Do not be too quick to say to yourself "oh, yes, jerf I know that goals aren't results", because, again, by their actions many people observably do not have this as clear in their head when they are planning and acting as they may think. As for the results of crypto, it is certainly clear that crypto is a haven for scams, pyramid schemes, and pump-and-dumps. That also on its own does not disqualify it; I think there's more in crypto proportionally than the US dollar but all fiat currencies have also had scams, pyramid schemes, and pump-and-dumps denominated in them. It is much less clear that crypto has attained its listed goals; there is non-zero evidence that they are in play, but it is also very mixed evidence and you can find plenty of evidence to the contrary of all the things I list. Crypto has largely existed in a regime with 0% interest, as was mentioned. It is a very viable theory that despite the goals of crypto of being an independent currency, that it is in fact a derivative of existing fiat currency. As for the evidence, there is the fact that it is acting exactly like a very leveraged fiat derivative would be acting when money stops being free, which doesn't necessarily perfectly logically prove the case but is strong evidence. Perhaps someday crypto will be independent but it isn't putting on a very convincing show of it right now. Instead it's looking an awfully lot like the most leveraged fiat currency derivative there is out there at the moment, or at least the most leveraged one us normals can see.
  - alasdair_ 4y ago
    Crypto is highly correlated with equities and is sensitive to interest rates in the exact opposite way than you'd expect for something that is supposed to be inflation-proof. As a simple example: BTC stopped dropping and actually rose $1000 on Thursday when the CPI numbers came out indicating that inflation grew less than expected last month. This shouldn't happen if crypto was actually an inflation hedge. Instead, almost all of crypto's value is speculation-based and so when the supply of money is more expensive (i.e. higher interest rates), the value of crypto assets in USD tends to decline and vice versa when interest rates are predicted to be lower (or not rise as much as expected).
  - fortuna86 4y ago
    Crypto was a play thing for people with too much money that didn't know what to do with it. The money dries up, the only use case for crypto (gambling) disappears.
- tootie 4y ago
  Is it? There's no reserve rate on the books but there's still a natural interest rate. And I'd estimate that for something like Bitcoin it's sky high. That's how it produced massive returns with no equity or assets. When Bitcoin was first launched, economists said the mining and splitting algorithm would be massively deflationary and that seems to have come true.
  - JumpCrisscross 4y ago
    > would be massively deflationary and that seems to have come true Bitcoin makes Argentina and Venezuela look like bastions of hard money. It’s lost purchasing power, i.e. inflated, at an astronomical rate.
    - isolli 4y ago
      It depends on the observation window, really. Bitcoin is deflationary in the sense that there is a maximum amount of BTC that will ever be mined. So, all else equal, the price of bitcoin should go up relative to other assets as the economy grows (and the stock of bitcoin does not). Of course, it might implode along the way, and there are plenty of wild swings on the way up (which what we've seen so far).
    - tootie 4y ago
      In the past year, yes. I'm talking about the bull run years. It's well below it's peak but still trading around $16k when it was worth $0 15 years ago.
    - qnr 4y ago
      This is blatantly untrue. Venezuelan bolivar has lost 100% of its value (within a rounding error) - current exchange rate is something like 800 trillion of old bolivars to USD. Argentine peso is doing somewhat better than bitcoin this year, only losing 40%, but you don't have to go far back for it to become much, much worse. In the entire history of bitcoin there are very few periods when you'd come out on top holding argentine pesos rather than bitcoins.
chinathrow 4y ago
I recommend going off and not going in on crypto, everywhere, anytime. It's what I told peers asking me about this crypto thing for years.

throwup 4y ago

Not your keys, not your cheese. It's sad how many people have to learn this the hard way.

chitowneats 4y ago
Also not your cheese if you bought BTC any time in the last few years. Without the exchanges, and especially without investor confidence, the days of wild speculation are ending. The price is going to continue to fall and everyone with BTC in their personal wallets gets to take a haircut too.
- nicbou 4y ago
  It's still your cheese if no one wants to buy it. It's arguably even more yours.
  - chitowneats 4y ago
    Cheese typically refers to money. Cryptocurrency isn't money.
    - nicbou 4y ago
      It's money, just like the Zimbabwean dollar
      - chitowneats 4y ago
        Fair comparison. Can't be used as toilet paper in a pinch though.

FollowingTheDao 4y ago

warinukraine 4y ago
> Bitcoin's intrinsic value is exchange fraud. That's a really funny and clever take.
Zaskoda 4y ago
Hacker news is one of those places I love to visit because of the insightful and informative perspectives on issues of technology and culture... that is, until the topic has anything to do with Bitcoin.

warinukraine 4y ago

Take your magic beans off-exchange, because otherwise someone might steal them.

thepasswordis 4y ago

While I agree with you generally, it's a bit absurd to compare these bizarre degen exchanges with something like coinbase.

jmull 4y ago

Why wouldn't you get out of any/all crypto you can right now? If you're bullish on crypto's long-term prospects you can always buy back in after the crash. There will be a new "ground floor". (I would suggest no one do that... just saying, even if you believe whole-hog in the future of crypto, now's the time to sell any way you can.)

dredmorbius 4y ago

And this will be how the cryptocurrency / DeFi world learns another concept of regulated banks: bank run.