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*a safe asset with thin liquidity and $2 billion of cash injections from binance and bitfinex

JumpCrisscross 4y ago
> a safe asset with thin liquidity and $2 billion of cash injections from binance and bitfinex Safe asset is in part a statistical designation: it holds value or goes up in times of financial stress [1][2]. Crypto did that in the last weeks. There is a second component of money-like stability that crypto does not meet. But it's interesting to see crypto rise while bank stability falters when, previously, Bitcoin was correlated with the S&P 500. [1] https://www.stlouisfed.org/on-the-economy/2018/december/safe-assets-us-economy https://www.stlouisfed.org/on-the-economy/2018/december/safe... [2] https://www.jstor.org/stable/2328809?seq=1#metadata_info_tab_contents https://www.jstor.org/stable/2328809?seq=1#metadata_info_tab...
- pclmulqdq 4y ago
  Right, but what I'm saying is that the appearance of a "safe asset" relied on $2 billion of purchases and very thin liquidity in the market (allowing that $2 billion to have a larger than normal effect on price). Without the $2 billion of extra purchases, who knows whether it would have been a "safe asset" or not? My guess is "no."
  - JumpCrisscross 4y ago
    > without the $2 billion of extra purchases, who knows whether it would have been a "safe asset" or not? My guess is "no." I tend to agree. But external stabilization hasn't been a disqualifier for historical safe assets.
    - notahacker 4y ago
      A track record of it failing to hold up under numerous other periods of market turmoil is pretty disqualifying though, as is its spectacular failure to achieve one of its stated goals of being an inflation hedge when we finally got around to experiencing significant inflation.
      - JumpCrisscross 4y ago
        > track record of it failing to hold up under numerous other periods of market turmoil is pretty disqualifying though I agree. To be clear, I'm not declaring Bitcoin a safe asset. Just pointing out that it behaved like one in the preceding weeks. That's genuinely interesting. > its spectacular failure to achieve one of its stated goals of being an inflation hedge Correct. Though I'd be amiss not pointing out that equities, too, failed their traditional role as an inflation hedge in that time.

> a safe asset with thin liquidity and $2 billion of cash injections from binance and bitfinex Safe asset is in part a statistical designation: it holds value or goes up in times of financial stress [1][2]. Crypto did that in the last weeks. There is a second component of money-like stability that crypto does not meet. But it's interesting to see crypto rise while bank stability falters when, previously, Bitcoin was correlated with the S&P 500. [1] https://www.stlouisfed.org/on-the-economy/2018/december/safe-assets-us-economy https://www.stlouisfed.org/on-the-economy/2018/december/safe... [2] https://www.jstor.org/stable/2328809?seq=1#metadata_info_tab_contents https://www.jstor.org/stable/2328809?seq=1#metadata_info_tab...

pclmulqdq 4y ago
Right, but what I'm saying is that the appearance of a "safe asset" relied on $2 billion of purchases and very thin liquidity in the market (allowing that $2 billion to have a larger than normal effect on price). Without the $2 billion of extra purchases, who knows whether it would have been a "safe asset" or not? My guess is "no."
- JumpCrisscross 4y ago
  > without the $2 billion of extra purchases, who knows whether it would have been a "safe asset" or not? My guess is "no." I tend to agree. But external stabilization hasn't been a disqualifier for historical safe assets.
  - notahacker 4y ago
    A track record of it failing to hold up under numerous other periods of market turmoil is pretty disqualifying though, as is its spectacular failure to achieve one of its stated goals of being an inflation hedge when we finally got around to experiencing significant inflation.
    - JumpCrisscross 4y ago
      > track record of it failing to hold up under numerous other periods of market turmoil is pretty disqualifying though I agree. To be clear, I'm not declaring Bitcoin a safe asset. Just pointing out that it behaved like one in the preceding weeks. That's genuinely interesting. > its spectacular failure to achieve one of its stated goals of being an inflation hedge Correct. Though I'd be amiss not pointing out that equities, too, failed their traditional role as an inflation hedge in that time.