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Ask HN: What happens if/when crypto will significantly go down?

As we know, the crypto sector has been up for a while, and I hear conversations about the inevitability of it going even higher. I am not sold on it. In fact, I'm curious to hear what you think it will happen if crypto goes down by 20/30% or more. Would another crash happen? Would Microstrategy go bust? Etc. Also, what's your bull or bear case for crypto, and for Bitcoin in specific?

PaulHoule 1y ago
There is "down" in terms of price and then there is "down" in terms of "the system is down". The latter problem is looming for Bitcoin. Even though the Bitcoin price remains high, the volume of outstanding transactions is falling https://www.blockchain.com/explorer/charts/mempool-size https://www.blockchain.com/explorer/charts/mempool-size People are still interested in Bitcoin as an investment, but not that interested in trading Bitcoins on the chain -- particularly not using them to buy things. Right now miners are rewarded with Bitcoins for signing blocks, but that reward is halved every four years and will disappear by 2140 or so https://www.investopedia.com/tech/what-happens-bitcoin-after-21-million-mined/ https://www.investopedia.com/tech/what-happens-bitcoin-after... in theory after that it will be well established and people will be willing to add a "tip" to have their transactions processed but that requires a high transaction rate. 2140 is a long time away and a lot can happen -- over all if the price of bitcoin doubles every four years mining rewards stay the same in terms of being able to pay your expenses, but to do so 29 times means it has to expand 536,870,912 times which will outrun the economy. At some point in the future Bitcoin mining might not be profitable, and if that's the case for a sustained time, Bitcoin is cooked.
- simonebrunozzi 1y ago
  > At some point in the future Bitcoin mining might not be profitable, and if that's the case for a sustained time, Bitcoin is cooked. Mining difficulty adapts over time; it can also decrease, so become profitable again. See [0]. [0]: https://www.coinwarz.com/mining/bitcoin/difficulty-chart https://www.coinwarz.com/mining/bitcoin/difficulty-chart
webdevver 1y ago
$180k eoy $300k by 2030 beyond that - anything between $0 and $1M. hard to imagine big dips in the near term (<5y) - too many people are sidelined with cash waiting to get it.
- simonebrunozzi 1y ago
  I'm sure your prediction will be correct, but there's a chance that it's simply a random comment and random numbers thrown out. What would be the reason behind these numbers?
  - webdevver 1y ago
    vibe-based fortune telling. just my gut feeling, nothing more. no objective criteria were consulted when i made that comment.
scrlk 1y ago
MicroStrategy's average is currently ~$72k: https://x.com/saylor/status/1947266086627360854 https://x.com/saylor/status/1947266086627360854 There are a now a number of companies attempting to run the same crypto treasury strategy with BTC and alts. I suspect the next FTX style blowout might be caused by these treasury companies.
- simonebrunozzi 1y ago
  Without any need to be a bull or a bear, but just observing and thinking: I'd say that if more companies try to become BTC treasuries, it is going to push the price of BTC up, way up. What do you think?
  - scrlk 1y ago
    Yes, it's simple supply and demand dynamics at work. FWIW, I think the treasury companies bear a resemblance to the 'ponzinomics' of Olympus DAO and its forks in the last crypto cycle. They ran to tens of billions in market cap before going to zero. This is the first cycle where TradFi is getting properly involved, so no idea how high we go across BTC and the rest of crypto.
npoc 1y ago
Plenty of material below if you click on the dots. Be sure to try the log function too https://bitcoindeaths.com/ https://bitcoindeaths.com/
_wire_ 1y ago
What is the basis of the bitcoin valuation increase other than self-induced inflation? Is bitcoin supporting anything productive? It seems the one thing bitcoin can't do is be a useful currency because it's too slow and expensive. With respect to "freedom", crypto currency is ultimately a cage: It is the most centralized instrument of trade ever implemented, and anonymous only as an accident of an incomplete implementation. The infrastructure buildout to support bitcoin mining is self-justifying and provides a semblance of "growth" that gets proffered as an illusion of productivity, but this is an ouroboros. If large amounts of money are being laundered through bitcoin, that might be confused with the dynamics of an investment. But that's not socially productive, it's regressive. So bitcoin is a currency that's too expensive to use and not structured to produce returns as capital or reserves. Ask people you know why they buy bitcoin. Is it because they want massively "profit" like the people they heard about who "invested" early? An economically useless financial instrument with gains realized by distributing the proceeds from growing numbers future buyers towards cashing out shrinking numbers of early buyers is a pyramid scheme! Pyramid schemes end when the supply of shills is exhausted.
- simonebrunozzi 1y ago
  > this is an ouroboros Wow, I've never heard the term in English, but I looked it up [0] and of course it makes perfect sense. In my native Italian language, we would call it "a snake that eats its own tail", which is what an Ouroboros symbol depicts. Fascinating. On the general comment: thanks, I personally agree with most of your assertions. And yet, it seems that rational negatives on crypto or BTC fail to make it crash, or kill it. It keeps growing. Perhaps we're just a bit behind a real huge crash, but what if not? [0]: https://en.wikipedia.org/wiki/Ouroboros https://en.wikipedia.org/wiki/Ouroboros
wbnns 1y ago
Some people will fold, while others continue to hold or buy the dip Bear case: Solar flare or thermonuclear war/nuclear winter puts us back a century without an internet, which in effect turns off crypto for everyone Bull case: It all becomes ubiquitous, everyone holds it in some form and as to the technology behind it, people don't even realize they're using it everyday to easily maintain their digital sovereignty

PaulHoule 1y ago

There is "down" in terms of price and then there is "down" in terms of "the system is down". The latter problem is looming for Bitcoin. Even though the Bitcoin price remains high, the volume of outstanding transactions is falling https://www.blockchain.com/explorer/charts/mempool-size https://www.blockchain.com/explorer/charts/mempool-size People are still interested in Bitcoin as an investment, but not that interested in trading Bitcoins on the chain -- particularly not using them to buy things. Right now miners are rewarded with Bitcoins for signing blocks, but that reward is halved every four years and will disappear by 2140 or so https://www.investopedia.com/tech/what-happens-bitcoin-after-21-million-mined/ https://www.investopedia.com/tech/what-happens-bitcoin-after... in theory after that it will be well established and people will be willing to add a "tip" to have their transactions processed but that requires a high transaction rate. 2140 is a long time away and a lot can happen -- over all if the price of bitcoin doubles every four years mining rewards stay the same in terms of being able to pay your expenses, but to do so 29 times means it has to expand 536,870,912 times which will outrun the economy. At some point in the future Bitcoin mining might not be profitable, and if that's the case for a sustained time, Bitcoin is cooked.

simonebrunozzi 1y ago
> At some point in the future Bitcoin mining might not be profitable, and if that's the case for a sustained time, Bitcoin is cooked. Mining difficulty adapts over time; it can also decrease, so become profitable again. See [0]. [0]: https://www.coinwarz.com/mining/bitcoin/difficulty-chart https://www.coinwarz.com/mining/bitcoin/difficulty-chart

webdevver 1y ago

$180k eoy $300k by 2030 beyond that - anything between $0 and $1M. hard to imagine big dips in the near term (<5y) - too many people are sidelined with cash waiting to get it.

simonebrunozzi 1y ago
I'm sure your prediction will be correct, but there's a chance that it's simply a random comment and random numbers thrown out. What would be the reason behind these numbers?
- webdevver 1y ago
  vibe-based fortune telling. just my gut feeling, nothing more. no objective criteria were consulted when i made that comment.

scrlk 1y ago

MicroStrategy's average is currently ~$72k: https://x.com/saylor/status/1947266086627360854 https://x.com/saylor/status/1947266086627360854 There are a now a number of companies attempting to run the same crypto treasury strategy with BTC and alts. I suspect the next FTX style blowout might be caused by these treasury companies.

simonebrunozzi 1y ago
Without any need to be a bull or a bear, but just observing and thinking: I'd say that if more companies try to become BTC treasuries, it is going to push the price of BTC up, way up. What do you think?
- scrlk 1y ago
  Yes, it's simple supply and demand dynamics at work. FWIW, I think the treasury companies bear a resemblance to the 'ponzinomics' of Olympus DAO and its forks in the last crypto cycle. They ran to tens of billions in market cap before going to zero. This is the first cycle where TradFi is getting properly involved, so no idea how high we go across BTC and the rest of crypto.

npoc 1y ago

Plenty of material below if you click on the dots. Be sure to try the log function too https://bitcoindeaths.com/ https://bitcoindeaths.com/

_wire_ 1y ago

What is the basis of the bitcoin valuation increase other than self-induced inflation? Is bitcoin supporting anything productive? It seems the one thing bitcoin can't do is be a useful currency because it's too slow and expensive. With respect to "freedom", crypto currency is ultimately a cage: It is the most centralized instrument of trade ever implemented, and anonymous only as an accident of an incomplete implementation. The infrastructure buildout to support bitcoin mining is self-justifying and provides a semblance of "growth" that gets proffered as an illusion of productivity, but this is an ouroboros. If large amounts of money are being laundered through bitcoin, that might be confused with the dynamics of an investment. But that's not socially productive, it's regressive. So bitcoin is a currency that's too expensive to use and not structured to produce returns as capital or reserves. Ask people you know why they buy bitcoin. Is it because they want massively "profit" like the people they heard about who "invested" early? An economically useless financial instrument with gains realized by distributing the proceeds from growing numbers future buyers towards cashing out shrinking numbers of early buyers is a pyramid scheme! Pyramid schemes end when the supply of shills is exhausted.

simonebrunozzi 1y ago
> this is an ouroboros Wow, I've never heard the term in English, but I looked it up [0] and of course it makes perfect sense. In my native Italian language, we would call it "a snake that eats its own tail", which is what an Ouroboros symbol depicts. Fascinating. On the general comment: thanks, I personally agree with most of your assertions. And yet, it seems that rational negatives on crypto or BTC fail to make it crash, or kill it. It keeps growing. Perhaps we're just a bit behind a real huge crash, but what if not? [0]: https://en.wikipedia.org/wiki/Ouroboros https://en.wikipedia.org/wiki/Ouroboros

wbnns 1y ago

Some people will fold, while others continue to hold or buy the dip Bear case: Solar flare or thermonuclear war/nuclear winter puts us back a century without an internet, which in effect turns off crypto for everyone Bull case: It all becomes ubiquitous, everyone holds it in some form and as to the technology behind it, people don't even realize they're using it everyday to easily maintain their digital sovereignty