Crypto diehards are about to find out if it really was a bubble

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    • #467663
      • Total Posts: 11,935

      For most of its 13-year history, Bitcoin has enjoyed an environment of easy monetary policy and zero or negative rates. While there is no straight through-line from the Fed’s coffers to Bitcoin buy-orders on exchanges, there is a connection, according to David Tawil, president of ProChain Capital, a crypto hedge fund. For one, the Fed buying any type of asset can have ripple effects and lift prices of other investments. “All the buying power, all the investable power that exists has to go somewh ..

      Second, with rates at rock-bottom lows, investors have been forced to scour the market for higher-yielding opportunities and many turned to crypto given its ability to post outsize gains. Think of a junk-bond investor who was accustomed to high-single-digit returns even on bad days, said Tawil. “He’s going to be forced to put money into something ‘riskier,’ but, more importantly, something that yields something he’s used to getting.”

      So what happens when financial conditions become tighter? “The initial move is the opposite of what happened when they put the money in — everything’s going to go and swing the other way, until it settles down,” Tawil said. “That’s why you have this immediate reaction in the market because everyone’s anticipating that the money is going to leave the riskier stuff.”

      The last time the U.S. central bank raised rates was in December 2018, its final increase in a series of hikes. Back then, Bitcoin was trading at about $3,700 and concepts such as “decentralized finance” and “non-fungible tokens” were years away from entering the vernacular. It turned out to be a rough year for the original cryptocurrency, particularly toward the end, when Bitcoin lost more than 40 per cent during the last two months — a period that also coincided with a walloping in U.S. stocks.

      Jesus: Hey, Dad? God: Yes, Son? Jesus: Western civilization followed me home. Can I keep it? God: Certainly not! And put it down this minute--you don't know where it's been! Tom Robbins in Another Roadside Attraction

    • #467693
      Ohio Barbarian
      • Total Posts: 24,981

      Probably has something to do with all of those giant asset bubbles that look like they may burst soon, triggering yet another capitalist recession.

      I’m looking for seeing the Dow Jones drop 10,000 points in a day, myself. Stockbrokers dropping out of windows would be nice, too.

      Never let your morals stop you from doing the right thing.--Isaac Asimov

      The United States is also a one-party state but, with typical American extravagance, they have two of them.--Julius Nyerere

    • #469028
      • Total Posts: 2,567

      Bitcoin was created as a safe haven against systems collapse. Since that, the blockchain revolution has become much more than store-of-value oriented financial speculation. Central banks and governments all over the world are very divided in their reaction to serious competition to their centralized book keeping – and book cooking. Salvador broke a major barrier as the first state to adopt Bitcoin as a legal tender.

      Now inflation is running rampant, and Central banks are talking about raising interests. On the other hand, the cumulated mountains of debt are so vast, that you are fucked if you raise the interests, as well as fucked if you don’t. The system has been kicking the cans of systems collapse uphill, and  now the cans of systems collapse are rolling back down the hill in an avalanche.

      There’s not much predictability during systems collapse. Just the mathematical certainty that ponzi schemes collapse. Central bank fiats are mathematically ponzies. Most blockchain systems aren’t mathematically ponzies.


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