Tether fake dollar printer has been going crazy the last few days, they printed a billion and a half in just 3 days. And no surprise there's an exact correlation between crypto prices and the amounts they print
If this is true (which I think it is), then aren't all these institutional investors going to get crushed when it crashes? And won't it circle even faster downward if they try to sell their positions once it starts doing so?
How are they even buying all this Bitcoin? Are they unwittingly assisting in the Tether prints?
The entire Tether market cap is 22 Bn$, It's very unlikly that Theher alone is able to double the Bitcoin price in just a couple of weeks (current market cap 744 Bn$)
Market cap is irrelevant when we don't know the trading volume, if I created a million random coins and sold one of them for a thousand, I'd have a billion dollar market cap coin, despite only having a thousand dollars of real money involved.
And we definitely don't know the real numbers, reported tether trading volumes are total nonce, they wash traded them to the point that they report higher volumes than all the world stock/bond markets combined.
It's "backed by other assets", not backed 1:1 but "is always valued by Tether at 1 USD" and "Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all." all on their website.
Why does Tether always come up in HN crypto threads? I'm surprised it's still around after it was revealed they're running a fractional reserve. When I worked in the industry Tether was a joke and there were many alternatives that are backed 1:1.
Because they keep printing more and more unbacked money to the point that they are the 3d largest crypto currency right now and almost all crypto trading happens in tether, not actual dollars, so it's unclear how much actual money there is in that market and how much of it is fake dollars.
At least with BTC, if previous data is any decent indicator of future value (big IF), I think the price will come crashing down and land at probably $12k-$15k or so.
My personal opinion is that the prices are driven by FOMO / hype / speculation, just like they were in 2014 and 2018. Big spikes in price that last a couple of months, then back to the trend-line. That line is growing with time, even a bit more than linear - a very slow exponential growth.
From the people I speak with in the BTC camp, you seem to have two parties:
1) Those that believe crypto will replace fiat, and sincerely believe that there's no point in trading crypto for fiat - so they only purchase, and never sell.
2) The vast majority: Those that wait for some magic number, and will sell as soon as it's been crossed.
edit: with that said, I think fundamentally a lot of institutional investors are getting in on the game because of zero interest rates, uncertainty around COVID, and in general trying crypto out for alternative risky / high-yield investments.
What interesting isn’t the price, what’s interesting is the relative stability. Bitcoin is up almost 2x the peak from 3 years ago which isn’t that exciting from a ROI perspective. Tesla for example hit 10x over the last 3 years peak to peak.
The current peak might go much higher, but without that
the peak to peak growth slowdown may discourage a lot of people long on Bitcoin. In other words if the price falls to 20k without hitting 100k, you might see a truly giant sell off.
PS: Peak to peak growth is what’s important from an long term investment standpoint. You could have made great returns investing in say gold at the right time, but gold is a terrible option across 40+ year timescales.
3) those who believe BTC is likely to be a pretty good store of value regardless of whether (1) happens or not and include it in their portfolios on the belief that it will therefore not lose value vs cash (fiat) and may well increase in price significantly as more investors come to the same conclusion.
I'd say the current BTC state in this cycle is similar to the beginning of 2017. Regular people are still sleeping on this, not minding it too much. ALTS are barely pumping, compared to the 100x's they did in 2017. BTC will simmer down and correct, but when, that's the question.
Purely anecdotally, I know a bunch of people who took their COVID check, and since they were working and unaffected, and just bought crypto. The timing of this spike doesn’t correspond to the checks well, but my intuition says they are sort of related. People with jobs that are anti-fragile to covid seem much more likely to understand Bitcoin.
For a different view may I highlight the Best of Bitcon Books @ Open Blockchains [1] - Austrian Economics Bullshit to the Max - The Bitcoin Fraudsters' Lies
Bitcoin halved on May 11, 2020 which incentives mining because of a lower inflation, lower supply and higher demand. On top of this, you have speculators timing their investment around this halving cycle to get these crazy spikes. This is built into the protocol and will continue to occur until 2140.
Since fewer people sell coins than buy them over time, you end up with a more and more stable asset class which derives value from being a decentralized currency that can be sent across the world without being hindered by banks and governments.
While Bitcoin shouldn't be viewed as an 'investment' (no more than gold is), it would be a mistake to simply dismiss the idea of holding any. A lot of smart people buy gold etf's to hedge against inflation. Bitcoin is a way to hedge against central banks, sanctions, and global money transfer restrictions.
> Bitcoin is a way to hedge against central banks, sanctions, and global money transfer restrictions.
It's beautiful to have a technology that offers the choice to take back your money and branch off into a system where governments can't print money to finance their wars.
All they care about is opening new accounts, and selling financial products to people who don't need them. They custody your money, but it's impossible to reach them when you need their help. The banking industry continues to exist with websites that were designed in the 2000s. The tipping point for me was when my bank denied cash withdrawals during the initial weeks of the first COVID lockdown.
You may not have been through the same experience, but remember that most of the world's population is either legacy-banked, or unbanked.
Bitcoin hitting $1T is not just speculation - there's a deeper story behind it. All the hype aside, let's not forget what Bitcoin really fixes.
Chase is pretty good about giving me debit cards, credit cards, FDIC protection, e-checks, safe/reversible transactions, and fraud protection. They also do actually answer the phone when I call.
Maybe you just need a new bank? Bitcoin provides none of these solutions.
Markets have a way of humbling the intellectually honest. Many smart developers have lost more than they thought possible trying to outsmart the market. It's just numbers right? Bitcoin is up 3.7 million x now from 12 years ago, with average fees of $11 a transaction now. There's also less retail adoption than 3 years ago. I could point out other counterintuitive facts, such as, the price going up higher when inflation was higher (100% inflation year 1.)
One must come to crypto with an open mind if one wants to discover the truth of it. Bitcoin, and other coins go both higher and lower than you think possible. disclaimer: I am biased.
From that I can tell, all this economic and ideological based theorizing is completely misguided.
BTC has gone up, but all the theories about what it was going to be and do proved all false:
1. didn't replace fiat,
2. didn't even get used as a currency at all except initially on the black market,
3. wasn't prosecuted by governments at all, none tried to shut it down,
4. but did get regulated in the sense that all commercial entities that deal with BTC need to follow KYC and AML laws,
5. didn't become as decentralized as it was envisioned,
6. most people who "own" BTC, actually own an account with an exchange,
7. does not go counter to the normal markets but instead follows the same trends.
Seems like practically everyone who said anything about understanding BTC is full of shit.
I feel cryptocurrencies in a time of corona are interesting. In March, the US injected a 2.2 trillion dollar stimulus package. Just a bit ago, a new stimulus package of 900 billion dollar was dropped. The US debt is 27.7 trillion dollar [1]. I don’t know what that entails but that sounds like a big number that you might want to have smaller.
I wonder if this is accelerating some flight of capital into cryptocurrencies as the US dollar is also heavily devalued compared to the euro (1.23$ for €1 at the moment).
I am not a crypto fundamentalist, but currently I have a few percent of my net worth in it in order to hedge.
I am watching with curiosity how this story will unfold. I wonder if nation-backed currencies will be as pervasive as they were in the 20th century. It might be that we will have secondary or tertiary currencies (crypto or not).
Some musings from yet another armchair economist (nah, I am not even that, just a guy on the web).
That's not gonna happen. Right now the government/fed essentially "rolls" their debt. They sell $30,000 in treasuries for $29,999, and in 3 months time sell $30,001 in treasuries for $30,000 to buy back the old one. (numbers not to scale, for illustration purposes) This is how the debt increases via the interest rate on treasuries.
The more likely "disaster" scenario is instead of "rolling" they just print, buy and don't issue a replacement treasury.
I've sold all my crypto when the price reached 20k a few months ago. Feeling a bit sad now, but I was really tired from ups and downs of my net worth.
Also, I'm disappointed that Bitcoin price depends a lot on big players, they can manipulate the price a lot. I don't feel like I have much control over my money.
I think a cryptographic key is worth nothing, I can pull thousands out of my ass at pretty much no cost.
So I don’t have any regret because I would have never made any money with it. I would have sold it all when it reached $10. And if not I would have thought there is no way this thing is worth $100 and would have sold. So there is no way I would have reached $1000, let alone $30,000.
The only decisions you should regret are the decisions you could have got right with the information you had at the time. Otherwise it’s like regretting not having picked the right lottery number
Eh, and I sold first of my blocks when it just passed $100. And I had 1 more block simply gifted to me on a flash stick I since lost when it was way below $100.
I don’t think I’d enter at this point, but if you’re a sceptic, Preston Pysh on The Investors Podcast (We Study Billionaires) is a good source for the bullish case. That podcast is consistently good, if you’re into active investing at all.
So the party keeps going as long as there is enough of willing buyers to buy at these levels. I wonder when the situation reverses and there is more sellers than buyers.
Here's another thing I have thought about. I recall reading that if you have money deposited at the bank, they borrow that money forward to others. So in fact the bank is lending more money than it actually "owns" money. For bitcoin or cryptos, this value is pretty inert and unutilized or do people use it as collateral for loans?
There's the world of DeFi (decentralized finance). Probably not what you had in mind, but it's people doing all sort of things to leverage their crypto to make more money, all within the crypto system.
To my mind it's a house of cards, and I'm generally very pro-crypto. But it's out there and billions of dollars are moving through it.
You can’t use it as collateral in traditional bank loans, unless you hold it through a proxy like an ETF or Microstrategy. BlockFI and a few places like it allow you to borrow against it. That’s how BlockFI provides its high yield to depositors.
Good, this means I can finally exit at a modest profit.
I jumped on the bandwagon in 2017, and made the mistake of doubling down in 2018. I put some in Ethereum which is a pretty solid coin in terms of value, but made the mistake of buying Ripple (XRP) and some other random shitcoins because of trying to spread my investments on the one hand, and assuming everything would follow the bitcoin anyway. Which is partially true I guess.
Anyway, my eth is up so if I sell that now I'll break even. I bought XRP at like $2 and then some, that one's only worth $0,18 at the time, lol.
We're not talking massive amounts thankfully, there was a limit on how much I could spend at once via credit card.
Microstrategy's $425M buy order was brokered by Coinbase, and it didn't shoot up the price. Anyway, exchanges will usually deny placing such large orders. Institutions use OTC desks instead, and there are plenty of them these days.
Maybe it won't go back down to 8, but I do consider it very likely it'll drop back down to at least 12-15. Humans simply don't work in a way that allows something to nearly triple (in value, land, whatever) overnight and stay there.
I bought at 8, I bought below 8, I bought above 8... but there's no way in hell I'm buying above ~20 for the next 2-3 years.
Bitcoin looks equivalent to shorting the US (steep rise in presence of perceived instability) with the implication of becoming long China (since that’s where most miners are located, and miners are required for transactions to work) in a sense.
