I was 18 at the time and was just a broke high school/ college student. I really don’t remember
Boiler Room: The Official Stock Market Discussion
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as @phcitywarrior pointed out above "Inflation is generally a monetary (demand) issue. Too much money chasing too few goods.". this has been the case since 2005/2006/2007.
could this be because wages have only recently started to go up in anything to the same degree as inflation. shadow stats inflation even. input costs have been surpressed by outsourcing (exporting wage and manufacturing inflation).
"The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980"
Alternate Inflation Charts
www.shadowstats.com
i don't think crypto collapsing will have a major effect on the economy. why should it? price moves at the margin. the 1tn market cap doesn't mean that 1tn (nwt) flowed into crypto.
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two principles
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Markets Hate Uncertainty
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seekingalpha.com
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so now the rise is fixed the position is more certain.
also markets can be oversold/bought in advance of a "decision".
these (and the expectation of a rally) can lead to a bounce after the event passes but if that event does not change the fundamentals then the broader directional forces are highly likely to take over again.
as @phcitywarrior pointed out above "Inflation is generally a monetary (demand) issue. Too much money chasing too few goods.". this has been the case since 2005/2006/2007.
could this be because wages have only recently started to go up in anything to the same degree as inflation. shadow stats inflation even. input costs have been surpressed by outsourcing (exporting wage and manufacturing inflation).
"The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980"
Alternate Inflation Charts
i don't think crypto collapsing will have a major effect on the economy. why should it? price moves at the margin. the 1tn market cap doesn't mean that 1tn (nwt) flowed into crypto.
Yeah CPI definitely understates overall inflation, but not all companies are experiencing it to nearly the same degree yet majority are raising prices as if they are. And crypto imploding has a spillover effect. The total amount of crypto we know of is a little under $1 trillion, but we have no clue as to the total notional of derivatives tied to crypto. Add to that many of these projects are billions in Ponzi schemes. If people invested in these projects guaranteeing unbelievably high returns suddenly lose all their money, they’ll have to sell stocks, real estate etc if they took out loans to invest. Crypto contagion is very real, especially if it crashes suddenly in a major way.
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ok. i haven't looked at that close enough. i do know that wage inflation has taken off which in one of the major components of feedback inflation.
It's 1tn notional but that doesn't mean that 1tn currency (real money) was invested in crypto. and it is global not just the USA.
this says 66% is american but no idea if true - Global Cryptocurrency Ownership Data 2021 - TripleA .
it costs ~100m to move BTC by 1% I think I read on here.
"U.S. banking giant Bank of America (BofA) claims only $93 million in capital is needed to influence Bitcoin’s price by one percent. "
" The researchers compared Bitcoin to gold and 20-year-plus treasury bonds, saying both of these markets would require $2 billion and $2.25 billion, respectively, to move a similar percentage point. "
Bank of America: It Takes As Little as $93 Million To Move Bitcoin Price by 1%
U.S. banking giant Bank of America claims only $93 million in capital is needed to influence Bitcoin’s price by one percent.
www.cryptoglobe.com
true but there aren't that many avenues or companies doing this. does a sizeable OTC derivatives market even exist in crypto?
These are already included in the totals and we are assuming a massive collapse across the board irrespective of ponzi or not. i.e. something like Tether failing.
~100m moving the market by 1% means the actual inputs are not that large. even if we are working from the ATH.
88m3
Fast Money & Foreign Objects
ok. i haven't looked at that close enough. i do know that wage inflation has taken off which in one of the major components of feedback inflation.
It's 1tn notional but that doesn't mean that 1tn currency (real money) was invested in crypto. and it is global not just the USA.
this says 66% is american but no idea if true - Global Cryptocurrency Ownership Data 2021 - TripleA .
it costs ~100m to move BTC by 1% I think I read on here.
"U.S. banking giant Bank of America (BofA) claims only $93 million in capital is needed to influence Bitcoin’s price by one percent. "
" The researchers compared Bitcoin to gold and 20-year-plus treasury bonds, saying both of these markets would require $2 billion and $2.25 billion, respectively, to move a similar percentage point. "
Bank of America: It Takes As Little as $93 Million To Move Bitcoin Price by 1%
U.S. banking giant Bank of America claims only $93 million in capital is needed to influence Bitcoin’s price by one percent.
true but there aren't that many avenues or companies doing this. does a sizeable OTC derivatives market even exist in crypto?
These are already included in the totals and we are assuming a massive collapse across the board irrespective of ponzi or not. i.e. something like Tether failing.
~100m moving the market by 1% means the actual inputs are not that large. even if we are working from the ATH.
Yeah BofA found last year that it only takes $93M to move crypto by 1%. That makes it even more dangerous. Given that, it’s not unfeasible at all for crypto to fall by 90% within a week. An asset that big declining by that much will have major ripple effects. Investors who borrowed to invest will have to sell everything including stocks to meet margin calls. Add to that the uncertainty about derivatives tied to crypto and there will be a massive risk-off pendulum swing. Many people are over leveraged in their exposure to crypto. And, unlike the traditional financial system, governments aren’t going to step in to save crypto.
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that works on the way up as well as on the way down.
it means that the high notional amount 1tn has to be discounted because it didn't take 1tn to get there.
so it's not going to do "1tn" worth of damage.
that makes it less dangerous than the headline figure woould suggest not more.
No the $1 trillion is the total value of all crypto outstanding. It’s not notional. It’s the underlying value of all outstanding coins, or the total market cap. Market cap and notional value aren’t the same thing. In finance notional refers to the multiple of the underlying that outstanding derivatives are tied to. That’s the problem, we don’t know the notional. The notional of derivatives outstanding tied to crypto could be $2 trillion, $5 trillion, $10 trillion. We have no idea, so that uncertainty makes it more dangerous.
And yeah, the relatively small inflows/outflows that it takes to move crypto works up and down. But the difference is there is more long leverage. Forced selling and liquidations are the reason why markets go up like escalators and down like elevators.
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ok.
some specific questions.
do you agree that crypto price moves at the margin? yes or no?
do you agree that the movements have higher gearing than say the bond market? yes or no?
do you agree that due to this gearing it takes less than 1tn total inflows to result in crypto market cap of 1tn? yes or no?
thanks
I don’t understand your line of questioning. Yes, I agree that crypto is way more volatile to marginal flows relative to other assets, especially bonds. And the last question doesn’t really make sense. Regardless of underlying volatility, a market cap over $1 trillion doesn’t imply that $1 trillion or more in inflows was required to reach that valuation. The valuation derives from what buyers are willing to pay for each token multiplied by total outstanding tokens. Same with any market cap. You know that Microsoft’s $1.87 trillion market cap doesn’t derive from $1.87 trillion in total inflows from investors right?
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ok.
so (example using BTC price now of 22,596.60), if I buy 100m of BTC, BTC market cap will go up 1% i.e. $425,688,775,353 / 100 => 4,256,887,753.00 => 4bn
it therefore follows (ceteris paribus) that if 4bn is straightline lost from BTC market cap in reality (on average) "only" about 100m of external inflows (i.e. real world "money") is actually "lost".
do you agree?
Price has nothing to do with being decentralized. The technology for most crypto isnt impacted by the price, and centralized exchanges are part of the problem.
That company is about to go bankrupt for using phony instruments like margin which shouldnt be in crypto. And people found out precisely because crypto is open and verifiable
No. Unrealized gains and losses are “real world money”. That’s why accounting rules require companies to mark-to-market the assets on their balance sheet. And margin calls are based on the value of holdings falling below a certain amount, not inflows.
