What’s going on with Tesla?..First we hear Kathy wood talk them up as a $3k share, yet have been selling this week. Now I’ve just read that Chamath has done similar
Also, I read somewhere today Musk himself may be selling some shares in November…
China has cracked down on cryptocurrencies multiple times and there’s next to no impact. Cryptocurrencies are a thing now and they’re just not going to disappear. They have legitimate use cases and it will be extremely hard to reign in.
There’s just so much money and big exchanges including the CME for instance which provide futures for Bitcoin as an example plus with institutional money moving in.
Defi which is decentralised finance there are so many opportunities. While there are huge areas cryptocurrencies can improve and there are a lot of scams which is concerning there’s just too much momentum behind it all for it to just disappear.
But does the world need so many? A month ago a young bartender told me she was stashing money in XRP. Surely, that marks the top. Surely.
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Cryptocurrencies move in cycles and we’ve seen that with Bitcoin, Eth and other coins dropping 70% plus on more than a few occasions. There’s more volatility but the upsides are also much larger.
For instance on certain USD backed stable coins you can lend and receive circa 20% returns. Now there are certain risks with stable coins, potentially collapsing, but there are plays where you can short a stable coin for a small cost as well. Call it an insurance play.
There are other more lucrative options where you can both be long and short the same coin, therefore a neutral position, provide liquidity to an automated market maker, yield farm and receive much higher returns. There are coins with simply outrageous returns and still provide growth for further returns.
Cryptocurrencies often move a few percentage points a day. Compare that with stocks and so forth and the difference is clear. There are risks of course. Naturally.
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The question is will governments allow crypto to exist without regulating it into parity with their own currencies. Right now crypto is primarily a speculative instrument, offering “returns” primarily because traders are pushing it higher. Most dollar-denominated assets are up 20% for the year, even rally losers like value stocks. Ironically, only inflation hedge gold is down.
No one is really prepared for the inflation scenario in front of which nearly all assets are set to fold. Now, one could argue with so few places to hide crypto might weather the storm. However, how much of the positions in crypto are leveraged/ Or rather, how much of the market in general is leveraged. Will traders have to sell crypto to meet margin calls on other assets?
There is no limit to how much crypto currency can be created, but there would certainly be a limit on demand if it began to sell off in a prolonged way.
On the other hand, I could imagine a scenario in which investors run to crypto in a market selloff, because so many believe Bitcoin, for example, is a hedge. Guess we’ll see.
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This is the key issue. Real likelihood that Crypto will be legislated out of existence before it retains true transactional value - expect it to happen first in China but can also imagine a scenario where US does likewise. Crypto is purely speculative with its transactional value squarely in criminal activities. Ultimately a currency relies upon a promise of enforcement backed by force - something the state will quite rightly retain its monopoly over.
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That has started.
India are looking at Etherium for use in their education system. There’s also Cardano being linked to Ethiopia etc.
I think its use is unavoidable now. The only question is what regulations will be introduced to manage it.
But what is it’s use? In El Salvador for example, you are not strictly using the Crypto currency to pay for things - you are converting to a currency like dollars first from the cryptocurrency. I suspect if other countries do adopt it, they will follow this model.
With such volatility, I still don’t see how it is a useful medium of exchange.
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Here’s the definition of Etherium
“As a blockchain network, Ethereum is a decentralized public ledger for verifying and recording transactions. The network’s users can create, publish, monetize, and use applications on the platform, and use its Ether cryptocurrency as payment. Insiders call the decentralized applications on the network”
and for a definition of a blockchain of which a cryptocurrency is the currency of that system
The basics of blockchain technology are mercifully straightforward. Any given blockchain consists of a single chain of discrete blocks of information, arranged chronologically. In principle, this information can be any string of 1s and 0s, meaning it could include emails, contracts, land titles, marriage certificates, or bond trades. In theory, any type of contract between two parties can be established on a blockchain as long as both parties agree on the contract. This takes away any need for a third party to be involved in any contract. This opens up a world of possibilities including peer-to-peer financial products, such as loans or decentralized savings and checking accounts, wherein banks or any intermediary is irrelevant.
I just think as the world becomes more and more digital the need for blockchains and associated currencies will become unavoidable.
I think you maybe missing my point. A currency is a store of value, and a medium
of exchange. While Crypto Currencies can do both of these things, the fact you don’t know what it’s value will be day to day with any degree of certainty makes it unreliable for purposes of buying goods and services. Hence why in El Salvador, people are using systems that convert the crypto currency to dollars to conduct the transaction. It’s not a straight up purchase with crypto currency.
@El_Dorado regarding Bitcoin as as hedge, I’m sure I have read that when the markets sell off, Bitcoin has too, so it doesn’t appear to be much of a hedging tool yet as far as I can see?
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No it isn’t. Perhaps Currency is not the correct term we should be using? Although it is used as a currency when being used as its primary purpose.
While I generally agree with you and believe any stock market tears will ultimately translate to crypto, take last week as an example. S&P 500 down, Bitcoin up. The market is not yet closed in the U.S. today, but the same relationship is evident.
So I think my point is more in the short term. The view that crypto (especially Bitcoin) can be a hedge may hold sway in the nearer term. We shall see.
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Ouch!
I think what he is saying is that while they might be designed as currency, that is neither how they are being used or how people see them being used in the future.
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It is staggering. In the UK there have already been multiple failures (7) of the intermediary providers, essentially due to the interaction of an uncapped wholesale price and a capped retail price. That was largely before this spike. Only a matter of time before one or more of the majors fails now.
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Crypto again powering higher on a day when global equities are falling. Then look at the S&P 500 or your favorite index against any of the major cryptocurrencies on a three-month basis. It’s clear where the new money is going (I mean the money central banks are printing). This for an asset which pays no dividend, makes nothing essential and isn’t used at all as a major medium of exchange in the vast majority of transactions. It doesn’t even give off a fragrant aroma, as at least tulips did.
It’s an interesting phenomenon. One to watch closely, I think.
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If they want to start regulating it they had better get a move on. Crypto is powering ahead with projects, new coins new applications etc. This is one that I’m trying to follow
Unless they can stabilize the price I can’t see it being adopted widely enough to replace standard currencies. Like @El_Dorado I see this being more a bubble than genuine technical advancement. Too much spin by supporters of these currencies.
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You’re probably right. All I’m suggesting is that there seems to be “a need” for it within the digital world, or at least a market for it. And that market is growing very quickly. I think the clock is ticking with regard to bringing it under control in an easy manner.