We're starting to see the cascade of exchange failures, just like we saw in 2008 with the banks during the GFC. The exchanges all made loans to one another in order to backstop their customer's assets. Now that the value of those loans are evaporating the entire system is going to come crashing down all at once. This is a systemic crisis, and there is no white knight to save it.
I'm curious because a lot of this started (in the short term) with Binance dumping their FTT. Just yesterday it looked like a "4D chess move" because then Binance could acquire FTX for next to nothing. Now I'm curious if Binance just tipped over the gasoline can that can finally set this whole shitshow of uselessness ablaze, but potentially taking down Binance with it.
I'm not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state internally that it made sense to sell his holdings in FTT. I could buy the idea that he wanted to hurt FTX with his tweet, but things quickly escalated out of control.
I also think the offer to buy FTX was motivated by a desire to avoid a broad crypto collapse which would hurt Binance along with everybody else. But that offer had to be withdrawn because things got so bad.
Now everybody involved is worse off than they were before, a lot of customers might lose money, and there is a pretty good chance that regulators and governments are going to get more involved in the crypto market in response.
If this was planned in advance, it was not 4D chess, it was just a really bad plan.
People are ascribing brilliance and cunning to something that was simple self interest. FTT was risky, so they dropped it. What would they have done if FTT was risky and they didn't intend to acquire FTX? The same thing.
> cascade of exchange failures, just like we saw in 2008
They are related in both being cascading crises of confidence. ‘08 manifested from a novel opacity around correlation (lack of centralised counterparty reporting) from novel non-bank banks (shadow banks). This is just a three-point recursion cycle: FTX, FTT and Alameda.
It's a "very small player" that has their name plastered on one of the most prominent arenas in the United States. (FTX also had their name on another arena, for that matter!)
It's quite possible that the public perception poison will be way worse than any collapses themselves because these players have tried so hard to associate themselves with crypto in the public eye.
There's a beautiful difference. Unlike in 2008, today
- I can transact efficiently and safely without a bank account. This is currently not possible in traditional finance
- Subsequently, none of my assets are locked. I have never stored assets in an exchange, and have no need to do so.
- Exchanges can't ask daddy government to mint coins for a bailout.
Tl;dr: exchanges and banks who think they can get away with being overleveraged, doing unbacked derivatives trading, lending without locates etc. are in for a bitter surprise. Crypto can't be gamed so easily and it shows.
The problem is, if these exchanges collapse, the value of that crypto you have will drop significantly. So yes, you still have your crypto assets, but there is a real chance they could end up being worthless.
Even if you don't use exchanges, you are still exposed to their failure because they are major players in the market that determines the value of the cryptocurrencies. When major players in a market go bust, it's unlikely that any of the other market participants will end up unscathed.
Given that crypto value is based solely on what other people are willing to pay for it, it really could go to zero. It probably won't go all the way to zero, but I'd still expect a significant drop.
"Solana’s native SOL token suffered as a result of FTX’s collapse, dropping over 40% on Wednesday at a price of $14.37. This is 92% below its price from a year ago."
I looked it up and it was trading for $230.23 on Nov 9, 2021. As of posting this comment it's at $13.16
At the end of day, this entire fiasco really drives home the point if its not your keys its not your coins. Shady exchanges/banks can always collapse and take your entire portfolio with it, but if you have a securely backed up wallet, then your coins will be untouchable no matter what kind of shady shenanigans goes down in the wider cryptocurrency landscape.
I think people are too hyper focused on the price aspect of cryptocurrencies. The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.
The genie is already out of the bottle and there is no way to put it back. There will always be those especially in the younger generations that want something better than the current system. Bitcoin shows that you can have a completely transparent monetary system based on code that is available to be audited by anyone. Bitcoin may or may not survive, but the idea behind it will.
Celsius = centralised, terra = centralised, FTX = centralised...
The point is stop trusting centralised wolf in sheeps clothing.. same goes for ethereum with Proof Of Stake.. ur just reinventing central banking (but private)..
It's your keys, and your coins, and most importantly your initial and continuous due diligence... and not just on the asset itself, but on the possible motivations of any asset holder with a sufficient stake to meaningfully affect the price.
If you store your funds in a secure wallet, you will not be able to FOMO in recklessly on shitcoins hoping for a 10-bagger, the facilitation of which is the raison d'etre for most crypto exchanges.
People don't want to buy and hodl, they want to get rich. There's no Benjamin Graham for crypto because crypto has no fundamentals, no underlying value to go long on. The best any crypto advisor can do is to warn you when to hit the ejector seat button.
Coinbase, which happen to be a Y Combinator unicorn, is saying they're totally fine. Credit where it's due: Coinbase never ever dealt with Tether/USDT. They say the $42 billion of USDC they minted are all backed and that all the clients' assets on their site (USDC/coins/EUR/USD/etc.) are all backed 1:1.
I hope Coinbase is and stays an honest (and regulated) player in that crazy space:
creating 20,000 new currencies isnt really an economy, or rather its a purely entertainment based economy like Las Vegas or Macau. Those things I guess are valuable but is this the best use of our computing power and our Human Resources?
The S&P 500 is obviously superior even though BTC did well pre-2013. BTC is more like a commodity than an equity, so the long-term returns are expected to be worse compared to index funds.
I didn’t buy it at £400 once because it had fallen so much from £1,000. I wouldn’t be surprised if it goes up again when people look to alternative sources of income to offset inflation.
Another crypto crash? I'm surprised anyone would have serious money still in crypto after the last megacrash, which came after the previous crypto crash.
Nothing but crashes. Bitcoin crashed to $2 in 2011, then it crashed to $250 in 2015, then it crashed to $3000 in 2019, and now it's crashed again to $15000. Smart money knows to stay away and avoid the crashes.
This is a joke, but it also misses the point: a volatile asset doesn’t have to crash to any particular baseline. It only has to crash below the stake price for its investors.
because everyone following the best practices is unscathed.
everyone had a choice to just never touch TerraLuna.
everyone had a choice to not keep their funds on exchanges.
I'll give some sympathy to custodial smart contracts being drained and advertised as non-custodial, a legal distinction that has little practical distinction for the user except unlimited amounts and no permission needed to use. But you didn't have to use those either.
and overcollateralized stablecoins type fiat are still fine (for now)
and overcollateralized stablecoins type crypto are still fine with redemptions functioning smoothly through pretty amazing stress tests
other kinds of stablecoins are the ones that actually have implosions and make the news, with the notable exception and danger of Tether which still have passed every stress test despite such a large attack surface being consistently attacked by state actors very publicly
regardless, it has been entirely possible to have stable value in crypto the whole time, and in fact that's where a majority of the capital is, far beyond any hacks, exploits and exchange implosions. overcollateralized stablecoins are still $120bn and has been a steady amount for the past year. redemptions go well when desired, people just don't desire.
and then for the people that actually have the risk profile for volatile assets and self-custody those assets? they're fine too. let the VC and bankruptcy trustees fire-sale, let everything trade for another 90% discount, that's not controversial, commodities trade like that, digital commodities are trading similarly.
You're cute. In the end of the day this entire shenanigan is a game of musical chairs and as every chair is taken out, you should be more anxious to sit down quickly before the music stops. The actual details hardly matter, this is a game played only by investors, and money is slowly draining. Nobody is inserting new chairs into your musical game, only new participants with their own chairs. Unlike musical chairs, you can leave right now.
> redemptions go well when desired, people just don't desire
Why hold stables? I’m confused why you’re interested in coin pegged to inflationary fiat. The yield accounts are all scams, so that’s definitely not a good idea.
The old saying goes, when you are getting stock tips from your cab driver, get out of the market. Maybe the same should be true for arena's. When your local arena is named after a crypto site, sell your coins.
Readit News
I also think the offer to buy FTX was motivated by a desire to avoid a broad crypto collapse which would hurt Binance along with everybody else. But that offer had to be withdrawn because things got so bad.
Now everybody involved is worse off than they were before, a lot of customers might lose money, and there is a pretty good chance that regulators and governments are going to get more involved in the crypto market in response.
If this was planned in advance, it was not 4D chess, it was just a really bad plan.
Deleted Comment
Fortunately, unlike 2008, the global economy doesn't depend on this stuff working.
They are related in both being cascading crises of confidence. ‘08 manifested from a novel opacity around correlation (lack of centralised counterparty reporting) from novel non-bank banks (shadow banks). This is just a three-point recursion cycle: FTX, FTT and Alameda.
it's a noise https://coinmarketcap.com/exchanges/crypto-com-exchange
it's the failure of all the suspicious exchanges for sure
It's quite possible that the public perception poison will be way worse than any collapses themselves because these players have tried so hard to associate themselves with crypto in the public eye.
- I can transact efficiently and safely without a bank account. This is currently not possible in traditional finance
- Subsequently, none of my assets are locked. I have never stored assets in an exchange, and have no need to do so.
- Exchanges can't ask daddy government to mint coins for a bailout.
Tl;dr: exchanges and banks who think they can get away with being overleveraged, doing unbacked derivatives trading, lending without locates etc. are in for a bitter surprise. Crypto can't be gamed so easily and it shows.
Even if you don't use exchanges, you are still exposed to their failure because they are major players in the market that determines the value of the cryptocurrencies. When major players in a market go bust, it's unlikely that any of the other market participants will end up unscathed.
Given that crypto value is based solely on what other people are willing to pay for it, it really could go to zero. It probably won't go all the way to zero, but I'd still expect a significant drop.
When you buy an asset from heavily leveraged market you get high risk even when you don't use leverage yourself.
The value of most coins is going to zero as a result of this. Crypto is going to be a frigid wasteland after this for quite a while.
I looked it up and it was trading for $230.23 on Nov 9, 2021. As of posting this comment it's at $13.16
I’m not sure “not your keys, not your wallet” is really the message to take away from ~Celcius~ ~Terra~ ~TAC~ FTX.
The genie is already out of the bottle and there is no way to put it back. There will always be those especially in the younger generations that want something better than the current system. Bitcoin shows that you can have a completely transparent monetary system based on code that is available to be audited by anyone. Bitcoin may or may not survive, but the idea behind it will.
The point is stop trusting centralised wolf in sheeps clothing.. same goes for ethereum with Proof Of Stake.. ur just reinventing central banking (but private)..
The only truly decentralised coin is bitcoin..
What a brave new world crypto is bringing us.
This has always been the case with crypto. It's just much harder to successfully execute with crypto than it is with cash.
People don't want to buy and hodl, they want to get rich. There's no Benjamin Graham for crypto because crypto has no fundamentals, no underlying value to go long on. The best any crypto advisor can do is to warn you when to hit the ejector seat button.
To hold your own keys etc is just too complicated.
I dont want to put 100k onto a USB drive where I may forget the PW to.
Crypto is just not going to hit mainstream if you cant get exchanges "banks" to stop selfimploding.
I hope Coinbase is and stays an honest (and regulated) player in that crazy space:
https://www.coinbase.com/blog/our-approach-to-transparency-r...
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We'll see what happens next.
We're seeing the dominoes fall before our eyes.
crazy
What is fascinating is that The S&P 500 is up around 10% since Feb 2020 (pre covid) while BTC is up 50% since.
What a wild ride it's been.
I think we can safely put the claims about crypto offsetting inflation to rest.
everyone had a choice to just never touch TerraLuna.
everyone had a choice to not keep their funds on exchanges.
I'll give some sympathy to custodial smart contracts being drained and advertised as non-custodial, a legal distinction that has little practical distinction for the user except unlimited amounts and no permission needed to use. But you didn't have to use those either.
and overcollateralized stablecoins type fiat are still fine (for now)
and overcollateralized stablecoins type crypto are still fine with redemptions functioning smoothly through pretty amazing stress tests
other kinds of stablecoins are the ones that actually have implosions and make the news, with the notable exception and danger of Tether which still have passed every stress test despite such a large attack surface being consistently attacked by state actors very publicly
regardless, it has been entirely possible to have stable value in crypto the whole time, and in fact that's where a majority of the capital is, far beyond any hacks, exploits and exchange implosions. overcollateralized stablecoins are still $120bn and has been a steady amount for the past year. redemptions go well when desired, people just don't desire.
and then for the people that actually have the risk profile for volatile assets and self-custody those assets? they're fine too. let the VC and bankruptcy trustees fire-sale, let everything trade for another 90% discount, that's not controversial, commodities trade like that, digital commodities are trading similarly.
Where? Which crypto investments would have resulted in that during the "whole time"? Or even just the last few years?
Why hold stables? I’m confused why you’re interested in coin pegged to inflationary fiat. The yield accounts are all scams, so that’s definitely not a good idea.