The Crypto Selloff Wiped $7 Billion Off Corporate Balance Sheets (qz.com) 112
At least 26 public corporations are holding bitcoin on their balance sheets, according to data compiled by cryptocurrency analytics firm CoinGecko. Since the price of cryptocurrencies began to plummet in November, they've collectively lost nearly $7 billion. Quartz reports: The price of Bitcoin peaked above $67,000 on Nov. 8, but has since fallen 46%. Corporate crypto holdings for the largest 26 totaled at least $14.7 billion at the height of the rally. As of Jan. 26, they're worth $8 billion. The companies -- which include electric carmaker Tesla, financial services startup Square, and South Korean video game developer Nexon, along with a slew of crypto miners, exchanges, and investment firms -- hold 217,240 bitcoin. That's a little more than 1% of all the bitcoin in the world.
Re:So what? (Score:5, Informative)
If you want to compare crypto currencies to the stock market, then the price drops mentioned in the summary would be at Great Recession levels of loss. That doesn't make it sound much better.
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A comparison would only make sense to look at those with both bitcoin and cash. I'm guessing it's a lot less than 7 billion in cash depreciation.
Re:So what? (Score:5, Informative)
How much was wiped out of the stock market? Everything has gone down.
Well, since you ask, the S&P500 is down about 5% since the end of November. That compares pretty favorably to the 46% drop in crypto cited in the summary.
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That 46% drop does not take into account the whatever percentage UP crypto has gone through since the last year.
Well, Y2Y the S&P500 went up like 15%, while Bitcoin has been moving laterally over the same period, so...
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That 46% drop does not take into account the whatever percentage UP crypto has gone through since the last year.
Astute observation. Not many people realize this, but "since November" in the summary means that excludes October.
Re:So what? (Score:5, Informative)
How much was wiped out of the stock market?
Less than 10% of what was lost in the crypto economy over the same period. You're welcome.
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Stock market has nothing to do with the real economy either. Wall Street isn't Main Street.
Re:So what? (Score:4, Informative)
Not entirely, most IRAs, pensions, etc. have their money tied up in the stock market. It very much affects the real economy.
that's noth (Score:2)
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Microstrategy can be in real deep shit if BTC keeps sliding down in price. The guy took a relatively healthy company with a yearly net income of $500mil and borrowed to the tune of $2 billion, just to bet the farm on crypto. It's insane.
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IIRC, it was something like $31-32k.
Microstrategy has an earnings call due next week. That'll be fun to watch.
lost? (Score:3)
unless they sold for less than what they paid how is it a loss?
if you hold on to it while the market goes up and down, then all that is being done is riding out the market
the actual selling price will 'wave collapse' all fantasies into a determination of whether you lost/gained or broke even; from the article -- although vague -- that doesn't seem to be the case here
y'all think there's more to it?
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They did not lose any chips, the chips are changing in value, just like shares in a company. There's a big difference.
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Oh, so just like stocks. Your point?
Re:lost? (Score:4, Informative)
Seriously, why is this so hard to understand?
Because it's naïve. And technically incorrect.
The point is: if you own stock, and that stock tanks, YOU'VE LOST MONEY.
This is exactly and precisely wrong, according to the mature and standard investing practices of the modern day. I can break it down as concretely as possible, more concretely than is even practical:
1. When you buy $100 of stock, you have less money than you did before. You have some stock instead. You LOST MONEY the moment you bought the stock, but you gained a stock.
2. When the value of the stock goes up, you don't have any more money than you did before. And you have the same amount of stock you did before. You haven't gained money, nor have you gained stock.
3. When the value of the stock goes down, SAME DEAL! You haven't lost money, you haven't gained money, nor have you lost stock or gained stock. Your checking account balance, and the number of shares owned in your stock portfolio, HAVEN'T BUDGED!
4. When you sell the stock, you GAIN MONEY, but lose the stock. If you compare the price you sold it for, to the price you bought it for, then you can determine if you scored a NET gain, or a NET loss.
Do you see? THIS is the base level no-nonsense reality of what is happening. This is why fluxuations in stock prices are usually called "unrealized gains" or "unrealized losses." What you own does not change as the market fluxuates, all that changes is what you could own if you buy or sell it. But until you sell it, you don't have the money it is worth, and so you have not incurred a loss or a gain.
THIS is hard to understand, for children. Adults, however, should be able to understand this once it is explained to them.
If you buy a stock, and its value goes up, and you think "yay, I have gained money!" then you are reacting out of emotion and not reason. You haven't gained that money until you sell, and that is an objective, concrete fact that the IRS understands (since it doesn't tax you until you sell).
Inasmuch as you can't see the future, and can't know for sure whether the stock price will go up or down, you are taking a chance by buying the stock. You are risking your wealth on it. These are facts. Gamblers do the exact same thing, so these are things that investing has in common with gambling: risk and speculation. BUT, when you buy stock you buy a share of ownership in an actual business, and that money winds up helping the business to prosper, whereas when you gamble you buy only "a chance to win" and literally nothing else. That is the key difference between the two, which makes the former much more sensible than the latter (so long as you are educated and intelligent enough to understand these concepts, as well as other concepts needed to assess a business and make wise choices about how to invest).
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By that logic, if I leave my money under a mattress through 20 years of inflation I haven't lost money either.
Unless you're being overly pedantic, "money" is not cash plus bank balances, it's shorthand for "ability to buy available goods and services." If I can trivially convert a commodity into cash, that commodity may as well be money. If on Monday I could have converted some stock or BTC to cash and purchased a house, and on Tuesday I no longer can because my fungible commodities lost value, I am perfe
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I disagree that "you've lost money" is the same thing as "you've lost net worth" or "you've lost purchasing power." I think that these phrases exist to make an important and useful distinction.
When talking about balance sheets, as the article is, big swings in net worth (where the current market value of assets gets totaled up) are important things to watch, but when seeing dips it is super-important to remember that the losses are unrealized, so you don't do panic sells and turn them into actual losses of
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What you say is half true, but the reality is more complicated than you imply.
First, keep in mind that Bitcoin has no inherent value. It's not like a building or a piece of equipment or the copyright on a book. Most assets that companies own are things with inherent value, things they can use to earn money for the business. Not Bitcoin. A Bitcoin you never sell is completely worthless. The only way you can earn money from it is by selling it, so sooner or later you have to sell it. Otherwise you've ju
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Not quite like stocks. With stocks I can check the balance sheets, the markets the companies are in, the competition, the quality of the products. With Crypto, I get squat.
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Most companies increase their value over time, you can predict with some degree of confidence of what kind of growth a company will see. With stocks you can say, if company X does A B and C actions, they'll be worth Y value per share in a year. With bitcoin, no one can put a value on it, anyone that tells you what the price will be in a week (let alone a year) is lying.
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what is value ?
It is all paper value...wiped from a ledger.
Is the person who owns it dying of hunger on a street because of it...say like in Zimbabwe when their currency got devaluated.
It is just a game and gambling for people billions of dollars to play with. ...the losers all the others...few winners lots of losers.
Just a different form of Casino or ponzi...the winners are the one that convert to dollars or some other useful money at the peak
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unless they sold for less than what they paid how is it a loss?
All those company CEOs were partly responsible for the massive rise in price last year, with their big press announcements and all those slashdotters posting here about how this finally makes Bitcoin legitimate, etc., as a result.
Bottom line: They deserve it.
Let's hope they'll be more wary next time around.
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because corporate holders have balance sheets they have publish, and they have to list assets on them. Assets are marked to market.
If on next quarters disclosures wipe a few million in dollar value off the asset side of the sheet and your not huge - investors get a bit twitchy.
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unless they sold for less than what they paid how is it a loss?
Because we're talking about Balance Sheet which records the value of assets. If the value of a particular asset goes down, then the value of your balance sheet goes down. For example if you have a an unused building that suffers damage that your insurance doesn't cover. Your have suffered a loss, even if you didn't sell the building because its value has gone down.
Then consider Account Receivable (part of your assets in your Balance Sheet), if you have a contract to accept 1000 BTC at some point in the f
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thanks, that helps... and thx also to DarkOx above; I guess for the building analogy I would counter that although your building is damaged, that loss won't be manifested until you try to sell it and you might not get as much out of it; and even then, if you sell for more than you paid because the real estate market has gone up, you'd still come out ahead, even if damaged
the part that sticks out is DOx's "....Assets are marked to market..." which to me means that up until the 'loss' they were 'making' to
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Jesus Christ of course there is more to it.
It's an asset. You know, that stuff that can be used as collateral for loans? A company's assets and liabilities are used to determine its value. That, in part, determines what investors are willing to pay for the stock. So this will have an impact on the stock prices of the company, even if they don't sell.
This is basic. Very, very basic economics. If you don't understand simple things like assets and liabilities, please tell me you are not investing in crypto. It
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Jesus Christ? wow, I got promoted
I love condescension, lil man, can do it all day
whatever it is you were trying to say was lost in your unverified assumptions and rage spittle; and when a question asked in good faith is nothing but an opportunity to disparage and belittle your superiors.... that says much about you as well
consider yourself part of the problem, junior
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Rage? Sorry, that was laughter, not rage. Why in the world would I be angry? I just find the whole situation hilarious. I mean, it would be sad if it were normal people getting fleeced. But crypto bros all seem to be deserving of their fate. Ignorant of financial basics, and feeling that the world owes them fame and fortune, that were so unfairly denied.
Your anger and obvious projection of same gives me some insight into the questions you refuses to answer though. I'll take it as given that you've lost quit
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unless they sold for less than what they paid how is it a loss?
if you hold on to it while the market goes up and down, then all that is being done is riding out the market
the actual selling price will 'wave collapse' all fantasies into a determination of whether you lost/gained or broke even; from the article -- although vague -- that doesn't seem to be the case here
y'all think there's more to it?
They are specifically talking about corporate balance sheets.
Assets on them need to be priced. It's an actual loss and needs to be accounted for.
You can stick your fingers in your ears and go "la la la la I can't hear you", while thinking "It's not a loss until I sell it", if you're a private gambler.
But accounting departments don't get to play that game.
The fact that it was mostly paper losses... (Score:5, Interesting)
... is quite revealing, IMHO. There's very little real liquidity in the crypto universe.
Over $1tn worth of market value wiped away in a few hours... and nothing really happened. Hell, if you check stablecoins like Tether, which are the real backbone of BTC et al, their volume didn't even move. Which either means that no one redeemed a cent, or the entire crypto economy is smoke and mirrors.
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Even actual currencies can see these kind of changes. The Turkish Lira has lost a lot of its value recently. About half of its relative value compared to the US dollar whi
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Is it much different than a stock that can see similar swings in valuation despite no real underlying changes?
Oh, very much so. If the S&P500 lost a trillion and change over a couple hours you'd see chaos. We're talking Great Recession levels here.
I think Peleton stock has dropped off even harder than Bitcoin, but it wasn't as though their offices burned down or most off their inventory or parts or products sank while crossing the ocean.
No, they just announced they're halting production of all bikes and treadmills [cnbc.com]. You know. The things they actually sell. Peloton has an earnings call due this February, which will be really interesting to follow, but there's no two ways about it: right now, the company is in deep water.
Even actual currencies can see these kind of changes. The Turkish Lira has lost a lot of its value recently.
Yeah, over the span of an entire year. And it's wrecking havoc in the country.
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Is it much different than a stock that can see similar swings in valuation despite no real underlying changes?
Oh, very much so. If the S&P500 lost a trillion and change over a couple hours you'd see chaos. We're talking Great Recession levels here.
LOL. Let's not be overdramatic here. The total market cap of the S&P500 was $40T at the end of 2021. A $1T loss on that is a drop of about 2.5%. Would a drop of 2.5% cause chaos? No, it would be a big down day and might cause some concern, but Great Depression levels? *eyeroll*
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Great Recession, you moron. You know, -10% intraday trading losses, and a few trillion dollars of market cap value disappearing overnight. It's not like this happened too long ago either.
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He's wrong about the 1 trillion, but right about the relative change. If any stock market lost 50% of its value it would be a big deal. That's almost exactly the S&P drop in the great recession, as he said.
It's not really a surprise they're halting product (Score:2)
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The primary value of crypto is method of exchange that bypasses currency controls. Everything from paying ransom to getting your money out of China.
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Yur shure schmart hurr hurr
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Indeed - but I do believe it is huge investors squirrelling away funds as an inflation hedge?
A considerable amount of BTC value moved off exchanges into private wallets during the recent FED interest rate signals.
When we see huge volumes of BTC moving to exchanges, that's a signal the market is tanking.
Right now, that isn't happening.
Cryptocurrency is just being used by huge financial investors, but if regulati
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Re: The fact that it was mostly paper losses... (Score:2)
You're spectacularly wrong.
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Not lost (Score:2)
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Sure. And those AiG share holders who didn't sell in 2007 haven't lost a cent either. It's just a matter of time!
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7 bil is (Score:2)
Re: 7 bil is (Score:2)
GIVE US A FILTER SLASHDOT!!! (Score:2)
JFC already - give us a fucking cryptocurrency (aka "cryptoshitcoin") story filter Slashdot - we're tired of these blatant Slashvertisements!
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Fight inflation by destroying wealth (Score:4, Insightful)
I've always seen crypto as a bubble that is intended to be popped. Destroy wealth to balance out the inflationary printing of money.
Lots of people lose, but the ones that can direct where the printed money goes get to win while the rest of us lose.
Blown out of proportion (Score:2)
I'm no defender of Bitcoin, and currently don't even own any. But I'll say that this article is total BS. The current price of Bitcoin is higher than it was during two months in 2021 (Jun - July), just 6 months ago. So it's still higher than the lowest lows in all of 2021.
Second, they're comparing the price of a huge surge that peaked in Nov to now, considering it a loss. The only way any of these companies lost that money, assuming they're dumb enough to sell low, is if they bought that Bitcoin at its exa
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It'll go back up, Mr Impatient, do you not understand "volatile"? Eat the marshmallow now, or get more if you wait.
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It'll go back up, Mr Impatient, do you not understand "volatile"? Eat the marshmallow now, or get more if you wait.
While you're waiting I'll eat your marshmallow for you.
Don't worry. I'm sure it will come back if you wait long enough...
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Imaginary value (Score:3)
So, what I learn here is that imaginary coins valued in imaginary fiat money are now worth less imaginary money than they were at some point in the past. Some companies traded some of their imaginary fiat money for a different imaginary currency, and the relative values shifted opposite to what they hoped. You can probably imagine the size of my imaginary tears.
Let's all remember that actual value resides in tangible goods which can be used to provide for real human needs, like food, water, shelter, the creation and transportation of the above, physical security, the human labor required to provide for the above, and hopefully, while we have "civilization", things which enrich our minds like education, and forms of art. Maybe I'm missing a few things, but I imagine you understand my point. Everything else is "valuable" only in the sense that someone is willing to trade something for it. You accept money for your labor or your goods in the hope that someone will be willing to trade you things of actual value in exchange for this money stuff that you can't eat. When you are trading imaginary things for other imaginary things, the "value" is a mutual agreement to perpetuate an illusion.
Oops, I hope I didn't just crash the global economy.
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You didn't crash it, but it's wobbling with laughter at your primitive level of understanding.
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It's obviously a shame that my primitive level of understanding gets me paid - with that terrible imaginary fiat currency, no less - for designing and creating financial software. Quite possibly YOUR money flows through my code, so be afraid! I do not, of course, claim to be an economist, but I do know what money is, and how it is created, distributed, and destroyed.
With that said, please understand that my comments are not intended to be definitive nor even instructional, merely amusing. Apparently I've fa
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Certainly! I'm imagining it flowing into your non-physical bank account even as we speak! ;)
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Oops, I hope I didn't just crash the global economy.
No, I think any macro-economist would largely agree with your assessment. I would only add that it's in everyone's best interest to perpetuate the illusion of value of currency because it provides liquidity. [wikipedia.org] The alternative, bartering, wastes a lot of resources trying to match parties willing to trade with each other. Using currency as an intermediary allows for fast and convenient transactions. Its value is in its usefulness as a tool to facilitate trade.
One problem (of many) with current cryptocurrenc
Apple lost that much holding cash last year (Score:2)
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I think you are missing the point. Yeah, Apple losing that much due to inflation is crazy. Now imagine if their money was stored in bitcoin. The loss would be catastrophically higher than just 7% from inflation.
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You missed the point. You seem to be hung up on how earnings are lost in general in an article about depreciation. Bitcoins are so volatile that they resulted in a considerably larger depreciation loss over the currency that it's supposed to replace. The only people who made money are those that got in early. Their gains are literally a result of everyone else's losses, which is identical to gambling.
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Stupid decisions... (Score:3)
... lead to massive losses. What is the story here?
Prime Example (Score:3)
A good currency is a proxy for real value. [wikipedia.org] Current cryptocurrencies are far from it.
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Despite most people's disdain for central banks, they do regulate the money supply. [wikipedia.org] When the Federal Reserve thinks the buying power of the US Dollar is too high, they cut interest rates to increase the supply of money. The larger money supply then reduces the purchasing power of a dollar. This keeps prices relatively stable, despit
This is one of many reasons we need to kill crypto (Score:5, Insightful)
I don't want to be laid off from my job because a ton of companies over leveraged themselves on pictures of gorillas in sunglasses. If we can crash an economy with tulips we can crash it with jpegs.
Historical cycle of bubbles and busts... (Score:2)
Historical cycle of bubbles and busts. From the "Tulip Mania" [history.com] in 1637 to the dot-com bubble of 2000 [ted.com], the same pattern of behaviour, but nothing changes. Not it is Bitcoin, which is nothing except binary digits on some storage medium.
Yet like the 2008 crash where the cost was passed onto the taxpayers, these corporations will pass the loss onto customers and shareholders, or beg for a government bailout.
Round, and round we go... [youtube.com]
JoshK.
Corporate balance sheets aren't real money (Score:2)
They're merely a numbers game for the ultra-rich and no real humans are harmed when crypto fluctuates.
so... (Score:2)
That's a little more than 1% of all the bitcoin in the world.
So that means that private individuals "lost" about 700 billion. That's bullshit, of course.
These are all made-up numbers, like most of the financial "markets". How much did they actually SPEND ? It's only a loss if they bought at the high point and sold now. Otherwise it's just a hypothetical number on a spreadsheet.
Wah. (Score:2)
Serves them right (Score:1)