Crypto Traders Turn Against Each Other in a Collapsing Market (bloomberg.com) 127
With crypto prices tumbling precipitously, traders have begun increasingly turning against one another to eke out ever-elusive profits. From a report: Many shark traders scour blockchains -- digital ledgers for recording transactions -- seeking information on other traders, particularly those with highly leveraged positions, an anonymous user known as Omakase, a contributor to the Sushi decentralized exchange, said in an interview. The sharks then attack the positions by trying to push them into liquidation, and earning liquidation bonuses that are common in decentralized finance (DeFi), where people trade, lend and borrow from each other without intermediaries like banks. Related strategies may have contributed to the collapse of the TerraUSD stablecoin, with shark traders making money off price arbitrage between the Curve decentralized exchange and centralized exchanges, according to Nansen, a blockchain analytics firm.
Recent troubles at crypto lender Celsius Network were exacerbated by arbitragers as well. The price of stETh token that Celsius has a large position in started trading at a large discount from Ether, to which it's tied. "As stETH goes down, arbitragers buy stETH and short ETH against it, sending ETH lower, which again lowers collateral values across DeFi," effectively worsening Celsius's position, according to a recent Arca note. As Omakase put it, "In a downtrend environment, where yields are harder to access, what we are going to see is some actors utilize some more aggressive strategies, and that may not be necessarily good for the community." Omakase added: "The environment has become more player vs player."
Recent troubles at crypto lender Celsius Network were exacerbated by arbitragers as well. The price of stETh token that Celsius has a large position in started trading at a large discount from Ether, to which it's tied. "As stETH goes down, arbitragers buy stETH and short ETH against it, sending ETH lower, which again lowers collateral values across DeFi," effectively worsening Celsius's position, according to a recent Arca note. As Omakase put it, "In a downtrend environment, where yields are harder to access, what we are going to see is some actors utilize some more aggressive strategies, and that may not be necessarily good for the community." Omakase added: "The environment has become more player vs player."
wat (Score:5, Insightful)
What kind of imaginary horseshit is this? There was only ever so much actual money involved, and never enough to go around, so it was always fundamentally player vs. player. This is just the part of the musical chairs game when the music stops. No one should be surprised at what happens next.
Re:wat (Score:5, Insightful)
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Arghh, last week I had mod points available to mod this up, this week I don't
Re:wat (Score:5, Insightful)
So does a chunk of concrete, but I'm not under any illusion that it's a currency or has any inherent value.
Re:wat (Score:5, Insightful)
It's almost as if government was invented to meddle in the economy to prevent criminal activity from becoming a destabilizing force.
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Re:wat (Score:5, Funny)
Naa, before it was PvE, because they tried to harvest NPC-like idiots. Now the NPCs do not want to play anymore and it has become PvP. It is all about gamification of work!
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Work? What work?
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Proof of work?
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Imaginary work. It is imaginary coins after all!
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The problem is said work is all too real, and has a measurable impact on our world. Few people would give a shit otherwise, except as a financial and technical curiosity.
I'm really hoping the price crashes and stays at a point where it's no longer worth the electricity to mine new Bitcoin. I don't care if people want to speculate on crap like this. I DO care if it's sucking up otherwise useful electricity and hardware from the market, driving up prices for everyone else.
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I DO care if it's sucking up otherwise useful electricity and hardware from the market, driving up prices for everyone else.
And that is at the core of things. If these morons were just playing their stupid game with nobody else affected, I could not care less. But they are doing damage to everybody.
Re: wat (Score:2)
Re:wat (Score:5, Interesting)
The distinction is that before, they would mainly focus on getting cash from non-crypto people in to feed the pyramid and didn't do much toward people already in, because that would hurt their chances at getting more suckers into the pyramid. The pyramid needed to look like one big happy family to back up the pitch that this was the new, utopic way to do economy, so you better get your cash in it. 'Crypto always goes up' is a central theme and screwing with each other would undermine that image.
Now that people aren't making deeper layers of the pyramid, they have to try to do what they can within the pyramid to get whatever they can.
Re:wat (Score:5, Insightful)
Re:wat (Score:4, Informative)
Looks like the end-game of any other ponzi scheme to me.
Even Bernie Madoff's clients got part of their money back. When crypto goes to zero, it'll really go to zero.
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Re:wat (Score:5, Funny)
Last fool protocol has been activated.
Re: wat (Score:3)
Bored Tulip Bulb Yacht Club.
Re:wat (Score:5, Insightful)
There was only ever so much actual money involved, and never enough to go around
This is a fundamental fact ignored in virtually all reporting about crypto. That trillion dollar plus (misnamed) "capitalization" is not backed by much real money and cannot be converted into actual currency. It was never "capitalized" in the first place, it was manufactured from an artificial scarcity algorithm, and the supposed value is based on an extremely thin conversion volume.
If you have a billion dollars in Bitcoin the only way you can turn it into an actual asset is to get someone to swap a real asset for the BTC - it is not possible to cash it out into a billion dollars cash and then buy the asset. We have seen this situation years before crypto. About 20 years ago when Second Life was big and shiny, people became billionaires in Linden Dollars which made them US$ millionaires at the Linden Dollar exchange rate (which existed so that people could us USD to buy stuff in Second Life). But when someone did an actual test on how much could be cashed out of Second Life the exchange collapse when the withdrawal exceeded a few thousand dollars -- which was all the money that was really backing the exchange.
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How does this differ from Amazon stock or any part of your 401K?
How does this differ from your house, if you own a part of it?
Re:wat (Score:5, Insightful)
If you don't want to live in your house, you can tear it down, sell the pieces, use the land for something else (like a park or a garden or farming).
If Bitcoin goes down, there's nothing you can do with the packet of random digits that produces any value at all.
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I suppose you could sell the used video cards and server racks, depending on where in the pyramid you were...
=Smidge=
no, no, no (Score:2)
details matter.
If a real company goes under, the shareholders can go to the courts and get some help dividing up whatever assets were there. While this will not make them whole (if it could have, the company would not have gone under) but it will soften the blow and they'll get some fraction of what they owned.
With crypto, those rows of machines stuffed with Nvidia cards do not belong to the dotcom that is going under - they belong to crypto miners who are possibly fellow victims. The only assets to be divi
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If you have an entire data center set up to process crypto, you are a corporation. You are doing that as a business, not a hobby, and you may or may not have investors of your own because that's a lot of money up front. If the dotcom goes bust, it's taking the entire ecosystem down with it, you included.
Sure, it's not the same situation as crypto "investors" (speculators) who got burned buying financial products, but it's still part of the ecosystem as a whole. Hence, "depending on where in the pyramid you
Re:wat (Score:4, Insightful)
Because Amazon is an actual company with tangible, fungible, assets under SEC regulation, with a P&L that sells goods and services. They are required to follow GAAP, file 10Ks and all the other bits and pieces that any other publicly traded company does. (no comments about if they do or not - that's not the point).
Your 401(k), likewise, is invested similarly in stocks, bonds, cash, and other fungible assets, hopefully with companies that have tangible assets.
As for your house - it is the quintessential definition of a real asset. Even if you only own part of it. Yes, at the most simplest terms, cryptocurrencies are the same as these other things in terms of worth - in that it is derived from what someone else is willing to pay for it. But with stocks, houses, etc. there is something physical underlying that worth that provides intrinsic value to it and therefor makes it a class of asset. Cryptocurrencies, and by extension NFTs, have no underlying value to them.
Hence the ongoing collapse of the pyramid. Folks are scrambling to hold on to what they have while the entire thing comes collapsing down around them.
Let's put it this way... after the crash in a housing market, you still own the house. It may not be worth as much as it did before, but it's value as a house hasn't changed.
Re: wat (Score:5, Informative)
Well, theoretically Bitcoin isn't like your house, it's like money, with which you can tinder a small fire or prop a rickety table if it loses all financial value. Money as a tangible affair without financial value has little intrinsic value.
The issue (in part - naive, I know) is that buyers ("investors" gives them too much credit for smarts) invested in "Bitcoin money" as though it was a security, which any dolt should know it's not.
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Beyond what others will say, Amazon is a singular stock and you shouldn't ever put all your money into a single place. There are very few people that make sense to have a lot of their worth tied up in Amazon (e.g. Bezos), otherwise, it is ill-advised to put everything in a singular stock. An unregulated cryptocurrency is more like putting things into a singular stock. Beyond that, of course, an unregulated crypto-currency is also 'based' on nothing more than an arbitrary consensus of random people, with n
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Well, I was responding to someone suggesting that cyrpto-currencies situation isn't really different from a stock or housing, so I was simply responding to the comparison they were trying to make.
In terms of 'currency' untethered from any thing, the main distinction is that fiat currencies are generally tied into some governing authority that is broadly responsible for the legal and general state of society in some area. If the USD screws up beyond the US authority to reign it in, it would almost certainly
Re:wat (Score:5, Informative)
In addition to the two (as of this writing) informative answers about the nature of real assets, a hint in understanding this is given by my point about "capitalization". If no one paid any money to create the balance sheet asset, then it is pure speculation, not a real asset. This isn't a definition, but a helpful rule-of-thumb.
By the way, that common line about "not owning her your house" if you have a mortgage is literally not true. When you buy house, even if you have a mortgage, you are the sole owner - which is why you can sell it at a higher price if it appreciates, pay off the mortgage and have cash in hand. The mortgage does not give the bank any ownership rights - nor any of the responsibilities (another way of telling that you own it - who is paying the property tax?). The bank has a lien on your property (note the "your" as in - the property you own) if you do not pay your debt as agreed, just as a contractor who does some work on your house has a "mechanics lien" until you pay your bill. The repairman does not own part of your house.
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If you stop paying that mortgage, the bank can't just prevent you from selling without you making them whole- they can have a sheriff pull you out of your house, and then they take full ownership of it and owe you nothing.
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From a purely technical perspective, you're not wrong, however there is a distinction between a bank lien and a mechanic's lien, and that goes with the contract involved in the mortgage.
If you stop paying that mortgage, the bank can't just prevent you from selling without you making them whole- they can have a sheriff pull you out of your house, and then they take full ownership of it and owe you nothing.
The same exact thing can happen to your car. If you default on a payment then the lien holder can repossess your vehicle.
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Here, you cannot repossess a vehicle for a mechanic's lien.
Only lenders can repossess.
However, what they can do is foreclose and force sale via court judgement.
However, in that case, they're lower on the priority list than the lender, so there's no guarantee they'll get any money.
I suspect that all added up to the shop not enforcing its lien.
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But when someone did an actual test on how much could be cashed out of Second Life the exchange collapse when the withdrawal exceeded a few thousand dollars -- which was all the money that was really backing the exchange.
A lot of crypto aficionados like to fast talk past the long history of failed and dangerously unstable exchanges, usually insinuating that such is not an issue to non-stupid people. But having enough trustworthy exchanges with access to capital with which to stay liquid is a fundamental step in the crypto puppet becoming a real boy. Without such exchanges, crypto currencies are inherently too unstable for anything other than a speculation (gambling) for regular people.
Sure, if you are pretty well off, may
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Didn't click the link, but I'm sure just letting the bathroom sink run can be mining vector eventually. It's constitutional after all.
Let them fight! (Score:4, Funny)
#LetThemFight
Very inpressive technology (Score:5, Funny)
Cryptocurrency is a very impressive technology because it manages to be a pyramid scheme, a ponzi scheme, an insider trading scheme, AND money laundering scheme. At the same time!
It's really incredible technology!
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It probably also holds the record for longest-running Ponzi-like scheme. They usually collapse within 5 years. Isn't innovation wonderful?
Re:Very inpressive technology (Score:4, Interesting)
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Wow, 20 years! Some people are true masters. I stand corrected.
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Bernie leeched of the trusting Jewish community for 20 years, but he kept his bloodsucking to a small group and tapped in lightly. If he had reduced the blood sucking just a little bit more, he might have been a legitimate investment manager!
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Yes, pretty much. Ponzi-like in that they produce no value and all the money people can take out comes directly from money people put in. Could also be called "atypical Ponzi", "Ponzi inspired" or maybe even "novel Ponzi-derived" or "novel Ponzi-inspired". Hmm. "atypical novel innovative pyramid inspired investment scam"?
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No, but they are Ponzi-like.
It's debatable. The key point that makes something a Ponzi scheme is that the "investment" being sold doesn't exist at all. I guess the question would be whether any given cryptocurrency proponents are True Believers (TM) or if they know that there's no real value and are intentionally lying. It might be a 50/50 split.
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I agree that, for the most part, "Ponzi-like" appears to be fair.
I would quibble and say that the Bitcoin network does produce arguable value, insofar as transactions are made. The value of the transaction simplies a kind of value of the whole network. Of course, whether this effort by the network really justifies the nominal price of the Bitcoins is highly questionable, because direct costs and opportunity costs should be factored in. Furthermore, there are a number of plausible scenarios that could cau
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The yield-farms "guaranteeing" X% returns for parking your crypto that are currently collapsing are textbook ponzis.
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They definitely are.
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Not for certain.
I mean put in x and we will give you a guaranteed return some time in the future - describes a huge portion of the annuity and life insurance industry.
The difference being they don't off 90% and other stupid rates of return. Rather they offer something comfortable below the average return of the markets over a fairly large time scale. You accept the poorer return because of the certainty about it and the protection of the principal - and they maintain the reserves to fill in the holes if the
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Indeed. In the context of today's financial world, promising returns over 4% is pretty aggressive. Once you get into the ballpark of 10%, I would bet good money they were playing silly games that baked in the assumption the crypto values would always go up.
Perhaps they used a variant out of Enron's playbook, making profits by betting on its own stock, which it could do cheaply because it had so much easy access to its own stock. Likewise, it would tempting for a "clever" cryptocultist running an exchange
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The ones who take deposits and pay 18% interest are literally Ponzi schemes.
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That is an interesting point. Even if they could not achieve the stupidly high returns promised, the exchange, by default, is short term solvent by simply having 50+% of its deposits sitting around doing nothing. A large chunk of those coins were "invested"...somewhere...where? Other crypto schemes? NFTs? Where did they go?
I think you are on the right track.
I would further speculate that some of those "investments" will prove to have connections to exchange insiders. In other words, this will turn out
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Re:Very inpressive technology (Score:5, Funny)
It's a dog-eat-dog world out there, and traders are wearing Milk Bone (TM) underwear.
I think you mean it's a Doge-eat-Doge world ... :-)
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...and traders are wearing Milk Bone (TM) underwear.
NORM!
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So glad to see someone else get the reference.
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Capitalism is a dog-eat-dog world. Crypto is exactly the opposite.
Not Currency (Score:2)
The only thing it is definitely not, is a currency.
I've got some knives! (Score:2)
Dueling with guns is so 18th century. I've got some knives they can use to do this the right way!
Not Money (Score:3)
The goods and services "crypto" is used to pay for are mostly criminal in nature and its primary purpose is speculation.
It's backwards.
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Your opinion of what money is isn't back in fact or theory.
https://cdn.mises.org/What%20H... [mises.org]
That's a nice little book that explains what money is, how money works, and how governments have destroyed the value of money.
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Yours is nothing more than an argument from authority, except there is no agreement that Von Mises is the best economist there ever lived.
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Ah yes, the libertarian kooks must be right!
It says so right here in their book, published by the libertarian kook company.
Excellent! Lets watch the show! (Score:2)
I am already entertained quite well. At least one positive thing coming out of this.
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So you decided to not get even poorer by "investing" in crapcoins? Good decision.
Testing to Failure (Score:2)
Hunger Games: Crypto Edition (Score:2)
This seems to be a concept ripe for a new streaming game show: "Hunger Games: Crypto Edition".
Heck, Netflix thinks a dystopian send-up of the depravity of late state capitalism is a great idea to turn into a real game show [theguardian.com].
Relevence isn't obvious so I'll call it Unrelated, (Score:1)
But what does This Arnd Bergmann person have against legacy architecture chains in the Kernel?
This is happening everywhere (Score:2)
What do you think meme stock trading is? The regulators and market makers know that 10% short interest is the threshold where shorting puts a short squeeze on the table. Forget AMC and Gamestop and look at Redbox right now. Best case scenario it is shorted 138% of its float on a thesis that a crappy merger will go through and drive the price down to $0.69/share.
The regulators now have a basic problem in investing in general. Retail and small time rich guys have learned how to find the rich guys with lots of
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Because "all money is dark money..." and "if you ain't cheatin you ain't tryin.." and " ...all is fair in love and war " and "...judas was an apostle too " and "..more of that" and on and on....
Can we finally get to the important bit? (Score:2)
I.e. when are GPUs finally going to become affordable again now that they ain't needed anymore for cryptowanking?
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Not to mention that we can expect a flood of current ones "slightly used" when the cryptards start liquidating their assets to avoid hitting the ground too hard.
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leverage (Score:5, Insightful)
The real pain for Bitcoin investors starts when the margin calls hit. It's one thing to put money into BTC and then lose that money. It's another thing entirely to borrow money to buy Bitcoin and then lose money you ain't got. $20k is right at that threshold.
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What surprises me is that BTC hasn't yet gone into a complete meltdown yet. Looking at the graphs, I see a good increase in volume, but there's still plenty of buyers at the current €20k mark (besides the few obvious attempt to bounce the price into an upward trend). Still plenty of people hoping to buy the dip.
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Still plenty of people hoping to buy the dip.
They're going to be in for a little surprise when THEY want to cash-out.
Re: leverage (Score:2)
20k is around the 4-year moving average (and several other moving averages). The 4-year is especially relevant since that's how often the software adjusts the rate of issue.
So, if you're looking at long-term trends, now looks like a solid accumulation phase.
And even if you don't believe that, there seem to be some big players in the space (MicroStrategy, El Salvador) who see this level as a buy. That could create a self-fulfilling prophecy.
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The real problem isn't the crypto bros (Score:1)
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Re:The real problem isn't the crypto bros
Typical crypto bro will never take responsibility for anything other than their speculative gains. Wall St. is the stock market made up of the majority of players in the market, including retail investors. If the majority decided a company with no credible earnings and pays no dividend is a scam, its stock price will reflect that.
Re: The real problem isn't the crypto bros (Score:2, Interesting)
The whole stated point of crypto was that it was supposed to be immune from governmental and Wall St shenanigans. Events of the last few months have shown that be be a lie.
The thin-air backed Ponzi scheme is collapsing, and doing so in a rather predictable fashion. There is some doubt about the historical truth of tulip mania; there will be no such doubt about crypto.
and there is no floor (Score:2)
Same old Wall Street bums. (Score:2)
What a wonderful community (Score:3)
If you ever read a crypto subreddit, tweet thread, etc. they almost always talk about "the community". It always struck me as ironic because crypto has roots that tend to run anarcho-libertarian and highly individualistic. Painting with a broad brush here, but the participants are often the antithesis of those who would desire to be part of a community. They're in it for themselves. Talk of the "wonderful community" in various crypto circles always had a ring of sociopathy about it.
Now we're seeing their true colors. What a wonderful community.
Re: What a wonderful community (Score:2)
The community definitely works together. They just do so willingly, not due to some governance scheme.
Elliot wave theory and its application to crypto-currency markets is a clear demonstration of how this works in practice. Markets without fundamentals succumb to groupthink. The market starts acting how people think it acts, rather than people thinking the market acts how it really acts, if that makes sense.
Fools (Score:2)
My thousands of Dogecoins are still holding their value of 1 Dogecoin = 1 Dogecoin.
Crypto scammers (Score:2)
Scammers have, I assume randomly, added my phone number to their group lists. It is scary to see how many fools on there think we were magically put into some sort of legit crypto trading discussion list. The "leader" of the group acts like some crypto/finance/economics expert. Meanwhile, idiots, some of which must be bots spewing with fake testimonials, keep asking him for his esteemed opinion on the economy and where to invest. They don't seem to catch that it's a fraud, they buy the story that they were
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Mr AI, I think you need to get more training before you can start to write in proper English.
Oh, I thought that was just Hunter Thompson's reincarnation.