News Forum - Cryptocurrency crash: what is happening?

[Thaiger]

The global market of cryptocurrency dipped below US$1 trillion to $962 billion for the first time yesterday. Bitcoin fell below $23,000, hitting its lowest point since December 2020. Over the weekend, Ethereum collapsed by 24%, falling to its lowest level in more than 14 months. Meanwhile, crypto lending company Celsius froze withdrawals for its customers yesterday, claiming it lacked the funds to honor withdrawal requests. What’s going on? Overall, the crypto market has lost more than 2 thirds of its value since peaking in November, falling from $3 trillion to $962 billion yesterday. The prime cause of the crypto crash […]

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[Fanta]

So $2 trillion down and $962 billion to go until it reaches it’s actual current worth. Great idea and the international currency of the future however I don’t have the patience or financial knowledge required to detail why assigning a financial value to something with no asset backing is foolhardy at best, a scam at worst. 

[Pompies]

It's like watching the khum loy every year. Come to think of it, crypto is as substantial as a fire balloon and those who were caught in its delusional embrace will see their "investment" turn to ashes. Good riddance to something that does nothing but add to global warming by consuming outrageous amounts of electricity.

[oldschooler]

30 minutes ago, Fanta said:

So $2 trillion down and $962 billion to go until it reaches it’s actual current worth. Great idea and the international currency of the future however I don’t have the patience or financial knowledge required to detail why assigning a financial value to something with no asset backing is foolhardy at best, a scam at worst. 

No intrinsic value. It’s main worth is hiding transactions between criminals from govt & banks who might seize or tax these funds or launch investigations.
Too complex & slow to use to ever replace convenient fiat currencies, which are also created on computers with no backing except Govt / Public “ confidence”.
 

$30 trillion world debt ? Debt Amnesty / Reset / Asset Swaps Coming Soon ? 

I got out of crypto back in July when realizing its “bubble” nature when reading half of China was trading it !

Like in “Big Short” movie where guy realizes the US housing bubble after strippers in one club telling him they each “own” 3-4 properties on teaser loan interest rates with zero proof of income !!

[DoUKnowWhoIAm]

1 hour ago, Thaiger said:

what is happening?

Reality is catching up, that's what ultimately happens to all ponzi schemes.

[RedBirdy]

Inflation is out of control and all risk assets are selling off, including equities, anticipating the raising of Interest rates by the federal reserve and other central banks in the coming months. People are putting money in cash and other assets they deem as 'safe' at the moment for protection. BTC will survive at any price, and experienced traders stackers use these times to accumulate in anticipation for the next bull cycle. This is aside from the big shortsellers in crypto, manipulating and creating trading inflection points, profiting on the decline and then buying back cheaper. 

Altcoins NFTs etc, those without much utility, may have a tougher time regaining momentum. 

 

[palooka]

Basically it's gambling and guess what?

"Joe average" did his shirt. (As always) 

[Grumpish]

For cryptocurrency and NFT investors looking to diversify their portfolio - I have some nice tulip bulbs for sale. Without anything backing it investing in cryptocurrency is just a gamble and like any other form of gambling, people should never bet what they can't afford to lose.

[Dancbmac]

6 hours ago, Fanta said:

 I don’t have the patience or financial knowledge required to detail why assigning a financial value to something with no asset backing is foolhardy at best, a scam at worst. 

Kinda like fiat currency.

Edited June 14, 2022 by Dancbmac

[TJM]

Hang on hodlers, volatility is scary when market is going down and exhilarating when it goes back up.  It’s the nature of the beast.  

[Fanta]

7 minutes ago, TJM said:

Hang on hodlers, volatility is scary when market is going down and exhilarating when it goes back up.  It’s the nature of the beast.  

Depends when you bought it wouldn’t you say? imo, $3,000 billion to $962 billion isn’t volatility. It’s an implosion. 

[BigHewer]

Quite a few crypto investors have little to no experience in conventional investing and don’t have the experience of getting through historical downturns. Inexperienced investors are more likely to panic sell in my experience. 

Personally I’ve never touched crypto (and wouldn’t), but I don’t take any glee  from watching the small time Joes lose their “investments”. 

It’s the big fish who profit from the psychology of the crypto market. 

[RedBirdy]

2 hours ago, Dancbmac said:

 I don’t have the patience or financial knowledge required to detail why assigning a financial value to something with no asset backing is foolhardy at best, a scam at worst. 

Kinda like fiat currency.

Yes but unlike fiat currency, BTC cannot be inflated arbitrarily the way central bank fiats can and are currently experiencing. There will be a fixed amount of them. It is a tradable non-political and soon to be non-inflationary store of value... add to that you can be your own bank and control your own funds... BTC is an emerging asset of value where gold is too cumbersome to move for individuals (as it is physical and heavy) and can be easily seized. ie venezuelas gold at the Bank of England. 

 

[Wackamole]

good news. let's hope it keeps going that way

[Donald]

This Ponzi scheme will come to an end. If not now, then soon. Wasn't Bitcoin supposed to be a save hedge against inflation and the devaluation of fiat currencies ? If you can afford to gamble and to loose, then go ahead. But people who have saved up a little money and then put all their savings in this crypto shouldn't complain if they loose everything. Those who bought Luna that lost all of it's "value" overnight where dealt a harsh lesson.

[TheDirtyDurian]

crypto lending company Celsius froze withdrawals for its customers yesterday, claiming it lacked the funds to honor withdrawal requests....

crypATM not working!

[Dancbmac]

On 6/14/2022 at 8:36 PM, RedBirdy said:

Yes but unlike fiat currency, BTC cannot be inflated arbitrarily the way central bank fiats can and are currently experiencing. There will be a fixed amount of them. It is a tradable non-political and soon to be non-inflationary store of value... add to that you can be your own bank and control your own funds... BTC is an emerging asset of value where gold is too cumbersome to move for individuals (as it is physical and heavy) and can be easily seized. ie venezuelas gold at the Bank of England. 

Thanks for your description and I am onboard with crypto for a couple of years now.  I messed up with my reply when I was quoting another person in which I did not edit correctly.  Everything is going down including stocks due to good ole USA Fed, USA politicians overspending & shutting down the economy during the pandemic, and my understanding is similar in European Union and other countries causing current inflation. During the lockdowns I was able to spend more time researching to understand crypto, as I have known about it for several years, but I never invest in anything I do not understand.  Unfortunately, many entities or “Whales” over leveraged big margin loans to buy more crypto and now that the prices have dropped they need to sell more to cover their margin calls, which is making prices worse until the dust settles.  The positive side I see when the bottom hits are nice lower prices to add to my portfolio.

Also to add your comment about seizures, that the US and NATO countries seized or froze Russia’s gold and dollar denominated assets after their invasion.  Same for crypto if one is not diligent on moving them off their exchange and into a hard wallet, as hackers have a great time stealing from exchanges and governments can also seize whatever is not secure.

[Dancbmac]

On 6/15/2022 at 11:34 AM, Donald said:

This Ponzi scheme will come to an end. If not now, then soon. Wasn't Bitcoin supposed to be a save hedge against inflation and the devaluation of fiat currencies ? If you can afford to gamble and to loose, then go ahead. But people who have saved up a little money and then put all their savings in this crypto shouldn't complain if they loose everything. Those who bought Luna that lost all of it's "value" overnight where dealt a harsh lesson.

Yeah, Bitcoin was designed for something similar, but one of the problems was a few “Whales” due to greed or some asset management funds got margin Ioans against their BTC assets, (MicroStrategy ?) to buy more BTC, similar to what some stock traders do, and multiple issues happened at the same time to cause the prices to come down, as these folks had the sell for margin calls on those loans, which adds more BTC into the wild market causing prices to drop more and catching others also having margin calls. Others who are inexperienced are panic selling and adding to the price drop, but it will bottom out similar to the stock market and should rise again over time.  Luna was definitely a Ponzi scheme and had questions about it’s backing for several months and they tried to be slick and buy a bunch of BTC for backing, but it was little too late before they collapsed.  No one should invest all their eggs into one type of investment, because there are too many “bad eggs” in any type of investments who eventually get caught.  Ever hear of Bernie Madoff?  He mastered the Ponzi scheme for a very long time.

[MasviL]

On 6/14/2022 at 12:20 PM, RedBirdy said:

Altcoins NFTs etc, those without much utility, may have a tougher time regaining momentum. 

Which crypto-stuff have any "utility" in your opinion?

[RedBirdy]

 

On 6/21/2022 at 12:04 AM, MasviL said:

Which crypto-stuff have any "utility" in your opinion?

Good question!

Utility will come down to what you value individually. While I said NFT have little utility currently, that may very well change soon with NFTs moving into with music and ticketing, big brand marketing advertising campaigns etc. NFTs are a new idea that haven't even been fleshed out yet.... an evolving intersection between traditional ownership and digital assets/items etc.

https://www.techtimes.com/articles/265815/20210924/burger-king-launches-new-nft-campaign-sweet.htm

 

Personally I find BTC,  the Ethereum network , and responsible stable coins to offer 'utility'.

Crypto is great for me as an international traveler I can:

Trade, transfer and adjust funds at will  - Almost instant resolution times - No bank holidays - No limits - No 2to3 business day crap - Little to no bureaucracy or red tape 

Plus this comes with the satisfaction of knowing I own and control funds that represent my values as to what money should be: an open and hard to manipulate (on various fronts) unit of exchange between agreeing parties.

Others will tell you privacy coins like Monero are valuable since they offer the added layer of complete anonymity of transactions to protect against those who may wish to snoop and/or monitor. 

Crypto has inherent qualities that individuals governments etc may value irrespective of price. 

Quick reply as i'm not inclined to write an essay but there is alot more to be said in response to your hopefully honest inquiry. 

Edited June 22, 2022 by RedBirdy

[HansCS]

People have finally figured out Crypto is a scam.

[RedBirdy]

I should add that with all the benefits I enjoy with crypto. People new to the space should not jump in headlong without knowing the risks and being aware of its volatile nature, price is very much dependent on capital inflows/outflows just like the stock equity market. Not everyone is capable or able to use this new tech without getting burned at times as it requires a certain level of sophistication and knowhow to understand the underlying mechanics while also navigating price fluctuations. As a currency, commodity trader I am willing to take the risk and will not look back. 

If you are a Hodler :holder: who is ideologically attached to Bitcoin and what it represents, who  will not sell it no matter what the price.... May god bless you and you have my respect 

Edited June 22, 2022 by RedBirdy

[Cabra]

Crypto currencies (of which there are currently over 12,000 different ones - and many are just flat out scams/jokes) threaten the sovereignty of countries and governments and as such they (in their current incarnation) will never be allowed to fully succeed. The fact Bitcoin has mindshare (and is the tool of choice for laundering fiat currencies) has allowed it's value to grow. Probably too much as we are seeing with this current correction. There are also issues with the way Bitcoins specific implementation of their Blockchain ledger was designed that makes widespread adoption (allowing for millions of transactions per second) virtually impossible. Their is probably room for some crypto investment in most people's portfolios. But choose wisely and know what your getting into. Unwise speculators always get eaten alive. 

[RedBirdy]

22 minutes ago, Cabra said:

Crypto currencies (of which there are currently over 12,000 different ones - and many are just flat out scams/jokes) threaten the sovereignty of countries and governments and as such they (in their current incarnation) will never be allowed to fully succeed.

Lets be specific and say it threatens Central banks who love to inflate currencies and use currency as a weapon or mode of control. I agree there will be efforts to curb its adoption, but with limited success going forward as it becomes more and more institutionalized by individual actors, American companies, and sovereign countries themselves. https://www.fool.com/investing/2022/06/09/could-bitcoin-be-legal-tender-in-40-countries-soon/  

We will see how free and democratic these countries will be in another example of hypocrisy when they say you cant use your owned and earned money to buy harmless tokens that people love, but that seems like a remote and unlikely circumstance

22 minutes ago, Cabra said:

The fact Bitcoin has mindshare (and is the tool of choice for laundering fiat currencies) has allowed it's value to grow. Probably too much as we are seeing with this current correction. There are also issues with the way Bitcoins specific implementation of their Blockchain ledger was designed that makes widespread adoption (allowing for millions of transactions per second) virtually impossible. Their is probably room for some crypto investment in most people's portfolios. But choose wisely and know what your getting into. Unwise speculators always get eaten alive. 

BTC is still being developed with lightning network etc for those who see this as a shortcoming... There may come a day when btc is used for everyday transactions in major countries but I honestly could care less  

To me BTC doesnt need to be used in Starbucks or Mcdonalds transactions as I can easily convert it to the local currency and they are paid as they wish, with their own preferred fiat... with many crypto card companies now. However I do agree with most of what you express

Edited June 22, 2022 by RedBirdy

[Janneman]

What is happening is quite simple. People bought crypto for 1.000 $. The price went up to 10.000 $. Next they got a loan based on the value of the crypto they owned. Usually 60%, so 6.000 $, which they used to buy even more crypto. On which they got another 60% loan, etcetera. Works very well as long as it goes up. But then, panic! Interest is going up! War with Russia! Crypto prices are dropping! Now those same people that started with 1.000 $ suddenly have a debt of 6-10.000 $. The crypto-bank kindly asks them to deposit extra money because their worth/debt ratio is too low. The only way to deposit money is too, well, sell their crypto. Which leads to even lower prices. Then the stablecoins start crashing, cryptobanks freeze their assets, and a lot of people end up broke. I do pity those people, but just a little bit. They were simply too greedy.

I'm not saying crypto in itself is good or bad since I do not know enough of it. But this mechanism of borrowing money based on the value of something volatile is tricky. It triggered the crash on Wall street in 1987. It also triggered the crash on the tulip market in Holland back in the 17th century. One tulip bulb was worth as much as a house in central Amsterdam. Right before the market crashed that is.