Crypto’s $600B Crash Hits a New Low

https://www.bloomberg.com/news/articles/2018-08-08/bitcoin-tumbles-to-3-week-low-as-sec-postpones-etf-decision

by pseudolus • 8 years ago

78 107 8 years ago

avgDev• 8 years ago

I used to ride on the crypto hype train. Made quite a bit of money from btc. However, it is too risky of an investment. Most people that push crypto sound like pyramid scheme people.

At a party dude was telling everyone to invest in btc because it is the future, and it was $14k at the time. I explained that it is very risky and volatile and dude would just ignore whatever I was saying, even though I mined many cryptos, bought btc for 1 penny and had a better understanding of tech than him. 3-4 months later crypto was back to $6k and he never mentions it again with me around lol.

The point is many crypto businesses screwed people over (MtGox). Many people lost fortunes from private wallets due to malware, forgetting pw.

If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.

agumonkey3• 8 years ago

A serious % of btc is near pure cult. So much time and energy wasted for the prospect of quicksilver it's insane.

all_blue_chucks2• 8 years ago

The value of any particular coin is pure marketing. Anyone can start a coin. There is literally an infinite supply. The only thing giving them vale us popularity, and marketing is what drives popularity.

Token price speculation (aka "crypto investing") is much more about marketing than it is about technology. This is why you see cult-like marketing attempts.

thaumaturgy• 8 years ago

Ignoring all of BTC's significant issues for a moment, there are a lot of groups in Bitcoin. One of those is the fairly average, tech-savvy want-to-be-investor, who has a little bit (but not a lot) of disposable income and wants to do something with it that's better than the 2% annual yield of ... pretty much everything else.

With BTC, you could buy in at almost any amount, get out whenever you wanted, and transfer fees were pretty low. Those aren't common traits for most other investment vehicles.

It's kind of a side effect of so much capital being locked up in a smaller and smaller percentage of the population. The folks closer to the bottom are clawing at anything that might improve their situation a little, even if it comes with a lot of risk.

ironjunkie• 8 years ago

Usually that same % doesn't understand the tech AT ALL. They repeat the same koolaid about "Money not managed centrally by the government"

arcticfox• 8 years ago

It's amusing how confused come of the cultists are at the price dropping with no reason, forgetting that it went up with no apparent reason either

desireco42• 8 years ago

It definitely attracts 'wrong' kind of people, but that doesn't mean idea is bogus. It needs more legitimate uses.

justicezyx• 8 years ago

Your assessment from investment side is sound.

Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy.

Bitcoin as a main-stream pioneer served its purpose well, and now the focus is actually to provide equal-quality infrastructure for crypto to become a meaningful candidate for future economy.

That prospect certainly does not warrant the hype and money currently in the area on a case-by-case basis. But any such large-scale changes have to have a phase of rampant lock-in of wealth from general public so the society as a whole commit to support the development of the technology for some minimal amount of time.

I actually no longer regret my negligence to bitcoin, which for anytime between 2009 and 2014 can help me make a fortune from complete financial freedom to a year of income, now I see the society have committed a good amount of resources; and a substantial fraction of people are aware of the concept. It's not the time for engineers to start work hard and build the actual infrastructure.

That hopefully can deliver the actual value!

guiomie2• 8 years ago

"Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy."

What? It's over 50% of total crypto market cap. And a huge chunk of the altcoins are barely liquid.

EpicEng6• 8 years ago

Although I'd like to point out that bitcoin is now a rather small fraction of the whole spectrum of crypto economy

Sure, if you're calculating market share using the metric "how many crypto coins exist?", which makes no sense.

394549• 8 years ago

I used to ride on the crypto hype train.

What crypto hype train? Most crypto, such as AES, RSA, Mersenne Twister and the SHA series of hashing algorithms were very carefully designed and vetted over a long period by professionals. There's not much hype there, just solid technology. That cryptocurrency thing seems to attract scam artists like moths to a flame, though.

The point is many crypto businesses screwed people over

Like RSA making the backdoored Dual_EC_DRBG the default RNG in BSafe?

bdamm• 8 years ago

Time to just accept that "crypto" means cryptocurrencies and also cryptography, and interpret the context to understand which is being spoken. Here it is clearly cryptocurrencies. Moving on...

EpicEng6• 8 years ago

Are you being purposely obtuse?

pmlnr• 8 years ago

You're looking for the word: cryptography.

Neither cryptocurrencies nor cryptography are, by definition, the only crypto.

SippinLean6• 8 years ago

Cool.

What does that have to do with the SEC postponing its decision on whether to approve VanEck's ETF backed by Bitcoin, specifically?

bdcravens7• 8 years ago

That some of the recent gains are part of that same hype train, and the slump in light of recent ETF denials/delays is part of the same usual cycle.

dudus• 8 years ago

Bitcoin was already at 7500 much lower than its peak days before the decision

whb07• 8 years ago

When there’s volatility there’s “alpha” to be had. If it was a flat lined chart, then no one would gain or lose which means 0% yield for an investment (my math could be wrong /s ).

The question is if you’re sophisticated or lucky enough to ride the variance on an upward direction.

EpicEng6• 8 years ago

Which is why it's not a practical currency. If it's a speculative investment I have many other options.

redm• 8 years ago

"If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured."

Just out of curiosity, what makes you think that insured transactions to verified parties will not occur at some point? Credit cards have evolved substantially from the days of paper imprints themselves.

EpicEng6• 8 years ago

What about the state of crypto right now leads you to believe they will _ever_ be a common form of currency?

mrb3• 8 years ago

«If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.»

As always, the reality is not as black and white as you present it. Credit cards and fiat money certainly have advantages but they also have many drawbacks. Just to name a few: credit card fraud eats into merchants' profits, international money transfers are slow and crippled with high fees, bank accounts or cash can be frozen or seized by authoritarian governments, hyperinflation destroys savings, etc.

There are use cases where crypto adequately solves some of these problems that neither credit cards nor fiat money can solve. And, yes, crypto comes with a different set of drawbacks but that doesn't mean crypto is "too risky" for anyone to do anything with it.

Jdam• 8 years ago

If I pay with a credit card I have level of protection. When I put my money in a bank the money is insured. Crypto is simply too risky as a way of storing money and trading.

People actually realize that an anonymous, autonomous & decentralized system is not always desirable.

gammateam2• 8 years ago

Crypto is simply too risky as a way of storing money and trading.

And when its not risky the price will be higher because so many other people will be storing and trading it safely.

Thats the real bet.

If it fits your risk profile then you have it, and probably have had it since 2012 because the fundamentals were the same then as they are now. If you weathered the risk back then you'll weather it now where its a lot less risk.

And if today's lack of risk still doesn't fit your risk profile, then you have to wait. Simple.

notyourday• 8 years ago

I used to ride on the crypto hype train. Made quite a bit of money from btc. However, it is too risky of an investment. Most people that push crypto sound like pyramid scheme people.

Yes, and it includes those that peddle professional services i.e. lawyers and accountants. Those are the people who add the veneer of legitimacy to this pyramid scheme. These are the people that need to get their hands slapped.

The really funny part is that the same firms would never touch penny stocks, pink sheets or sellers of unregistered securities because that's "dirty". Cryptocoins on the other hand, absolutely! They are all over it.

bitanarch• 8 years ago

I've been a crypto investor started in 2013. I narrowly avoided MtGox by withdrawing my Bitcoins from it right when the rumors about withdrawal issues started.

If you have the efficient frontier model in mind, then you should know you shouldn't put too much money into it because the volatility of it is insane. My small early bets in Bitcoin and Ethereum worked out because the volatility turned out to work in my favor. But if they did go to zero it wouldn't have mattered much anyway. There're still other non-crypto stuff (e.g. tech stocks, ETFs) I invest into.

There're known ways to make risky investments work in a portfolio in the finance world - or else VCs wouldn't exist, coz nobody would give money to a VC to begin with. It's also a fact that most in the general public don't know about it. As a result, many public investors would see a Bitcoin as the same as a share in Google or Facebook - something to put money in. While in fact the attitude you take for each of these should be very different.

This would actually quickly lead to questions like how to protect public investors. Sure when Bitcoin drops or a startup fails everyone would be angry and people's instinct is to ban it, or at least make it available only to sophisticated investors. But then when things go well people would complain that only the VCs and hedge funds have access to the best investment options. I think the solution to this all is really investor education (modern portfolio theory isn't super complicated math) and better transparency. The latter can be done with better regulations of exchanges and ICO issuers. But the former has a long way to go.

dagoat• 8 years ago

I completely agree with you, but that guy could now point out that BTC did go beyond 14k and it may do in the future. Making him "right". That being said, I've encountered what you describe as well and it's mildly disturbing

jefe_• 8 years ago

Take the resources being spent to get Bitcoin onto Wall Street, spend them to get Facebook Moms onto Bitcoin and suddenly the value rises. Salvageable currency, without that utility it suffers.

mkirklions3• 8 years ago

I believe in Bitcoin only.

The people that have been around for almost a decade have treated Bitcoin as a hedge against Fiat currency inflation. Similar to how people treat gold. I am one of these people that believe in the 21,000,000 solutions as something that is nuclear chemistry proof and rare.

Outside of that is a joke.

dApps unused, copypasting bitcoin (or various alt coins), then promoting it as a world changing idea. Various centralized currencies which defeat the entire purpose.

I imagine things like Tether will be the future allowing money to be moved cheaply. As I develop my own coin, I choose to tie it to a very popular investment rather than produce yet another silly 'rare' number.

CryptoCURRENCY needs to move things that are hard to move, cheaply. Crypto that stores and manages data seems like a foolish application due to the enormous expense, unreliable txn times, and unneeded verification.

lez• 8 years ago

'things like Tether' - There are basically two of them. Tether and MakerDAO.

MakerDAO has the advantage that it is designed so that you don't need to trust any human or organizational player. Just the crypto itself.

Tether can fall apart any minute. (e.g. when Tether executives play dirty)

Animats• 8 years ago

MakerDAO can fall apart, too. From their white paper:

"If there is a sudden market crash in ETH, and a CDP ends up containing more debt than the value of its collateral, the Maker Platform automatically dilutes the PETH to recapitalize the system. This means that the proportional claim of each PETH goes down."

There's a lot of obfuscation about both that and Tether, but the reality is that a big drop in the asset held for stabilization will break the stability. And the asset is some cryptocurrency, not gold or land or something with a track record. Tether at least claims they have dollars, but their auditors are not convinced.

cortesoft• 8 years ago

Why would you use bitcoin as a hedge against inflation instead of some real asset that has persistent value? Land, gold, etc?

mkirklions3• 8 years ago

Land is good, but can be seized by a government. I know an Iraqi family that went from riches to rags due to this.

Gold is good, but as a chemical engineer, nuclear chemistry is a real threat.

I love ETFs, but I think the market is artificially inflated by the current trump bull run.

Bitcoin is used worldwide and can be kept on a cellphone or piece of paper.

sdf43543t3452• 8 years ago

As others have stated; Land and Gold can be confiscated; Thieves, Governments, Inflation. Its also hard to move. Any lock can be broken; any safe cracked. I trust in AES with many iterations of SHA512 to protect my coins.

I feel you don't really understand the value that cryptocurrency is adding; It is by its nature very easy to move and cheaper to protect than Gold. Its the long bet against eventually everything will be eaten by the state; or by inflation.

pavel_lishin4• 8 years ago

Outside of that is a joke. ... copypasting bitcoin (or various alt coins), then promoting it as a world changing idea
As I develop my own coin

How is your coin different from copy-and-pastes?

1996• 8 years ago

Spoken differently to see the glass half full: Ethereum Classic jumped to new hights, the highest of the last 4 month, while Bitcoin returned to the 6.something it was at the last month before passing 7k due to ETF rumors

Business as usual, some people make money (those who bought ETC 2 or 3 weeks ago at the dip, and are selling now in BTC or in USD), some people lose money (those who speculated on the ETF success). These are cold hard facts - not the half full, or half empty glass.

The article title however is just dramatization, maybe for clickbait, or maybe intended to please an audience of people mostly hostile to crypto? It is bloomberg that hits a new low.

alkonaut• 8 years ago

Practical use of these things is always just around the corner. At the moment it seems to be too slow and expensive to use for transactions (as currency) and too volatile to use as a value store. Right now it's a fun gamble, and for transactions where using normal currency woule have a higher cost (i.e. you are buying something illegal).

joeblau4• 8 years ago

What a wild ride. I bought Ethereum almost two years ago at 12 dollars a token on Coinbase and it's changed the financial trajectory of my family. I still have high hopes for cryptocurrencies, but I think this pullback is necessary to clear out the speculators and let the developers work on the core infrastructure of a lot of these tokens.

aw3c2• 8 years ago

Did you turn it into real money or are you still speculating (now with the future of your family at stake)?

joeblau4• 8 years ago

I turned it into "real"(fiat) money. I expect to be sitting on the sidelines for another 2ish years. We bought a Model X and took the remainder and invested it into a pretty strong (IMO) YC startup.

#ThisIsNotInvestingAdvice

leowoo91• 8 years ago

It looks like there were people waiting for a good quit spot, other than that crypto market doesn't seem to be hard hit since 8 months straight and still stays valuable.

devinus4• 8 years ago

I'm one of the core developers for Nano[1] (formerly called RaiBlocks). It's one of only a handful of cryptocurrencies with an actual working product available today that does everything it claims to do: Instant transactions with zero fees on a green network that could be powered by a single wind turbine.

Despite what I see as it's massive potential for things like micro-transactions, global remittance, arbitrage across exchanges, a development platform for payments and functioning as an actual currency (i.e. a medium of exchange, what you send is exactly what the other person gets) -- the market does not reflect this reality at all right now. There are several projects that are objectively scams with higher market caps than Nano.

To me this reflects that the market is completely irrational right now. I knew as early as January that there was going to be a reckoning, but until some of these coins and tokens that are going nowhere are shaken out projects will just have to stand on their own merits and prove that they're valuable.

[1] https://nano.org/en

atomical4• 8 years ago

It's not working because it's impossible to use Nano as currency when it has so much volatility. Imagine sending your friends $10 and they only receive $9.

DSingularity• 8 years ago

That’s actually not true. Even if the volatility were that extreme, you could easily mitigate it.

At this point you are just saying anything that comes to mind and is negative without putting in thought.

devinus4• 8 years ago

That might be a valid criticism against e.g. Bitcoin with a 30 minute confirmation time, but if you send your friend $10 worth of Nano they'll have $10 worth of Nano by the time they receive it, ignoring whatever they decide do with it.

patrickg_zill• 8 years ago

I've always had the opinion that Bitcoin's price was supported in part, by the Chinese using it to get around China's capital controls.

So possibly this crash, in addition to the SEC refusal to let a Bitcoin ETF trade, is also affected by the recent tariffs and the Yuan devaluation...?

Crypto’s $600B Crash Hits a New Low

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