Major crypto lender Celsius freezes withdrawals as markets tumble

https://www.reuters.com/technology/crypto-firm-celsius-pauses-all-transfers-withdrawals-between-accounts-2022-06-13/

by pseudolus • 4 years ago

384 401 4 years ago

This is not looking good for Crypto. Bitcoin is around 24K USD today after a ~10% fall. Other major crypto are following or likely to follow .. Terra Luna fiasco was just the trailer .. The whole movie is going to be more horrifying ..

geerlingguy• 4 years ago

And BTC just dropped below $24k... a lot of people trying to catch falling knives today.

DonHopkins• 4 years ago

HODL those knife blades!

foepys• 4 years ago

Not only that but Bitcoin fell over 23.5% over the last 7 days.

dan12343• 4 years ago

Also, Ethereum has dropped 37% over the last 7 days, 18% in the last 24h.

Could be an interesting week.

toolz8• 4 years ago

bitcoin falls 99% in one day to 1 cent - 2011

bitcoin falls 56% - 2012

bitcoin falls 83% to $50 - 2013

bitcoin falls 84% to 12k - 2017

bitcoin falls ~50% to ~30k - 2021

"crypto is not looking good long term" - numerous people on hacker news every single time crypto is down.

spupe• 4 years ago

Bitcoin at 12k in 2017? Really?

You should welcome all the nay saying here if you think Bitcoin is bound to go up again.

mattbrewsbytes• 4 years ago

Do these line up with major markets downtowns? Fwiw, all major markets are down like 3% (so far) today. Crypto behaves more like a stock and typically when there are market downturns the more volatile stocks are impacted much more.

lm284692• 4 years ago

I mean with that volatility idk what kind of usage it can get besides pure speculation.

So either way you're making the same argument as the "crypto is not looking good long term" people

lolsal• 4 years ago

Volatility isn't a virtue for a currency. It's fine for speculative financial vehicles that involve cryptography in some way, though. That vehicle might be driving to $0, though.

celestialcheese• 4 years ago

This crash has the sparkle of DeFi, which makes it more toxic. With the amount of leverage we're seeing peek it's head up, and the size of these yield farming ponzis, the fallout could finally breach the barrier into real-world finance.

jjfoooo4• 4 years ago

The bad look is that major exchanges are freezing up with these drops

BenoitP2• 4 years ago

https://99bitcoins.com/bitcoin-obituaries/

altdataseller• 4 years ago

24k is too high. Way way way too high.

jpmoral• 4 years ago

Also https://news.ycombinator.com/item?id=31720277

newaccount2021• 4 years ago

if you can't realistically use crypto as money (which you can't), then there is no reason to hold it unless it is rising

crypto does not generate revenue

crypto does not generate dividends

crypto is only something you try to sell to a bigger fool

if crypto even just goes sideways....then its just a cash-equivalent with no real-world utility

these pyramid schemes have a long way to fall still...crypto will be the greatest ponzi scheme of the last 100 years

if you like exotic cars, the crypto kids will be liquidating soon...keep your eyes open

saurik3• 4 years ago

I mean, some cryptocurrency projects do generate revenue and pay dividends because they are selling a service to people, whether it be storing files, transferring data, or running computations (encoding video, training AI models, etc.).

Saint_Genet2• 4 years ago

Selling shovels to prospectors is not the same as being a prospector yourself

monkey_monkey• 4 years ago

Can you name some of them? I'd be very interested to see what they're doing.

puranjay• 4 years ago

most of the dividends are in the native token (or the blockchain token) which, unless the price remains stable or up, constantly reduces in value

A great example is OpenSea. Their trading volume crashed at the same time ETH prices crashed. A sale of 100 ETH in January earned them $7,500 (@$3k ETH).

The same sale now will earn them $3,000 (@$1.2k ETH).

tjansen2• 4 years ago

I think DeFi was an interesting idea with some potential. It seems like nobody was able to come up with a solution that found widespread use, but with the right application it might have worked. But for now, it looks like that window of opportunity is gone. Maybe with the next crypto generation...

lottin3• 4 years ago

The problem with DeFi is that can't be used for financing. Financing requires seizable assets whereas blockchain assets are intrinsically unseizable. It can still be used for things like swaps, but that market isn't very large.

seunosewa• 4 years ago

What was the best application of defi in your view?

SkipperCat• 4 years ago

I couldn't agree more.

The only real value I saw with crypto was for anonymous transactions a la Silk Road. Turns out immutable ledgers aren't the privacy boon we thought they'd be.

Pxtl• 4 years ago

It also provides a great way to pay ransoms, which allowed crypto locker ransomware to be monetized and scaled up to a new and exciting level.

I hate crypto.

serf• 4 years ago

if you can't realistically use crypto as money (which you can't), then there is no reason to hold it unless it is rising

i'm glad i've been able to convince those suckers over at Mullvad to continually sell me hours for this not-money btc.

They're really going to have egg on their face once they realize how I pulled the wool over their eyes.

ethanbond• 4 years ago

The old “Madoff’s staff can buy groceries, no way it’s a scam!”

adam_arthur15• 4 years ago

"Look, they're paying me 20% guaranteed yield! How can this not be real?"

orbit74• 4 years ago

Bitcoin is a quantum leap. In history we have moved from single entry accounting to double entry accounting (the current traditional financial system despite the interconnectedness based on an ancient accounting system) requiring a 3rd party to maintain integrity a system open to and actively abused. Bitcoin is triple entry accounting an immutable trust-less based system. That's a huge huge innovation. The bitcoin token has been valued by the open market and is the fastest appreciating asset in history.

Fiats actually a flawed manipulated system, look over time at how much value the dollar loses in a generation and to countries that have been destroyed by inflation.

viraptor2• 4 years ago

This has a high "Jesse, What the Fuck Are You Talking About" energy. The reason Terra fell is because most of the transactions that were supposed to assure its value were kept in a secret double accounting system. And that brought BTC down ~50% which shouldn't happen if it's not held up by magical behind the scenes accounting. There's no 3rd party integrity here and it's not been appreciating for weeks now.

HelloNurse• 4 years ago

Fiats actually a flawed manipulated system, look over time at how much value the dollar loses in a generation and to countries that have been destroyed by inflation.

Inflation would be a nice problem to have for Bitcoin: it would mean that it is de facto money, anchored to the real world by meaningful prices and conversions, and following the trends of actual economy and finance.

throw457• 4 years ago

What? :D

jslove2• 4 years ago

Gold does not generate revenue... its still worth 11 trillion

dan12343• 4 years ago

At least you'd still have the physical gold (which has utility) if the price went to zero. With crypto, all you'd be left with is a wallet address.

vsareto• 4 years ago

Crypto offers very little in terms of intrinsic value (it's not zero though)

ncallaway• 4 years ago

Crypto’s problem is that it has the most actual utility when it goes sideways. Being a decentralizing cash equivalent has some value.

But, it can’t be stable. If it goes sideways long enough to demonstrate utility as a currency, then more people would want it, which would drive up the price and hurt that underlying value.

Saint_Genet2• 4 years ago

It's pretty amazing watching crypto speedrun the last 200 years of financial history failures all over again.

dontbenebby3• 4 years ago

I mean, they basically only use it for structuring or tax evasion most of the time.

Bitcoin et al are a Paypal killer, as in a low cost way to transmit currency or whatever, but you can do that in other less wasteful ways.

It's a shame what it turned into is something people place on comprmised mnachines to silently siphon up CPU cycles for profit.

(Especially since often those profits went towards things like Juche nukes.)

capableweb6• 4 years ago

Bitcoin et al are a Paypal killer, as in a low cost way to transmit currency or whatever, but you can do that in other less wasteful ways.

You're talking about Proof of Stake or you imagine some other novel way of transferring currency digitally, without centralization and securely?

toolz8• 4 years ago

I'm genuinely glad crypto enthusiasts spend more time defending their position than they do being as obtuse against fiat as this comment is towards crypto (in my opinion). If they were as unnecessarily hostile, I imagine it might sound something like this:

It takes nearly half of the US budget with their military to secure the USD value by destabilizing poor countries and exploiting them for their crude oil, which is the most traded commodity in the world by fiat. In relation it's trivial to dissociate your identity from crypto you own, making it impossible for someone to prove you have crypto to steal, even with a gun to your head. All secured by harmless nerds using fractions of a percent of the worlds electricity usage, which doesn't even begin to approach the electricity the military utilizes from even a single one of the largest militarized nations.

It's obvious to me that neither of these are honest positions to take in a debate about the benefits and costs of these classes of assets.

trompetenaccoun4• 4 years ago

Can you explain? What happened in the past 200 years that cryptocurrencies are mirroring?

gonzo414• 4 years ago

Banks running out of money and just failing outright leaving their customers high and dry for one. In addition to this, the scams, the lack of any consumer protection. The hype bubbles, the sheer amount of personal faith that is required to have confidence etc etc.

Also the lack of standards and the terrible promise of decentralization, yet the reality of centralized markets and brokers. (This is a more modern failure).

IHLayman• 4 years ago

I would say definitely look at the “Gilded Age” of banking in the US. History may not repeat but it sure rhymes.

https://www.federalreservehistory.org/essays/banking-panics-...

jgerrish• 4 years ago

S&L, FDIC, 10k, subprime lending, etc.

I don't see why all countries would outlaw "crypto".

I hate that term for it's semantic shift, but that kind of rebellious tribalism fueled this drum beat.

Each class of cryptocurrency technologies, institutions and securities has an analog in the list above. And each will lead to new protections. Maybe Big Brokerage will invest at most X% in cryptocurrencies but not ones repackaged into NFTs.

Etc.

This isn't a bull market, or a bear. To borrow a perhaps racist or outdated term, it's a Buffalo market, and regulators are at the buffet.

charwalker• 4 years ago

Crypto solves a bunch of problems of its own making while retaining all the human problems (fraud, etc) of the existing banking system without hundreds of years of regulations and policy to stabilize systems and attempt accountability.

Tether is analogous to the gold standard but without verifying the gold exists in reserves, or ever existed at all. Exchanges are facilitating billions in money laundering and fraud while eating massive fees and paying millions to founders. Transactions can be hidden behind shell wallets/groups and filtered through many exchanges reducing transparency and increasing odds of successful illegal activity.

There is a ton of legitimate criticism just looking at the fraud side of Crypto and how lack of regulation in that space enables a ton of crime. It's often drowned out by PR or the next big blockchain based thing that seems flashy but still comes with all the same problems as regular physical money.

It's like asking your IT group to install spyware on users workstations instead of respecting or enforcing HR policy. It's a people problem, not a tech problem.

orbz• 4 years ago

Part of me feels like this is actually somewhat a feature. It's like a research implementation of an economy that iterates more rapidly than the current economy. What if the real value in all of this is finding out mechanisms to bake consumer protections, transparency, anti-money laundering and fraud detection into the main economy in an automated fashion?

ryanbrunner2• 4 years ago

It's a very costly experiment, both in terms of the energy required to power the experiment, and financial losses of the participants (many of whom are almost definitely not treating their investments as an experiment)

mikhmha• 4 years ago

You could just observe the economy of an MMORPG - no blockchain needed.

Jabbles• 4 years ago

Ah, so it's like AlphaZero, it learns from scratch, starting by making random moves.

selimthegrim• 4 years ago

The real treasure was all the regulators we suborned along the way

TacoToni• 4 years ago

Nothing to add here, but this is fascinating to think about. Thank you for this perspective.

Izkata• 4 years ago

On the individual level, a few years of bitcoin helped me get an intuitive-level understanding of why common investing advice works.

thaway28394• 4 years ago

The real economy actually produces value. It feeds people, clothes people, entertains people, etc. even if it does so imperfectly. The economy's value dropping 20% a day would represent a real problem that needs to be addressed.

We saw this when COVID began. The stock markets were plummeting as people increasingly realized that COVID was not gonna be gone by Easter, and that this would affect us for some time and how impactful it would be.

With crypto, the only thing that the falling prices is tell us that another layer of the onion of scams that crypto is built upon has been peeled, and the only real question is how deep the layers go and whether there even is something of value deep inside.

rchaud5• 4 years ago

When brogrammers try to do finance from 'first principles'.

thr0wawayf003• 4 years ago

"Crypto is real."

- Billboards all over Austin, TX right now

mbg7212• 4 years ago

Ohio has a somewhat notorious billboard that reads "Hell is real."

mrep• 4 years ago

indiana has one too with jesus is real on the other side.

robinsta• 4 years ago

I drive past that billboard between Columbus and Cincinnati all the time! FC Cincinnati and Columbus Crew have coopted it for their rivalry games, calling it the "Hell is Real derby". Seems like this week maybe hell and crypto are the same thing?

mumblemumble• 4 years ago

Crypto is real. Hell is real. Therefore, crypto is hell.

This is the one time I'll accept the fallacy of the undistributed middle without question.

BitwiseFool• 4 years ago

Ohio has a somewhat notorious billboard that reads "Hell is real."

What an odd way to welcome people to Ohio, surely they already know where they are? /s

reaperducer• 4 years ago

I've seen fly posters recently for a coin with an expletive as its name.

When financial instruments get named after vulgarities, it shows the kind of people who are running this space.

thr0wawayf003• 4 years ago

There was another billboard in Austin promoted by the same company that read "Crypto is a revolution disguised as a Casino." Feels like the opposite...

thrwyoilarticle• 4 years ago

IMO part of the issue is that 'crytocurrency' refers to two things: the first is the technology to do things without trust, the second is the social movement.

The social movement is bananas but gets defended with arguments for the technology.

It was no secret that the banks could run. Not being on-board with the vices of the social movement is decried as FUD.

xwdv4• 4 years ago

If you hold any significant crypto assets, it is time to sell. The scheme is over.

capableweb6• 4 years ago

Indeed. Sell now, buy later, profits always.

A4ET8a8uTh05• 4 years ago

I chuckle a little when I see things like that. Time to sell was about a year ago at their heights. At this point, you may as well hold and see what happens.

xwdv4• 4 years ago

The only thing to see is your balance dwindle all the way to zero.

The game is over. Dump your crypto and buy real assets. Anything – stocks, real estate, lambos, is better than holding worthless digital coins.

Avalaxy2• 4 years ago

Yes, selling at the bottom. Great plan. And then FOMO buy in again at the next peak.

Not saying I believe in cryptocurrencies, at all, but I've been active in the space for 9 years now and after every bubble it was the same again: it just went back up to new record highs for absolutely no rational reason at all.

chinathrow2• 4 years ago

You do not believe but are active for 9 years in it? How does this go hand in hand?

batiudrami• 4 years ago

You think this is the bottom?

rowls66• 4 years ago

BTC price still over 24,000. Far from the bottom.

carlivar• 4 years ago

I disagree this is the bottom. It may hover at 20k a bit but I think it's going down to 10k or so.

xwdv4• 4 years ago

The bottom is zero. There is no intrinsic value.

gigaflop• 4 years ago

The only reason I'm upset is that I typically fatten my stacks within the first week of the month, when my budget resets. It feels like it takes a few days for shit to hit the fan.

cypress662• 4 years ago

I assume you are short on crypto given how sure you are?

Crypto has had multiple crashes, dropping even harder that now. Every time people claiming the bubble popped, it's over, etc.

It's silly claiming with such certainty the future of crypto.

speedylight• 4 years ago

So is this the bubble people talked about when crypto was starting to become mainstream?

rufusroflpunch3• 4 years ago

Yup it’s popping. But it’s not just crypto. The whole economy is popping. Crypto is first because it’s the most leveraged and least regulated. But it’s not going to end there, not by a long shot.

tru3_power• 4 years ago

What’s next?

tootie2• 4 years ago

The whole economy is not popping. Only assets. Equity and crypto were both inflated and experiencing corrections. We're still hovering around 50/50 on likelihood of a real recession. Labor market is still incredibly tight. We could lose a million jobs in the US tomorrow and it would just alleviate upward pressure on wages. Equity will start to recover once inflation is tamped. Crypto, nobody knows. Could recover completely, could go to zero.

TrackerFF• 4 years ago

People have been warned about high inflation before the war in Ukraine. Then the war broke out, and lots of things got more expensive (fuel, energy), and other commodities are yet to shoot up. Interest rates are going up to fight inflation.

So people are facing higher prices from all fronts. What are the first things to get sold off to afford all the various "real life" necessities? high-risk investments. Or any kind of investment, as most people simply do not have any investments.

A4ET8a8uTh05• 4 years ago

I am confused as how this is a story about crypto and not story about Celsius. If Robinhood stopped withdrawals, would we be having a conversation about solvency about of US government? It is interesting, but it shows that crypto has an oddly rabid opponent base.

Just to put it in perspective, everything is falling today.

For the record, I don't disagree with some of the criticisms, but the knee-jerk reaction to anything crypto is just odd.

minor edit: I have minor stake in crypto, but nothing that would make me retire/commit suicide over losses.

capableweb6• 4 years ago

Yeah, I'm also not a whole-heart fan of everything cryptocurrencies, it has plenty of problems. But I have the same perspective as you, both bases have very intense knee-jerk reactions to anything happening.

I think it has to do with how new the field is. People reacted to the internet in the same way when it was new. No, I'm not saying cryptocurrencies are as useful as the internet is. But when the internet first appeared, people who didn't like the internet, grouped everything on the internet together. I was called porn-addicted because someone had heard there was porn on the internet and that I worked with the internet, so obviously I must be doing something related to porn.

Similarly people hear "cryptocurrency" and they immediately think of scams, although there is currencies that obviously aren't scams (Bitcoin, for one). But they've seen a scam using Bitcoin, so everything related to Bitcoin must be a scam too.

I have nothing to gain/lose by cryptocurrencies going up/down, so I don't really care. But it makes me slightly scared to see how for example many HN users react to cryptocurrencies, when this audience usually seems pretty calm and collected to me.

Makes me wonder what other subjects gets treated the same way as cryptocurrencies, but I don't realize it yet.

ceejayoz4• 4 years ago

If Robinhood stopped withdrawals, would we be having a conversation about solvency about of US government?

If it turned out the USG had a significant amount of its funds stored in Robinhood, yes.

timeon• 4 years ago

everything is falling today

Seems like it is.

oddly rabid opponent base
anything crypto is just odd

Well if nothing else it has unnecessarily huge carbon footprint. Probably not all, I haven't checked recently, maybe ETH is already PoS.

A4ET8a8uTh05• 4 years ago

I suppose that partially explains it. The concern from the opponents is based on ecological impact and any bad news is a way to bring it down ( not completely unlike fossil fuels ).

mudrockbestgirl• 4 years ago

People like to generalize. Celsius is supposed to be backed by enough collateral for customer funds to be safe, just like many other crypto projects. If it turns out it can't honor the agreement it will become a story about crypto because the alternative are government-insured accounts, which would honor the agreement.

Also, it looks even worse because these are not even "extreme market conditions" by crypto standards.

400thecat• 4 years ago

crypto is the ponzi on which other ponzis are build. Without crypto, there would be no celsius ponzi.

aaaaaaaaata4• 4 years ago

It sounds like money is the ponzi, then.

lm284692• 4 years ago

I am confused as how this is a story about crypto and not story about Celsius.

Because it's a relatively small eco system and everything is tied together. As soon as one domino is falling the whole eco system follows.

And look at the graph of the top 20 cryptos, they all follow the exact same graph as BTC. Anything bad happening at a relatively large scale to BTC = BTC goes down = the whole crypto world panics = they all go down

A4ET8a8uTh05• 4 years ago

I will admit this is an interesting argument.

I would question the characterization of small. Even today, total crypto market cap is just shy of 1T. Even relative to more established plays it is nothing to sneeze at.

But note that the same could be argued about USD system("Look at this market today. Everything is falling. Everything is tied together. One bad inflation reading and domino is falling down and the whole ecosystem follows."). I am exaggerating for effect, but not that much.

bhouston4• 4 years ago

I like the balls on the CEO of Celsius calling out people for saying they can not withdraw right before they lock down withdraws...

https://twitter.com/SilvermanJacob/status/153617697375127961...

Classic run on the bank scenario. And the bank behind all of this is not secured or even worse, so it makes sense.

chinathrow2• 4 years ago

How do these fine folks sleep at night?

thr0wawayf003• 4 years ago

Because they've been getting obscenely rich. It's amazing what making loads of money can do to one's morals.

a2tech2• 4 years ago

In extremely soft beds in rooms that the people they're defrauding will never ever be able to afford.

__alexs• 4 years ago

It's probably hard to sleep after all the cocaine they take tbh.

mathieubordere• 4 years ago

One of his recent retweets is also hilarious:

https://twitter.com/davthewave/status/1535760979333873665?s=...

"#Bitcoin lows around these levels lining up with previous lows as time-relative to previous halvings.

Previous halving cycle shows a mini parabolic breakout from the lows.

Chart shows a regularity and logic for the ongoing macro bull."

The amount of pseudo-science bullshit is mind boggling.

malfist2• 4 years ago

Only an idiot thinks past performance equals future performance in markets. The ARKK out front should have told you

MafellUser• 4 years ago

Frankly that not too atypical to regular chartist's talk. Draw some lines on some charts and make up a whole story. To give the cryptoists some credit, there's no fundamentals in cryptos so they have to use the only other tools available aka tea leaves.

ctvo• 4 years ago

Has anyone done an investigation into how this current issue, Luna previously, etc. is hitting the various VC cheerleaders? a16z in particular for their rampant pumping.

dQw4w9WgXcQ• 4 years ago

VCs got in at stupid early prices on a lot of these projects, unlikely they're hurting. a16z if you hadn't noticed was shilling Solana hard through their latest "State of Crypto" deck. What is hurting though is all the project and company grants that rely on the value of the underlying token. You've got a lot of crypto startups who have to sell on the open market to continue ops that will start to feel the heat.

Sytten2• 4 years ago

As a contributor the mentionned fund that invested 750m into that exchange (it is a mandatory government saving taking ~10% of our paycheck each month) I must say I am really pissed off. They don't invest in our own early stage startup citing "risk" and then they go and invest in a foreign crypto exchange of all things.

bpicolo• 4 years ago

Pension funds going into high-risk company ventures operating in a regulatory grey area is insane.

lotsofpulp3• 4 years ago

Defined benefit pension funds have always been a nice pot of money to enable corruption. That is why IRA/401k is better. Just let people choose what they want from Vanguard/Fidelity/Schwab.

heretogetout• 4 years ago

It's wild to me that public pensions are allowed to invest in individual companies.

jelling• 4 years ago

Unfortunately, a lot of pension funds are behind so the started taking more risk. Frontline did a good piece called "The Pension Gamble" on this: https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/

huijzer• 4 years ago

Indeed. The same decline in pension funds occurred in the 2007 crash and other crashes. Unfortunately that’s often the reality when people manage other’s people’s money. The gains result in large bonusses for the money managers and the losses result in large losses for the investors. The incentives are wrong.

qeternity• 4 years ago

Heads I win, tails you lose.

dan-robertson• 4 years ago

That’s the case with a typical hedge fund but is it the case for pension funds like this one? I thought pension fund managers were not particularly incentivised to take risks for larger returns, but I don’t really have evidence for this assertion.

jeromegv• 4 years ago

The round was 750m, la Caisse invested 150 millions.

What's absolutely bunkers is that no major Quebec news sites are talking about this news this morning. La Presse, Journal de Montreal, TVA, nothing. (TVA is mentioning that the crypto market is down and casually mention la Caisse investment down in the article, but it's hardly an important news) Radio-Canada did make a major investigation into this investment few weeks ago (how timely!) but has yet to update it https://ici.radio-canada.ca/recit-numerique/4095/caisse-depo...

rednik• 4 years ago

Journal de Montreal has this (published 6 minutes ago) https://www.journaldemontreal.com/2022/06/13/cryptomonnaie-c...

Sytten2• 4 years ago

Better than 750m I guess, but with my napkin math its still 1200 old YC deals / 300 new YC deals which are most likely to have a better ROI than a crypto exchange. But la Caisse doesn't invest in small businesses, they want big deals to reduce risk (ironically).

ChainOfFools• 4 years ago

I have no numbers to back this up but only an observation which I thought completely trivial until now, that of the hundreds of crypto people that I've interacted with since I first started dabbling with it in 2013, it always felt a bit odd, as someone who mainly lived and worked in the federal district in DC, how an outsized proportion of them - and especially ones that stand out as being the most ideologically strident type of crypto-bro - were French Canadians.

numair• 4 years ago

You should call a securities lawyer and also the legal department of the pension, and threaten to sue. Whichever idiots have done this deserve to suffer some consequences — even if you sue and it gets tossed out, they will think twice before trying some sort of ridiculous nonsense like this again.

Pensions are extremely difficult to pitch for any sort of deal, even when it’s safe and makes sense. There is definitely some sort of back-channel relationship that led to this deal. You need to figure out how this happened, because there’s likely to be more of this sort of corrupt junk in your pension’s portfolio.

You should also question how economically benefiting from proof of stake mining has any place in any fund that purports to care about ESG (that applies to everyone!).

SoftTalker• 4 years ago

It's pretty obvious. Look at the history of big union pensions in the USA, e.g. the Teamsters.

908B64B197• 4 years ago

I wonder if there's indeed grounds for a class action against those who made the due diligence work. Should it be found that they might not have acted in the fund's best interest or that there was some back-channeling the repercussions might be interesting.

But your money is definitely gone.

Now, on the other hand, forcing everyone to invest in that fund 10% of their earnings, considering the huge amount of risk they are taking and the very speculative nature of their investments... that sounds like something else that would be great to challenge in courts.

JimmyRuska• 4 years ago

Maybe they were offered more guarantees on their investment, or they already exited that position after a heads up. For Celsius, saying a major pension fund was a key investor was worth a lot.

ypzhang22• 4 years ago

There is a big difference in Canadian pension funds and US pension funds.

Canadian pension funds are run more akin to a private equity firm. They invest directly in growth stage deals and therefore take commensurate risks like any other private equity firm.

That means that they make bets with more asymmetric risks and balance their entire portfolio rather than staying at a specific risk band with all of their investments. They pay for professional staff commensurate with that model. A canadian pension fund's employees earn salary and bonuses comparable to a investment bank or private equity firm.

You can't necessarily look at one off investments and have to look at return over time which is generally healthy and their funding ratio, which is generally much healthier than US pension counterparts.

There is a reason the "Canadian Model" is held up as one of the ideal pension management models.

stouset• 4 years ago

This sounds roughly equivalent to an actively-managed mutual fund. To anyone paying attention the past few decades, these have been widely discredited in favor of passive index funds.

Why would this model be held up as the ideal, and by whom? Why would pensioners be better served by expensive and underperforming active management rather than more cheaply balancing risk through a pension manager picking a balance of index funds and periodically rebalancing?

Perhaps I’m missing a crucial detail unique to pensions, but it just sounds like yet more expensive financial industry snake oil to me.

sgt101• 4 years ago

Bitcoin is at 24k now, down 20% in a few days... at 21K the Microstrategy margin call kicks in. That may cause 130000 bitcoin to be dumped onto the market.

This is what I call a significant bear case.

ephbit• 4 years ago

Do you happen to have any source for these numbers?

coolspot• 4 years ago

According to their CFO, they have more collateral to put in to avoid margin call.

https://www.marketwatch.com/story/microstrategy-shares-slump...

Night_Thastus• 4 years ago

Joyous day! I'm glad to watch each and every one of these burn to the ground. I feel sorry for anyone who got suckered, but this needs to happen.

aaaaaaaaata4• 4 years ago

"Stable"coins?

Or digital tokens?

Applejinx• 4 years ago

Yes.

adam_arthur15• 4 years ago

What justifies Bitcoin being valued at 30k vs 20k?

The answer is nothing. And same applies to 10k. Since there's no measurable intrinsic value, there's zero fundamental factor limiting the downside

deebosong• 4 years ago

To reiterate, you're basically saying it's just speculation and greater fool theory, correct?

Because that's to me what it looks like functionally, while some people I know seem to deny this is what they're doing and telling themselves "it's the future of everything" for no other reason than that's what they want it to be (so they can make bank off of their speculative bet).

adam_arthur15• 4 years ago

Yes.

If you can't point to any math to justify a given price, there is no intrinsic value. Thus price is only driven by speculative factors.

With stocks there are earnings that can be distributed back to shareholders. This is a measurable and explainable fundamental factor.

Real estate has rents... Bonds have coupon payments. Crypto has nothing. Though some will pay you "yield" by diverting money from newer entrants... Aka pyramid-esque structure

bhouston4• 4 years ago

Yes, Bitcoin is worth nothing but it is a "consensual reality" among a large group of people that it is worth something and thus it is.

It is incredibly hard to predict if such a consensual reality will collapse -- but it can collapse if there is a strong "vibe shift" towards something else that competes effectively with the current "consensus."

It is like fashion. What is considered stylish and not is just a group consensus. And it can shift relatively quickly, but it is hard to predict and certain people in key nexus have a lot more influence than the ramble.

zhte415• 4 years ago

I was introduced to Bitcoin in 2011 by a friend. I'd never heard of it before, and it sounded like something I'd not be interested in. I didn't go all-in with him renting an apartment where the cost of electricity was paid by the landlord, it's basically free, but he 'gave' me some in lieu of his bar bill, just a handful, with the proviso I hang on to it and spread the word that there was use for it.

In that long conversation, the most compelling 'use' was it's 'non use'. That it is intrinsically rare and so as long as it's achieved a sufficient momentum to continue to exist (aside from transactions, we went over various uses for the blockchain that I was struggling to understand), just having some is itself a diversification and thus valuable for that. Diversification like having some precious metal is too. 'Having' being an important point. Another friend was a gold nut (I mean that in a non-pejorative sense, a term he used) that wouldn't touch gold futures or any form of 'contractual gold' and wasn't that keen even on security boxes.

In this, Bitcoin did make some sense. Just hanging on to some. Not for investment purposes, and not for speculative purposes, but for, depending on your perception, the value you may find in something 'rare' in your (somewhat) physical possession. This may be for a time of turmoil when 'rare' assets are extremely valuable, especially divisible ones (sufficiently 'rare' cash, for example, is well documented to be valuable at these times). 'How much' depending on your appetite: appetite for an asset _held for this purpose_ (a purpose that isn't investment or from-time-to-time speculation), and this 'how much' (price*quantity) re-balanced not based on a Bitcoin's price (nor gold's price per ounce) - from this perspective the day-to-day 'price' of Bitcoin becomes less relevant, re-balancing better smoothed than marked-to-market daily given it's volatility.

[A small aside, but on this 'rarity': I remember clearly the first time I held a gold bar, by no means a common occurrence in my life. It was beautiful. Shaped more like a house brick than something stacked in Fort Knox, it had the portrait a family embossed on it, two parents, three children, the family dog, the chateau in which they lived, and their signatures. It was cast at the time of the French Revolution, and sits, certainly when I handled it and I imagine still today, unclaimed, in London, where it was sent for safe keeping. Sad.]

olalonde5• 4 years ago

It's true but it's also true of fiat currencies (more or less).

colinmhayes• 4 years ago

Fiat currency has intrinsic value. You need it to pay taxes, don't have enough and you go to jail.

coreyh14444• 4 years ago

The US Government has an absolute monopoly on taxing every single American person and business indefinitely. That's, uh, substantially different.

pavlov• 4 years ago

Fiat currencies are created by sovereign entities which control fundamental things like land and people (they can even draft their population and send them into war).

If you own land in the United States, you pay property tax in USD. That's just one of myriad ways that the dollar is backed by the physical assets of the nation.

mortehu• 4 years ago

Creating a valuable fiat currency is easy. If you pay your kids in your own currency for chores, it will initially be worthless. If you however declare that hours spent on YouTube must be paid for in chore dollars, you'll suddenly see that it has some value. Note that it would not be so easy for your kids to create a valuable currency.

Aunche• 4 years ago

Real currencies are backed by the goods and services people offer for a predetermined quantity of that currency. In a gold-backed currency, one of these goods happens to be gold, but the same also applies to fiat. The Chipotle in my area is "backing" the dollar by allowing you to exchange $10 for a chicken burrito. When sign an offer letter to your employer, you are also essentially "backing" the US dollar with your labor. Meanwhile, when goods or services exchanged with bitcoin, they still priced in fiat currency, so you're still backing your local fiat. The only thing Bitcoin is backed by is speculators who want to well Bitcoin to someone else in the future for more fiat.

FollowingTheDao2• 4 years ago

More like less. You cannot pay your taxes in Bitcoin. And the U.S. dollar is backed with petroleum.

danuker5• 4 years ago

It would be a combination of:

* supply

* demand

The supply is well-known in advance, and is an advantage to Bitcoin. US M2 money supply grew 8.04% in the past year [0], while Bitcoin's grew ~1.75% [1].

Demand is very volatile, and suffers from the bandwagon effect (price increase -> buy, price decrease -> sell).

[0] https://ycharts.com/indicators/us_m2_money_supply_yoy

[1] https://charts.woobull.com/bitcoin-inflation/

FollowingTheDao2• 4 years ago

Yes, I heard there was a huge demand for Tulips back in the day...

donkeyd• 4 years ago

The funny thing to me is that the BTC promoters keep talking about the blockchain being used to pay for stuff, like the occasional Tesla, or bananas in third world countries. However, last time I checked, about 90% of transactions involving BTC happened off the blockchain. It happened in marketplaces where no actual crypto is transacted and it's all in the databases of these marketplaces. The value of BTC has nothing to do with the actual use of the Bitcoin Blockchain.

If anything, the ETH blockchain might have more value in the real world, since it's used to transact stupid monkey pictures and stuff like that.

eric_cc9• 4 years ago

This is shortsighted and won’t age well. Consider the world in 2030. Another 8 years of advancements into bitcoin infrastructure, point of sale devices, mobile wallet integrations, etc

Plus failed central banks, failed paper currencies, etc

hacknat3• 4 years ago

You've just described money. Is BTC good at being money? No. But your argument isn't the reason.

rootusrootus• 4 years ago

Generically, perhaps. But specific money like the USD has value backed up at the point of a gun.

czbond2• 4 years ago

The only things that give money value are leadership (faith in the government) or military (punitive damage).

rglover13• 4 years ago

What justifies Bitcoin being valued at 30k vs 20k?

That it's a safeguard (not hedge) against tyrannical money.

This will play out over the next few years as governments will introduce digital currencies (CBDCs) to replace their own failing currencies (simultaneously robbing citizens of their savings). The bait-and-switch of this is that they will give out free money (it costs them nothing to do so) to entice people but not tell them that their money can expire, have its purchases limited to "approved" vendors, and be taken from them instantly without recourse.

Bitcoin is a safeguard against this if you hold it in your custody. This is its ultimate value: it cannot be manipulated or stolen by the state. Something that's never existed in the history of humanity.

There's a reason the genesis block contained this: https://en.bitcoin.it/wiki/File:Jonny1000thetimes.png

robbiep5• 4 years ago

How many, or what percentage, of crypto owners/holders actually have their crypto in their own custody? I would hazard to say somewhere south of 1%.

So what benefit is it? Everyone has only traded one form of vendor lock in to another (that is deserving of vastly less trust, as evidended by the Wild West of scams, rug pulls and outright frauds)

time_to_smile• 4 years ago

That it's a safeguard (not hedge) against tyrannical money.

Then why isn't BTC and other cryptocurrencies skyrocketing right now and seeing widespread adoption by Russian oligarchs looking to move around their money?

After all, if you're on the losing end of it sanctions are "tyrannical money".

There's also an argument to be made that it is precisely the tyranny behind fiat currency to ultimately gives it its value. The United States has a vast array of coercive means (from locking you in prison for forgery to trade weapons that can destroy your economy) to ensure that the USD has value.

There is never a technical solution to realpolitik. We'll increasingly see this in the coming months with crypto as powerful people will get their piece of the pie from the crypto boom, while most average players will be left with nothing.

emptyfile• 4 years ago

I wonder if even 1 in 100 current Bitcoin owners would articulate an opinion such as this.

rchaud5• 4 years ago

it cannot be manipulated or stolen by the state.

How's that different from the paper notes in a Monopoly game box? The Fed can't steal it or debase its value either. I still need a large group of people that also hold monopoly money and are willing to transact goods and services for it, with the understanding that the monopoly notes have zero fiat cash value.

lkrubner• 4 years ago

"tyrannical money"

The USA has an elected legislature, independent courts, multiple levels of appeals in the judicial system, a strong system of civil rights, the right to trial for anyone accused of a crime, the right to an attorney, an independent press, and an active civil society made up of tens of thousands of organizations; all of which shapes the political environment which in turn shapes monetary policy. In what sense is the USD tyrannical?

ddalex2• 4 years ago

I'm sorry, but this doesn't make any sense to me.... What I am missing ?

as governments will introduce digital currencies

Governments generally don't create money, central banks do. Famously, some central banks are actually private entities, not government (public ones)

own failing currencies

What exactly currency is failing, and which are the indicators ? USD and EUR are roaring successes in facilitating value exchanges on a global scale.

simultaneously robbing citizens of their savings

If that's the intention, banks can do that right now by printing money. Oh wait, they do.

will give out free money (it costs them nothing to do so)

Yes, printing money has a small marginal cost.

not tell them that their money can expire

Why somebody would expire money when they try to prop the economy on which they base their own support ?

have its purchases limited to "approved" vendors

Again, why anybody would shoot themselves in the foot by killing the economy that keeps them alive ?

it cannot be manipulated or stolen by the state

I'm sorry all your post reads some like crypto-prepper thing. If you feel that the state is out to steal you, you'd better start arming too, because if the state is out to get you, they'll not do it via obscure economic means, they will send the state-sponsored-thugs to violence it out - see Russia.

Something that's never existed in the history of humanity.

Gold?

eric_cc9• 4 years ago

Why does the paper dollar have buying power? What justifies its value?

The answer is nothing. Since there's no measurable intrinsic value, there's zero fundamental factor limiting the downside

adam_arthur15• 4 years ago

The fact that it's the mandated unit of exchange for commerce in the US, and the government ensures it maintains a relatively stable value.

It doesn't have intrinsic value, but it certainly has value by fiat/authority

ars• 4 years ago

And what justifies gold being worth any particular amount of money?

The answer is the same: nothing.

Except that that's not true for gold and it's not true for Bitcoin. Something has value if people want it.

That's it.

People want Bitcoin, therefore it has value.

Your search for fundamentals is simply inappropriately applied. It's like asking what color is a smell, it's simply the wrong question.

adam_arthur15• 4 years ago

Gold's intrinsic value is defined by its chemical properties and value for use in manufacturing. A large percentage of mined gold is used for productive purposes, not simply to sit in a vault.

Companies buy gold for use in electronics manufacturing, believe it or not.

But a portion of gold's market value is driven by a speculative spread over the intrinsic value, similar to BTC. Except for BTC the intrinsic portion is close to 0.

datadata9• 4 years ago

There is actually no upside limit, but there is a fundamental downside limit of zero.

What justifies oil being $130 dollars a barrel vs $100? The answer is also nothing.

rchaud5• 4 years ago

I wonder if comments like this are representative of the average crypto buyer. "The value of real commodities used in daily productive activity, is also entirely made up".

adam_arthur15• 4 years ago

Yeah, I'm sure supply and demand mechanics around production and consumption of oil don't influence the price.

I actually never considered that!

dorgo2• 4 years ago

back to first principles. We have wishes and desires. If we can't get everything we want in quantities we want then we prioritise. I want good food, some mobility and a lot entertaiment. Oil is needed for mobility. Take the average over priorities of the population and you know the price for oil. Markets are just there to determine desires/priorities of the population.

tboyd47• 4 years ago

The downside is at least limited at 0. The upside is unlimited.

tim333• 4 years ago

(Number of people into bitcoin) x (average amount of portfolio they stick in bitcoin) = bitcoin price / number of bitcoins.

In practice the bottom will probably be about $10k as people will start thinking that used to be $65k, maybe it'll go back, and buy some.

It's all human psychology but so is the value of a lot of things.

dorgo2• 4 years ago

Something is wrong with the equation. The right hand side of the equation is:

bitcoin price / number of bitcoins

$23,304 / 19,066,500 BTC = $0.001 /BTC

If there is one human into bitcoin, then they invested $0.001 ? If there are more people into bitcoin then they invested even less on average?

It doesn't make any sense.

adam_arthur15• 4 years ago

Price is defined by the most recent trade, nothing else. It doesn't matter how much money is in crypto accounts.

When you buy crypto with USD that's a one time transaction that has no bearing on future price.

E.g. the ARKK etf has had massive net dollar inflows YTD despite falling over 50% in the same timeframe

cuteboy19• 4 years ago

This is text based Technical Analysis, which is possibly the only thing that has less predictive power than actual TA

whiplash4513• 4 years ago

But it won’t because « it will converge towards the world’s GDP in the end ». LOL.

nayuki• 4 years ago

Celsius freezes at zero ;-)

seanw444• 4 years ago

Crypto is starting to invoke a tribal, emotional response in people now. It's bizarre to see these comments. Scammers scam. Surprise. Unregulated waters are dangerous unless they're tread carefully. Surprise. People using a technology for a completely different reason than it was invented for are ruining it for the rest of us. Surprise.

EamonnMR2• 4 years ago

Should the tribal response really be so unexpected, considering the relentless way Crypto Enthusiasts, especially the NFT variety, hounded every other online community with hype?

shakezula• 4 years ago

I believe OC addressed this under “scammers gonna scam” section.

duxup• 4 years ago

The complete disconnect between the ethos of the tech behind crypto and the ecosystem has been weird.

A friend of mine loves his freedoms and avoiding the terrible big banks who he thinks might steal his money / do things he doesn’t like …

JumpCrisscross• 4 years ago

“A loan worth more than $278 million, one of the biggest single loans on decentralized lending platform MakerDAO, is labeled as a loan made by Celsius, according to data tracker Block Analitica. If Bitcoin falls below $22,534.89, the position will be liquidated, adding more sell pressure for Bitcoin, the analytics firm said.

Data shows that the address used 17,919 wrapped Bitcoin, a version of Bitcoin that can be used in decentralized finance, as collateral for a loan worth $278,490,419 in the decentralized stablecoin DAI. While the blockchain explorer Etherescan didn’t labeled the wallet as Celsius, a wallet from Celsius sent additional 2,000 wrapped Bitcoin to support the position. Celsius did not immediately respond to a request for comment on the wallets.”

https://www.bloomberg.com/news/articles/2022-06-13/bitcoin-s...

haasted• 4 years ago

Seems they're trying to deposit more BTC into the contract to push down the liquidation price:

https://nitter.net/DU09BTC/status/1536353233156902914#m

Seems to have managed to push it to 18k. Quite the gamble.

BenoitP2• 4 years ago

22 534.89 * 17 919 = 403 786 746

So, am I reading this right that 403 M$ are used to secure 278 M$?

Or maybe are they accounting for market impact (by way of thin order book) for when the position is liquidated?

lampshades• 4 years ago

Loans in DeFi are generally highly over collateralized, so you are probably reading it correctly.

kerblang• 4 years ago

Let me see if I understand this: I put 10 bitcoin into this bank, and it gets loaned to you. If you cash it out to 10 bucks immediately, and bitcoin later drops to half a buck, you can buy 10 bitcoin, pay back the loan and keep 5 bucks, right? Not including whatever interest, I guess.

So this is a way to short bitcoin?

Edit: Sorry, maybe just to short Celsius' own tokens, although maybe it's indirectly shorting other currencies

unfocused• 4 years ago

I still remember looking at Bitcoin and Ethereum back in day. I was just curious and I know my friends bought and sold some. Back in 2017 (video is earlier) I looked at a video that explains, what Ethereum is: https://www.youtube.com/watch?v=Clw-qf1sUZg

This video has not aged well. It's full of so many buzzwords that my mind can't keep up. Also, the idea of anonymity and privacy...clearly they gave up on that as everybody is using their real names, addresses, etc so sign up for exchanges.

Again, I don't know enough about it, but since I've looked it back in 2017, until today, I'm still as confused, which is why I've stayed away from it.

lykahb• 4 years ago

Reminds me of the South Park investment report: aand it's gone.

circa• 4 years ago

This is what happens when you centralize a decentralized currency

papito• 4 years ago

That's why I have a problem with someone else managing my money (outside of direct fund managers, of course, who take a fixed percentage fee and are incentivized to have the fund grow, not to fleece me).

https://www.youtube.com/watch?v=gvZSpET11ZY

Major crypto lender Celsius freezes withdrawals as markets tumble

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