At least tulip bulbs had a tangible use.
One could start to wonder how much of the market has been floated on paper profits on crypto. Any smell of the sort of collapse we saw in debt derivatives 14 years ago?
Steve
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@steve203 the paper profits from crypto could have been used as collateral to secure margin debt for buying stocks. Here’s the margin level. It correlates closely with the level of the stock market. Even the little minimum in June is there.
But the amount of money invested in crypto is minor compared with the size of the stock market.
And the people who have invested in crypto (many minorities and young people) are not the same people who swing the stock market (institutional investors).
Wendy
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Disagree. Maybe there were lots of enthusiastic young people in the game, but they don’t have the kinds of big money that moves these things. No, it was (and I know no one will believe this) hedge funds, venture capitalists and other big boys who should have known better.
In addition to these traditional hedge funds, there are now over 300 crypto based hedge funds. Yeah, gimme that 2-and-20 for throwing money into something I know absolutely nothing about, except that everybody’s doing it so it must be good!
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Elon Musk bought Bitcoin for Tesla and I wished he hadn’t. Cathie Wood touts Bitcoin.
The Captain
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Why should “the wise” care if the market is full of air? They can hold the rest of the population hostage until the government bails them out “must save Wall St, to save Main St”. Can’t nationalize them, like some countries do, because that is “socialism”. Just throw money at the money people until they say they have enough.
Steve
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Why even bother to say that? Those folks just take money. Why think they know or should know what they are doing? Just ask them for a used car off the lot and it will be cheaper next time.
If someone did this with bitcoin (or pretty much any crypto) for the last ~year then they would have likely experienced margin calls every few weeks as bitcoin dropped from ~$60k to $17k. Furthermore, if they held their crypto in one of the failed exchanges/custodians, nearly ALL their margined stock would have had to be sold since the collateral is not available anymore.
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As far as I’ve read, only about 1/3 of crypto was bought by institutions (and often using OPM - “Other People’s Money” as in hedge funds). The other 2/3 was bought by individuals around the world. Furthermore, a lot of the investing by VCs seem like large numbers, but are only a small portion of their AUM (Assets Under Management). The only exception may be Andreesen Horowitz who has tens of billions in crypto. BUT in their case, they also invested in crypto 10 years ago, so much of those billions could be gains on bitcoin/etc as it rose from ~$25-$250 then to ~$16,000 now.
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Maybe. I lot of the crypto wasn’t “bought” but was “created” and it’s still held, or has been mined by very large outfits, not individuals. Even those “individuals”, like so many things, come in different buckets. There are individuals with gigantic holdings, and a bunch of bit players who hold small amounts.
Yes, I’ve seen surveys that say that as much as 20% of the population has dabbled in/bought/traded some crypto, but I suspect the numbers are small (relative to the crypto world, not relative to their individual wealth.,) I’ve also seen the research that says 75% of those individuals are male, and are overwhelmingly 18-28, not exactly people with great wealth other than that inside their crypto wallet, which may not be so great anymore anyway. I’ll still maintain the movers in these markets are the very big fish; and they’re getting slaughtered too.
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The miners who mined bitcoin at $10, $100, $1000, $10,000 and held it … haven’t lost any money. There’s reportedly been VERY little mining over $10,000.
This is one of the inherent problems of crypto and crypto exchanges. You don’t always know who holds what because when you (“bit player”) “deposit” your crypto into an exchange, let’s say FTX, that crypto is held in an FTX wallet (“gigantic holdings”).
If we’re concerned with true losses, then it isn’t the miners who have many true losses. And it might not even be the biggest VC (A-H) because they’ve been in it since 2013 at MUCH lower prices.
The true losses are borne by the suckers who bought at $60k, $50k, and $25k over the last two years (either directly or via some sort of fund). And the true losses are by those who invested (provided equity) in the various exchanges/other orgs that have gone bust.
Not according to the Time article:
The concentration of miners is even more profound, data show. NBER found that the top 10% of miners control 90% of the Bitcoin mining capacity, and just 0.1% (about 50 miners) control 50% of mining capacity.
And as for “individuals”:
This measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity,” researchers Igor Makarov and Antoinette Schoar wrote.For instance, the data did not not assign the ownership of early Bitcoins held in about 20,000 addresses to one person (Satoshi Nakamoto) and considered them as belonging to 20,000 different individuals.
I’ll agree that those who got in super early haven’t “lost’ anything, although I’m sure they feel they have. And I’m sure that there are lots of young people who played and lost, but I maintain the bulk of the wealth (if you can call it that) in crypto is in the hands of the big boys.
I’d agree with that. I am saying that the losses (true losses, not paper losses from some sort of absurd “high”) are among the newcomers, most of whom are individuals that were sucked in by the incessant hype throughout the pandemic, and bought at relatively high prices (with high fees to boot).
As far as mining goes, I think you missed part of my point. The vast majority of bitcoin has ALREADY been mined. Nowadays, under 1000 bitcoin a day are being mined. Out of a total maximum of 21 million or so. It’s no surprise that only 50 miners are mining most of it … because “nobody else” wants to (because they don’t have access to cheap/free electricity to run the machines that do the mining).
The NFT market is doing extremely well in some areas.
DraftKings an online fantasy team sport gambling outfit sells NFTs in one of its divisions. If you buy the NFT of a favorite NFL player you can have him on your fantasy team all season.
Top Shots is the NBA outfit for different NFT products. The major down turn has not affected them nearly as much.
There are other outlets I do not know about that may also similarly have very good results right now. It depends on their respective market.
How is that different from regular fantasy?
At its peak, NBA Top Shot generated $224 million worth of NFT trades in February 2021. Even earlier this year, when the overall NFT market was still booming, Top Shot did $59 million in trades in January 2022.
So down to roughly 1% of the peak. You’re right, that’s probably not as bad as the rest of the crypto space, but pretty incredible meltdown none-the-less.
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I do not gamble. I have a marketing friend at DraftKings. She seems to think that is a perk they are offering. I donno more than that.
Thanks for the info on Top Shots. Always willing to admit when I am wrong or do not know. I do things differently than some.
This is like going to Starbucks and getting stars when you spend a few bucks on a coffee.
If you are over a certain age this does not appeal but if you are well under that certain age this might have a lot of appeal.