Crypto downdraft as market accelerant

The recent drop in cryptocurrencies is forcing the equivalent of margin calls and forcing the sale of other assets (eg: stocks, gold) adding more weight to the downdraft. This is, to a lesser extent, the same phenomenon as the deflationary shortage of assets which took place after the closing of Lehman Brothers and money market funds breaking the buck. As in that case, the connections between the crypto assets and more conventional ones are opaque and non-obvious.

Jeff

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As in that case, the connections between the crypto assets and more conventional ones are opaque and non-obvious.

For all the fanfare, crypto assets are denominated in US$$$$ as is the whole economy!

When you speculate with crypto you pay with US$$$$!

Gold is denominated in US$$$$

Housing is denominated in US$$$$

Inflation is denominated in US$$$$

Treasuries are denominated in US$$$$

The Captain

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The recent drop in cryptocurrencies is forcing the equivalent of margin calls and forcing the sale of other assets (eg: stocks, gold) adding more weight to the downdraft. This is, to a lesser extent, the same phenomenon as the deflationary shortage of assets which took place after the closing of Lehman Brothers and money market funds breaking the buck. As in that case, the connections between the crypto assets and more conventional ones are opaque and non-obvious.

True - but keep in mind the differences in scale between the two. The total market cap of all crytpo currencies, even at their peak, was “only” about $3 trillion. The total amount of Lehman’s portfolio of various derivative agreements and contracts was estimated to be between $35-40 trillion - an order of magnitude higher.

Three trillion dollars is still very big, and the crypto bust (about $2 trillion of that value has now gone to money heaven) will certainly have impacts outside of crypto. But the entire sector is still less than 10% of what was involved with the Lehman collapse.

Albaby

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I don’t own any and really follow it but one thing that stands out to me is the headlines about crypto companies widely laying off people. To me that pretty much says, “Game Over”.

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