Author Topic: What do you think of adding a low% of crypto allocation  (Read 235285 times)

maizefolk

  • Walrus Stache
  • *******
  • Posts: 7400
Re: What do you think of adding a low% of crypto allocation
« Reply #1400 on: November 22, 2022, 08:09:36 PM »
At the end of the day, true credit would (should) be the dominant form of credit that would exist that is simply the transfer of real capital between savers and borrowers. True credit can expand and contract as needed, but it is always backed by real capital and doesn't present systemic risk in the same way that false credit does. Furthermore, the ability that bitcoin would allow for individuals to take full custody of their funds at any time would provide a further check and balance against false credit throughout the system.

Loaning bitcoins (or USD) would seem to fall into the category you are defining as "true" credit. In both cases I hand over my dollars (or bitcoins) to a second party who assumes a contractual obligation to pay them back to me, ideally with interest, at a later date.

But in both cases I have counterparty risk. I cannot take custody of my funds at any time, I'm dependent on the party I've signed a contract with to return the funds I've lent them following through on that contract. The credit risk would appear to be equivalent in both cases, no?


roomtempmayo

  • Handlebar Stache
  • *****
  • Posts: 1142
Re: What do you think of adding a low% of crypto allocation
« Reply #1401 on: November 22, 2022, 09:56:44 PM »
But I merely point out the fallacy in arguing for interventionist monetary policy that both adherents were so obviously committed to.

So the nut of your enthusiasm for crypto is that it will create a stable money supply outside of state control?

Why exactly do you think that those who currently control the money supply, with all of the power and armies to back them up, would just sit around and willingly let that happen?

And why would the general population that is always poor accept that system when states are unable to intervene in financial crises?  You'd have one economic cycle until the pitchforks come out, just like they did in the 1890s.

« Last Edit: November 22, 2022, 10:03:10 PM by caleb »

Telecaster

  • Magnum Stache
  • ******
  • Posts: 3551
  • Location: Seattle, WA
Re: What do you think of adding a low% of crypto allocation
« Reply #1402 on: November 22, 2022, 10:22:41 PM »
FWIW, if you're a bitcoin maxi who doesn't associate with the many scams across the industry, you're probably not participating in those third-party institutions doing the scamming and likely holding custody of your own bitcoin. After all, that is the entire point of bitcoin.

There was a good article that was just published that talks about the separation bitcoin needs from the industry that has now completely corrupted the original idea of it.

https://www.nbcnews.com/think/opinion/bitcoin-vs-ftx-crypto-king-sam-bankman-fried-problem-rcna57964

That was a well-written article that brings up a point I've made many times over the years.  As we've had these discussions over the years, Bitcoin proponents have claimed that adoption is increasing because of Square, Flexa, Paypal, government of El Salvador, etc. have made it possible to complete Bitcoin transactions for everyday expenses.  But, as I've pointed out, all those examples require a trusted third party, which negates the entire premise of Bitcoin.    If the transaction requires a trusted third party, then you don't need Bitcoin at all.  Full stop. 

Quote
The main point behind their economic beliefs is that bitcoin would provide a stable money supply with which goods can be priced. It is also why bitcoiners don't recognize your claim that bitcoin has "inflated by about 350% in the past year". It is because they're not looking at CPI inflation since that is a secondary effect. They're focused on monetary inflation. In that case, bitcoin has only inflated by 1.5% over the last year.

They can recognize my claim or not. But the reality at the kitchen table is that if you were saving up for a down payment on a house or a car in Bitcoin, your down payment has turned into dust.  The notion that monetary inflation is only 1.5% as you watch your savings vaporize is cold comfort. 

BicycleB

  • Walrus Stache
  • *******
  • Posts: 5263
  • Location: Coolest Neighborhood on Earth, They Say
  • Older than the internet, but not wiser... yet
Re: What do you think of adding a low% of crypto allocation
« Reply #1403 on: November 22, 2022, 10:29:01 PM »
Thanks for clarifying; that helps. The now-bolded does raise the question of which aspect of the money supply should be stable, though (as well as how to create that stability).

If the currency is Fixcoins and you have a fixed number of Fixcoins, the value of a given good is unstable whenever the supply of goods changes. If you seek a fixed price for a given good, the number of Fixcoins would have to be unstable, adjusting to varied supply of goods. What's more important? Is it the number of Fixcoins that should be stable, or the price of goods in terms of Fixcoin?

Anecdotally, people scream about inflation whenever the price of goods changes in terms of the dominant coin. Wouldn't such price changes be a guaranteed fixture (no pun intended) of a system with a fixed number of coins as the currency? Wouldn't most people prefer steady prices of goods? Wouldn't economic decisions be made most neutrally and efficiently under stable prices of goods?

I don't think under either system you will ever achieve a stable price of goods. I don't think any economist would argue that and even under basic scrutiny that idea falls apart. After all, you only have one supply of money and massive amounts of different goods each with their own varying supply. Even if you attempt to control the supply of money for one single good, every other single good out there will have their own independent supply as well that can't be controlled for as a result.

The price of goods should be determined by the market, not the money supply. If supply of a good decreases and demand stays the same, then the price should go up. If the supply of a good increases (maybe as a result of increased production), then the cost of that good should come down. That's basic economic theory. I'm not sure why anyone would think that controlling the money supply is a solution to these natural market forces.

I agree prices are unlikely to be perfectly stable, but I didn't mean that they would be. And when I wrote about a given good, I didn't mean that some regulator would control the whole economy based on one good's price. My phrasing "a given good" implies that there are other goods in the system. I discussed one good in attempt to be clear. Sorry if it didn't work.

We agree that there are many prices in the economy. I'm sure you're aware that in the US, economists attempt to summarize the many prices using measures such as CPI. Conceptually, such a thing as relatively stable prices can be understood, and so can relatively unstable prices. It appears to me that most people prefer relatively stable prices.

If govts affect the size of the money supply, as you already agree that they do, logically their effect could tend toward relatively stable prices or unstable prices in terms of the chosen currency, depending on the govt's actions. You yourself state repeatedly (if I understand you) that overly inflating the money supply causes problems, which implies that a less inflationary policy could be chosen. If you thought a govt could be trusted to maintain a fixed money supply, it sounds like you'd prefer that to the fiat fiasco (as one might call it) that currently dominates the globe. Since govt is untrustworthy in that regard, you propose that Bitcoin will serve as the fixed or stable money supply, correct?

What I'm proposing is that if the money supply really became fixed, "stable" at some consistent size, then prices would vary. You seem to agree with that, specifying that under a fixed money supply, the resulting prices would lead to the best, most undistorted economy.

Prices vary now too, so it's a fair question which circumstance they'd vary more in. I'm suggesting that it's possible for govts to come closer to stable prices than a fixed currency would, and offering the thought that most people would prefer that to the fixed "stable" supply of currency.

You're welcome to disagree. Just hoping to be understood along the way, I guess. Anyway, take care.

okonumiyaki

  • Stubble
  • **
  • Posts: 190
Re: What do you think of adding a low% of crypto allocation
« Reply #1404 on: November 23, 2022, 02:15:53 AM »
Furthermore, the ability that bitcoin would allow for individuals to take full custody of their funds at any time would provide a further check and balance against false credit throughout the system.

Eh?  How does that work? 

If A lends B bitcoin to buy a house from C, the bitcoin now belong to C, and A has an IOU from B.  A has no ability to take full custody of their funds at any time. Depending on the contract and local laws, they may be able to take custody of the house

bwall

  • Handlebar Stache
  • *****
  • Posts: 1220
Re: What do you think of adding a low% of crypto allocation
« Reply #1405 on: November 23, 2022, 05:02:14 AM »
Keep in mind that since the year 1900 the population of the USA was 75 million, give or take. Today it's 4.5x larger. Thus, in order to keep the money supply exactly the same relative to the population, the USA would have to dig 4.5x more shiny metal out of the earth. If you can't dig enough metal out of the ground to keep up with population growth, then you experience deflation.

To put it another way, higher population means more productivity (more workers and more goods). Not all deflation is created equal in the same way that not all inflation is. Deflation as a result of higher productivity is a good thing. It is why the cost of many technologies goes down over time or the cost of a food crop goes down as yields increase. Those are good reasons for deflation and having a stable money supply over the course of those changes is not a bad thing. It means people can afford more things and the standard of living for people goes up.

Higher population doesn't mean more productivity per worker. Many countries today have higher populations than 40 years ago but not higher productivity.

Higher population might lead to more aggregate economic output for a country. But the increased economic output resulting from increased population cannot be equated to increased worker productivity and increased standards of living. For decades leading up to 1980 (or even 1990?) China's population increased significantly, yet productivity remained unchanged. As a result, standards of living remained very low for decades despite increased population.

Higher standards of living are driven only by higher worker productivity.

Higher worker productivity is driven by by one thing and one thing only; innovation and the resulting technological advances.
Therefore, increased population has no bearing on increased worker productivity.

bwall

  • Handlebar Stache
  • *****
  • Posts: 1220
Re: What do you think of adding a low% of crypto allocation
« Reply #1406 on: November 23, 2022, 04:52:04 PM »
No national highway system either without mining gold first.

Nor could FDR have spent all that money on social programs if we had to dig a specific metal out of the ground first. Which, I suspect is the real reason people today wish for the return of the gold standard. Less spending towards poor people would be a direct result.

Expanding the money supply doesn't mean you can't fund social programs or projects. It just means you need to actually have a plan to pay for it as opposed to being able to inflate away the incurred debt. I'm not sure why you say you need to "mine gold first" here (assuming you're referring to a gold backed currency). You still have credit within the system and governments can still sell bonds, for example. It just means that more responsibility must be taken to ensure those bonds can be paid for in the future. It doesn't prevent you from having insurance programs either. If you're concerned about poor people, I would argue that the massive increases in CPI inflation over time as a result of inflationary monetary policy have robbed far more poor people of their wealth.

By definition poor people in the USA are neither creditors nor possessors of wealth. One could argue that they benefit most in an inflationary environment (at the expense of creditors), but only to the extent to which they have loans at rates fixed below the rate of inflation.

However, if by poor people you mean the citizens of China, then I'd agree 100%. The PRC currently holds around $1trillion in US debt and $3trillion in USD reserves. Take, say, 9% average annual inflation for 2022, then this means a wealth transfer on the order of 360 billion USD from the (poor) citizens of China to the (rich) citizens of the USA, or about $1000 per capita, USA. Even with a historically low USD inflation rate of 2%, this still results in an $80 billion annual wealth from China to the USA. Dollar deflation would result in a wealth transfer from the USA (borrower) to China (creditor).
As a US taxpayer I'm glad to see the USA benefit at the expense of China.
As a person who wishes to see the poor enjoy the fruits of their labor, it saddens.

FINate

  • Magnum Stache
  • ******
  • Posts: 3114
Re: What do you think of adding a low% of crypto allocation
« Reply #1407 on: November 28, 2022, 10:12:10 AM »
This just in: Crypto firm BlockFi files for bankruptcy after FTX collapse

The faster crypto crashes and burns, the better.

ChpBstrd

  • Walrus Stache
  • *******
  • Posts: 6662
  • Location: A poor and backward Southern state known as minimum wage country
Re: What do you think of adding a low% of crypto allocation
« Reply #1408 on: November 28, 2022, 04:25:51 PM »
This just in: Crypto firm BlockFi files for bankruptcy after FTX collapse

The faster crypto crashes and burns, the better.

22 years ago, I was on forums a lot like this one where people were arguing about whether Yahoo, Netscape, and Pets.com were good values now that they'd fallen by double digit percentages.

Then, as now, I was against the fad investments being promoted on the media despite having no underlying economic rationale.

Then, as now, there were "bros" arguing forcibly about how all the old geezers were missing out on the big picture. The internet was inevitable, they correctly said, so therefore all these money-bleeding companies were inevitable, they incorrectly said.

The difference is that the internet actually was inevitable in 2000 and this was obvious at the time. It is not clear whether cryptocurrencies and NFTs are inevitable in 2022.

In 2000, tech companies like Amazon, Apple, and Microsoft were destined to create value. However, can we really say in 2022 Dogecoin or Litecoin or even Bitcoin are destined to become the world's next reserve currency? After 13 years of development, Bitcoin still isn't being used as a currency except in cases of kidnapping, laundering, or ransomware, after which it's quickly tumbled and traded for dollars. You cannot buy a stick of bubble gum with it. It's harder, not easier, to use than dollars, despite all the development effort that went into it. It's less secure too. After all this time it's still just a speculation. Compare this stall-out with the continuous improvement and new business ideas emerging from the internet circa 2000.

So the people we shook our heads at for buying AOL, Webvan, and Boo.com actually had a stronger rationale than crypto has right now.


FINate

  • Magnum Stache
  • ******
  • Posts: 3114

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 23129
  • Age: 42
  • Location: Toronto, Ontario, Canada
Re: What do you think of adding a low% of crypto allocation
« Reply #1410 on: November 30, 2022, 12:46:28 PM »
Speaking of failing crypto exchanges . . . did Magic: The Gathering Online Exchange ever make good for the hundreds of millions that disappeared from it?  It did handle what, 70% of bitcoin transactions at one point?

waltworks

  • Walrus Stache
  • *******
  • Posts: 5653
Re: What do you think of adding a low% of crypto allocation
« Reply #1411 on: November 30, 2022, 02:22:21 PM »
OT but I actually know someone who has boxes of Magic cards stashed away that he considers his retirement fund.

I had to stop talking to him about anything to do with investing a while ago.

But they will probably be worth more than crypto, to be fair. And at least you can play with them.

-W

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 23129
  • Age: 42
  • Location: Toronto, Ontario, Canada
Re: What do you think of adding a low% of crypto allocation
« Reply #1412 on: November 30, 2022, 02:52:10 PM »
Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

GilesMM

  • Handlebar Stache
  • *****
  • Posts: 1494
  • Location: PNW
Re: What do you think of adding a low% of crypto allocation
« Reply #1413 on: November 30, 2022, 03:55:49 PM »
...

In 2000, tech companies like Amazon, Apple, and Microsoft were destined to create value....

I thought that at the time. Then MSFT went sideways for a decade after the tech crash and with Steve Ballmer doing nothing as CEO.  They were still the operating system in everyone's PC, but had mis-steps in phones and other stuff.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 7400
Re: What do you think of adding a low% of crypto allocation
« Reply #1414 on: November 30, 2022, 04:24:43 PM »
Speaking of failing crypto exchanges . . . did Magic: The Gathering Online Exchange ever make good for the hundreds of millions that disappeared from it?  It did handle what, 70% of bitcoin transactions at one point?

They're in the process of doing so.

Took 8+ years. Doing the math, people are going to be made at least whole in USD terms, but still only a small fraction of what their deposits would have been worth if they'd kept the bitcoins they had on the exchange when it collapsed from now to today. (When MtGox failed bitcoin was at about $100. Now it's 170x higher.)

mistymoney

  • Handlebar Stache
  • *****
  • Posts: 2417

BicycleB

  • Walrus Stache
  • *******
  • Posts: 5263
  • Location: Coolest Neighborhood on Earth, They Say
  • Older than the internet, but not wiser... yet
Re: What do you think of adding a low% of crypto allocation
« Reply #1416 on: November 30, 2022, 10:24:58 PM »

ATtiny85

  • Pencil Stache
  • ****
  • Posts: 947
  • Location: Midwest
Re: What do you think of adding a low% of crypto allocation
« Reply #1417 on: December 01, 2022, 05:22:06 AM »
Kraken to lay off 30% of its staff.

release the kraken?

I think it's more of a (cough cough) release from the kraken

kraken night soil, lovely mental image.

I have enjoyed reading all the crypto talk. Until crypto is in mainstream stock index funds, I won't own any, but it is great to read the back and forth.

...

In 2000, tech companies like Amazon, Apple, and Microsoft were destined to create value....

I thought that at the time. Then MSFT went sideways for a decade after the tech crash and with Steve Ballmer doing nothing as CEO.  They were still the operating system in everyone's PC, but had mis-steps in phones and other stuff.

Yeah, but at no time during that decade was there ever a thought that MSFT was not doing "something real", and it was still somewhat obvious that they would continue to create value throughout, right? I bought 50 shares in taxable somewhere around 2002, and they look decent now. (all VTSAX all the time now, but have some old individual stocks like this that will eventually be donated)

Reynold

  • Bristles
  • ***
  • Posts: 353
Re: What do you think of adding a low% of crypto allocation
« Reply #1418 on: December 01, 2022, 09:52:25 AM »
In looking at the Forbes article cited earlier I saw a mention of an earlier June 28 interview with Bankman-Fried, CEO of FTX, where he warns that some "third tier" exchanges are secretly already bankrupt. 

https://www.forbes.com/sites/stevenehrlich/2022/06/28/bankman-fried-some-crypto-exchanges-already-secretly-insolvent/?sh=6ec2134a47f7

The article also mentions FTX as one of the largest exchanges, and Bankman-Fried says that FTX had been profitable for the last 10 quarters.  I hate to think what it would look like now if by some mischance it had been *losing* money. . . :) 

Scandium

  • Magnum Stache
  • ******
  • Posts: 2827
  • Location: EastCoast
Re: What do you think of adding a low% of crypto allocation
« Reply #1419 on: December 01, 2022, 12:34:14 PM »
Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

Last I played a Cursed scroll milling deck was the shits! Is that still the case?

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 23129
  • Age: 42
  • Location: Toronto, Ontario, Canada
Re: What do you think of adding a low% of crypto allocation
« Reply #1420 on: December 01, 2022, 12:48:39 PM »
Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

Last I played a Cursed scroll milling deck was the shits! Is that still the case?

I last played MTG in the 90s  . . .  my understanding of the current ruleset is rather limited.

Telecaster

  • Magnum Stache
  • ******
  • Posts: 3551
  • Location: Seattle, WA
Re: What do you think of adding a low% of crypto allocation
« Reply #1421 on: December 01, 2022, 02:19:09 PM »
In related news, Kevin O'Leary on Twitter shows why it is a called a confidence scam:

Quote
I lost millions as an investor in  @FTX and got sandblasted as a paid spokesperson for the firm but after listening to that interview I’m in the @billAckman camp about the kid!

https://twitter.com/kevinolearytv/status/1598123428527017985

He can't admit to himself that he was scammed, and so doubles down on his opinion that SBF is a good guy.   Charles Ponzi reportedly received Christmas Cards in jail from his victims. 

talltexan

  • Walrus Stache
  • *******
  • Posts: 5344
Re: What do you think of adding a low% of crypto allocation
« Reply #1422 on: December 02, 2022, 11:43:35 AM »
Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

Seriously, red is the worst color, takes no talent to play. Just bolt to the face, then bolt any critters that come out.

Psychstache

  • Handlebar Stache
  • *****
  • Posts: 1594
Re: What do you think of adding a low% of crypto allocation
« Reply #1423 on: December 02, 2022, 12:11:49 PM »
Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

Seriously, red is the worst color, takes no talent to play. Just bolt to the face, then bolt any critters that come out.

There's a bit more skill to winning consistently with burn, but any goof can pick it up and do okay with a little luck. I don't know about tournament winning though. If you are not Patrick Sullivan, then you're pretty much 45% to win with burn regardless of format or opponents deck choice.

Scandium

  • Magnum Stache
  • ******
  • Posts: 2827
  • Location: EastCoast
Re: What do you think of adding a low% of crypto allocation
« Reply #1424 on: December 08, 2022, 12:16:18 PM »
Crypto comes and goes, but a tournament winning high quality red burn deck is forever.

Seriously, red is the worst color, takes no talent to play. Just bolt to the face, then bolt any critters that come out.

Agreed! Blue is fun, because it pisses everyone off. Black is cool because it's the most metal.
(I'm glad we can finally get something useful out of this thread)

achvfi

  • Pencil Stache
  • ****
  • Posts: 524
  • Location: Midwest
  • Health is wealth
Re: What do you think of adding a low% of crypto allocation
« Reply #1425 on: December 08, 2022, 12:53:59 PM »
It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

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

CNBC anchors just move on to some other topic.


Telecaster

  • Magnum Stache
  • ******
  • Posts: 3551
  • Location: Seattle, WA
Re: What do you think of adding a low% of crypto allocation
« Reply #1426 on: December 08, 2022, 05:46:06 PM »
It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

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

CNBC anchors just move on to some other topic.

The mainstream media has been incredibly soft on crypto.  The space is shot with billions of fraud and market manipulation and there is very little serious press dedicated to it.  Even recent stuff with SBF has been incredibly softball. 

ChpBstrd

  • Walrus Stache
  • *******
  • Posts: 6662
  • Location: A poor and backward Southern state known as minimum wage country
Re: What do you think of adding a low% of crypto allocation
« Reply #1427 on: December 09, 2022, 09:36:18 AM »
It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

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

CNBC anchors just move on to some other topic.

The mainstream media has been incredibly soft on crypto.  The space is shot with billions of fraud and market manipulation and there is very little serious press dedicated to it.  Even recent stuff with SBF has been incredibly softball.

Yep. The media / social media been complicit and given crypto-scams lots of free publicity. Similarly, the government has refused to investigate all but the most obvious frauds if cryptocurrency or NFTs are involved. Wouldn't want to anger the apes.

Losing thousands of dollars on cryptocurrency scams like FTX or rug-pulls is going to be a generational experience for younger men in this era. How will they respond? Probably with more distrust of the mainstream media and more distrust of their government.

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 23129
  • Age: 42
  • Location: Toronto, Ontario, Canada
Re: What do you think of adding a low% of crypto allocation
« Reply #1428 on: December 09, 2022, 11:39:58 AM »
Losing thousands of dollars on cryptocurrency scams like FTX or rug-pulls is going to be a generational experience for younger men in this era. How will they respond? Probably with more distrust of the mainstream media and more distrust of their government.

Ironically, the same couple things that will set them up for the next big scam.

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 6633
Re: What do you think of adding a low% of crypto allocation
« Reply #1429 on: December 09, 2022, 11:54:46 AM »
It was interesting to see Jamie Dimon say that Bitcoin is not a real market. I wonder if they know/think there is some kind of manipulation going on.

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

CNBC anchors just move on to some other topic.
The mainstream media has been incredibly soft on crypto.  The space is shot with billions of fraud and market manipulation and there is very little serious press dedicated to it.  Even recent stuff with SBF has been incredibly softball.
In case you missed the interview with Kraken's new CEO (formerly its COO), he called SBF a "fraudster" and used the word fraud multiple times.  The CNBC host had to state that SBF has not been convicted of fraud or any other charge.  They have to tread carefully in case SBF goes to court and is found innocent, which then turns statements to the contrary into slander.

In the CNBC interview by host Andrew Ross Sorkin, he repeatedly asked SBF about "co-mingling of funds", which SBF claimed was part of FTX's borrowing program that users could agree to.  But the host kept using "co-minging of funds" in every question, regardless of that answer.

The impression I'm gathering is of a two-faced person.  Binance helps FTX get started, and within a few years they learn SBF is badmouthing them to U.S. government regulators.  People claim to have been told about liquidity fears and co-mingling of funds earlier than SBF stated in his interview.  I think we're going to need third party forensic accounting to unravel it, rather than interviews.

Telecaster

  • Magnum Stache
  • ******
  • Posts: 3551
  • Location: Seattle, WA
Re: What do you think of adding a low% of crypto allocation
« Reply #1430 on: December 09, 2022, 04:52:11 PM »
The impression I'm gathering is of a two-faced person.  Binance helps FTX get started, and within a few years they learn SBF is badmouthing them to U.S. government regulators.  People claim to have been told about liquidity fears and co-mingling of funds earlier than SBF stated in his interview.  I think we're going to need third party forensic accounting to unravel it, rather than interviews.

In a recent interview with Coffeezilla, SBF straight up said FTX was co-mingling funds. 

https://youtu.be/4o_jPzBZSIo

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 6633
Re: What do you think of adding a low% of crypto allocation
« Reply #1431 on: December 09, 2022, 08:32:36 PM »
The impression I'm gathering is of a two-faced person.  Binance helps FTX get started, and within a few years they learn SBF is badmouthing them to U.S. government regulators.  People claim to have been told about liquidity fears and co-mingling of funds earlier than SBF stated in his interview.  I think we're going to need third party forensic accounting to unravel it, rather than interviews.
In a recent interview with Coffeezilla, SBF straight up said FTX was co-mingling funds. 

https://youtu.be/4o_jPzBZSIo
Great video for learning about co-mingling of funds, and for what SBF did.  First, I didn't realize that margin customers and other customers need to have two separate pools of assets.  If you have one big account where margin and non-margin deposits are held, that is co-mingling of assets.

SBF says FTX had one "omni" pool for all customer funds... which means margin customers and spot customers shared the same pool!  Any losses in margin accounts would eat away at accounts which had no margin terms on their accounts.  It sounds like FTX did not use separate pools for margin and non-margin accounts.  And according to the video, that would be fraud.


GilesMM

  • Handlebar Stache
  • *****
  • Posts: 1494
  • Location: PNW
Re: What do you think of adding a low% of crypto allocation
« Reply #1433 on: December 13, 2022, 08:59:59 AM »
I predict he will plead to lesser charges and serve about 8 years. Complex case.

ChpBstrd

  • Walrus Stache
  • *******
  • Posts: 6662
  • Location: A poor and backward Southern state known as minimum wage country
Re: What do you think of adding a low% of crypto allocation
« Reply #1434 on: December 13, 2022, 01:35:52 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 23129
  • Age: 42
  • Location: Toronto, Ontario, Canada
Re: What do you think of adding a low% of crypto allocation
« Reply #1435 on: December 13, 2022, 02:03:01 PM »
HODL HODL HODL!

Glenstache

  • Magnum Stache
  • ******
  • Posts: 3493
  • Age: 94
  • Location: Upper left corner
  • FI(lean) working on the "RE"
Re: What do you think of adding a low% of crypto allocation
« Reply #1436 on: December 13, 2022, 02:04:19 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
Well, I think it is rational to think that there is a high risk profile associated with crypto unless there is a greater degree of control on it. But, that greater degree of control is regulation, which crypto has been allergic to almost by definition and intent.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 7400
Re: What do you think of adding a low% of crypto allocation
« Reply #1437 on: December 13, 2022, 03:58:14 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

What reaction to the fall of FTX do you feel would have painted the people who used it in a positive light? I feel like you're setting up a no-win scenario here:

If people complain that they lost money, they're idiots who have been conned.
If people accepted the risk and so don't complain, they're clearly criminals or conmen themselves.

If any possible outcome results in the same conclusion I'm not sure you're actually learning anything.

Travis

  • Magnum Stache
  • ******
  • Posts: 4219
  • Location: California
Re: What do you think of adding a low% of crypto allocation
« Reply #1438 on: December 13, 2022, 04:05:01 PM »
SEC charges disgraced crypto tycoon Sam Bankman-Fried with defrauding investors.

The report to Congress from the current FTX CEO was certainly entertaining. Amongst other managerial oddities, what little accounting FTX actually did was done on Quickbooks.

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 6633
Re: What do you think of adding a low% of crypto allocation
« Reply #1439 on: December 13, 2022, 04:07:25 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.
Weeks ago an FTX investor cursed on air he was so pissed off, and more recently Kraken's new CEO called Mr Bankman-Fried a "fraudster".  If you don't listen, that isn't silence.

BicycleB

  • Walrus Stache
  • *******
  • Posts: 5263
  • Location: Coolest Neighborhood on Earth, They Say
  • Older than the internet, but not wiser... yet
Re: What do you think of adding a low% of crypto allocation
« Reply #1440 on: December 13, 2022, 05:18:50 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
Well, I think it is rational to think that there is a high risk profile associated with crypto unless there is a greater degree of control on it. But, that greater degree of control is regulation, which crypto has been allergic to almost by definition and intent.

Good point, @Glenstache!

Fwiw - recently an article appeared in my email from a source I don't recall seeing before. It alleges that despite crypto community efforts, US regulators have been on the case, primarily due to current SEC chair Gary Gensler who as professor studied crypto before the SEC job. The effect, it says, has been a huge regulatory success story in that SEC blocked crypto from fatally infecting the wider financial system.

Details:

1. Like you said, crypto has largely sought to avoid and minimize regulation
2. Bankman-Fried lobbied for light regulation to avoid heavier regulation
3. SEC under Gensler has, with increasing detail and success, repeatedly asserted that:

a. crypto is securities, therefore under SEC jurisdiction
b. crypto exchanges need to conform to securities law
c. crypto "banks" need to follow securities law (and I assume banking laws) but should not receive bank-like assistance from government

4. Additionally, and consequentially, accounting standards have been updated to require banks that accept crypto to detail those holdings and hold sufficient cash to redeem in dollars any crypto received

Results include:
5. 3a above is increasingly if not universally accepted
6. 3b above is increasingly accepted as a principle; implementation varies but is in process and has had some positive effect (effect is implied by the article, not directly stated)
7. due to 3c above, the number of crypto banks is limited and normally they have not received bank-like assistance
8. due to 4 above and other factors, several crypto companies tried to get stock listings but basically were stymied, preventing additional crypto acceptance that could have led to greater danger
9. overall, the SEC's actions walled off the bulk of the conventional financial system from cypto effectively enough the keep the financial system safe

https://www.economicliberties.us/our-work/gary-gensler-got-it-right/?emci=ce3aec84-ff7a-ed11-819c-000d3a9eb474&emdi=e52317f0-097b-ed11-819c-000d3a9eb474&ceid=25082919

TL;DR - look! crypto is collapsing but conventional finance isn't! (not due to crypto, anyway) and it could have, but government blocked the infection from wounding the system and that's a regulatory success. 
« Last Edit: December 13, 2022, 05:28:21 PM by BicycleB »

bwall

  • Handlebar Stache
  • *****
  • Posts: 1220
Re: What do you think of adding a low% of crypto allocation
« Reply #1441 on: December 13, 2022, 05:21:43 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.
Weeks ago an FTX investor cursed on air he was so pissed off, and more recently Kraken's new CEO called Mr Bankman-Fried a "fraudster".  If you don't listen, that isn't silence.

I've also heard a couple of people complain about losses. However, not to the degree to be expected for multi-billion losses.

Perhaps those suffering loss are overseas and harder to find and report on? Wasn't FTX-Bahamas for ex-USA (offshore) account holders whereas the FTX-USA exchange was for the much smaller pool of USA based holders? Not sure.

Perhaps there are other reasons why we haven't heard much from loss-holders. Perhaps they participated in large run-ups and view their losses as paper losses? Perhaps they held *hitcoins? Perhaps they don't know that they're losers (i.e. they didn't send coins to FTX but their current exchange operator did and hasn't notified them--I'm looking at you, Gemini)

edited: or, perhaps the reason is as outlined by @BicycleB . Crypto was walled off from the financial system and thus the damages were retained within the crypto ecosystem.
« Last Edit: December 13, 2022, 05:27:19 PM by bwall »

Glenstache

  • Magnum Stache
  • ******
  • Posts: 3493
  • Age: 94
  • Location: Upper left corner
  • FI(lean) working on the "RE"
Re: What do you think of adding a low% of crypto allocation
« Reply #1442 on: December 13, 2022, 05:24:57 PM »
SEC charges disgraced crypto tycoon Sam Bankman-Fried with defrauding investors.

The report to Congress from the current FTX CEO was certainly entertaining. Amongst other managerial oddities, what little accounting FTX actually did was done on Quickbooks.
Quickbooks! They also apparently handled invoices, etc through Slack.

Glenstache

  • Magnum Stache
  • ******
  • Posts: 3493
  • Age: 94
  • Location: Upper left corner
  • FI(lean) working on the "RE"
Re: What do you think of adding a low% of crypto allocation
« Reply #1443 on: December 13, 2022, 05:40:05 PM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.
Weeks ago an FTX investor cursed on air he was so pissed off, and more recently Kraken's new CEO called Mr Bankman-Fried a "fraudster".  If you don't listen, that isn't silence.

I've also heard a couple of people complain about losses. However, not to the degree to be expected for multi-billion losses.

Perhaps those suffering loss are overseas and harder to find and report on? Wasn't FTX-Bahamas for ex-USA (offshore) account holders whereas the FTX-USA exchange was for the much smaller pool of USA based holders? Not sure.

Perhaps there are other reasons why we haven't heard much from loss-holders. Perhaps they participated in large run-ups and view their losses as paper losses? Perhaps they held *hitcoins? Perhaps they don't know that they're losers (i.e. they didn't send coins to FTX but their current exchange operator did and hasn't notified them--I'm looking at you, Gemini)

edited: or, perhaps the reason is as outlined by @BicycleB . Crypto was walled off from the financial system and thus the damages were retained within the crypto ecosystem.
Or maybe the big holders/losers are simply speaking through court filings.

On a parallel note, the SEC filing is an interesting read. It is striking how many tweets are included in the filing to illustrate points.
https://www.sec.gov/litigation/complaints/2022/comp-pr2022-219.pdf

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 6633
Re: What do you think of adding a low% of crypto allocation
« Reply #1444 on: December 14, 2022, 04:23:30 AM »
From the Nov 2021 peak to the start of Nov 2022, Bitcoin (BTC) lost 57% of its value (68,789.63 to 20,494.90).  After the FTX collapse, it fell roughly 20%.  If the FTX collapse is catastrophic as some claim, why only a 20% drop?
https://finance.yahoo.com/quote/BTC-USD/

It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).

LateStarter

  • Bristles
  • ***
  • Posts: 266
  • Location: UK
Re: What do you think of adding a low% of crypto allocation
« Reply #1445 on: December 14, 2022, 06:20:05 AM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money.

Remember the 'street riots' that followed the regulated-dollar-Madoff shitshow ? No, me neither.

The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

or (c) embarrassed about leaving themselves exposed to such risk by holding significant funds on an unregulated exchange in a wild west sector, and taken it on the chin as a hard lesson.
This would certainly be me if I'd been caught up in it.

At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).

It's very clear (to me, at least) that most of crypto is pretty scammy and fraudy. Caveat Emptor - and the further from regulation and the further into the weeds you venture, the moreso.

ChpBstrd

  • Walrus Stache
  • *******
  • Posts: 6662
  • Location: A poor and backward Southern state known as minimum wage country
Re: What do you think of adding a low% of crypto allocation
« Reply #1446 on: December 14, 2022, 08:28:54 AM »
I'm still waiting for the street riots that would occur if an actual dollar-bank pulled something like this and lost their depositors' money. The silence is deafening, which suggests depositors were (a) largely comprised of criminals, or (b) fully aware they were participating in a greater-fool gamble and had already accepted the possibility of losing their entire investment.

At this point, after a decade of suspicious hacks, rug pulls, pump-and-dumps, and outright fraud, is it still reasonable to think by default that ANY company strictly in this space is legitimate? Or is it more rational to assume they are not legitimate until proven otherwise (and IDK how you'd prove legitimacy because all records can be falsified).
Well, I think it is rational to think that there is a high risk profile associated with crypto unless there is a greater degree of control on it. But, that greater degree of control is regulation, which crypto has been allergic to almost by definition and intent.

Good point, @Glenstache!

Fwiw - recently an article appeared in my email from a source I don't recall seeing before. It alleges that despite crypto community efforts, US regulators have been on the case, primarily due to current SEC chair Gary Gensler who as professor studied crypto before the SEC job. The effect, it says, has been a huge regulatory success story in that SEC blocked crypto from fatally infecting the wider financial system.

Details:

1. Like you said, crypto has largely sought to avoid and minimize regulation
2. Bankman-Fried lobbied for light regulation to avoid heavier regulation
3. SEC under Gensler has, with increasing detail and success, repeatedly asserted that:

a. crypto is securities, therefore under SEC jurisdiction
b. crypto exchanges need to conform to securities law
c. crypto "banks" need to follow securities law (and I assume banking laws) but should not receive bank-like assistance from government

4. Additionally, and consequentially, accounting standards have been updated to require banks that accept crypto to detail those holdings and hold sufficient cash to redeem in dollars any crypto received

Results include:
5. 3a above is increasingly if not universally accepted
6. 3b above is increasingly accepted as a principle; implementation varies but is in process and has had some positive effect (effect is implied by the article, not directly stated)
7. due to 3c above, the number of crypto banks is limited and normally they have not received bank-like assistance
8. due to 4 above and other factors, several crypto companies tried to get stock listings but basically were stymied, preventing additional crypto acceptance that could have led to greater danger
9. overall, the SEC's actions walled off the bulk of the conventional financial system from cypto effectively enough the keep the financial system safe

https://www.economicliberties.us/our-work/gary-gensler-got-it-right/?emci=ce3aec84-ff7a-ed11-819c-000d3a9eb474&emdi=e52317f0-097b-ed11-819c-000d3a9eb474&ceid=25082919

TL;DR - look! crypto is collapsing but conventional finance isn't! (not due to crypto, anyway) and it could have, but government blocked the infection from wounding the system and that's a regulatory success.
These are very good points. We have to keep in mind that multiple members of Congress have received "donations" from the crypto industry, including FTX, and in return they've opposed all meaningful regulation of the sector and tried to get crypto-assets de-regulated under a "commodities" label.
https://www.washingtonpost.com/business/2022/12/01/senate-agriculture-ftx-hearing-crypto/

Eight of our illustrious lawmakers sent Gensler a letter in March telling Gensler he had no authority to investigate crypto exchanges like FTX (an investigation was already ongoing at that time).
https://onlysky.media/mclark/bankman-fried-arrested-now-whats-to-be-done-about-ponzinomics/?__vfz=medium%3Dtray_notification#vf-7630696c-a3c5-43a8-91d2-6cc5ca23a22f

So Gensler was politically constrained from going too hard after fraud at FTX, but what he could do is wall off the dollar-based banking system so that the coming implosion would not become contagious. Perhaps he is due our gratitude for running megabanks out of the space, despite not being able to stop the scam itself. Gensler is about to be hauled before Congress and it will be an interesting dynamic as members of Congress like Tom Emmer who tried to undercut his investigation of FTX will no doubt boldly blame him for not doing enough.

BicycleB

  • Walrus Stache
  • *******
  • Posts: 5263
  • Location: Coolest Neighborhood on Earth, They Say
  • Older than the internet, but not wiser... yet
Re: What do you think of adding a low% of crypto allocation
« Reply #1447 on: December 14, 2022, 12:04:33 PM »

It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).

What is the $84 billion figure from? I agree with you that $84B seems small compared to the overall financial system. YCharts today asserts BTC market cap is down about $580B since a year ago. Presumably the total including other coins is larger. For discussing systemic risk, wouldn't the right number be the systemic one?

https://ycharts.com/indicators/bitcoin_market_cap#:~:text=Basic%20Info,65.17%25%20from%20one%20year%20ago.

Regardless of the number, personally I've been imagining that the issue is not the dollar amount, but instead one or more of the following (yes, some of them overlap):

1. Normal banks are backstopped by the govt to fully replace losses; if this guarantee were applied to crypto, the resulting increase in confidence might have allowed much larger dollar amounts to be at risk
2. BTC market cap and crypto cap generally are to some extent notional; no one paid full price for all the coins. But if banks were backstopped on the losses, suddenly "real" money in the broader financial system is at stake.
3. On some level, point 2 implies that the non-crypto-buying public would pay for the losses of crypto buyers
4. To the extent that creation and loss of nominal crypto are potentially unlimited, a rational observer could conclude that a crypto collapse would be potentially unlimited, therefore more capable of causing systemic collapse
5. However you slice it, putting the govt on the hook for crypto means potential systemic risk because it's an additional risk factor
6. Any factor can cause a panic, but since crypto is risky, both allowing its spread and putting the govt on the hook to repay it would logically increase the risk of panic

Prior this, prior to buying any crypto, I had considered the question of systemic risk and also how big could crypto get and tried to assess them by comparing crypto "cap" to measurements of other financial quantities, such as dollar value of gold in existence, gold used as bullion (if it's "digital gold", which is bigger?), dollars of paper currency, dollars in bank accounts, notional value of derivative contracts, market cap of stocks in US market, market cap of global stock market. Using $2T as rough peak for crypto, it seemed that the number is large relative to gold, smallish but potentially material compared to US stocks (less than 10%), small compared to total dollars in accounts, very small compared to estimated derivatives.

From the above paragraph's comparisons, I then supposed that if crypto were to crash the system, it would be due to becoming a totem of panic or by triggering a chain of derivative contract defaults, not probably as a direct result of crypto value itself disappearing. It seemed to be that crypto had absorbed speculative energy that might instead have gone to gold or the stock market, but had not created a value amount similar to or larger than the rest of the system, as happened with tulips in the tulip mania if I understand correctly. A 10x increase would put crypto close the US stock market in value and represent a much larger risk, including likely large distortions of investment instead of the relatively small ones to date. So far it mostly was soaking up uninformed speculation, a perpetual part of the system, without expanding the quantity of the system's apparent speculative energy to some extraordinary level. So I figured greed could ramp up another 10x of crypto increases before reaching tulip levels, and maybe 3x or 5x before even being likely to trigger panic except at a symbolic level - unless it triggered chains of derivative defaults, a possibility that I couldn't estimate and which could already be in play.

With all that said, it's the qualitative aspects that seemed powerful in the article, so I quoted it. Personally, I felt the significance wasn't so much about crypto per se as it was to inform readers that a govt agency has been doing its job to limit risks. I don't know if the author's implication that Gensler really saved the system is correct but I think it's important he did the kind of things he was supposed to be doing.
« Last Edit: December 14, 2022, 12:22:59 PM by BicycleB »

MustacheAndaHalf

  • Walrus Stache
  • *******
  • Posts: 6633
Re: What do you think of adding a low% of crypto allocation
« Reply #1448 on: December 14, 2022, 12:29:54 PM »
It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).
What is the $84 billion figure from? YCharts today asserts BTC market cap is down about $580B since a year ago. Presumably the total including other coins is larger. For discussing systemic risk, wouldn't the right number be the systemic one?

You dropped the first paragraph of my post, which held my main point:

From the Nov 2021 peak to the start of Nov 2022, Bitcoin (BTC) lost 57% of its value (68,789.63 to 20,494.90).  After the FTX collapse, it fell roughly 20%.  If the FTX collapse is catastrophic as some claim, why only a 20% drop?
https://finance.yahoo.com/quote/BTC-USD/

My post was responding to those who point to the FTX collapse as a systemic problem, which means the recent 20% drop (now 12%) in BTC, and not the 57% drop before FTX collapsed.

I divided the market cap of BTC by the current price to get the number of Bitcoins (21,014,822), and then multiplied that by the price drop ($20.5k to $16.5k = $4,000 drop roughly).  From before the FTX collapse to afterwards was a loss of $84 billion to BTC's market cap, roughly.
https://coinmarketcap.com/currencies/bitcoin/

The recent discussions all centered on FTX, not events before that.  The $84 billion of BTC market cap loss from FTX is less than the $95 billion the Fed is withdrawing from the bond markets (quantitative tightening) every month.
https://www.bloomberg.com/news/articles/2022-08-29/qt-to-hit-full-stride-with-fed-shrinking-9-trillion-portfolio
« Last Edit: December 14, 2022, 12:56:34 PM by MustacheAndaHalf »

BicycleB

  • Walrus Stache
  • *******
  • Posts: 5263
  • Location: Coolest Neighborhood on Earth, They Say
  • Older than the internet, but not wiser... yet
Re: What do you think of adding a low% of crypto allocation
« Reply #1449 on: December 14, 2022, 01:52:58 PM »
It's also not clear why the loss of $84 billion of BTC market cap would put the financial system at risk, when the Fed removes that much money from the bond markets every month (QT).
What is the $84 billion figure from? YCharts today asserts BTC market cap is down about $580B since a year ago. Presumably the total including other coins is larger. For discussing systemic risk, wouldn't the right number be the systemic one?

You dropped the first paragraph of my post, which held my main point:

From the Nov 2021 peak to the start of Nov 2022, Bitcoin (BTC) lost 57% of its value (68,789.63 to 20,494.90).  After the FTX collapse, it fell roughly 20%.  If the FTX collapse is catastrophic as some claim, why only a 20% drop?
https://finance.yahoo.com/quote/BTC-USD/

My post was responding to those who point to the FTX collapse as a systemic problem, which means the recent 20% drop (now 12%) in BTC, and not the 57% drop before FTX collapsed.

I divided the market cap of BTC by the current price to get the number of Bitcoins (21,014,822), and then multiplied that by the price drop ($20.5k to $16.5k = $4,000 drop roughly).  From before the FTX collapse to afterwards was a loss of $84 billion to BTC's market cap, roughly.
https://coinmarketcap.com/currencies/bitcoin/

The recent discussions all centered on FTX, not events before that.  The $84 billion of BTC market cap loss from FTX is less than the $95 billion the Fed is withdrawing from the bond markets (quantitative tightening) every month.
https://www.bloomberg.com/news/articles/2022-08-29/qt-to-hit-full-stride-with-fed-shrinking-9-trillion-portfolio

I dropped the first paragraph of your post because it didn't raise any questions in my mind that felt useful to address, and I think it can stand just fine. No disrespect intended.

Thanks for the explanation of the $84B. It clarifies to me that we are (or seem to be) thinking of different things as "the system", which I didn't realize at first; my apology. You're focused on BTX and its effect on BTC, if I understand you. And your calculation seems very logical.

My line of comment took as the main context a different commenter's remark that crypto has been generally regulation averse (commenter used different words). Thus when I address systemic risk, I mean risk to the broader financial system. Sorry for not making myself clear.

Fwiw, I think your BTC point re FTX is cogent. I myself have been quite intrigued by the relative stability of both BTC and ETH since FTX's fall. Is its stability evidence that exchanges have little influence on BTC or ETH prices, and investors of those coins should now have little to fear? Are other exchanges propping up the prices, but they will fall after after other exchange collapses? Is some other factor propping up the prices, and if so, will they collapse or have they bottomed?
« Last Edit: December 14, 2022, 02:01:10 PM by BicycleB »