Crypto comes apart

See the latest Australian dollar analysis here:

Macro Afternoon

Did get yourself some stablecoin? I hope not:

As a $15bn stablecoin, Terra is supposed to sustain its value to the USD one-to-one.

Unbelievably, at least some of its capital is…wait for it…secured in Bitcoin!

As BTC comes apart so too does the pyramid scheme. This might be the ugliest chart I have ever seen:

With zero regulatory scrutiny and inflation still hot, there is no way that the Fed can bail out the crypto complex.

But it is going to be fun to watch the segment beg for it.

Houses and Holes
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  1. Maybe this is the start of its mass adoption (which will happen after it crashes). Its true value is the marginal cost of validating the ledger, nothing more or less. The blockchain and the use cases of the chain is where the value is. With that said, the 2 biggest coins (BTC and Ether by Mkt Cap) are terrible replacements for all existing fiat and institutional offerings. Too many processing capacity limits and huge energy (gas) costs. Our local eftpos network makes them look pathetic on both fronts.

    We are also finding out that the “distributed ledger making it resilient” claim is now where near as resilient as most have believed. ASX is moving there Chess system to blockchain, its a great example of a practical use case with a private chain and enterprise backing. But guess what, they dont need to issue a speculative coin to make themselves rich.

    The adults will take over soon.

      • Lighting is a layer above BTC and off ledger for a period and effectively negates many of the benefits/claims associated with the original BTC. Its not immutable if its not on chain and because of this it is open to fraud which has to be monitored (i.e. trusted parties). It has to aggregate transactions and then settle a bunch of transactions in one transaction on BTC.

        My point stands, BTC and Ether have not been built as standalone protocols to address issues at scale and rely on secondary protocols with all their dependencies and limitations to allow the speculators to justify the insane prices.

        Remember, the whole pitch of BTC and Ether was an immutable distributed ledger technology which would solve fundamental issues with traditional fiat processes and systems of trust.

  2. Do Crypto coins suffer from Inflation, like Fiat money? Seems that way, though they reckon it’s solving Sodoku Puzzles to generate new coins. Better to buy Gold than BitCoin IMHO.

  3. Long term hodlers are still sitting pretty but its the recent participants (say early 2020 on…) who are getting totally rekt. Real people are getting really hurt. Really, really hurt. Deaths will result. I blame the authorities who allowed this insane clown casino (stable mega printing, wash trading, staking, NFTs, the even dumber stuff I havent kept up with) to snowball and suck in so many poor fools. This is on their shoulders. They should have done something about this years ago. Criminal negligence.

    • If you invested more than you’re willing to lose in Crypto, that’s on you and your stupidity (from the person in that link). I always said never invest more than you’re willing to lose. I’m willing to lose everything I put into it and I’m financially stable, ahead on the mortgage, not behind on any bills, and carrying minimal debt. Crypto for me is play money. It could easily have been spent on booze or other frivolous activity. This is a free market in action and I don’t want to see any kind of intervention.

  4. If you want to buy any illicit drugs the consideration require is XMR, banned in the Aus for its uber privacy. BTC was popular for illicit use, it will be it’s downfall because illicit vendors don’t except BTC.

  5. It’s quite astonishing how the commentary around crypto repeats itself every cycle. None of you have anything new to say. Cryptos are the only free markets there are. Of course they’re going to be volatile, and there will be very good reasons for that. Terra is $15bn…whoop de doo. Tether is $83 trn. This is a storm in a teacup and will probably result in a better stablecoin born from its ashes. Truly free markets have a value all their own. How much nay saying would a nay sayer say if a nay sayer could say nay?

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