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Off-Topic Stock Market & Crypto Discussion

Crypto’s Link to Stocks Is Fraying. This Slump Will Test the Floor.​

The current market selloff suggests that when stocks sneeze, cryptocurrencies can come down with something worse than a cold.

Crypto’s correlation with stocks had become well established last year as institutional investors piled into the assets and it became more established. The link managed to hold even after Russia’s invasion of Ukraine roiled markets in February.

But Bitcoin, the first and biggest cryptocurrency, is down about 34% this year, having slipped below $30,000 on Tuesday. By contrast, the Nasdaq is down 25%. Crypto intelligence provider Glassnode reports that some 40% of Bitcoin holders are now underwater.

Other digital assets have fared worse. Ether, the second-largest cryptocurrency, slipped to its lowest since 2021. TerraUSD, a stablecoin intended to be closely tied to the U.S. dollar, fell as low as 30 cents. The cryptocurrency that backs it, Luna, has also plummeted.

Shares of Coinbase, the platform for crypto trading, reported a wider than expected loss on Wednesday. Its shares tanked, falling 83% from their all-time high in November.

Everyone expects crypto to be volatile. That is part of its charm, and has allowed many traders to profit from it. What goes up very quickly can also sink fast. Bank of England Governor Andrew Bailey warned investors to only get into crypto if they are prepared to lose all their money.

The question was always whether crypto assets are a bubble whose value can sink to zero when market optimism evaporates.

We may have an answer in the very near future.
 
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JMG said:
I think stablecoins are totally dead after what is happening with the Terra ecosystem. The amount of money lost will never be forgotten.

Completely sick to my stomach.

Delegating Luna was a scam from the jump - terrible idea and completely trapped everyone from escaping before the undelegation period ended.
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The difference is that Terra is a stablecoin based on an algorithm that pegs it to a dollar but is backed and collateralized by LUNA tokens. All other algorithm stable coins have followed a similar path Luna has down to 0 and we dont hear about them anymore. The other top stablecoins are pegged to the dollar and backed by dollar reserves. USDT is the scariest because it is unknown if they have the money for their market cap. DAI, USDC and BUSD all post balance sheets showing the money to back the coins. Having said all this, hoping Do Kwon finds a solution because .95 cents was a price too appealing to pass up for a bag of LUNA token. The ecosystem is still very large and sophisticated.
 
Gentlemen, one last porst and I will let you go back to your thread. Some very smart and wealthy individuals have told me "never fight the Fed Reserve"; if they are tightening, you reduce risk, if they are easing, you increase risk.

Its the opposite for the Federal government, its generally smarter to fight them. Many of the laws are either stupid or poorly written, and they tend to have the OPPOSITE effect of what they intended.

I know the second paragraph will rustle a few jimmies, so here are just a few examples:

The Feds cracked down on IPO's after the dotcom crash, but made it so difficult and painful for a company to go public that it created a whole new industry, the pre-ipo private equity funds. So now, instead of the average investor raking in IPO profits, its wealthy investors who get most of the vig.

The war on oil: By restricting new leases, passing new climate laws, threatening the companies, admonishing banks not to lend to oil companies, etc. etc. all that has happened is that oil companies are now extremely profitable but are hesitant to drill, so we have a national security and inflation problem. So the smart investors have been riding the oil boom, which is likely to continue until the government changes its tune, which it wont until 2024, at the earliest.

After the Great Recession, the Feds dramatically tightened the rules on new construction, mortgages, etc. States then added additional rules, studies, permitting requirements and other hurdles. As with the first two examples, they made it so painful to build new residential housing that builders not only built a lot less, but it was mostly luxury housing, where they could make the most profit and the borrowers didnt need mortgages and/or could get easily approved.

Same with rental residential, builders built less and only built class A housing, so nowhere near enough to meet demand. I saw one study recently that indicated that to reach supply/demand equilibrium, two million units a year would need to be built for 10 years, and we have rarely, if ever, built above one million.

p.s. If you put two and two together, if the government REALLY wanted to reduce inflation, they would have to address the second and third examples, which again, is not happening until 2024, at the earliest.
 
SpikeUM said:
Gentlemen, one last porst and I will let you go back to your thread. Some very smart and wealthy individuals have told me "never fight the Fed Reserve"; if they are tightening, you reduce risk, if they are easing, you increase risk.

Its the opposite for the Federal government, its generally smarter to fight them. Many of the laws are either stupid or poorly written, and they tend to have the OPPOSITE effect of what they intended.

I know the second paragraph will rustle a few jimmies, so here are just a few examples:

The Feds cracked down on IPO's after the dotcom crash, but made it so difficult and painful for a company to go public that it created a whole new industry, the pre-ipo private equity funds. So now, instead of the average investor raking in IPO profits, its wealthy investors who get most of the vig.

The war on oil: By restricting new leases, passing new climate laws, threatening the companies, admonishing banks not to lend to oil companies, etc. etc. all that has happened is that oil companies are now extremely profitable but are hesitant to drill, so we have a national security and inflation problem. So the smart investors have been riding the oil boom, which is likely to continue until the government changes its tune, which it wont until 2024, at the earliest.

After the Great Recession, the Feds dramatically tightened the rules on new construction, mortgages, etc. States then added additional rules, studies, permitting requirements and other hurdles. As with the first two examples, they made it so painful to build new residential housing that builders not only built a lot less, but it was mostly luxury housing, where they could make the most profit and the borrowers didnt need mortgages and/or could get easily approved.

Same with rental residential, builders built less and only built class A housing, so nowhere near enough to meet demand. I saw one study recently that indicated that to reach supply/demand equilibrium, two million units a year would need to be built for 10 years, and we have rarely, if ever, built above one million.

p.s. If you put two and two together, if the government REALLY wanted to reduce inflation, they would have to address the second and third examples, which again, is not happening until 2024, at the earliest.
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Remember when Bush W was pushing bio-fuels?….lol
Capitalism, supply and demand…How long has it been since the oil companies made big profits? It’s been awhile. Well now it’s their time. Everything has been kept artificially low and now the genie is out of the bottle. Just think long-term. There are very strong companies at or near lows…I’m buying..eventually inflation will peak…yes it hurts.
Cash is king.
 
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SpikeUM said:
Gentlemen, one last porst and I will let you go back to your thread. Some very smart and wealthy individuals have told me "never fight the Fed Reserve"; if they are tightening, you reduce risk, if they are easing, you increase risk.

Its the opposite for the Federal government, its generally smarter to fight them. Many of the laws are either stupid or poorly written, and they tend to have the OPPOSITE effect of what they intended.

I know the second paragraph will rustle a few jimmies, so here are just a few examples:

The Feds cracked down on IPO's after the dotcom crash, but made it so difficult and painful for a company to go public that it created a whole new industry, the pre-ipo private equity funds. So now, instead of the average investor raking in IPO profits, its wealthy investors who get most of the vig.

The war on oil: By restricting new leases, passing new climate laws, threatening the companies, admonishing banks not to lend to oil companies, etc. etc. all that has happened is that oil companies are now extremely profitable but are hesitant to drill, so we have a national security and inflation problem. So the smart investors have been riding the oil boom, which is likely to continue until the government changes its tune, which it wont until 2024, at the earliest.

After the Great Recession, the Feds dramatically tightened the rules on new construction, mortgages, etc. States then added additional rules, studies, permitting requirements and other hurdles. As with the first two examples, they made it so painful to build new residential housing that builders not only built a lot less, but it was mostly luxury housing, where they could make the most profit and the borrowers didnt need mortgages and/or could get easily approved.

Same with rental residential, builders built less and only built class A housing, so nowhere near enough to meet demand. I saw one study recently that indicated that to reach supply/demand equilibrium, two million units a year would need to be built for 10 years, and we have rarely, if ever, built above one million.

p.s. If you put two and two together, if the government REALLY wanted to reduce inflation, they would have to address the second and third examples, which again, is not happening until 2024, at the earliest.
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For sure on the bold part. Ironic, oil companies get called greedy all the time by the current admin, yet our government would have us believe these greedy corporations aren't drilling, yet never lay out nor explain the reason why they aren't. Seems contradictory to me.
 
nobeastofburden said:
For sure on the bold part. Ironic, oil companies get called greedy all the time by the current admin, yet our government would have us believe these greedy corporations aren't drilling, yet never lay out nor explain the reason why they aren't. Seems contradictory to me.
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I agree - whatever your position is on global warming/climate change, etc. etc., ECONOMICALLY and NATIONAL SECURITY wise, we have to drill, drill, drill. As I wrote above, working on alternative fuels can continue or even accelerate concurrently with that drilling.
 
I have a question..With all this doomsday talk about inflation, stagflation, shortages, war, deficits..Why hasn't gold [safe haven] moved up?
 
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Kjdcanefan said:
The difference is that Terra is a stablecoin based on an algorithm that pegs it to a dollar but is backed and collateralized by LUNA tokens. All other algorithm stable coins have followed a similar path Luna has down to 0 and we dont hear about them anymore. The other top stablecoins are pegged to the dollar and backed by dollar reserves. USDT is the scariest because it is unknown if they have the money for their market cap. DAI, USDC and BUSD all post balance sheets showing the money to back the coins. Having said all this, hoping Do Kwon finds a solution because .95 cents was a price too appealing to pass up for a bag of LUNA token. The ecosystem is still very large and sophisticated.
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Do Kwon just got outed for being a part of the Basis Coin failure. This is his second failed stable coin. Them elastic joints are bound to be exploited. We saw what happened with Titan. Luckily I only lost 5800, I know someone that got liquidated and lost 40k.

Think this kills all layer 0/1s eventually and if you like BTC this is what the space needed. Well maybe ether survives. Too much money flooding into projects that might be but are bereft with bugs and holes, and that’s not even getting into the scaling issues. BTC works for what it was intended to do.
 
mr.h said:
I’m guessing rate hikes and tightening has a lot to do with it.
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You answered your own question. Having written that, gold is up about 2% for the year, vs. Crypto down 50%+, Nasdaq down 25%+, S&P and most bond indices down 15%+, etc. etc. Probably the third best hard asset, after real estate and oil.
 
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bobbydigius said:
Do Kwon just got outed for being a part of the Basis Coin failure. This is his second failed stable coin. Them elastic joints are bound to be exploited. We saw what happened with Titan. Luckily I only lost 5800, I know someone that got liquidated and lost 40k.

Think this kills all layer 0/1s eventually and if you like BTC this is what the space needed. Well maybe ether survives. Too much money flooding into projects that might be but are bereft with bugs and holes, and that’s not even getting into the scaling issues. BTC works for what it was intended to do.
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BTC is only "safer" because of the massive amount of money it would take to invade the system. This has very little to do with PoW being safer vs PoS. If BTC wasn't the first crypto created and there was another before it that stole its thunder, and BTC had a market cap of say 100M, then it would be exposed to the same type of invasion that LUNA received. Ether will survive, Cardano will survive. Luna may yet recover, I doubt it will ever be in the 100 dollar range again though.
 
Kjdcanefan said:
BTC is only "safer" because of the massive amount of money it would take to invade the system. This has very little to do with PoW being safer vs PoS. If BTC wasn't the first crypto created and there was another before it that stole its thunder, and BTC had a market cap of say 100M, then it would be exposed to the same type of invasion that LUNA received. Ether will survive, Cardano will survive. Luna may yet recover, I doubt it will ever be in the 100 dollar range again though.
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While you are correct it’s overall MC being helpful you are wrong that it’s the same thing. Let’s take a step back first though.

I never said anything about PoW vs PoS, that’s a different argument that pertains to security and hacking and yes PoW is better in that case. PoS has major problems with it and isn’t battle tested and the efficiency thing is way over blown.

They tie in because all these projects have great ideas in theory but they are not in practice. DeFi in general is a **** idea in practice but sounds great on paper. All these coins aren’t sustainable.

In terms of Terra, I love the ecosystem, nerds were/are building cool things on it. The stable coin was a great idea but once again theory. You had people staking UST and getting ridiculous yields but it was all a house of cards. Reality is that everything hinges on demand. The elastic stable coins or algo stable will always fall apart when the market gets shaky and someone puts some pressure on it.

People lost a ton of money here because so many were leveraged. This was a disaster that frankly isn’t over yet. If BTC dips below 20k, the margin calls will make this look like a tiny blip.
 
Five Silver Linings From Barron's

The inflation data released on Wednesday jolted markets. Coming in at 8.3%, the rate declined for the first time in eight months but was higher than economists expected.

While it may have peaked, the squeeze will continue. But investors looking for silver linings can still find them.

First, the stronger-then-expected April figure leaves no uncertainty about what the Federal Reserve will do next. It will almost definitely continue with a series of half-point hikes. If the inflation rate fails to keep falling, three-quarter point hikes may come back on the table. No one needs to wonder if officials are about to pause to see how the fastest tightening in decades is playing out.

Next, if the Fed is moving hard and fast now it might mean that it won’t have to raise rates quite as high at the end of the cycle. To borrow former Bundesbank President Otto Pöhl’s metaphor, putting the cap on the toothpaste now is better than trying to put it back in the tube later.
Third, the central bank might be pleased to see the market selloff as a sign that investors expect tighter financial conditions. That is another reason rates might not have to rise as high as they otherwise would.

There is also a positive from the rising energy prices. They remain a strong component of inflation and may be doing the Fed’s work for it. Consumers having to spend more on gasoline gives them less to spend on other things, crimping overall demand.
About $2 trillion has come out of digital assets since November, according to data from CoinMarketCap. That money won’t be sitting in mattresses. So a fifth positive is it is likely that those funds will find their way into stocks and bonds, fueling any rebound.
 
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CFLCane said:
Copper down 15%, Aluminum down 18% since this post. S&P down 8% DJI down 7% in same time frame. Any inflation benefit from commodity prices plummeting won't be seen for awhile and will still be muted from supply chain problems. Expect more blood.
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Copper and aluminum continuing their slide down all week.
 
bobbydigius said:
While you are correct it’s overall MC being helpful you are wrong that it’s the same thing. Let’s take a step back first though.

I never said anything about PoW vs PoS, that’s a different argument that pertains to security and hacking and yes PoW is better in that case. PoS has major problems with it and isn’t battle tested and the efficiency thing is way over blown.

They tie in because all these projects have great ideas in theory but they are not in practice. DeFi in general is a **** idea in practice but sounds great on paper. All these coins aren’t sustainable.

In terms of Terra, I love the ecosystem, nerds were/are building cool things on it. The stable coin was a great idea but once again theory. You had people staking UST and getting ridiculous yields but it was all a house of cards. Reality is that everything hinges on demand. The elastic stable coins or algo stable will always fall apart when the market gets shaky and someone puts some pressure on it.

People lost a ton of money here because so many were leveraged. This was a disaster that frankly isn’t over yet. If BTC dips below 20k, the margin calls will make this look like a tiny blip.
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I only bring up PoW vs PoS because it is a fundamental difference between BTC and most other blockchains. The terra ecosystem was great and very sophisticated, but that 18% yield on stablecoins was insane I agree. DeFi is a great concept and I like it, I think it is still young and needs some more tinkering.g
 
Kjdcanefan said:
I only bring up PoW vs PoS because it is a fundamental difference between BTC and most other blockchains. The terra ecosystem was great and very sophisticated, but that 18% yield on stablecoins was insane I agree. DeFi is a great concept and I like it, I think it is still young and needs some more tinkering.g
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Id like to think anyone jumping into these conversations already knows that. DeFi has major problems to, its way too clunky. I think overall for the purposes it set out to accomplish, I think those things are beyond us at the moment. Im also of the thinking that when we finally kinda figure it out, we will discover that centralized is not always best. Im not married to that theory but I think its more probable than not. Blockchain has kinda made everyone go head over heels for anything and everything decentralized and it does always work. Decentralized means something will always be slow, at least it means that with our tech confines at this moment. I am ultimately a BTC maxi, think it is a gift bestowed upon us. Simple yet the foundation is strong and stable enough to build upon. At the end of the day, it gives you a peer to peer exchange currency, although slow as a snail and allows you to store wealth.
 
I am a dumb poor that has a hard time understanding or even conceptualizing this crypto ****. But having read a lot of these porsts I am following the Luna thing.

The 17-19% interest returns that CE was touting for Luna or terra or ust. Are the people who did that the ones I’m reading about staking and couldn’t sell on the way down and lost it all?
 
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