As far as BTC price goes (staying on topic), every dollar in a stable coin (a stable is where a bull shits) is a dollar not invested in, not supporting, the price of Bitcoin. These stable coins are making it easy to treat the cryptoverse the way Wall Street treats the stockverse. They "go to cash" at the slightest inkling of a problem economy that might tank the market. Hedging, trading, balancing. Whatever they want to call it, stable coins make that approach easy to duplicate within the cryptoverse. Not surprising then, to see this strong correlation between BTC and the Nasdaq these days. I suspect USD "coins" are popular because it's not easy for Wall Street to officially convert to the cryptoverse, and back again to USD world. So they want a mode, in the cryptoverse, to mimic USD mode on Wall Street. That is, when they move billions into the cryptoverse, they want/need a local cash mode, so they don't have to slosh those billions back and forth...perhaps to stay under regulation radar. If it wasn't so convenient to convert, there would probably be a lot less correlation between BTC and Wall Street, that is, between BTC and whatever effect the FED is having on stocks. USD mimicing coins (aka "stable" coins) facilitate trading. Ok fine. But they do give more power to traders to dance circles around holders, whose holding gives traders more power by giving them fewer coins to push around (less liquidity). It appears the main ideology of the traders is correlated with FED effects on the economy and stocks, and less on the steadily increasing metrics of the miners, holders, and users of BTC...not to mention it's value as a store of value. So then, are these "coins" really desirable at all? I mean, until i can walk into Wells Fargo with a pocket full of USDT on a Ledger or some other USB stick, and walk out with USD no questions asked, how "convertible" are these coins really? The FED has never been audited. Why do we tolerate audit resistant points of failure within the cryptoverse? It seems people are addicted to the opacity of the genesis of magic money, rather than actual white papers and open source. [edit] So the only actual "backed" coin i can see is one actually generated and regulated by the US government. I would not care if the current brands were regulated out of existence, if they can't, like Bitcoin, carry their own water up the hill.
For end users of these stable coins perhaps their desirability over USD are the dodgy high interest rate on offer, like 10 to 20%. I cant think an other reason why anyone would want to hold them over plain old USD.
Man, what platform are you on? I could be cleaning up arbing buys off of your platform I wish I had access to your mythical quotes screen I could have bought some at $25K
The great crypto ‘ponzi scheme’ finally crashes Bitcoin has lost $800 billion since its peak last year with the risk that more losses are to come. It is world that relies on the greater fool theory: that there is always a lesser mortal out there willing to buy some worthless crypto off you at a higher price. Christopher Joye Columnist May 13, 2022 As a result of sharply higher inflation and interest rates, the great unregulated crypto-currency “ponzi scheme” has finally started to unravel, as we warned it might in December 2021 and January 2022. In concert with its highly correlated listed equities masters – the S&P 500 and Nasdaq Composite indices – bitcoin has plummeted 63 per cent from a peak of $US68,991 in late 2021 to a low of just $US25,424 this week. At this nadir, bitcoin’s market capitalisation had shrunk by $US800 billion, prompting some investors to start referring to it as simply “bitcon”. Bitcoin’s price has collapsed from $68,991 in late 2021 to $25,424 with US$20,000 on the horizon for short-sellers. Bloomberg. It is certainly a hedge fund’s dream with droves of retail investors beguiled by a preternatural “buy-the-dip” reflex only to see more sophisticated short-sellers pummel crypto-currencies ever-lower. Twitter has been awash with rumours that powerful hedge funds, including Ken Griffin’s legendary Citadel, have led the waves of short-selling that systematically turn these rebounds into punishing dead-count-bounces. These allegations have, nonetheless, been denied by Griffin’s independent brokerage firm, Citadel Securities (although notably not by his hedge fund, Citadel). Even more sensationally, so-called “stable coins”, which are supposed to be pegged to specific currencies, such as the US dollar, and trade dollar-for-dollar with them, have collapsed as investors belatedly question the quality of the unstable assets (or collateral) backing these purportedly safe investments. The TerraUSD stable coin, which is remarkably backed by bitcoin, used to trade consistently at $US1. In the past week, it has plunged 73 per cent to a low of just 27¢ after the value of its collateral had dropped like a stone. Some $US14 billion of TerraUSD value has vaporised as a result. It beggars belief that these financial products have been pushed on naive consumers –that have little-to-no financial literacy – without a shred of regulatory protection in place. The vast crypto ponzi schemes make the sharemarket “boiler-rooms” in the 1980s and 1990s (popularised by The Wolf on Wall Street film) look positively trivial in comparison! Global regulators, including the SEC in the US, the FCA in the UK, and ASIC in Australia, have all been missing-in-action as the crypto-currency ponzi has exploded. Terra’s price has collapsed from its US$1 peg with the USD to a low of US27c. Source: CoinMarketCap CoinMarketCap TerraUSD’s market cap has been slashed from US$18.8bn to US$4.75bn CoinMarketCap As we explained in January in a piece that argued crypto-currencies could become a 21st century version of the great Tulip Bulb Bubble, the key drivers of the crypto craze were interest rates on conventional cash (eg, bank deposits) going to zero during the pandemic while at the same time governments poured trillions of dollars of cash into households’ savings accounts in an effort to stimulate greater spending, investment and speculation. Animal spirits were certainly liberated, as all asset-classes soared to record highs. Yet as these forces now reverse as interest rates sky-rocket (making cash look suddenly appealing) and governments withdraw their stimulus measures, crypto-currencies have proven to have little value beyond the “hopium” that investors can convince others to impute a higher price to them. Five crypto myths debunked The likes of bitcoin and Ethereum were serially spruiked to punters on the basis of several key sales propositions, all of which have been debunked. The first popular idea was that crypto-currencies were a tractable hedge against a bout of inflation. And yet since the advent of sustained inflation, these non-income producing and highly speculative assets have had their valuations torched. A second narrative was that crypto-currencies were a powerful portfolio diversifier, protecting investors against declines in the value of other asset-classes, like equities and bonds. In practice, however, crypto-currencies have proven to be highly correlated both with one another and with listed equities, amplifying traditional portfolio risks rather than reducing them. A third pitch was that crypto-currencies would serve as an alternative (and presumably safe) store of wealth. In the first serious inflationary stress-test that they have faced, crypto-currencies have failed miserably, inflicting massive losses on households. If you were worried about inflation and equity risks, crypto-currencies have been the worst possible place to hide. You would have been much better off simply putting 100 per cent of your money in the Nasdaq Composite Index. A fourth angle was that the emergence of “stable coins” could protect investors against the extreme volatility of conventional crypto-currencies by pegging their value to a specific currency, such as the US dollar, and trading $US1 for $US1 with that currency. But as investors tragically discovered this week, stable coins are also a con, because they have been backed by the most dodgy collateral imaginable: other crypto-currencies! Witness the 73 per cent decline in the value of the TerraUSD stable coin. Even ostensibly safer stable coins, like TetherUSD, which is backed by much more secure collateral (eg, corporate and bank bonds), have had their US dollar pegs smashed (TetherUSD, which had always traded at $US1, tumbled down to US95¢ during the week). One final idea has been that non-income producing crypto-currencies would have some inherent practical use (or utility) that could supplant the traditional bank and credit card intermediated payment system. That is to say, you could use crypto to buy any manner of goods and services. And yet 13 years since folks started minting and trading bitcoin, it is almost impossible to use it in any normal setting. A ponzi scheme built on a ponzi scheme. A similar observation applies to the allegedly revolutionary (and associated) blockchain technology, which has yet to be adopted on a widespread basis anywhere. The one pervasive use-case for crypto has been in the criminal and non-democratic domains where digital currencies have been relentlessly harnessed for money laundering, tax evasion, cyber-crime, and to fund many other nefarious and highly illegal activities, including terrorism, Russia’s war against Ukraine, paedophilia, and to help dictators and despots circumvent sanctions. The most common application of crypto-currencies is pure speculation. That is to say, people principally use bitcoin and Ethereum to buy, sell, and provide finance (or lend) against other crypto-currencies. It is world of ponzi schemes built on other ponzi schemes that relies crucially on the greater fool theory: that there is always a lesser mortal out there willing to buy some worthless crypto-currency off you at a higher price. Another popular application has been to use crypto-currencies to buy and sell seemingly value-less digital images, aka non-fungible-tokens (NFTs). Like the crypto used to pay for then, NFTs have been gripped by the mother-of-all ponzi-induced speculative bubbles that is now sadly unwinding. Crypto is devoid of any practical use It bears repeating that crypto-currencies are not inflation hedges: the only thing they have demonstrated is that they exacerbate inflation risks. They are not portfolio diversifiers: crypto-currencies are all highly correlated with one another, and with equities. They are not a safe or stable store of wealth that can be compared to, or compete against, traditional cash instruments, such as government-guaranteed bank deposits. (Un)stable coins likewise provide no assurance against catastrophic losses, as we have seen. And to date, crypto-currencies have proven to be devoid of any practical uses outside of promoting ponzi schemes, speculating on other digital currencies, trading digital images, money laundering, tax evasion, and supporting highly illegal activities, including the evil kleptocrat Vladimir Putin’s war against a free and democratic Ukraine.
Why this bitcoin miner welcomes ‘creative destruction’ in crypto Iris Energy co-founder Dan Roberts says a brutal selloff of experimental crypto products could see a flight to more established assets such as bitcoin. May 13, 2022 https://www.afr.com/chanticleer/why...reative-destruction-in-crypto-20220513-p5al28 If Dan Roberts is feeling the pinch, he’s not showing it. The co-founder and co-chief executive of Australian-born, US-listed bitcoin miner Iris Energy has seen the value of his company fall from $US1.5 billion last August (during its last funding round as a private company) to $US363 million ($527 million). Its Nasdaq-listed stock tumbled 33 per cent in the last five trading days amid a brutal selloff in crypto assets that has seen the bitcoin price lose 20 per cent over the same period. Dan Roberts of Iris Energy. James Brickwood From Roberts’ perspective, Iris remains on track – ahead of schedule, even. “Yes, we’re exposed to the price of bitcoin. It’s a volatile asset. That’s part of the opportunity. It’s on this exponential uptrend over the last 12 years, and we’re tapping into that. But ultimately, what we’re building is a real asset platform that today is monetising this new digital asset.” Iris sees itself as a renewable energy and infrastructure play, with mining bitcoin simply the best and highest use for that energy. The company’s March quarter numbers showed it increased bitcoin mining revenue by 445 per cent year-on-year to $US15.2 million, with adjusted earnings before interest, tax, depreciation and amortisation rising 358 per cent to $US7.3 million. But Iris is at the start of what is planned to be a rapid ramp up in computing power, which is expressed in the bitcoin world as exahashes (EH/s) per second. In the March quarter, Iris had 0.8 EH/s, but it plans to hit 10 EH/s early next calendar year before reaching its ultimate goal of 15 EH/s later that same year. To get there, Iris has or will construct four data centres (three in the Canadian province of British Columbia and one in Texas) that are powered by renewable energy. At a bitcoin price of $US40,000, Iris believes it can generate $US505 million in profit with 10 EH/s and $US761 million of profit at 15 EH/s. Roberts is thrilled with the progress that Iris’ team of infrastructure veterans are making. But the fall in the bitcoin price is not easily ignored. Will Iris’ economics keep stacking up? ‘We can ride the volatility’ Roberts is confident. First, Iris’ cost of production per bitcoin over the last few months has been between $US8000 and $US8500, so theoretically bitcoin could fall a lot further before its profitability was threatened. Second, the data centre it is building in Texas, which will account for 63 per cent of its computing power, will have energy costs 30 per cent to 40 per cent lower than its other sites, further reducing its cost of production. Thirdly, a falling bitcoin price is likely to force other bitcoin miners with higher energy costs out of the market; fewer miners in the market means Iris will get a greater share of the bitcoins mined every 10 minutes. “We look at the profitability of our operations, the operational levers we can pull if bitcoin does have a protracted drawdown,” Roberts says. “We’re a real asset business, we’re very profitable, we can ride the volatility and be here when the good times roll.” Roberts argues it’s important to separate the crash in stable coins that have panicked crypto markets in recent days from bitcoin. Stable coins, he says, are early-stage experiments that need to be treated as such. Bitcoin, on the other hand, “has been a finished product for a decade” and offers much greater protections in terms of its security levels and the fact only 21 million coins will ever be mined. Roberts says that a period of “creative destruction” in crypto could be healthy in the long run, just as it used to be for economies. “It’s a very efficient innovation environment, and arguably when you have these moments of discovery around asset values and those innovations, and you get a drawdown, that wash-out is really beneficial for the sector because you reset. People take stock again of what’s got value, why does it have value, and you can build up sustainably again.” Right now, that feels like a very optimistic view. Roberts may be able to make the distinction between the most speculative parts of the crypto world and bitcoin, but how many other investors will do the same? The big question raised by the crash in stable coins is how far the contagion spreads. The losses investors are wearing in their stable coin portfolios have already spilled over into bitcoin and other more established digital assets. Will crypto losses also spill over into equities? Retail crypto investors are likely to be hit hardest. But it’s hard to see institutional investors stepping into rescue crypto assets in the way they might step in to buy beaten-down stocks – most professional investors have got more than enough volatility in their equity portfolios and will have no wish to add more. Roberts and Iris might eventually provide a test of investor appetite for the sector. Iris has secured $US750 million of the $US1 billion of capital it needs to get to 15 EH/s, but will need to tap debt markets for further funds. Roberts is confident that a debt-free balance sheet, solid free cashflow and a record of raising equity will help Iris convince true believers to back the company’s growth. “It’s a challenging macro environment, and we’re respectful of that. But equally, I think we’ve put ourselves in a really good position.” Will the market recognise that? The speed with which turmoil is spreading through crypto right now makes that impossible to answer.