Crypto Crypto News 2021

That sounds like you're describing BitMEX

Open interest closing after the dump is correct. High open interest made the size of the dump more risky, now with low open interest any decline shouldn't trigger massive liquidation cascades again.

 

What you’re describing are Australian “exchanges” the major exchanges gave are buyer and seller on each side of the order book

 

Well this piece of **** barely broke above 60 and is now around 50% down, hilarious

The next few months will be a popcorn fest as desperadoes and "true believers"
buy long dips and market makers sell short.

Best to start buying again around the 3k mark

 

China has to ban crypto a few more times this month for it to maybe come close to hitting the 3k mark again.

 

I went from a trader to a Hoddler in about 2 days. Crypto will likely still out perform any other investment in the next 12 months. I'll just DCA and forget about the price for now

 

Same here. I think my avg cost for BTC bought has dropped about $10k in the space of 2-3 days, during the 2-3 price dips. By the end of this calendar year it should get back on track to +50%.

 

Worst exchange I've ever traded on, they have lots of company.

They are all over the world. The local ones have some regulation ang lower leverage.
Pepper 2:1, ICM 5:1.
Only a few majors that have real volume.

Meanwhile the broken record...
Thodex cryptocurrency exchange chief allegedly goes on the run with $2bn in client funds | ZDNet

 

Possible, even so far including the crash its already outperforming when looking at 1/2/3/5 year returns.
Short term returns though depends when people bought, those who bought the top > 60k will likely have to wait longer than a year to profit.

In terms of 1 year performance for us, it's been a very good decision. Crashes are part of the game and it just turns returns from totally insane to just slightly insane. I feel for the people on leverage though who got liquidated, apparently 775,000 accounts were wiped out totally.

 

Honestly you have to be quite mad to leverage in these markets!
The returns are already astounding as is, leveraging is really just pushing your luck.

 

Sorry for my lack of knowledge in this area, but when people talk about leverage in the context of crypto, is this borrowing (incurring debt) to buy crypto?

 

Yeah leverage should be for gold/silver/currencies that move 15% in a year, not for stuff that moves 50% in a day..

Normally people mean trading on margin. You can margin with crypto collateral, on spot trades but most popular is perpetual futures that never expire and it just adds/subtracts to your balance every second.

However there is debt available too, e.g. if you've got BTC on the exchange you can withdraw USD even if you don't have it as it will take a loan against the BTC automatically (for FTX that is). Or you can deposit your crypto into a Decentralised finance protocol as collateral and borrow USD, then use that USD to buy more crypto. Most people though use the USD to take profits via a loan because it doesn't trigger a taxable event if the original crypto is not sold.

 

That was an epic rant!

 

Bogle heads are definitely not a fan of Bitcoin/Crypto and released a damning statement.

New Forum Policy Prohibiting Discussions of Cryptocurrency, Market Manipulation Schemes, etc as Investing Strategies - Bogleheads.org

Discussions of investment strategies based on securities or physical assets that have no underlying value or negative expected long term returns are prohibited. Examples include: cryptocurrencies; lottery tickets; tulip bulbs; Ponzi, pyramid, and multi-level marketing schemes; affinity frauds; and market manipulation schemes.

What's our problem with cryptocurrency?

It is my and the Advisory Board's feeling that the cryptocurrency market as currently constituted is extraordinarily risky and should not play a significant role in a prudent investor's portfolio. The risks go far beyond what we are used to dealing with in regulated market securities. like volatility or bankruptcy risk or interest rate risk. Crypto exposes you to non-market risks such as losing the keys necessary to claim your ownership of the tokens, having your tokens stolen by hackers or the operators of the exchange holding them, or having your tokens on an exchange seized by government agencies. All of these have already occurred on multiple occasions. And then there is the largest risk of all. In a very real sense, crypto tokens are already bankrupt. They have a literal value of nothing, they have a future value of nothing. Thus their price depends entirely on whether enough people are willing to ignore this fact and exchange real money for nothing. The only basis for buying them is the hope the the price will go up because it has gone up before. We have a 400 year history of fads like this in the financial markets, none of them ended well,

 

They just lost a lot of respect putting out such poorly researched statements.

So they're saying that banks also have a literal value of nothing, because their assets are only US Dollars from depositors (the same asset that AAVE and many other protocols hold as deposits).

Like the tech fad isn't it, Amazon, Facebook, Google didn't end well (in truth they ended up in the indexes of the funds that bogleheads buy).

 

Going with only the low risk option can often be the bad investment in the long term.. here's a good 10 tweet thread from a maths guy - why high risk can play a very useful part of strategy: https://twitter.com/AlamedaTrabucco/status/1402786806819553282

 

The two examples (5% p.a. vs 50/50 30%/-10%) have a different expected return so of course they give different results.

Crypto and a Boglehead philosophy are incompatible. Sound decision IMO, reinforcing the respect I have for the boglehead community.

Coincidentally this popped into my inbox today https://www.vanguard.com.au/adviser.../digital-currencies-and-investment-portfolios

 

When Bogle was alive he said "avoid Bitcoin like the plague" in 2017 during the previous Bitcoin boom. Bogle was never a fan of gold and didn't believe that gold was an investment either. Bogleheads would classify banks as having value because banks have earnings and an underlying rate of return.

Bitcoin will never be part of our portfolios, advisers say

Bogleheads are all about index investing and accepting that they're just after an average rate of return and not looking to outperform the market. You'll see fierce debates about investing in stocks based on potential growth, let alone investing in the relative unknowns of crypto.

 

Of course they have different expected returns - that's the point. Avoiding high risk totally is avoiding the improved return potentials. It's not for bogleheads, but an interesting concept to keep in mind.

If earnings and an underlying rate of return are their classification of value, then why did they say this about cryptocurrencies: "They have a literal value of nothing, they have a future value of nothing".
Obviously they don't know this is false, but maybe some on propertychat also don't know that projects in crypto have earnings or aim to (like early tech stocks) and an underlying rate of return? Some quick educational examples:
* Distributed Exchanges: these have earnings and tokens, the tokens earn a portion of earnings similar to shares. Every time someone does a trade on the exchange, the token holders earn a yield. As an example see the attached screenshots showing my $USD earnings from the last 12 hours from one such exchange. The EPS are to distribute ownership because they like decentralisation, but the BUSD is real money (US Dollars) and can be withdrawn to your bank account immediately. 32% yield is very high. Yield is high because the market is underpriced at the moment so the token is cheap but it still generates plenty of fees that have to be distributed.
* Borrowing/Lending protocols: these allow you to lend many types of currencies including $Dollars and earn money. These take a cut, that means the crypto has earnings.
There's many more examples, too many to list but banking and shares are what we are comparing to above. Few understand this, but the huge amount of vapourware that was in crypto in 2017 was just the start. The truly dedicated teams that understood the potential built like crazy over the last 4 years that led to the real products we have now.. products that work. Not everything in crypto is like this, there are plenty that are worthless and for that reason it's not for bogleheads. Actively managed crypto funds still outperform crypto index funds, in that way it's very different to shares and the market is inefficient while we are still early. Good research nets good high revenue assets.

I've got no problem with this - they're after the index return and they've saved many from the peril of actively managed funds. I do index funds too with an allocation of my portfolio. My disagreement was only about them releasing a statement with many false claims about an area that they have no interest or expertise in (cryptocurrencies). If they have no expertise on an emerging area of finance, they shouldn't boldly release incorrect claims that make them look silly and lose credibility., but should stick to what they're good at.