FTX collapse brings down a mainstream bank

DublinHead54 said:
@tecate what are your thoughts on Bitcoin losing ~10% of its value on Friday as SVB unravelled and how the price remains linked to the fiat banking shortcomings?
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Nothing exists in a vacuum. Circle had a wedge of reserves held via SVB. Ripple confirmed similar after the fact. Then there was Signature (banking a lot of crypto projects and startups) - which was dealt with - but prior to being dealt with, thoughts were on contagion. Stablecoins are important in the crypto ecosystem. It makes complete sense that BTC took a hit against that background. It's shown remarkable resilience. Even before the Fed announcement on bailing out SVB customers, it was back up to $21.5K. This past 18 months or so has seen everything thrown at it and its still above $20k.
 
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tecate said:
Even before the Fed announcement on bailing out SVB customers, it was back up to $21.5K. This past 18 months or so has seen everything thrown at it and its still above $20k.
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"back up to $21.5k"....& down from $61k :) .......& yet it still moves around exactly like a long duration risk asset....a pets.com stock certificate with libertarian and anarchic overtones........down when everything else is down, up when everything else is up.......I thought it was an antidote to chaos............a rock of Gibraltar in stormy times?........it acts more like the Hindenburg as soon as the going gets tough.....the 'story' for BTC continues not to stack up for those paying attention. For those like @tecate it requires the story to subtly morph over time to maintain 'the faith'.
 
letitroll said:
"back up to $21.5k"....& down from $61k :) .......& yet it still moves around exactly like a long duration risk asset....a pets.com stock certificate with libertarian and anarchic overtones........down when everything else is down, up when everything else is up.......I thought it was an antidote to chaos............a rock of Gibraltar in stormy times?........it acts more like the Hindenburg as soon as the going gets tough.....the 'story' for BTC continues not to stack up for those paying attention. For those like @tecate it requires the story to subtly morph over time to maintain 'the faith'.
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"Those paying attention"? I suspect you must have been party to that pub chinwag that the Duke told us about earlier. Please enlighten us as to who 'those paying attention' are and what it is they're paying attention to?
 
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Well! Well! Well! BTC up over $24k, more in keeping with the fiat vs crypto meme than the reasons given for its 10% fall. I should have gone against my inner self and had a punt. It is only short lived of course.
 
Duke of Marmalade said:
Well! Well! Well! BTC up over $24k, more in keeping with the fiat vs crypto meme than the reasons given for its 10% fall. I should have gone against my inner self and had a punt. It is only short lived of course.
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Never satisfied Duke. Criticism if it falls, criticism if it rises.
You previously said that it had a 50/50 chance of ever seeing $20K again. You doubled down on that and said that it would be back below $20K in April. Let's see. Bitcoin has made an asshat out of you and the other guy a couple of posts above you a number of times already. :cool:


https://twitter.com/x/status/1635300986075095040
 
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@tecate
I see that my prediction that it would fall below $20k by April was proven correct by over a month. I certainly never predicted that it would stay below $20k.
Impressive statistics for sure. I am particularly interested in the 640k transactions. Is there analysis of how many of these were actually currency purchases of goods and services? My guess is that the vast majority of transactions are between bitcoin and other currencies (including for onward purchase of goods e.g. PayPal), crypto or otherwise. There is no doubt that crypto is the biggest casino in human history.
There are 300 million credit card transactions per weekend in the US alone. So even if every one of those 640k transactions were for goods and services there is an awful long way to go to achieve 15% of World wide medium of exchange as predicted by High Priest John Kelleher on Investopedia.
I think he argued that 15% of World wide MoE would imply a price of $500k. Very top case scenario at the moment based on those 640k transactions is that bitcoin has 0.2% of World MoE suggesting a fair price of about $7k.
 
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Duke of Marmalade said:
@tecate
I see that my prediction that it would fall below $20k by April was proven correct by over a month. I certainly never predicted that it would stay below $20k.
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lol. So it was forced down due to systemic risk from your beloved banking system for an hour or two.
My understanding was that you were claiming that it would never see these prices ever again. Wait, that's worse. So it's made an asshat out of you twice in as many months?

Duke of Marmalade said:
Impressive statistics for sure. I am particularly interested in the 640k transactions. Is there analysis of how many of these were actually currency purchases of goods and services? My guess is that the vast majority of transactions are between bitcoin and other currencies (including for onward purchase of goods e.g. PayPal), crypto or otherwise. There is no doubt that crypto is the biggest casino in human history.
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Why don't you ask the guy on Twitter, Duke? I also wonder if those stats include or exclude Lightning Network transactions. Somehow I'd imagine they exclude them.

Duke of Marmalade said:
@tecate
Very top case scenario at the moment based on those 640k transactions is that bitcoin has 0.2% of World MoE suggesting a fair price of about $7k.
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And yet you're now saying that the price won't stay below $20K?
 
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tecate said:
My understanding was that you were claiming that it would never see these prices ever again.
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Well you misunderstood me. I never claimed anything of the sort. I may have claimed that it is very unlikely to achieve an ATH again, and I would still claim that despite its 15% bounce today.
tecate said:
Why don't you ask the guy on Twitter, Duke?
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I don't know how to tweet:oops:
tecate said:
I also wonder if those stats include or exclude Lightning Network transactions. Somehow I'd imagine they exclude them.
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Certainly LN transactions should be included and I presume you are right that they are not. The figure that we really need but will probably only ever get within guessing range is how many of these transactions (including LN) are comparable with your typical Visa transaction like buying a packet of fags, how many are virtue signalling by millennials and how many are juggling the chips at the casino?
tecate said:
And yet you're now saying that the price won't stay below $20K?
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I never said it would other of course from my ultimate prediction (well really supporting Professor Roubini and the Nobel predictions) that it will eventually hit zero or as near as makes no difference and will stay there. Don't ask me when.

Over to you for the LW:)
 
tecate said:
Nothing exists in a vacuum. Circle had a wedge of reserves held via SVB. Ripple confirmed similar after the fact. Then there was Signature (banking a lot of crypto projects and startups) - which was dealt with - but prior to being dealt with, thoughts were on contagion. Stablecoins are important in the crypto ecosystem. It makes complete sense that BTC took a hit against that background. It's shown remarkable resilience. Even before the Fed announcement on bailing out SVB customers, it was back up to $21.5K. This past 18 months or so has seen everything thrown at it and its still above $20k.
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But the premise of BTC is that it is a decentralised currency not at the behest of financial intermediaries or central banks i.e operating independently in a vacuum.

So what do you actually think this means for btc in that context?

It's very much showing evidence of not being a flight to quality asset when there is trouble in the fiat markets
 
DublinHead54 said:
But the premise of BTC is that it is a decentralised currency not at the behest of financial intermediaries or central banks i.e operating independently in a vacuum.

So what do you actually think this means for btc in that context?

It's very much showing evidence of not being a flight to quality asset when there is trouble in the fiat markets
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Let's leave the case for it being a risk-off asset aside for one second. So in this particular case, bear in mind that it and its ecosystem would have been directly affected. Bitcoin is very different to other crypto projects like DeFi projects and stablecoins, etc. - but they're still all part of the same sector. Stablecoins are very important in bringing money in and out of bitcoin and facilitating fiat coming into and out of the entire ecosystem. SVB was one of Circle's banks for holding a proportion of its reserves. The next worry was that other banks that bank crypto would suffer a similar fate.

As regards bitcoin's development as a risk-off asset, its a nascent asset with a piddly market cap comparatively. The claim has been that its developing into such an asset because it has all the required inherent characteristics to be one (it does). Of course we see attacks here from detractors on the basis that it dropped following a 110% flagged hype cycle. Hype cycles won't demonstrate that naturally enough - but there won't always be hype cycles. How it gets treated by the bigger money (rather than retail) is also likely to change as its understood better.
Bear in mind also that more and more people who own bitcoin have done so over long multi-year durations. I don't have the stats to hand right now but that number has gone up right through these bear market conditions. Detractors will tell you that these are fools and they'll come to their senses and drop it like a hot potato. They won't. Over the longer timeframe, bitcoin still is a store of value. Of course, if it fails completely, then detractors are proven right. That's not my expectation.

Bitcoin has to develop into the store of value role. It's unreasonable to think that it simply acts as such from the get go. People can scream and say look it nose-dived after a well flagged hype cycle all they want. What people need to look at is its inherent characteristics - they're the exact characteristics that reflect whats required for a good store of value. As it settles as an asset and as it is better understood, it will act in that capacity.
 
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Duke of Marmalade said:
Well you misunderstood me. I never claimed anything of the sort. I may have claimed that it is very unlikely to achieve an ATH again, and I would still claim that despite its 15% bounce today.:)
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You claimed that it had a 50% chance of never seeing $20k ever again (and a 75% likelihood of it never crossing $30k, and lastly a 95% likelihood of it never reaching $50 k again.

Duke of Marmalade said:
how many are virtue signalling by millennials and how many are juggling the chips at the casino?
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Yes, hundreds of thousands of transactions on the weekend as 'virtue signaling'. :-D
 
LUNA collapse > Celsius/BlockFi collapses > FTX blows up > which causes a run on Silvergate Bank, the crypto bros fav 'on-shore' bank > Silicon Valley Bank's balance sheet looked the most like Silvergate's in US in terms of asset liability duration mismatches.....and the crypto bros told their tech bro friends......and then the tech bros started a run on SVB.

Its gonna be fun times in crypto (if it weren't already) when folks figure the above out - how a rounding error in worthless gambling tokens brings down the 15th largest US bank. From a sideshow to centre stage. Thank you crypto peeps, your contribution to society has been immense.

The regulators have clearly already took this view over the weekend and thats why they shut down Signature bank even though it technically was still able to honor withdrawals. The US is DONE with crypto every on & off ramp left - even before this all the Wells notices that had gone out the door recently told you everything about whats happening post the FTX debacle. This SVB thing has just kicked it up 20 notches.
 
letitroll said:
LUNA collapse > Celsius/BlockFi collapses > FTX blows up > which causes a run on Silvergate Bank, the crypto bros fav 'on-shore' bank > Silicon Valley Bank's balance sheet looked the most like Silvergate's in US in terms of asset liability duration mismatches..
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It seems to me that you are making huge leaps here.
The fact that Silvergate "looked like" SVB is not a reason to blame crypto for the collapse of SVB.

But your conclusions about the Fed being worried that a crypto collapse might damage overall confidence and cause a run is probably right.

Not sure how they can manage that.

Brendan
 
SVB had nothing to do with crypto, someone might correct me please if I'm wrong but buying low rate bonds is the main reason for their downfall.

If other banks did the same which sounds very likely and the Fed is increasing interest rates making their low rate bonds less attractive then perhaps this will lead to the fed not increasing rates as aggressively as JPMorgan are predicting

In effect it might be the opposite of a black swan for crypto as we have seen this week
 
This is getting way out of hand. It looks like crypto has struck again and https://archive.is/1ctwa (it's about to take down a Tier 1 bank). Something should be done.
 
tecate said:
Crypto strikes again.
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You'll have to explain the link between First Republic and crypto. I can't find it myself.

This looks more a case of a bank suffering because it was overly reliant on large uninsured deposits. Those same deposits are now running out the door because they fear what happened at SVB could happen at their bank. Namely that First Republic Bank is carrying unrealised losses on its bonds and if those depositors don't get their uninsured money out fast they might lose some or all of it.
 
In fairness, both myself and the OP have been wrong on this. We both thought that crypto was at fault for this chain of failures (although I still think those last two are riddled with the stuff).

OP said: "I would say a few other bankers might learn from this."
Now that we know what the deal is, I agree 100%. They should enter into a prolonged regimen of self-flagellation while throwing the odd sharp rock at Jerome Powell, Martin Gruenberg & Janet Yellers.
 
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