That’s what’s different this time: Stuff blows up because of leverage and cascades through the crypto space because everything’s interconnected. Unlike prior “crypto winters” (you can also download the WOLF STREET REPORT wherever you get your podcasts).
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Also, The last 2 days I have read a story about the Crypto queen who scammed people out of 2 billion and a ponzu scam in S Africa that was 1.2 billion. She is on the FBI 10 most wanted list I think.
Cryptos have been a dream come true for hackers and scammers.
Maybe that is why I do not get the African Prince who needs help and will deposit 25,000 into my bank account.
She’s the only woman on the FBI’s 10 Most Wanted and they are claim this fraudster stole $4 BILLION and not a mere $2 trillion!
Why nobody reads bill gates comment on crypto for past few
Years he said he never invest in cryptocurrency , because is crazy
Idea. Actually crypto created for
FBI to catch the drug traffickers.
“Cryptos have been a dream come true for hackers and scammers.”
That’s what they’re for.
It may be helpful to think of cryptos as pump-‘n-dump stock schemes without the stock.
Also bribery, money laundering, and tax evasion. Crooks have to eat too, ya know, don’t they? Well, DON’T they?
Crypto is useful for illegal activities. Forbidden online poker / gambling. Drug and gun smuggling. Money laundering. What did I miss?
“It may be helpful to think of cryptos as pump-‘n-dump stock schemes without the stock.”
—
With established company stock you at least at the time of purchase own a part of something ‘real.’ With crypto it’s purely 0s & 1s !
Similar with fiat, government-backed paper Vs…
Still see a lot of similarity to the 50’s chain letters…I mean, the block chain records (even their addresses) were right there on the block chain letter. You “mined” it by crossing out the top name, putting yours on the bottom, sending 50 cents or a dollar to the other 9, then copying (by hand) and mailing the newly “mined” block chain to 10 more people…..and waited for riches to roll in.
I never played, but still got a kick out of the ones that threatened you with some witch-like curse for breaking the chain.
Maybe both are more like Multi Level Marketing? Or just Ponzi, I don’t know.
Still interesting that big once respected financial institutions jumped in.
Financial Engineering is completely out of control, that’s the bottom line…..or the “net net” as a boss I had used to say…..and at the end of the day, of course.
May you live in absurd times, eh?
And another crypto lender blocks withdrawals, announced just today:
Crypto lender Vauld announced today, Monday, that it suspended withdrawals and trading after users pulled almost $200 million over the last three weeks.
And no one can get their cryptos out.
It cited volatile market conditions and financial difficulties facing key business partners….
Hahahaha, they’re all:
1. leveraged and
2. interconnected!!
The outfit is backed by Peter Thiel and Coinbase.
Super crypto leverage succumbs to Kryptonite?
Couldn’t happen to nicer people, really.
@eg
At the top, anyway…
Not everyone has the advantages in life of people that post to investment forums. E.g. ‘Hillbilly Elegy’
Boom!
On the 4th of July!
How patriotic!
Why was this stuff allowed to exist in the first place? It’s a failure of government.
Your wrong they confiscated huge ,piles of crypto
@ Wolf –
When you said “users pulled almost $200 million over the last three weeks.”, did you mean 200 million dollars or 200 million worth of crypto?
#2. It’s all in cryptos. Getting dollars out of these outfits is much harder to begin with. You deposit crypto, and if you’re lucky, you get some or all of your crypto back.
@ Wolf –
I will listen to the podcast again. I was assuming these ”lenders” first sold you the crypto for dollars, then held and loaned out your crypto for you.
THANK YOU THANK YOU THANK YOU WR!
Looked at these currently fave cryptos a year or two ago IIRC,,, and could not see ANY long term value, AT ALL..
Far Shore was seriously considering I was missing out..
I read years ago that there was scandal in NZ gov’t when it was discovered Thiel not only bought a visa, but somehow NZ citizenship to go with his “bug-out” castle there.
All of these places (missile silos, etc) are really stupid, how long before the locals (especially those Maoris, who would LOVE to go back to pre-European days) or his own “loyal” well armed security people exercise their own agendas? Filthy rich aren’t that stupid and disconnected…..or are they?
Maybe having a bug-out is like having a bigger jet or yacht than others in their league….more status.
Ponzu is a Japanese dipping sauce, not particularly popular in S. Africa.
Although now I really want to know about the great ponzu scam of 2022.
They arrested John Kikkoman as the alleged perpetrator in the greatest punzu scam of the century.
…call the gazpacho police!!!
may we all find a better day.
So…buy the dip in the gambling tokens?
/s
Yup. Time to pick through the bones and buy for the next runup.
Have at it. It’s going to zero.
How can such a scam go to zero? I don’t think you appreciate why crypto was created.
Obviously we are moving into the era where all financial transactions are being tracked and traced. The Big Boyz want it so there we go. You don’t think that they will pay for it do you?
No, the little man will pay for that. And all the scammers working for the Big Boyz are to make out like bandits too. And let’s not forget fleecing the government. Just like how the internet was created – with public money.
The crypto space has a long way to go yet. So yes, buy when no one wants it.
Not only do I read here for information, but also for sentiment. As Buttcoin drops, and it has a way to go yet, all I read everywhere is to stay away. That intrigues me, as a contrarian.
There are still a few good companies to buy. I won’t say what they are, but I think it’s crazy to overlook buying them at such a discount.
Time will tell.
Every transaction with Bitcoin is permanently stored in the ledger.
Gambling tokens soon to be parking tokens?? Wait…they aren’t real coins! You can’t put air in the parking meter!
Do you even crypto, bro? Enjoy being poor!
We have several fairly wealthy neighbors…highly educated people…that actually “invested” serious amounts of money in the crypto pyramid scheme. I always enjoyed asking them to please explain how crypto derived its value…say…as opposed to gold or silver US Eagles. BOY did I ever get some interesting answers. The term “eyes glossing over” comes immediately to mind.
And gold and silver derive their value from?
3000 years of tradition that’s never been extinguished..
They have industrial uses. Electrical connectors, in avionics, computers, medical devices etc all have pins and sockets plated in gold for reliability and low contact resistance. Relays have silver and gold plated contacts. Silver used to be used in photography. Of course both find use in jewelry; might be baubles but they are real and valued. The list goes on. Describe a product that uses ‘crypto’ — you can’t. It is all make-believe.
Hello Doolittle, gold and silver have various uses such as jewelry and industrial applications like electronics and electrical systems.
Silver and gold have an established history and are actively traded commodities.
They are tangible in a way such as buying silver coins, ingots and bars and safely storing them in a bank vault, home safe with home security system, etc.
They are a good hedge as far as inflation, but if the world economy collapses, gold and silver will not be as useful as bartering skills, water solar still, egg laying chickens, homesteading capabilities and lead bullets.
Gold is money. Everything else is credit. (So it’s been said.)
And gold and silver derive their value from?
Acceptance…only acceptance.
Oh, no. If gold were worth a dollar, we’d make all sorts of stuff out of it – electrical contacts, plumbing, storage containers.
It’s unaffected by practically any solvent, and never corrodes. Bury it in the ground for a thousand years and it still comes out as bright and shiny as when it went in.
It’s an excellent conductor of both electricity and heat, and loves solder. High-reliability circuit boards are copper plated because solder joints are so reliable.
Silver, too, is an excellent conductor of heat and electricity. It also doesn’t corrode, but its surface attracts sulfur atoms which turn it the black color. It’s not corrosion, since that reaction is self-limiting.
That only scratches the surface. They are both extremely useful metals, and somewhat rare.
Pete,
Fair enough to argue Gold’s industrial uses…what would be it’s value if the great unwashed declined to own or speculate on the stuff?
Never invest in a something in which you are told you are too dumb to understand.
Never invest in ANYTHING if YOU don’t understand
Yes, that is what I keep telling myself!
I watched a video on YouTube yesterday by “MeetKevin”. He said that he lost more than $420,000 in Crypto.
Meet Kevin is a bull market genius that ran for CA gov during the recall.
Crypto investors are just gamblers, same as the meme stock chasers. Their main argument seems to be that haters are just too old to understand the new world of possibilities with crypto and gold is for fools.
One of the big bitcoin pimps borrowed against his 1s and 0s to buy a ranch in Texas, sight unseen. Can look him up on YouTube, name is Mark Moss and he does a podcast. I think many made good money early on and it’s become a religion and now they’re catching the falling knives. Since theyve bragged publicly, most don’t have the humility to admit their wrong.
The whole thing is a fascinating study in human psychology
“ The whole thing is a fascinating study in human psychology”
Not really…
I think human stupidity…
Think crypto, meme stocks, spacs, housing mania, auto mania, internet influencers, political liars, make believe jobs (think lifestyle coach) and others too numerous to list…
I swear I think the homeless guy pushing the stolen shopping cart has a better grip on reality than I do …
The dollar amount a jeweler is willing to pay in order to make jewelry Is where the value in gold and silver is derived , Pretty basic
How does gold derive its value?
From its unique properties and scarcity. All properties of sound money in one.
Gold is going nowhere, with all the turmoil in the World since March of ’22! It’s previous peak was in the last century at around $2500. Now it cannot hold up above 2000, let alone 1900!
Gold is a trade just oil and other commodities, subjected to perception whims of the mkt. By trading options one can make money trading on both sides, of course with hedges and being a nimble trader. definitely NOT for the novice!
With rising rate and strong US$, gold might even go down!
Unless Mr Powell pivots back like late 2018!
Uhh, Sunny, not sure where you get your data, but gold was never $2500/troy ounce in any major marketplace.
Nor has it ever held above $2000, shouldn’t expect that … yet.
Everything is a trade, even gold, even cash. Gold’s done better than most, this year…
Gold (or anything) only has “value” if the next person will accept it for his goods/services. Same with currency. I’ve been in places where USD colored paper was laughed at, but my spare hunting knife got me a bed and food. Value is what the next person agrees to.
JGarbo,
Cool story. What places are those?
“From its unique properties and scarcity.”
Well, a well used but low mileage Ford Pinto would be both unique and scarce…but of little value. Scarcity means nothing without a willing counter party.
It’s has all the right stuff. shines like the Sun when minted and polished, SCARCE, Malleable, does’t rust, no one else’s liability. Pure money which can be concealed quite easily.,and also divisible, do you really need any thing more then that!!! Ed K I’m 80 and when my time comes it will be transferred to my children. without the Government ‘s eyes Please reply to this answer if it helped your referal to GOLD.
and divisable
Because it is shiny, easy to shape, and a great conductor.
And the coins are pretty as is jewelry.
Silver is the better conductor. Gold’s electronic value lies in the fact that under most conditions, it won’t play “molecule” with other elements.
Jewelry’s value? Beats me. As an electronic tech we were taught never to wear any.
It’s kind of a long story. State theory of money indicates that it was lent value simply because at some point coins were minted and taxes were explicitly paid in said coins. It so happens that gold was suitable for such a process because its ductility and the fact it does not corrode. David Graeber’s “Debt” covers the topic far more broadly, including some very interesting philosophical insights from people around the era where currency is developed:
“Aristotle had argued that gold and silver had no intrinsic value in themselves, and that money therefore was just a social convention, invented by human communities to facilitate exchange. Since it had “come about by agreement, therefore it is within our power to change it or render it useless” if we all decide that that’s what we want to do. This position gained little traction in the materialist intellectual environment of the Axial Age, but by the later Middle Ages, it had become standard wisdom. Ghazali was among the first to embrace it. In his own way, he took it even further, insisting that the fact that a gold coin has no intrinsic value is the basis of its value as money, since this very lack of intrinsic value is what allows it to “govern,” measure, and regulate the value of other things. But, at the same time, Ghazali denied that money was a social convention. It was given to us by God.”
I reckon eventually the value derivation is conflated and the intermediary (state) is forgotten, and so people confuse the value of gold (humanized; conflated) and gold’s value (objective). Because ultimately it has very few uses, and in most cases there are many alternatives or very gold little is needed (e.g. electroplating). It’s a little like diamonds, we’re capable of manufacturing flawless diamond but they’re nowhere near as valuable as mined diamonds the latter of which can net as much as 3x the price of the former on some cursory research.
Didn’t Aristotle have an account at Athens Sachs….
Just curious…. :)
Gold isn’t at all like diamonds. We can’t manufacture gold from any base material.
Gold does have many, many industrial and artistic uses, but the market is small because the price has been jacked to the moon by the supply being hoarded by central banks and investors as part of their monetary base.
BTW, a large part of gold’s value is in places going through massive political upheaval. Gold is stable, portable and tradeable anywhere in the civilized world. It’s also a nice insurance policy in case you ever need to bug out and start your life over somewhere else. 10 pounds of gold will fit in a typical cup, can be carried easily – and is worth nearly $300,000. One pound can be easily hidden and will get you up and running anywhere. (Fortunately most of us have never had to do this, but those who have tell some compelling stories…)
Gold has earned its roles over thousands of years. That history isn’t arbitrary, it’s not accidental and it’s not simply “social convention”.
“ BTW, a large part of gold’s value is in places going through massive political upheaval”
If your saying gold’s value depends on politics, than gold has no intrinsic value.
Social or political upheaval? Take a lesson from the real survivalists. Instead of gold bricks they buy and stash .22 bricks. Great insurance policy to get you up and running under any adverse conditions.
Much cheaper, too.
@Apple – All forms of insurance have intrinsic value – gold is one kind.
Very plain and simple ” GOLD IS PURE MONEY–IT’S NO ONE
ELSE’S LIABILITY IT’S DEBT FREE”!!! Capeesh
Gold is debt free just like iron is debt free. But gold has a very high price, and iron has a much lower price. The price is a function of the market. That’s what matters. You can forget the “money” stuff. The world has moved on.
There was a time (during the Bronze Age, 3500-1170 BC) iron was more valuable than gold. They didn’t know how to smelt it yet and all iron came from meteors. Only the Pharaoh, etc could afford iron daggers and trinkets.
But when they did…oh boy!….The Bronze Age Collapse!!!….big time civilizations and trade just vanished…at least in the Mediterranean world…..aka Greek Dark Ages. Homeric legend time… Troy, etc. 1170 to 8-600 BC. Pirate rule, ex-slaves suddenly were all well armed, and likely pissed, killing weapons were cheap and available to all.
Still think it interesting and maybe significant that first known notions of democracy maybe “RE”-emerged soon after.
Can you believe Aluminum was one of the most precious metals in existence up to the late 1800’s. It was everywhere but you could not separate it from the ore. The Washington monument was originally capped with the metal at extravagant expense as a sign of the United States’ wealth and power. That is until Hall came around and birthed the monstrosity that was ALCOA.
I worked with a Vietnamese girl who had lived thru the fall of Saigon. She said the only reason why they got out was that her dad had some gold. She said her dad also had a lot of the local currency but that it had become worthless. She said that her dad had been a prosperous businessman in Vietnam and that he probably would have been killed by the North Vietnamese had they stayed in Saigon.
So… for her and her family, gold’s value was that it got her out of Vietnam alive and into the USA where they could start new lives.
Many such stories of gold and gems sewn into clothes being the toll paid to get out of places over the centuries HM.
Seems to indicate the ”portability” weighs heavily in the or any ”value” of gold etc.,
Only hitch in the giddy up I have heard was the guy who fell overboard with so much gold sewed into his clothes he went straight to the bottom and was never seen again.
Other than that and a little shine,,, no thanks for the overpriced gold.
I prefer brass!
Same can be said for anyone fleeing for safety. It sure is nice to have a little gold and silver in your pocket if trying to cross the border from say Ukraine to Poland for example. Border police might not take crypto, online payments OR dollars. But gold? Pass this way.
You guys are outvoted anyway per world preference for payment. 5 to 6 billion want precious metal over your paper or digital dollar. Just saying- if a UFO or strong wind happens to pick you and your Lazyboy recliner up and drop you into Asia, Middle East, etc.
Gold is like the Shingles virus. Gold fever is living in your body, you just don’t know it yet.
Throughout history rich people have maintained generational wealth by investing in gold, land, and art.
Gold is portable and a little can get you set up in a new country in a hurry if you need to flee for whatever reason. Property has title so you can get it back (or get paid for it) if it is taken from you in an upheaval. Same for art… it has “provenance.”
In modern times Dollars have played much the same role as gold. When I was in the military in the Middle East and Africa it was striking how much the locals tried to hang onto any dollars that came their way. It was useful if they had to flee in an upheaval.
A lady I was dating asked me for a ring. I told her no. She dumped me. If I would have given her a gold ring with a rock, she might have stayed longer. She divorced a husband before I met her.
This is hilarious! And a true explanation of the value of shiney sparkly rocks…
Apparently she thought “ old glue pot” was wore out and you were valuable as the new “stallion”…. :)
You are way better off….
Lucky guy!
I went through the same thing a while back, but maybe not as overtly. She asked me if I’d consider marriage. I asked “to you or in general?” I think that did me in.
A woman’s beauty is her wealth,
A man’s wealth is his beauty.
This is baked into the human condition.
The way to a man’s heart is through his stomach, hahahaha, now that we’re dragging out this old stuff.
“How does gold derive its value?”
To quote: “Shiny!”
Gold does have extremely valuable properties, but those only account for a few percent of its ‘value’.
The ‘value’ of anything is what people are willing to pay for it.
And you know how THEY are.
Who’s big Aspen vacation home doesn’t have a big stash of hidden bullion buried under it, known only to a few?
A wannabe, I guess, like many here.
The element forms during massive Supernova events…. our sun is too small to churn out gold.
Some newer science suggests that the Big Bang might have generated more than the supernovas… time will tell.
Did you guys know ALL science articles are now “pay to publish” and that there are literally thousands of journals competing? It’s a huge business, with conglomerates owning hundreds of specialized scientific journals or mags. Sometimes whatever institution got the grant or paid for the research will also pick up the publishing tab, but quite often the authors will only give you an abstract and charge for the their whole body of research.
Anyway, the most expensive by far (last I checked) was Nature. That’s also the main one read by MSM “science editors”.
Because it has the broadest base of buyer, it’s a value holder. It preserves wealth. One gold coin can buy the same thing today that it did 1000 years ago.
There is a finite amount & it takes a lot of effort to extract it therefore determining it’s value.
“One gold coin can buy the same thing today that it did 1000 years ago”. 1000 years ago eyeglasses hadn’t yet been invented. The very best use of gold yet discovered is frames for eyeglasses to be worn to ornament the human face. Gold frames became very popular in the 19th & 20th centuries. Still the very best for looks and utility. (I’m an optician).
Gold wedding bands exist for a reason. Golds value is directly supported by the second chakra. Gold represents love itself.
What were they selling a thousand years ago? I mean, how many ceiling fans could you buy back then with a gold dollar?
A little perspective — A room at an INN or Alehouse or a Toga, Waist coat or Men’s suit an ounce of Gold could purchase those items, Then and now go figure. You need some Gold.
@HowNow – only the very rich shopped at the Dollar store back then.
Ha ha, the Milligram Store today.
Or someday, if the gold bugs are right….microgram store?
I got your good point Harrold, I’m just being silly……gold bugs seem to call for some ridicule, IMHO.
Gold especially has no utility value other than people want it.
Same thing for Crypto.
Gold actual usage is just 40 percent or so
60 percent is for people wanting it
Can’t the same be said for Crypto?
What utility has a token that Alice alone has, that she can send via phone/internet, without need of a trusted third party, to Bob so that now he alone has it?
Same value as when Alice sends Bob an email. Probably less.
Gold is very useful for electric products. Most importantly, it is often used for satellites and other vehicles. It makes an ideal sunshield reportedly, which is why astronaut’s helmets are reportedly coated with it.
Aside from that, there are traditional uses: namely the gold-hoarding in India, China, and other countries via the purchase of jewelry and other objects. Hence, while cryptos-tulips have no legitimate utility aside from your being able to find a greater fool to sell them too, That is why I believe, except for money laundering, sales of illegal products, tax fraud, and drug deals, for which the crypto-tulips are very suited, the cryptos will not maintain their “values” over time: the real values are zero.
On the subject of foolish “investments,” note the reports that every single oil and gas project/purchase that mainland Chinese companies have purchased into is suddenly being sold, including shares of foreign companies. China’s electric vehicles will not really make a dent on its demand for many years. Indeed, it is burning more and more dirty coal even now, despite the massive air pollution it suffers and Chinese people talk about. So what is going on?
Speculation centers on the desire of China to imitate Russia and a report leaked from intelligence sources that allegedly in three months something was going to happen. Remember, if mainland China were to do something like Russia, it would face the same sanctions. What will happen to index funds and pensions that invest in mainland China? Will it pay the investors from countries “hostile” to it or pull a Russia-like move and nationalize everything.
Nah, NASA uses gold for sunshields because they have to spend their annual budget (with overruns). Or else.
I betcha it stops potentially eye damaging particles….just a guess.
I wired an MRI in Austin thirty years ago that had a hundred-ton steel shield and the operators observation window had gold foil sandwiched in it to stop radio frequency interference from messing up the diagnostic validity of the imaging. Essentially a high-pass filter that let visual light frequencies through but stopped everything below ten gigahertz, if memory serves. That’s a no-substitution-possible use for gold and there’s others.
But the real deal is gold is special because the whole world thinks so. And has for Ages, literally. Every other argument that extolls specific qualities of gold is secondary justification of the fact that everyone wants it and always has. Being primarily a monetary(store of value) and jewelry (pretty store of value) metal, it’s industrial uses should properly be minimal so that it’s market value might not be complicated by industrial demand cycles, as silver, platinum and palladium are. It can only have the value that society as a whole gives to it.
Quarter to one and some moron just found more fireworks.
Technology has consequences over time. Four hundred years ago platinum was a worthless contaminant found alloyed in New World silver. Today it catalyzes and fixes worthless contaminants in ICE exhaust.(i think) Silver and gold had been valued for many centuries before technology required durable electrical contacts and RFI shielding. If/when the alchemists/materials scientists get it together, that will change. Crypto mining isn’t alchemy. It’s a dilettante numbers game for people who didn’t work hard enough for their money. A con. A gated financial community that meters the number of people coming and going and is presently choking off the excessive departures. It’s the Hotel California of “investments”. Won’t repeat the lyrics because everyone knows them.
I ran an NMR in the 70’s….trying to make sense of doublets, triplets, etc, appearing at different RF freqs…..amazing what computer power can do. 1mm resolution and few harmful side effects…..it seems.
Is that banging due to coil wires slamming around or just monster high current relays? Thanks.
Nbay – the axially rotating x-ray guns in a CAT scanner emit at regular angular intervals to yield a composite image via software, and the reciprocating mechanical base they attach to makes a racket. And it’s radiation, invasive and cumulative. MRI lines up your molecules north south with the magnet, which comes charged from the medical manufacturer and will stay that way as long as the cryogen gets pumped, it’s a near-superconductor. The concentric radio frequency coil mounted inside the magnet is pulsed within the field, deflecting your water molecules’ electron’s orbits over momentarily at right angles. It’s a quantum change at submolecular levels that you can’t feel. The amount of deflection and time it takes to return to zero after the pulse is measured by the body coil, a very precise antenna. The computer makes an image from this information. Pulsing the RF coil might also be noisy from electromotive force reverberating through the frame. It’s high frequency but I don’t know how high. I’ve heard it and seen it on TV, but I can only guess.
Thanks a lot rick! I’m hip to the whole electromagnetic spectrum and it’s different properties. Worked in thin film interference filters, visual, near and far IR, (30+ microns) and also with microwave radio gear and in CO2 lasers).
NMR (which became MRI) was explained to me as hydrogen proton “spin coupling” differing in different chemical environments which then varied as it was swept by RF of different frequencies. All at “safe” frequencies, at least as opposed to x-rays. Maybe even just old time radio/TV freqs?, which are getting higher (cell phones). Ionizing radiation freqs as damaging to life is still pretty unquantified. Plus, I was just using it to identify purified organics, not image anything.
That “body coil” pickup antenna must be one real piece of engineering, as are adjusting the variables. I had heard they also vary the magnetic field for better resolution.
Since we are 70% water, your way of looking at it seems more practical for imaging.
So many ways to look at all all this stuff, especially to a mere non-specialized tech like me, but MRI obviously works!
Thanks again!
rick m-thanks for mentioning ‘New World silver’. understand that there were some interesting European economic effects from the relatively massive amounts of Au and Ag landing in Spain from the empire’s galleon highway…(‘clipping’ and debasing the coinage by the lower classes not declining in any event…).
may we all find a better day.
When common sense fails to control greed, the gullible fall for scams.
Dennis-one born every minute from what i’ve heard…
may we all find a better day.
The more Wolf kept speaking and describing the situation, the more it sounded like a Sci-fi broadcast on the radio…. Where’s that little green man when you need him….
Yeah! A financial Orson Welles for the crypto fans.
Banks do something similar but they are regulated and your money up to a point is insured. J.p. morgan and the big banks also use their customer deposits to trade in the stock market. They Buy and sell stocks and apply some leverage too.
But big banks are very good traders. I think a few years ago BAC might have gone a whole year without a single trading day loss. hard to believe
And the “big banks” were all bankrupt in 2008. They are so brilliant!
The majority of the money held and gambled by JP Morgan, Citi, Goldman and others is NOT insured. In the event of a crash they depend on the taxpayer to bail them out because the regulators charged with protecting the country decided that certain banks were judged to be “too big to fail”. Apparently breaking them up into smaller entities was too challenging to those who purport to protect the country.
Essentially this means the world economy is dependent upon ordinary citizens paying the gambling losses of the too big to fail banks if things go south for them. In other words the too big to fail banks can extort the country, if not the world.
I don’t see this as a sustainable way to run any civilization.
The 7,000 or so banks in the US regulated by the Federal Reserve do not gamble any money whatsoever. There are risks in a lending and that is fully taken into consideration and the US banks are in better financial condition now than ever in their history in the US.
where were you in 2008?
What do you think “proprietary trading” means? It’s an internal hedge fund, that’s what. All “systemically important” banks have it. It has nothing to do with banking, that’s for sure.
As for your last comment, only because of fake inflated wealth and central bank “puts” which supports the value of mostly non-existent bank collateral. Most lending is actually unsecured (“secured” by someone else’s debt) and to claim banks (US or otherwise) are in the best shape ever is ridiculous.
“Apparently breaking them up into smaller entities was too challenging”
The Big Banks, already too big for the economy, were saved for political reasons. And all their gambling losses were put onto the backs of the American taxpayer.
And in turn they went back to their old tricks, and things are much, much, much worse. Angelo Mozilo, Lloyd Blankfein, Jamie Dimon, Richard Fuld, James Cayne, Chuck Prince, Kerry Killinger – ALL of these guys, and more, should be in prison for their role in the so-called “Great Financial Crisis.” Instead, they got to keep all the loot.
A good list of major villains, alright, but you left out Buffet, everybody’s Kindly old financial grandpa….good disguise.
Who I also heard was more or less partnered with Gates. I know they went to Alberta together and kicked the tar sands around back in ’08 or so.
As long as they don’t use my taxpayer money to bail out the friggin crypto crap. Banks at least serve a purpose. Crypto serves no purpose. It’s just gambling with invented nothingness.
Crypto doesn’t pay interest either….
Wes,
Yes it does. Listen to the podcast. Depositors were promised interest rates of up to 20% APR.
@ Wolf-
Yes, it was pathetic enough they bailed out the banks.
Wolf said:
“It’s just gambling with invented nothingness.”
“Depositors were promised interest rates of up to 20% APR.”
————————————-
it sounds like compounding nothingness on top of nothingness
cb-or the unbearable lightness of unbeing…
may we all find a better day.
“I don’t see this as a sustainable way to run any civilization.”
Welcome to my world. What’s left of it.
We run things sustainably in our tiny corner of the planet but haven’t been able to scale them up.
In case you’re wondering, no, you can’t get here from there.
“BAC might have gone a whole year without a single trading day loss. hard to believe”
Not hard to believe when you factor in insider information, collusion, and other fraudulent behavior by our above the law bankers.
… and the ability to front-run your clients’ trades!
At least the crypto kiddies will have their NFTs to fall back on. /s
I actually had some cryptos in voyager because a year ago they were giving $50 of BTC free when you signed up. I sold the BTC and I withdrew all but 5 cash when Luna blew up. So I have $5 that will disappear.
Also,
Crypto lender Vauld on Monday paused all withdrawals, trading and deposits on its platform and is exploring potential restructuring options, the company said.
Vauld said it is facing “financial challenges
” due to “volatile market conditions” which has led to customers withdrawing more than $197.7 million from the platform since June 12.
Voyager has set out on a remarkable challenging new voyage as has Vauld over in Singapore!
I had 10k in Voyager on Friday when I heard the news. It was just some gambling money and I had already made back 10x in crypto so not a huge deal. I always counted that money as not there anyway. Like the cash I bring to Vegas.
Correct. If you already made 10x as much, then you only lost 100%.
That is good for you. I know a couple of people who had some cryptos in voyager. They were down about 40% on their initial investment. So even though they are down 40%….they are out of 100% of their investment. Some person probably bought a million dollar house on their 100% loss, plus your 10k loss, and a bunch of other voyager losses as their cryptos are no longer theirs? I do not completely understand where those cryptos are now. I guess they were loaned to Three Arrow Captial. What did 3AC do with the cryptos. Loan then to someone else. LOL What a scam.
So since each crypto is a ledger will they be able to eventually send the cryptos back to the person who owns the crypto and who had put then in Voyager?
Probably gambling money too for my friends but I doubt if they will ever put any big amount into crytpos again.
Crypto Default Swaps?
Greetings Wolf, since QT by Fed didn’t happened as expected in June. Could you cover that topic in one of your near future articles? Many thanks!
Huh? QT is well underway at the Federal Reserve.
Richie,
You’re too clueless and ignorant to comment here.
The June update will be posted here on Thursday, when the balance sheet comes out that has the Jun 30 runoff of Treasuries on it, which the last balance sheet didn’t because it cut off on Jun 29.
You obviously don’t know that Treasuries run off only twice a month, mid-month and end of month (Jun 15 and Jun 30).
You obviously don’t know nada about MBS.
You obviously don’t know that total assets are down by $52 billion from the April high. That’s QT — and the June 30 runoff is not even included in this figure.
Despite the fact that you don’t know nada about anything, you’re full of manipulative BS.
I will make sure to ridicule you and people like you in my article on Thursday without calling you out by name, since it’s fake anyway. But you will know who I mean to ridicule, just like I’m ridiculing you here in the comments. This much ignorance and manipulative BS deserves to be ridiculed.
This kind of written manipulation/dishonetsy is rampant. Thank you for calling it out.
My popcorn didn’t go to waste!
Wolf, you have been a very patient man, but seems it’s getting harder to hold back. You do come out with some great information time and again because of it.
These tightening deniers are exasperating.
Wolf, honest question, here. I’ve been following this chart on FRED.
https://fred.stlouisfed.org/series/WALCL
It looks like assets have leveled off, and have started to drop ever so slightly. Is this the wrong data to use to measure QT?
LOOK AT THE NUMBERS in the chart you linked!!!!!!!!!! Can’t you even READ??? The total is down $52 billion from April peak. That’s QT in start-up action.
Thanks, Wolf, for confirming this is the right place to continue watching TC unfold.
I was chatting with some stock market perma-bulls today. They all see the market sell off as over (4 out of 4). Nothing but blue sky on the way now (as they see it). Debating where the market is going with them would just waste my time.
Gold was also back in the local PM shop today. But it was moving fast at the lower prices. Probably all gone by now. Local people want the coins, not the bars. Only women want the jewelry.
Riders on the storm.
Some estimate that the Fed plan for interest rate hikes plus QT is the functional equivalent to increasing rates 4.5%.
Now if we are already in a recession, they have messed up big time by cutting at the wrong time. In a way it seems logical that biggest everything bubble will be followed by biggest everything crash.
Should have said Fed plan for this year alone. Just have a hard time seeing the Fed not pivoting by year end.
Did hear one theory that made sense that Fed would like to front load rate hikes and then become less active before election so they are seen as non political.
Volcker did that and inflation came storming back right away. I think Powell would be more likely to initially pause not pivot.
As usual “Web3 is going just great”.
That website is perhaps the best argument for regulated markets and the value of trust in a functioning economy. As someone who briefly worked in Fraud, I shake my head at how much fraud activity Crypto, DeFi, and Web3 is generating.
NFT is so ridiculous they should outright be banned yesterday.
I keep thinking, every time I see it, that NFT should be some sort of American Football Team……
Maybe or maybe not. Sometimes it’s helpful to get burned early in life so that you learn to be sceptical about someone selling you a financial product.
Wolf…..superb job of describing what’s goin on….in just another episode of the should-be sitcom called….”Fools….And Greater Fools”
The Actual Fools..
they participated in a small portion of what I call…..”The Big Money Game”…..which actually is the book title of that Old Classic “truth be told” satire….written by the pseudonym gentleman, Adam Smith. It should be REQUIRED reading….for anyone just even thinking about putting any money at risk….anywhere….anytime.
I always felt that just about ALL Crypto investors….did not know what the hell they were doing….at all. But the “story” sounded SO GOOD….such that it was just another chapter in the life of that dead-on maxim….. a fool and his money….are soon parted.
I personally said for a long time…..that once the FED issues its own digital Crypto coin….and then slaps the entire crypto industry with SEC type regulations…..that pretty much ALL the current crop of Crypto-Mania “darlings”…..will drop to ZERO…..OVERNIGHT…..if not sooner.
Nothing teaches “dummies” lessons faster than…… “sure thing” money…..vanishing….right before one’s very eyes.
ALL ….yes ALL….the fools …..will all be heading home soon…. with their tails….between their legs.
But the organizers….and “minds” behind sll the wonderful ideas…..have ALREADY LAUGHED…..all the way to the bank. Their Ferraris and Lamborghinis are already garaged…… at their Bahamas Beachfront homes.
The moment that the Staples Center in Los Angeles was renamed CRYPTO STADIUM was the absolute death knell and shoeshine moment for the crapto crowd – as if that was apparent from day one. The truly frightening thing is that there are more than 19,000 different craptos out there which are now exploding like a July 4th fireworks extraganza!
Gonna be a lot of renamed stadiums and other venues, before this Bear Market is done…
The truly frightening thing is YSC and UCLA joining the Big 10!
USC
Add another nail in the coffin for college football as it has been known. I’ve been watching for 45 years. There is a real competitive balance problem (since around 2006) and it’s getting worse.
I missed the definition of DeFi, but I’ll assume it stands for devalued finance. EvapFi?
Decentralized Finance.
“Not your keys, not your coins”, as they say on r/bitcoin. True hodlers don’t keep their coins on an exchange. But I guess this report is about speculators, those that want to get rich quick.
Anyway. Yes, the crash is different this time. And it’s good for the space. It will likely get rid of a lot of the sh*itcoins. Bitcion will survive[1], IMO. Time will tell.
[1] Hopefully MicroStrategy too.
But aren’t most of the true believers knob hodlers?
If you want to earn 20% interest on your bitcoin, you need to lend them out, and you do that by depositing them at a crypto lender, such as those mentioned, and then the crypto lender gambled with your bitcoin and lost, and having promised to pay 20% interest, shuts down withdrawals, and you don’t get your 20% interest and you don’t get your bitcoin back either.
I don’t even feel sorry for the ignorant greedheads who fell for this scam. In fact, I laugh out loud.
You have to be next-level stupid to think you can get 20% risk free.
There are going to be a lot of hurting but wiser people minted in the next couple of years.
billyt-and i thought folks might have gained a clue from Madoff only offering ‘18%’.
Mr. Barnum rolls in his eternal slumbers (yet again).
may we all find a better day.
.
A few months ago, I ran into an old neighbor friend that I haven’t seen on years since we moved out of the old neighborhood. I recalled his daughter became a nurse and I asked him how she was doing.
He said she got burned out during Covid as a hospital nurse and she quit and went into trading Crypto and is now a millionaire.
I wonder how she is making out now that the meltdown is in process? I could send him an email and ask, but I better leave it be.
Well I hope she got out soon enough, but yeah, better leave it alone. It’s like those people who always tell you how much they made in Vegas, but you never hear about their losses.
Most investors are 2nd rate gamblers.
Probably 99.99% of any “investor” who is showing a profit….quickly succumbs to greed…..plus the popularity now afforded him/her from their success stories they tell their friends……because they “made money”. And now they are “sources” for….how it is done. ALL ARE FOOLS…..soon to be parted with their money.
It is virtually impossible for any….except the most seasoned, experienced, and savvy, market players…..to accurately pick any tops or bottoms.
So almost all….ride the wave up, then greed helps them ride it back down…..or conversely, they buy at some low, then the “I have to get it back” emotion kicks in…….and helps them watch it as it goes lower.
One of the wisest words of wisdom for anyone “toying” with making money….in any market…..is the following…..
…..if you make money, you are happy……and if you lose money, you are (should be) wiser.
James Dines has written extensively on the aforementioned emotions. Plus Linda Raschke and Mark Douglas will also give you priceless wisdom and guidance….. .which will help you navigate the markets mine fields.
There are a number of others I can refer you to…..but these 3 will help any budding “gamblers” ….
possibly keep their ships afloat.
….Let the “buyer”…. beware.
“The second-grade sucker knows how to
keep from losing his money in some of the ways that get the raw beginner. It is this
semisucker rather than the 100 per cent article who is the real all-the-year-round support
of the commission houses.”
” It is naturally the semisucker who is always quoting the
famous trading aphorisms and the various rules of the game. He knows all the don’ts that
ever fell from the oracular lips of the old stagers excepting the principal one, which is: Don’t be a sucker!”
The excessive ellipses make your comments very disjointed and torturous. They are supposed to be used for omitted portions of a sentence or like “etc” at the end of a sentence (with a period.)
This style of typing reminds me of my crazy redheaded punk rock ex girlfriend from New Jersey. She thought it was cute and artistic.
A young neighbor kid is driving a Maserati and living at home. I suspect cryptos.
But a lot of people lost money making crypto traders wealthy
Funny how times change. 15 years ago I would have suspected the young neighbor kid driving a Maserati of being a drug dealer. I still would today, but now I would also include cryptos as a possibility. But you never know, when I was in high school, there was a kid whose parents died in an accident. He inherited some money and ended up spending it like a drunken sailer.
Yep, the whole thing is a Ponzi…just like all those Internet stocks in 2000. Who could be so dumb to believe that the ability to send wealth in a decentralized manner, outside our centralized banking, system could have value. Any one can plainly see that all crypto is headed to zero as government led banking and currency issuance can only strengthen from here.
Nice instructive nickname.
DeFI is making its way into a wide variety of simple and complex financial transactions. It’s powered by decentralized apps called “dapps,” or other programs called “protocols.” Dapps and protocols handle transactions in the two main cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH).
If your de-fi site gets hacked, would that be de-cryptocoin?
When are people going to return to a reality-based world? Ever?
I think we’re taking some first and timid steps into that direction.
Reality isn’t all that, but virtual is it’s own reward.
When we run out of other people’s money.
If by “reality-based world” you mean one without crypto[1] then never.
Bitcoin is the innovation of this century. It’s a vital part of the evolution of the internet. It’s not going away, sorry.
[1] Actually I mean Bitcoin but I haven’t the time to argue the point. Time will tell.
Beanie Babies haven’t gone away either.
You can worry about that if you want to. It’s not on my worry list. I’ve got things to do :-]
BTC isn’t an innovation of anything. It’s literally nothing. The only reason it exists along with all other “coins” is due to the unprecedented asset mania.
These are all get rich quick schemes, not businesses that create value and increase their stock price as a result.
My guess is that once the support at 20K is blown out, the bloodletting will become endless. I see 5K and even 1K as a very high probability for Bitcoin in less than 18 months.
Not all high risk investments are ponzi schemes. There are some emerging companies that are the next Amazon. But they are few and far between.
I see 5 cents per bitcoin as a highly optimistic possibility.
I will back the truck up and take all you got at 5 cents. But only at 5 cents. Til then I’m out.
At 5 cents, in fact long before then, all crypto miners will have shut down because the energy costs are far far higher than that. And with crypto miners shut down, bitcoin ceases to exist.
“My guess is that once the support at 20K is blown out, the bloodletting will become endless.”
Looks like that is happening right now. I don’t have any money in Crypto, but I have to say, this whole thing makes me nervous!
I wouldn’t worry, stocks & bonds are paragons of perfidy.
No way or how could they be construed as useless as cryptos.
Stocks aren’t. Obviously. They are shares of the equity in a public company where assets and liabilities are transparent.
BTC was as low as $3,500 or so in early 2019 after a huge fall from $20,000 back in 2017, only to climb up to almost $70,000 again,
Granted, things are different now with the Fed tightening the monetary ship.
The only big question now is when, or if, the Fed will chicken out and re-institute ZIRP and QE. This might be a worthwhile blog topic for Wolf, speculating on the quality of the Fed’s iron stomach for adversity. It’s an enormously salient question which needs to be seriously examined to help guide future investment decisions overall.
Warren Buffet and Charlie Munger made it 100% crystal clear that all of these stupid craptocurrencies were nothing but garbage, so why didn’t people listen to that correct and wise assessment?
Buffet hates anything he can’t use his fame to gain an advantage and profit from.
We will not consider any client that is involved in blockchain technologies in any way because we got sick of having to rescue them from scams. A few million in horror stories is all it took.
Requiring them to maintain a forfeitable escrow account in the event they ARE involved because they lied about it does not go over very well, but that, after all, is their problem, and not ours, and it would please me very much if you didn’t MAKE it my problem.
In other news, Prince Charles has denied that there is anything wrong with taking bags of cash (millions) from a Qatari politician, so I may not be as unamused as I usually am.
Those royals are as useless as cryptocurrencies and probably just as expensive.
Both have entertainment value, though maybe not worth the cost…
Cryptos “secured” by cryptos. Greedy morons deserve what they get. Some attempted to warn them , but they wouldn’t listen.
So we’re going to have some digital fireworks for the Forth of July? Thanks for the report Wolf, I don’t see how you keep track of all this, I have listen to it more than once just to get to a lesser state of confusion. Oh well, that’s why I’m here, to learn and educate myself even in my later years. Thanks again for all your hard work.
I have “to” listen……arrrg, proofread already!
Hello Wolf
Thank you, a great report once again.
Quite an eye opener! I haven’t been paying attention to this area so did a quick search on: Crypto High Yield Farming.
One site that came up in the results was coinmarketcap.They have a page on yield farming.
Some of the doozies in their list include:
Swerve – 62.4% yearly ($25 million AUM)
PancakeSwap – up to 1065871.07% Yearly (over $40 million AUM)
Perhaps when you do the transcript for the report you can include a list of some of these wonderful investment opportunities and document them as they blow up, like your excellent list of imploded stocks.
On my 2020 Form 1040 U.S. Income Tax Return:
“At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? Yes or No box to fill in –same line.”
On my 2022 Form 1040 U.S. Income Tax Return, will they also ask?:
“At any time during 2022, did you lose your a$$ gambling on Crypto, and or, DeFi?”
Now, the question is going to be tax related. How will the IRS treat capital losses? In theory, the IRS treats bitcoin as property. How will the citizen be able to write off loses? How many citizens, and how much money will this add up to for 2022?
For the true bitcoin believer, the proper answer to the first question from the IRS is:
Blank.
The IRS taxes gambling winnings. You can’t write off gambling losses.
All gambling , including large lottery wins, are tax free in the UK…..so if you want to win the lottery go to the UK////
Canada is closer and all lottery wins are tax free.
“The IRS taxes gambling winnings. You can’t write off gambling losses.”
HowNow,
I believe you can, to the extent of your documented “investment”, if you declare yourself a professional gambler, and only against the wins…not to exceed.
Who made the money? Somebody did.
Nobody made it; they simply stole it and issued digital tokens in return.
Those that sold to the bagholders and took their fiat and ran with it.
Those that sold in time to the greater fool and took their fiat and ran with it.
Lots of people made lots of money if they sold in time and took their fiat and ran with it.
But that money that they made came from the people that bought this stuff.
Exactly, it’s only a wealth transfer.
A sale at the peak is a wealth transfer from one person to the other.
But overall, $2 trillion have vanished since the peak. That wasn’t transferred. It just vanished. Poof. Gone. Sames with stocks, only bigger $$.
The keyboard holder
Plenty of people made plenty of money. Greater fool theory at its best. I know two people who made $40K per year at their normal day to day job, bought $2K worth of DOGE, and sold after it turned to $100K. That’s 2.5X their gross salary, and they paid zero taxes on it because the IRS was and still is trying to figure out how to tax these gains. They started a business with those gains.
I also know people who after finding out other people did this, lost $10K.
That’s a 50X return. In order to do that, they would have had to buy DOGE before it was ever even known. I call BS.
HODLers could never make money by definition.
I didn’t know the bonds microstrategy issued are unsecured. Who was stupid enough to buy them? I’d better they’re on tethers balance sheet.
Very clueless and stupid people, obviously.
If the crypto lobbyists have their way, it’s gonna be a lot more connected too………….
A wave of notoriously risky cryptocurrency firms could one day be integrated into the traditional banking system under a little-noticed provision in a new bill that is raising alarms among financial experts about potentially destabilizing consequences.
The provision — part of a sweeping proposal to regulate the crypto industry that Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced in June — would force the Federal Reserve to grant so-called master accounts to certain crypto firms seeking them from the central bank. The accounts give holders access to the Fed’s payment system, allowing them to settle transactions for clients without involving a separate bank.
I wonder if “Chatty Cathie Woods” still thinks bitcointrash is going to be worth 500k – LOL
The question I have is how all this will ripple thru regular equities, as one poster here said that cryptotrash could be leveraged to buy 5x on margin of market equities with 20% down – we’ll soon find out, – plus how many banks and companies were using it for transactions using this BLOCKHEAD – errrh – blockchain 1’s and 0’s idiocy possibly sitting on a hard drive in basements of geeks and hackers!
This is going to be a colossal mess made by fools, and lawyers galore are already swooping in like buzzards, so I have read.
Some IDIOT wrote this a few days ago:
“Marion Laboure, a Harvard University lecturer and senior economist at Deutsche Bank, in a report on Wednesday.
And stocks are in a bear market. But understanding the relationship between digital assets and equities reveals some optimism amid a looming “crypto winter”—and Laboure sees what could be a 40% rally for Bitcoin prices ahead.”
Yeah right, the wrong way pal – LOL
I saw a dead rat about 10″ long (big guy) during my dog walk late last week. Later in the day, the Turkey Vultures were feeding on it, like they do all the dead animals around here.
On my walk this morning, all that was left of that poor dead big rat was a surgically picked clean spine. So clean, in fact, no remains of flesh were evident on it and none of the thin bones were even broken.
Beautiful job! Love the work of those Vultures. Amazing precision.
The process of cleaning the meat off that dead rat and leaving an inedible spine bone has reminded me of what the Crypto websites are going to look like once the run to the exits is complete.
Where I lived off grid the yellow jackets always got there first and work from the inside out. They are the true “surgical” pickers. Never have seen how they and the buzzards (or ravens) interact, though. Probably would be interesting.
In San Antonio we used to put good condition deads on an ant pile. They could pick them cleaner than Warren Buffet does with BK banks.
But even down here, I watch ravens torture buzzards in the air, and then the starlings torture the ravens.
Cool to watch, it’s like fighter aircraft harassing lone bombers, but without guns.
because everything’s interconnected….
Thank goodness for that. We’ve all arrived at this awareness and just in time. Where next?
Alot of bankers in the comments today. Not a whiff of retailers that accept crypto or the countries that recognise as national legal tender.
Apparently having any vague grip on functioning finance makes one some kind of wretched “banker”?
It seems to have exempted anybody who ran or promoted these startups (too clever for that? /s), except the few actual bankers, who perhaps then were knowingly committing financial fraud.
How did these suckers think they were exempt from the principles of finance? Like, um, diversification of debtors, reserves, insurance? Was it, they thought they could fall back on having no credible controls? No real accountability? No ability to seek recourse from offshore entities? No effective modern security? “Smart” contracts with swiss-cheese hackable holes in them? That the price of an “asset’ such as their could not fall, though it was mainly fanboy-supported and sentiment-based?
In the old days, for about five minutes of my life, I might’ve wanted to smoke whatever they seem to have imbibed. But then, follow the (stolen) money, get to the truth. At the end of the day, whoever got away with some chips, gives the best answer (but will not offer it).
But I am having such sweet schadenfreude, seeing so many big shots get cleaned out and walking the hall of shame! Yeah, some small sliver of it it might’ve worked, and might still, but is that why you needed every little sucker’s precious money?
Best real live mania since housing, circa 2006. I hope some folks kept some of the crypto ads, because they will be fun to look at, like the subprime ones are.
I have a magazine from ’99 featuring Enron (completely incomprehensible trying to describe what they did), and Martha Stewart. Martha reinvented herself post-jail, not Enron. The magazine itself vaporized in the dotcom crash. Those numbers sound about right for public figures in USA business.
WOLF
You say this is just getting started. I would posit the early adopters who sold and converted to fiat are mostly gone now. I know one personally who turned about $100K fiat into $3M via early adoption of Bitcoin and other cryptos and then trickled them off to greater fools circa 2016-2020. He has converted everything to hard assets now to preserve his unreported capital gains.
I also believe he is too small a fish for the IRS to chase after.
I guess what I am theorizing is that these “big” Crypto lenders born in the past 5 years who will be circling the drain over the next couple years probably do not represent much of a real economic impact to the rest of the country / world. I would say this because it’s a collection of mostly tiny bag holders shaking their heads but then just going to their 9-5 jobs for the next 20+ years having learned a lesson.
If anyone feels this vaporizing of Monopoly $$$ will have any noticeable effect on other markets, I am eager to hear such a theory.
I tracked down a person on the net who had been bragging of all the illegal businesses he runs, including using crypto to avoid taxes. Reported it to the IRS anonymously and now he’s being audited for unreported taxes over the past several years. He’s not a big fish so if your guy grinds your gears, go ahead and snitch. Otherwise the rest of us just end up paying more :(
The guy I caught is still scheming though, creating fake linked in accounts and traffic to try and sell to corporate execs to make it seem like they’re bigger deals than they are. Just a total scumbag.
The IRS has a preference for smaller fish:
The big fish all have lawyers and can take decades to “digest”, dragging down KPI’s, the small ones will all have to settle fast.
Thanks for the comments – but no one has yet answered my inquiry:
“….If anyone feels this vaporizing of Monopoly $$$ will have any noticeable effect on other markets, I am eager to hear such a theory….”
I posit it is a nothing burger.
OK bpup:
Seems to me that the case is made fairly convincingly at this point in time that ”It’s the psychology” that is SO influential on markets.
Or, as Zig Zigler taught, ”it’s the sizzle not the steak” that one is selling, promoting, shilling for, etc.
As such, IF in fact there is a return to some sort of ”real” assets evaluation, including cost of renting money, as a result of total crash of these gambling tokens, the psychology will be shared, possibly globally, and at least add to the growing sad and negative vibes.
Also depends on how deeply the trillions of hidden ”paper assets” have become connected/associated in some way to these digital assets, which we may never know, just like we don’t/ever know about the real wealth of some of the old money families.
VintageVNvet
Fair enough – it’s tied up in psychology. I still “feel” based upon Wolf’s presentation here – that Crypto was leveraged to other Crypto, margin calls in Crypto, defaults on same, then BKs. The fiat that sparked it all was put in years ago (mostly) and early adopters are sitting fat in real assets (read: market stability) and many smaller players will be forgotten (or already have been).
As Wolf summarizes, it is fantastical, but kinda like all the fireworks yesterday – the sky lights up for an hour and then everyone goes home and it’s biz as usual. That’s my theory anyway – and I hope a lot of inexperienced investors learned a valuable lesson.
Io/faj-IRS, private citizen, or those in-between, the inclination to pluck the low-hanging fruit first is baked into human DNA…
may we all find a better day.
I searched and don’t see him mentioned here, what are thoughts on the Crypto savior Sam Bankman-Fried?
His exchange might block withdrawals too pretty soon. He is very exposed to some of the collapsed crypto firms, including Voyager.
Uh, no.
SBF is a quant. His recent public activities support/amplify the complex and dynamic algorithms he develops to trade through his other business on FTX and elsewhere.
Up, down, doesn’t matter. Everything is a trade.
CZ and SBF, miles ahead of everyone else.
> “Uh, no.
SBF is a quant.”
Quants blow up all the time. Your remark sounds like the absolutely standard hype for every supposed wizard behind the curtain who has found an unbeatable method. The graveyard is full of them.
I was curious about this guy with purportedly bottomless pockets. It makes more sense to me if he is burning money to try and arrest his own wipeout. Then again, he might be the next Milken or something. But the adoring hype line doesn’t add anything.
Uh, no. His firm lent to Voyager and has provided bailout loans to other firms in cryptos. His firm has been playing the central bank with cryptos to bail out failing firms, except it’s not a central bank — just more leverage and more interconnectedness.
“SBF is a quant”
When Aspergers meets cryptos.
Breaking news.
Crypto brokerage Voyager Digital files for Chapter 11 bankruptcy
Voyager commenced bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of New York on Tuesday.
The company suffered huge losses from its exposure to crypto hedge fund Three Arrows Capital, which went bust last week.
Sam Bankman-Fried’s Alameda Research is listed as Voyager’s largest creditor, with an unsecured claim of $75 million.
Given the recent frauds , there are increasing calls for government regulation of crypto s.
At the same time lack of transparency and reporting requirements is what makes cryptos attractive for illegal activity
The SEC just turned down GBTC application to be transformed from a trust to more like an ETC.
MSTR just bought another 480 bitcoins
Regulators could have made a difference on the way up, but they stayed out for a good reason.
Now that the whales have taken the chips and left the casino, the regulators can move in and punish the already-punished suckers without bothering the whales.
Lookup Silk Road ,billions stolen by uncle
I think a crypto could have value if it was transparent and went through a transparent IPO process. The fact that Bitcoin was created by an unknown person and is largely owned by a few whales gives me zero confidence. It’s a sales scam. Nonethelessless, central banks are equally non transparent and manipulative, so until that changes here will be demand for alternative currencies and stores of value.
Central banking has been monetary dictatorship with zero accountability and unclear goals.
All central banks are very transparent and the Federal Reserve is the most transparent of all of the 193 or so central banks and annually release a highly detailed and fully independently audited financial statement which is present to Congress and the American public, and moreover, they rebate more than 94% of their annual profit each year to the US Treasury and to its taxpayers. The full annual report is there for all to see at:
FederalReserve.gov
Go read and review it carefully.
Any idea what that noise from ex Senator Ron Paul about “auditing the FED” was all about?
cb,
SoCalBeachDude is talking about the financial audit that auditing firm KPMG performs on the Fed’s financial statements every year.
Ron Paul called for a periodic operational audit, which the GAO eventually did twice, and the last results were released in 2011 in a report by Bernie Sanders, which disclosed what was said and done during the bailouts and who traded what on the side.
I covered the Sanders report on the GAO audit of the Fed in 2011; this is the first paragraph:
https://wolfstreet.com/2011/10/21/the-gao-audit-of-the-fed-doesnt-call-it-corruption/
“The Government Accountability Office (GAO) finished its second audit of the Federal Reserve System and came out with a 127-page report that outlines, among other issues, the huge and complex conflicts of interests that arose when the Fed decided who got what during the multi-trillion dollar bailout mania between 2007 and 2009 (timeline of bailout mania; Senator Bernie Sanders’ 4-page Report on the GAO Audit).”
@ Wolf – “here is the first paragraph in my article from 2011 when I covered it:
https://wolfstreet.com/2011/10/21/the-gao-audit-of-the-fed-doesnt-call-it-corruption/”
================================
Thanks.
Your 2011 article was fantastic. It points out how sleazy the FED was, and how transparent they are NOT, contrary what cheerleaders like SoCalBeachDude says.
SoCalBeachDude said: “they rebate more than 94% of their profit”
———————————————-
profit? or ill gotten gains?
Interest from the securities they hold.
Yes Wolf, I understand. My point is that the FED gets to digitize from nothing the dollars to buy those securities, distorting the markets, suppressing interest rates, and punishing savers and dollar earners and holders by diluting the value of the dollar.
It’s a scam to benefit one class at the expense of another.
Let’s call it what it is.
legal fraud
If they were transparent, they would answer the hard questions honestly, but they do not. Their goals and statements are full of contradiction, and much of what they say is plainly false. For example, they say you cannot identify a bubble. They say they don’t respond to stock price movements. They say their policies have no impact on wealth concentration. Etc.
That is NOT transparency.
They are professional liars.
No, crypto wouldn’t have value if it was transparent. It’s nothing and transparency won’t change that. It only has value due to speculation, the trading of nothing.
Aside from the supposed “stable” coins which aren’t (necessarily) stable, the price is too erratic for use as a functioning currency or payment method at any scale. “Stable” coins don’t provide any incremental benefit to electronic fiat currency and are inferior, since it isn’t backed by the “hard power” of the state, or anything else.
Not being anything, it’s not a real asset either. No different than NFTs. It doesn’t produce anything, has no practical use, and only increases in value due to speculation.
Celebrating the “hard power” (translation – ultimately a gun in your face) of an increasingly less trustworthy state isn’t exactly a great long term strategy.
In fact, it is the very impetus behind the development of all altCurrencies.
There is plenty of fraud going on – but don’t ignore the most pervasive fraud of all.
The Chicago Mercantile Exchange (CME) trades Bitcoin futures and Micro-Bitcoin futures alongside the Sp500 and the currencies. They even have limit-down rules to halt trading in the free fall down days to protect conservative old investors like me trying to grow my Social Security. Shorting Bitcoin in your JPMorgan-Etrade (with SIPC Insurance} account does add a bit of respectibilty and legality to this opportunity, with little risk of them disappearing overnight.
Your understanding isn’t correct.
In a real market crash, trading halts due to intraday loss limits due nothing to prevent anyone from losing money. It’s another illusion.
The idea behind trading halts is that “waterfall” declines are supposedly the result of irrational temporary selling whereas of course, we know that parabolic increases make perfect sense and are the result of totally reasonable fundamentals.
It hasn’t happened yet but give it time. One of these days, an exchange or the entire market will be closed for days or weeks. Everyone will find themselves locked into their positions with no ability to sell, and when the markets reopen prices will crash again anyway not to recover for years or for something like BTC, maybe never.
Last time it happened was on 9/11. The US stock market recovered quickly but that wasn’t the end of the asset mania.
What’s weird to me is that it seems like the interconnectedness is limited to the Crypto world, like it’s very nice of these people to keep everything in house, and not spread the love around as in using crypto as collateral to buy stocks on margin. Just doesn’t make sense.
They probably did
It was starting to spread into other transactions. That was the dream of DeFi (and the hype to the small punters funding the dream).
Rut…roh! Peter Thiel backed craptocurrency lender suspends withdrawals who are left holding the empty bag!!!
Crypto is dead when the lights go out. And they will.
If the lights were to go out, crypto would be the least of your problems.
“If the lights were to go out…”
If? I wish I could be so optomistic.
What potential spill over into the rest of the system are we seeing? How many big companies and financial institutions invested in this Crypto / DiFi mess?
Grabbed this snippet from a Bloomberg article:
“Last year, according to crypto-security firm Chainalysis, a total of $3.2 billion in cryptocurrency was stolen from exchanges and decentralized finance (or DeFi) apps, in which crypto traders make deals directly with one another. That’s 100 times more than the total stolen in all bank robberies in an average year in the US, Federal Bureau of Investigation statistics show.”
I could follow up on this with all sorts of personal ruminations, but I just want to leave this amazing factoid out there for its own sake.
In fairness, swindlers have always taken vastly more than bank robbers.
Big bank robberies are essentially impossible in recent decades. A robber is either a semi-conscious druggie, or a recently released professional criminal who wants to get back into the familiarity of prison life in a well-run federal joint.
So-called ‘white collar crimes’ pays much better than mere little ‘blue collar crime’ by many orders of magnitude. Always has. Always will.
I wonder how much money is scammed out of old-fi like credit cards each year. That of course involves new tech such as Dark Web.
1) 200 comments Anti creepto, 200 reasons for old big whales bold
B&H billionaires to day trade, to speculate in crypto, for fun. Creepto will rise, at least for a while.
2) Gold jewelry stores disappeared from center malls.
3) 14K gold rings are too expensive for middle class women in US, China
and India to buy. The days of Italian gold chains are long gone. Gold prices
are too low to extract, too high to consume. Even if gold will plunge to the
800 – 1200 area 14K gold jewelry will not be back.
4) Creepto are commodities, limited supply, hard to extract. WTI is up,
food is up, but creepto and gold are down.
5) DXY reached Nixon Jan 1974 upper fractal zone : 105.90/ 109.50.
After fifty years Nixon dominate USD. Options
6) Option #1 : DXY will rise to Nov 1982/ Jan 1983 backbone 126.02/ 115.43.
7) Option #2 : DXY will reach Nixon July 1973 lower fractal zone 92.91/ 90.54.
8) Option #3 : A trading range, between the two fractal zones.
Delete bubble up to the Plaza in Nov 1982 and to the dotcom 1999/2001,
Delete the nadir in Mar 2008. Delete extremities…no collapse, no hyper inflation
I have never seen such a boondoggle of alternative currency flourish this long, – didn’t the Congress, Feds, SEC, FTC, etc, etc, see how this nonsense could effect so much financial chaos on all markets??
They were asleep at the wheel, – my earliest recall of bitcointrash was around $350 around 2015, and I thought it was a joke to buy back then, because it was based on popularity, and 1’s and 0’s on a hard drive somewhere, and thought it was total insanity that would fail.
How in the HELL can all our gov agencies miss such a mess?
The last Super Bowl was at SoFi Stadium and had so many crytotrash commercials that made me sick, – by paid airhead celebrities.
As far as the “bagholders” of this crytotrash who most likely lose everything, they will “sing” to the IRS and be armed with lawyers, and I see RICO laws enforced on the sellers who never reported income and promoted this BS, – and all their assets will be seized, and lawyers galore will tie this up for years.
All this makes Bernie Madoff fiasco look small compared to all this racketeering, along with all promoters on Youtube, Twitter, etc , – and ALL their fancy houses, yachts, houses, etc, will look very “juicy” for the FBI/IRS to seize, and I have LESS than ZERO sympathy!
yield has been dropping since last Fed increase, which seems strange in the light of expecting another 75bp cut in July.
#1: Powell said that the discussion at the FOMC will likely be whether it’s going to be 50 or 75, with some FOMC members saying that they COULD vote for 75, and some saying that they WOULD vote for 75. So everyone knows that the decision/vote will take place at the Fed meeting, and the indicated range as of now is 50-75.
#2: Not strange at all. It overshot going into the Fed meeting, now it’s unwinding the overshoot, and then it will shoot higher again. Look at the long-term chart. It always does that. The yield is just another betting instrument, not the needle on a fuel gauge.
Minor point: blockchain is simply a technology. Leveraging, the root cause, is a financial matter. CryptoCurrency may have had a bad business model. But the underlying technology has viable applications.
Such as? For what?
Exactly.
That tired old yellow metal has plummeted yet another nearly $35 per ounce today and is now at $1,778.20 as the US Dollar reaches a new high for the year and is now up a whopping 1.37 on the DXY to 106.49 and will soon be well over 110 and on its way towards its record high of 160 last seen briefly in 1985.
As a value type investor I went into this downturn with what evidently people want now which is dollars. Now comes the hard part deciding when and what to buy with them. Seems too early to put much to work. Housing is definitely not cheap enough.
Just checked BRK-B and price to book is 1.17. long term average is around 1.35 so we are getting there. Been just 3 or 4 times you can pick up at book value 1.0 and that has been a good buy each time.
Good luck with that.
I wish the USD would go to 160 on the DXY so that I can convert all my savings to another FX and then move somewhere else. It’s not going to happen.
The USD is in a long-term bear market against the few currencies that are actually worth owning as alternatives.
You’re talking about gold losing 2% today. Look what the USD has done since the 1960’s against other currencies and since ’71 versus gold.
Wonder how those are doing, who were buying crypto just ahead of the drop? Has anyone been able to cash out their chips at the Crypto “house” window? Getting harder to find others inside the casino to sell your chips to.
Indeed, and it bring back memories of the kerfuffle in tulips a few years ago back in1637 in the Netherlands.
Silver has plunged $0.54 per ounce down to $19.37 today as one of the biggest ever deflationary routs of commodities takes hold and intensifies.
That’s simply the paper price. You can’t buy ASE coins for less than $30 per.
No. It is the spot price and you can buy 100 oz bars for that price and most all coins unless they have any numismatic value such as proofs and uncirculated coins do which is a whole ‘nother market.
It’s the real price, just as other spot and futures prices are for other commodities.
The “paper” price is not supposed to be a retail price and it isn’t. Just like I can’t buy lumber at Home Depot or Lowe’s for the spot price, silver is no different. It’s still the benchmark for commercial transactions.
High premiums for physical aren’t just due to unprecedented demand but liquidity which is awful. The worst since I have been tracking it back to the 80’s.
If the spread was really just about demand, then market makers (mostly coin dealers) would raise their bids to make more money on volume. My explanation for why they don’t is the cost or inability to hedge inventory.
The risk that “metal bugs” have now (mostly without even knowing it) is that future forced selling of the physical metal will collapse the spot price and both premiums, the spread between “bid” and spot and the spread between “bid” and “ask”.
Silver closed at about $19 today. A more reasonable premium over spot for “bid” is something like $2 making “bid” $21 for an ASE instead of the $26+ I saw the other day. That’s about the marginal cost to turn the unfabricated metal into coin or bar form.
A more reasonable “bid-ask” spread might be $3 or $4 resulting in an “asK” of about $25 instead of well over $30.
There hasn’t been forced selling because of low unemployment. It didn’t happen in the GFC because the financial duress was temporary.
“Silver has plunged $0.54 per ounce down to $19.37”
Yeah…try to find a private party that will sell silver at spot….
That is the current spot price and you can buy tonnes of it at that price as vast amounts are available at that price.
Most buyers don’t want the physical metal. That’s why they buy substitutes like SLV. They are only attempting to make a fiat profit off of the change in market price.
Yes, I know the difference and why physical buyers want it.
I was in a coin shop today. The owner can not buy enough physical gold coin over the counter for his list of waiting buyers. He has to have it shipped in (very expensive). An oz of retail AU has $150/200 mark-up over melt (depending on they buyer, and what tender is used to make the purchase). Buyers get a better deal on one big coin. Smaller coins can double the premium over melt.
There is some physical silver that comes in locally. He buys at melt, and sells at 33% above melt. That is a super high premium.
Scrap PM (mostly jewelry, chains, etc) is bought at a sharp discount, and shipped out periodically to be melted/refined. He has been losing money lately on shipping scrap because of falling commodity prices.
ARK Invest is having a live podcast right now on youtube about crypto with Dorsey, Wood, Musk, and some other dude.
Too funny.
A bunch of idiots and grifters trying to pump it back up. Pump and dump, pump and dump, pump and dump….that’s all it is.
If Twitter, Tesla or Ark go under those three are going to be in deep do do. People don’t care too much til their money is gone, then the lawyers come out and the public wants a hanging.
Ah for the good old days. A simple tulip bubble was way easier to understand…..
As the great US Dollar magnificently soars today and is now up 1.58 to 106.70, preposterously overpriced metallic stuff continues its plunge into the abyss with gold now down $45.60 to $1767.40 and silver down $0.76 to $19.15 and other commodities deflating like popped balloons.
This morning there were several ‘analysts’ on Bloomberg saying there was really no chance of a recession, and they may be right as the world economies in the US have a high probability of just skipping the annoying ‘r’ word and heading straight into the biggest depression ever!
WTI (US West Texas Intermediate) oil has plummeted $8.74 per barrel all the way down below $100 to $99.49 per barrel today and keeps plunging which awakens dreams of getting a BMW V12 again!
Well, that trip below $100 was fun while it lasted, but it didn’t last long, did it? Now at $102
Oil has crashed almost $10 per barrel today. Remarkable.
Check out the dollar index and the Euro today. Euro futures down to 1.0296, a 190 pip move.
Great time to accumulate shares of oil companies—such as OXY, MRO, or DVN.
Do what Buffet is doing—buying up the oil companies
Don’t try to catch a falling knife.
If we go into a recession, those stocks will drop.
Buy when then interest rate hikes end. IMHO
While true, one can never time the bottom, so I believe in buying a little at a time. I’m still holding some long-term shares of MRO which I bought at $4.25. (I sold some off). Holding for another 2 years, most likely.
Oil went down today below 100 due to recession worries!
Let’s hope it doesn’t plummet into negative territory once again like what happened in 2020 when it went to -$33.00 per barrel.
The markets seem to be reacting as a whole now. I mean, how can all the individual commodities just happen to dump on a Tuesday? Isn’t it supposed to be a bit more complex, you know, the stuff the world uses? Commodity producers are at the whelms of speculating fools.
Next week, it may be the stocks diving again, Good stock, bad stock, they all dump at the same time. Monkey see monkey do.
Of course, we know all the crypto’s stink, so they should all be dumping together. Maybe this article should have been called:
Tales from the Crypt(o).
Bouncing back now, $102
Dogecoin already back down to 6c while shiba inu crashed to nothing, which is its true value. The crypto mania won’t end until dogecoin is close to nothing. I saw many online pimp shouting $1 when dogecoin is around 30-60c.
Elon Musk is a smart businessman but not decent guy. SEC supervision is very weak, IMO.
Rehypothecated rehypothecations.
I am just curious and would like to know how many commenters have read either a technical book or paper about either Bitcoin or Ethereum?
a16z just published a comprehensive 56 pages report “State of Crypto” where they highlight the incredible innovation happening in this market.
I have studied this matter for about a year and I can see there is value behind this technology, not saying Bitcoin is better than gold or FIAT Money but it’s a very good new investment alternative if you know what you are doing and where are your investing to.
Block chain technology has potential real and practical application especially banking and financial sector. I have no knowledge of Cryptos although one of my sons who in IT has been trying give me tutorial on them. right now it has crashed and in chaotic state!
Jn,
What exactly is the most valuable and useful feature of this tech? Seriously, I really wish someone could explain. And how will it work in the real world beyond crypto coins?
Maybe it is great, but why do I want everyone to know what I do with my money?
The most valuable feature is that it creates a direct path between ‘monetization’ and ‘anything digital’.
You don’t have to join a group you just have to build a good product and you instantly have an entire economy based on that product.
So far there have been no great implementations, but there will be.
1) EURUSD was up from 0.92 in May 2002 to 1.6 in July 2008, when
DXY reached nadir.
2) EURUSD is trading in a downtrend channel : July 2008 to May 2014 highs/ parallel from Oct 2008 low.
3) DXY is up 50% since 2008.
4) DXY is voice frequency. EURUSD is radio frequency that transmit
our voice to the world.
5) In 2008 the speculators spit on our dollar, today they respect it.
6) Putin might be doing us a favor, teaching us about life without natgas and oil.
7) EU commish Ursula Von der might wake up and save the Euro.
8) DXY entered Jan 1974 monthly fractal zone : 105.90/ 109.50. It might be peaking….
Actually there was a major leverage issue according to some people in the 2017 run up. Those people, many people, believed Bitfinex was using USDT U.S. Dollar Tether to buy massive amounts of bitcoin, pump it up, then unleverage its stablecoin slowly.
The real issue with interconnectedness is much worse than is suggested on the YouTube video, but in a different way.
In 2010 there was just Bitcoin and Namecoin, two cryptos only at that point.
In August 2010 somebody found a bug in the bitcoin code and counterfeited billions of bitcoin.
https://hackernoon.com/bitcoins-biggest-hack-in-history-184-4-ded46310d4ef
Today algorithms are much more complex in coins that have smart contracts, and many coins are built on top of big coins like Ethereum which have smart contracts.
A lot of “coins” that exist today are simply smart contracts built on Ethereum or another platform.
There have already been a lot of catastrophes for some investors from these bugs but a major bug that wipes out all coins on a specific ecosystem, like Ethereum, would cost many billions.
Digital currencies, once they evolve a bit, will do amazing things, but the current crop is not great.
Voyager declared bankruptcy.