Cryptocurrencies

[Dave86ch]

Frankly, the hits keep coming for the USD and the western Bank System.

 

Interesting analysis

 

https://youtu.be/pP_HHE0kFhA

Edited March 23, 2023 by Dave86ch

[rkbabang]

2 hours ago, Dave86ch said:

Frankly, the hits keep coming for the USD and the western Bank System.

 

Interesting analysis

 

https://youtu.be/pP_HHE0kFhA

 

 

Thanks for the video.  I think he's eventually going to be correct.  I just don't think he's got the timeframe right.  He thinks the dollar dies quickly in the next few months.  I think it will happen gradually over the next few decades.  I certainly hope that I am correct, because what he is predicting would be extremely messy and will certainly evolve much death and destruction world wide.  I think (hope) the can keeps getting kicked down the road for a long time yet.

 

[Dave86ch]

21 hours ago, rkbabang said:

 

 

Thanks for the video.  I think he's eventually going to be correct.  I just don't think he's got the timeframe right.  He thinks the dollar dies quickly in the next few months.  I think it will happen gradually over the next few decades.  I certainly hope that I am correct, because what he is predicting would be extremely messy and will certainly evolve much death and destruction world wide.  I think (hope) the can keeps getting kicked down the road for a long time yet.

 

I think the same way because I'm used to avoiding being trapped by variables like time (but I get Balji's goal). However, the logic makes complete sense and the data are there.

 

Hyperinflation, like many other events, usually catches people ill-prepared, as has happened every time in the past. It is a historical constant well depicted by stories like Noah and his ark. People mocked Noah when he was preparing his ark to save himself and his family. I don't think the story itself is relevant, but I believe there is a framework that tends to repeat throughout history. Rome and the Denarius are great examples, as well as well-known instances of hyperinflation in the modern era.

 

I saw people caught totally unprepared here in Switzerland during the failure of Credit Suisse, which in my opinion was completely predictable.

 

There are many signs that the world order is changing, as Dalio has extensively described.

Edited March 24, 2023 by Dave86ch

[Parsad]

23 Year Old Canadian Crypto Prodigy Files Bankruptcy

 

https://www.dailymail.co.uk/news/article-11905531/I-dont-know-live-Victim-slams-crypto-prodigy-lost-36k.html

 

Was a crook!  Cheers!

[rkbabang]

5 minutes ago, Parsad said:

23 Year Old Canadian Crypto Prodigy Files Bankruptcy

 

https://www.dailymail.co.uk/news/article-11905531/I-dont-know-live-Victim-slams-crypto-prodigy-lost-36k.html

 

Was a crook!  Cheers!

 

 

Sometimes you need the tide to go out to find this stuff out.  But with crypto it's hard to sympathize with the victims.  I know they are completely ignorant, but shouldn't their lack of knowledge make them hesitent to invest large sums of money?   

 

"The money was intended for her grandchildren's education, but she lost all but CA $10,000 ($7,300).

'The whole thing was based on trust,' she told CBC News last year. 

'What Aiden has done, I think, is awful — and I don't know how he can live with himself.'"

 

Crypto is supposed to be trustless.  If you are investing a ton of money based on trust into crypto, you are doing wrong.

 

[Blugolds11]

44 minutes ago, rkbabang said:

 

 

Sometimes you need the tide to go out to find this stuff out.  But with crypto it's hard to sympathize with the victims.  I know they are completely ignorant, but shouldn't their lack of knowledge make them hesitent to invest large sums of money?   

 

"The money was intended for her grandchildren's education, but she lost all but CA $10,000 ($7,300).

'The whole thing was based on trust,' she told CBC News last year. 

'What Aiden has done, I think, is awful — and I don't know how he can live with himself.'"

 

Crypto is supposed to be trustless.  If you are investing a ton of money based on trust into crypto, you are doing wrong.

 

 

I agree with you, "a fool and their money soon parted".

 

Really what this comes down to is greed right? Never underestimate basic human behavior. There has been A LOT of money lost over the years to "slam dunk, cant lose, get rich quick" pitches to the ignorant/unaware. Probably since humans have been around, in some form. 

 

How many people bought "meme stonks" based only on stories of others 3x,4x+ they heard/read with no clue what they were doing. The pumpers already made their money and got out, stocks crater and they are left holding the bag, unwilling to acknowledge they made a mistake and leaving the paper loss, with a hope it might rebound "someday". 

 

As long as there are humans, there will be those who are uneducated and vulnerable, and the sharks who are pitching "opportunity" playing on emotions of the weak and taking advantage of the situation. 

 

Literally unlimited examples of this with the same underlying story. Hell isnt this the same thing the States realize and take advantage of? For the nominal "investment" you have the chance to be set for life? State lotto anyone? The difference is, they only take a relatively small amount from the the masses $5/$10 for a ticket on the chance to hit it big, rather than someones entire nest egg and leave them destitute. The sums are different, but the basic premise is the same. Its a rigged game in favor of the house aka the state. Revenue in the form of lotto ticket sales, and then even if/when someone wins, the real winner is the state, because the winnings are taxed. 

 

Tbh, she says, "what he did is awful, and I dont know how he can live with himself" but IMO she should do some self reflection and say, crooks are gonna crook, I dont know how I could have let that money go so easily and how I was duped". I agree what he did was terrible, and he is a crook, but if it wasnt him, she would have likely fell for another sham, only a matter of time. A lion will always be a threat to the gazelle.  

[giulio]

8 hours ago, rkbabang said:

Crypto is supposed to be trustless.  If you are investing a ton of money based on trust into crypto, you are doing wrong

I agree, what you need is faith not trust.

 

Binance and CZ have 300+ accounts for proprietary trading and push users to use VPN to trade, like any other porn/file sharing website.

 

How can you trust something like that?  It's beyond ridiculous. 

 

G

[TwoCitiesCapital]

On 3/23/2023 at 5:45 AM, Dave86ch said:

Frankly, the hits keep coming for the USD and the western Bank System.

 

Interesting analysis

 

https://youtu.be/pP_HHE0kFhA

 

Just getting around to listening to this and it is f*cking scary

 

The argument seems to boil down to the below since he doesn't really lay it all out succinctly - 

 

1) FDIC insurance typically dissuades bank runs b/c most deposits are insured

 

2) bank runs can be started if people feel their deposits are at risk/uninsured which is what has happened with individual banks so far

 

3) FDIC fund balance is $128 billion versus 17.6 trillion in total bank deposits. In reality, nobody is insured if bank runs exceed ~1% of deposits. Fear, more attractive alternatives, and the continuous hemorrhaging of bak earnings/capital can precipitate systemic deposit flight in excess of that 1%. 

 

4) nobody is going to allow cascading bank failures to send us into Great Depression II so Congress/Treasury print trillions to backstop banks/capital flight/etc. 

 

5) But this is money in circulation as it is accessible by consumers as deposits - not bank reserves like historical money printing so this would be hyperinflationary.

 

So how likely is it that the average consumer realizes that FDIC insurance really ISN'T a thing if we get en masse deposit flight? And then precipitates that flight? 

Edited March 29, 2023 by TwoCitiesCapital

[Dave86ch]

6 hours ago, TwoCitiesCapital said:

 

Just getting around to listening to this and it is f*cking scary

 

The argument seems to boil down to the below since he doesn't really lay it all out succinctly - 

 

1) FDIC insurance typically dissuades bank runs b/c most deposits are insured

 

2) bank runs can be started if people feel their deposits are at risk/uninsured which is what has happened with individual banks so far

 

3) FDIC fund balance is $128 billion versus 17.6 trillion in total bank deposits. In reality, nobody is insured if bank runs exceed ~1% of deposits. Fear, more attractive alternatives, and the continuous hemorrhaging of bak earnings/capital can precipitate systemic deposit flight in excess of that 1%. 

 

4) nobody is going to allow cascading bank failures to send us into Great Depression II so Congress/Treasury print trillions to backstop banks/capital flight/etc. 

 

5) But this is money in circulation as it is accessible by consumers as deposits - not bank reserves like historical money printing so this would be hyperinflationary.

 

So how likely is it that the average consumer realizes that FDIC insurance really ISN'T a thing if we get en masse deposit flight? And then precipitates that flight? 

 

I am Swiss, and for many years, people have been questioning the pension insurance. This is because they are starting to realize that people now receive less money than in the past. The whole Swiss banking system is a trap designed to ensnare people through disadvantageous social insurance, funds and mortgages. What will happen is that over time, people will start to understand what money is and the consequences of avoiding this topic. We are starting to think long-term, as a more informed species, and the battlefield is knowledge and the willingness to be informed and to inform. At some point, the compound effect will kick in, and people will suddenly realize that we are immersed in an unsustainable web of illusions. The walls of this farce are cracking, and a coat of paint is no longer enough. 

We have to consume less atoms, build more bits and redistribute deflation forces equally.

In other words reducing inefficiencies.

[scorpioncapital]

Yet Swiss has one of the most inflation protected currency on Earth? Can you imagine the uproar when less than Swiss low inflation currency games occurs? Or is it a question of just taking a long time for the currency debasement to occur? The crypto-coins have made people very rich. Ethereum from 10-20 to 1800. It makes you wonder if the bubble is not even started to pop or if regular stocks could really boom in such an environment. They both do something useful, make money and are trading far less than these crypto coins!

[TwoCitiesCapital]

16 hours ago, TwoCitiesCapital said:

 

Just getting around to listening to this and it is f*cking scary

 

The argument seems to boil down to the below since he doesn't really lay it all out succinctly - 

 

1) FDIC insurance typically dissuades bank runs b/c most deposits are insured

 

2) bank runs can be started if people feel their deposits are at risk/uninsured which is what has happened with individual banks so far

 

3) FDIC fund balance is $128 billion versus 17.6 trillion in total bank deposits. In reality, nobody is insured if bank runs exceed ~1% of deposits. Fear, more attractive alternatives, and the continuous hemorrhaging of bak earnings/capital can precipitate systemic deposit flight in excess of that 1%. 

 

4) nobody is going to allow cascading bank failures to send us into Great Depression II so Congress/Treasury print trillions to backstop banks/capital flight/etc. 

 

5) But this is money in circulation as it is accessible by consumers as deposits - not bank reserves like historical money printing so this would be hyperinflationary.

 

So how likely is it that the average consumer realizes that FDIC insurance really ISN'T a thing if we get en masse deposit flight? And then precipitates that flight? 

 

And I guess what concerns me is that this doesn't REQUIRE a panic. 

 

It could just be the results of rational individuals seeking higher yielding money markets/Treasury bonds that continue to slowly deplete deposits. 

 

As dollars are withdrawn, banks are given the option to sell treasuries for a loss and book a hit to capital OR borrow from the Fed at a higher rate then their NIM and take the hit to earnings. I'm thinking most will opt for the latter.

 

But that means bank earnings are gonna get ugly, before considering any deterioration in loan portfolios and credit reserves, which could spark additional concern to depositors. And even if it doesn't, there is bound to be another failure or two solely from the hit to earnings depleting capital to levels that require additional equity issuance which might cascade into a failure like SVB did. 

 

Ultimately FDIC had $128 billion. $20-30 billion of that has already been spent on these recent failures. It doesn't take too many more for people to start questioning whether or not they're really insured. I know that Congress WILL step, but that IS precisely what gives his hyper inflation narrative credibility.

 

It is all a little concerning and seemingly obvious and yet here we are still raising rates 

Edited March 30, 2023 by TwoCitiesCapital

[Dave86ch]

22 hours ago, scorpioncapital said:

Yet Swiss has one of the most inflation protected currency on Earth? Can you imagine the uproar when less than Swiss low inflation currency games occurs? Or is it a question of just taking a long time for the currency debasement to occur? The crypto-coins have made people very rich. Ethereum from 10-20 to 1800. It makes you wonder if the bubble is not even started to pop or if regular stocks could really boom in such an environment. They both do something useful, make money and are trading far less than these crypto coins!

IMO, it's a checkmate situation. The inability of the central bank to raise rates without putting the financial system at risk fulfills the Bitcoin prophecy, which in the meantime has found its way as a hard money. This strengthens the myth and gives money to the supporters to play their role in the "reflexivity" dynamic. In other words, the Fed is financing its replacement because they don't have any other option. The more people realize the situation, the more people will switch.

[TwoCitiesCapital]

9 hours ago, Dave86ch said:

IMO, it's a checkmate situation. The inability of the central bank to raise rates without putting the financial system at risk fulfills the Bitcoin prophecy, which in the meantime has found its way as a hard money. This strengthens the myth and gives money to the supporters to play their role in the "reflexivity" dynamic. In other words, the Fed is financing its replacement because they don't have any other option. The more people realize the situation, the more people will switch.

 

It really is Game Theory esque. It's been pointed out nation states may buy in after one or two have adopted solely to not be left out in the event it IS successful. 

 

I think we'll see that play out with individuals first. Each person that pulls deposits and puts them in BTC to escape the "system" puts further strain on the system. The last ones out bare the most economic pain while the first ones out get most of the economic profit. There will be very large FOMO here if the banking situation gets more precarious to be obvious to the average consumer.

 

It may be all that will take is 2-3 more banks failing and the news reporting on the deficiency of the FDIC reserve fund to insure it while more deposits flee traditional banks. Gold, TBTF banks, Bitcoin, and even stocks may all prove to be beneficiaries of the flows but I expect it'll be gold/Bitcoin that shine the most in this scenario. 

 

Particularly BTC given it's capitalization relative to the expected flows and the inability of Feds to confiscate it if shit really hits the fan. 

Edited March 31, 2023 by TwoCitiesCapital

[Eng12345]

On 3/30/2023 at 11:20 AM, TwoCitiesCapital said:

 

And I guess what concerns me is that this doesn't REQUIRE a panic. 

 

It could just be the results of rational individuals seeking higher yielding money markets/Treasury bonds that continue to slowly deplete deposits. 

 

As dollars are withdrawn, banks are given the option to sell treasuries for a loss and book a hit to capital OR borrow from the Fed at a higher rate then their NIM and take the hit to earnings. I'm thinking most will opt for the latter.

 

But that means bank earnings are gonna get ugly, before considering any deterioration in loan portfolios and credit reserves, which could spark additional concern to depositors. And even if it doesn't, there is bound to be another failure or two solely from the hit to earnings depleting capital to levels that require additional equity issuance which might cascade into a failure like SVB did. 

 

Ultimately FDIC had $128 billion. $20-30 billion of that has already been spent on these recent failures. It doesn't take too many more for people to start questioning whether or not they're really insured. I know that Congress WILL step, but that IS precisely what gives his hyper inflation narrative credibility.

 

It is all a little concerning and seemingly obvious and yet here we are still raising rates 

Wouldn't a slow bleed to money markets/treasury bonds be a completley different scenario than a panic-induced bank run from a liquidity standpoint? 

 

Although I agree this whole thing may not be over it seems worlds away from the collapse of the US dollar predicted by this guy who is spouting off a bunch of gotcha words like insolvency. As long as the banking system overall has enough liquidity it is not like these bonds have taken permanent capital impairments of 20%...IF they can manage to hold long enough. 

 

Duration risk is the biggest risk and although we may see a consolidation of banks from those who have not managed that duration well... I'm not exactly convinced we're watching the fall of the us dollar like balaji seems to think. 

[SharperDingaan]

Lot of treasurers have begun to notice that BTC is a good diversifier of longer dated T-Bills.

 

Premium on a short BTC call/BTC market value at the time the call is sold, vs YTM on a T-Bill at the same maturity date. Potential ALM loss on the T-Bill portfolio under forced redemption, vs potential unrealized MTM loss on BTC, less any realized gains on assignments. Alpha = assignment BTC gains > cost of BTC puts limiting the maximum loss to the potential ALM loss on the T-Bill portfolio under forced redemption. Lots of room for an enterprising lad  

 

BTC low correlation coefficient vs T-Bills is bonus .....

 

SD

Edited April 1, 2023 by SharperDingaan

[TwoCitiesCapital]

On 4/1/2023 at 7:37 AM, Eng12345 said:

Wouldn't a slow bleed to money markets/treasury bonds be a completley different scenario than a panic-induced bank run from a liquidity standpoint? 

 

Although I agree this whole thing may not be over it seems worlds away from the collapse of the US dollar predicted by this guy who is spouting off a bunch of gotcha words like insolvency. As long as the banking system overall has enough liquidity it is not like these bonds have taken permanent capital impairments of 20%...IF they can manage to hold long enough. 

 

Duration risk is the biggest risk and although we may see a consolidation of banks from those who have not managed that duration well... I'm not exactly convinced we're watching the fall of the us dollar like balaji seems to think. 

 

The IF is the big question. 

 

The banking system lost $100+ billion in deposits in the weeks preceding the runs. That wasn't panic - that was rational behavior. 

 

If we continue to bleed a $100 billion here and $100 billion there every few weeks, you can be guaranteed there will be more bank failures/loss of confidence. 

 

The new Fed facility provides liquidity. But it doesn't provide solvency. It prevents banks from experiencing balance sheet destroying, overnight bank runs, but it does so at the expense of wrecking income statements by imposing a negative NIM. How many quarters of negative hits to earnings, deteriorating credit conditions, and deposits fleeing the system before there is another failure? 

 

Maybe this "solution" extends the problem long enough for us to skate by. I think that probably is the base case. But it is concerning to me that this whole thing is built on confidence in $100 billion insuring $17 trillion. Confidence is fragile - I dunno if it WILL be lost, or what would cause the loss, but it does seem like we're skating perilously close to that edge. 

[Parsad]

https://finance.yahoo.com/news/binances-us-arm-struggles-bank-140127369.html

 

Cheers!

[TwoCitiesCapital]

https://www.wsj.com/articles/bitcoin-blockchain-hacking-arrests-93a4cb2

 

More evidence and stories suggesting the "BTC is for criminals" story is simply fiction. 

[TwoCitiesCapital]

Bitcoin transaction count and volumes are absolutely exploding. 60-day rolling average of transaction count was ~300k transactions per day at the start of April. We're now seeing 500-600k transaction volumes today and the average is going vertical. 

 

It's held up extremely well amid the banking crisis and the run on stablecoins back in March. 

 

Today it is up 1.5% while the broader market is down 1.7%.

 

One day doesn't make a trend, but it really does seem like it's breaking it's correlation with equities and moving to a regime more akin to its pre-2020 0 correlation relationship with equities OR slowly evolving into the digital gold/crisis hedge narrative. 

Edited May 2, 2023 by TwoCitiesCapital

[rkbabang]

 

[TwoCitiesCapital]

3 hours ago, rkbabang said:

 

 

Glad I own COIN. A little upset I can't buy the futures myself

 

Really wish the SEC would do it's job here and pass regulation instead of regulation via the court system. 

Edited May 2, 2023 by TwoCitiesCapital

[Parsad]

Shaq gets served FTX papers at playoff game:

 

https://ca.sports.yahoo.com/news/shaquille-oneal-finally-served-in-ftx-lawsuit-while-covering-celtics-heat-in-miami-214138113.html

 

Cheers!

[rkbabang]

I just started reading "Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin", by Jason Paul Lowery  (https://www.goodreads.com/book/show/122975497-softwar).  I'm only about 30 pages in, but wow.  It comes at bitcoin from a completely different angle which I hadn't considered before and makes me think it will be bigger than even I suspected.  Do yourself a favor and read:

 

The Sovereign Individual, by James Dale Davidson

The Bitcoin Standard, by Saifedean Ammous

The Network State, by Balaji S. Srinivasan

Softwar, by Jason Paul Lowery

 

In that order to get a glimpse at what could be coming.  I still buy bitcoin weekly (and have been since 2014), but I'm thinking about stepping up the amounts.

 

 

[Parsad]

https://finance.yahoo.com/news/crypto-shares-tumble-u-sec-184211494.html

 

Cheers!

[Castanza]