Is cryptocurrency the greatest market bubble of all time?

More fallout in Australia from the FTX crash.

FTX collapse sends shockwaves through other Australian businesses​

Withdrawals now suspended at the Brisbane-based cryptocurrency exchange Digital Surge for more than a week

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Close to 30,000 customers in Australia are believed to be affected by the collapse of cryptocurrency exchange FTX. Photograph: Stefani Reynolds/AFP/Getty Images

Josh Taylor

@joshgnosis
Tue 29 Nov 2022 15.52 AEDTLast modified on Tue 29 Nov 2022 15.56 AEDT


The collapse of the cryptocurrency exchange FTX continues to reverberate in Australia with customer withdrawals suspended at the Brisbane-based exchange Digital Surge for more than a week.
Close to 30,000 customers in Australia are believed to have been caught up in the collapse of FTX this month, but the flow-on effects are now being felt by other businesses.

Digital Surge – which allows customers to invest in cryptocurrency in Australia through multiple methods, including through their self-managed super funds – advised customers last week it was suspending deposits and withdrawals after the “greatly upsetting” news of FTX going into administration.

Having withdrawls suspended is not good news for crypto generally. When withdrawls for anything are restricted, that creates one thing: fear. Specifically, fear that those affected will not be able to withdraw their currency, and that their capital will eventually be worth nothing. This fear will lead to mass withdrawls when they again become available, because "anything is better than nothing".

I still believe that the real fallout from the FTX collapse is yet to be felt. What happened there is, by all accounts, so scandalous and damaging that the ramifications will be severe and broadly felt. My gut feeling is that December is going to be a bad month for crypto.

greggles said:

Having withdrawls suspended is not good news for crypto generally. When withdrawls for anything are restricted, that creates one thing: fear. Specifically, fear that those affected will not be able to withdraw their currency, and that their capital will eventually be worth nothing. This fear will lead to mass withdrawls when they again become available, because "anything is better than nothing".

I still believe that the real fallout from the FTX collapse is yet to be felt. What happened there is, by all accounts, so scandalous and damaging that the ramifications will be severe and broadly felt. My gut feeling is that December is going to be a bad month for crypto.

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in the short term it's not good news, but longer term i think it's a healthy thing. crypto was originally founded upon the ethos of decentralisation and self-custody, it's been slowly drifting away from that due to emergence of all these centralised entities and all the fancy marketing they've spewed out. with the bad actors slowly being weeded out and trust in centralised entities diminishing, that should push the community back to the core ethos. if it takes further falls in the market to get there, then so be it.

i've seen some articles/videos recently that claim on-chain analytics show the amount of crypto held on exchanges is dropping rapidly, but they are not being swapped back to fiat, they are being withdrawn to self-custodial wallets. i have neither the time nor expertise to verify this myself, but if true, that would suggest the return to the core ethos is already well underway. the question is though, will people remember this when the next bull market eventually comes around, and new centralised entities spring up with all their marketing spiel again?

Sharkman said:

in the short term it's not good news, but longer term i think it's a healthy thing. crypto was originally founded upon the ethos of decentralisation and self-custody, it's been slowly drifting away from that due to emergence of all these centralised entities and all the fancy marketing they've spewed out. with the bad actors slowly being weeded out and trust in centralised entities diminishing, that should push the community back to the core ethos. if it takes further falls in the market to get there, then so be it.

i've seen some articles/videos recently that claim on-chain analytics show the amount of crypto held on exchanges is dropping rapidly, but they are not being swapped back to fiat, they are being withdrawn to self-custodial wallets.

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The rise of interest bearing deposits never really made any sense to me, clearly the deposit takers were simply using the funds to punt and FTX looks to have been a significant punter.

All this "end of crypto" talk. Everyone must have forgotten all the other crypto winters.

Crypto is the most massive returns, or losses you are likely to see in your lifetime. It's all based on two of the most powerful forces in the world (Fear and Greed) and will eventually see something spring from the dust.

Anyone who thinks it's an investment has rocks in their head. Same with anyone that keeps large holdings in an online brokerage.
It's a casino full of scammers and the majority of people are too dumb to play. It's value is zero. Treat it as such.

For any technical/ share traders its bloody nirvana. The returns alone are like nothing you will ever see again. I hope it isn't over just yet. But I do believe it will be a long winter.

While money is contracting its easy to bag crypto. But it's just all part of the cycle where you move to the next thing until the money circles back.

So_Cynical said:

The rise of interest bearing deposits never really made any sense to me, clearly the deposit takers were simply using the funds to punt and FTX looks to have been a significant punter.

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it's even worse than that, not only were they punting using customer funds, they were also taking out fiat loans that were collateralised by tokens, many of which were tokens that they created themselves (CEL for Celsius, FTT for FTX etc). since those tokens were highly illiquid, it didn't take much (Binance selling their FTT stake for eg) to cause the price to drop sharply, sending people running for the exits, pushing the price down further, which triggered margin calls, causing the whole thing to come crashing down.

this is not the fault of the system itself, which was founded on decentralisation and self-custody, as i wrote above. it's the fault of bad/greedy centralised entities within that system, and i think a lot of people in general aren't differentiating between the two, instead they equate the failure of Celsius, FTX etc. as the failure of the entire ecosystem. i'm not saying the whole ecosystem won't fail, it may well all come down eventually, that's why i'm only allocating at most 1% of total capital to crypto, but failure of bad actors within the system isn't the same thing as failure of the system itself.

Sharkman said:

this is not the fault of the system itself, which was founded on decentralisation and self-custody, as i wrote above. it's the fault of bad/greedy centralised entities within that system, and i think a lot of people in general aren't differentiating between the two, instead they equate the failure of Celsius, FTX etc. as the failure of the entire ecosystem.

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Except that interaction with crypto exchanges or brokers (not peer to peer) is necessary to buy and sell say Bitcoin, then you initiate a transfer to your cold wallet for self-custody. So engagement with centralized entities is necessary to buy/sell Bitcoin or convert to fiat. The aversion to using self-custodial wallets is understandable to some degree. Stories of forgotten passwords and lost wallets (like the guy in Wales who offered to pay the local council to excavate the local landfill tip to recover his hard drive and $100 million in Bitcoin) etc. is enough for many to preference holding crypto on exchanges.

Trader X said:

Except that interaction with crypto exchanges or brokers (not peer to peer) is necessary to buy and sell say Bitcoin, then you initiate a transfer to your cold wallet for self-custody. So engagement with centralized entities is necessary to buy/sell Bitcoin or convert to fiat. The aversion to using self-custodial wallets is understandable to some degree. Stories of forgotten passwords and lost wallets (like the guy in Wales who offered to pay the local council to excavate the local landfill tip to recover his hard drive and $100 million in Bitcoin) etc. is enough for many to preference holding crypto on exchanges.

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have to minimise exposure to counterparty risk by depositing the fiat, executing the trade and immediately getting it off the exchange onto a self-custodial wallet, so unless the entity happens to collapse in that small window, it should be fairly safe. it can be on-ramped small parcels at a time, as unlike tradfi, usually there's no minimum brokerage, it's a straight percentage. it's leaving it on there for extended periods of time that dramatically ups the risk.

some people are already getting part of their salaries paid out in BTC, presumably straight into self-custodial wallets, eg.


self-custody also means self-responsibility, can't avoid that. but these days such stories of self-custody mishaps are getting drowned out by stories of people losing their life savings because they left it all on a centralised entity which collapsed (and i would agree that is an utterly stupid thing to do), so there does seem to be a renewed push towards self-custody once more.

in any case both sets of stories serve a useful purpose - how does that quote go? it's good to learn from your mistakes, but it's better to learn from somebody else's? i'm aware it was said by someone who's staunchly anti-crypto, but it applies nonetheless. crypto is still in its infancy, there's much left to be learned as it matures.

Kucoin offering 299% apr on bitcoin? Wtf

Kucoin either has an error or its the next to fold.

Fear not, the bottom for Crypto is in.
The worlds most watched and most frequently wrong finance expert, Jim Cramer, has urged people to get out of Crypto because its not too late.
FromCNBC

CNBC’s Jim Cramer on Monday told investors that they still have time to sell their cryptocurrency holdings.
“You can’t just beat yourself up and say, ‘hey, it’s too late to sell.’ The truth is, it’s never too late to sell an awful position, and that’s what you have if you own these so-called digital assets,” he said.

The collapse of FTX, the bankrupt cryptocurrency exchange that was worth $32 billion at its peak, has thrown the crypto space under intense scrutiny and spurred mounting losses in a market that has seen digital assets get pummeled by the Federal Reserve’s interest rate hikes.

Cramer, who has warned against staying in speculative assets while the Fed continues to tighten the economy, reiterated his argument and said that investors shouldn’t be fooled by some coins’ inflated market capitalization.
He added that he expects more marginal names including XRP, dogecoin, Cardano and Polygon to fall much further, possibly to zero.
“Tether, a so-called stablecoin that’s supposed to be kinda-sorta pegged to the dollar, still has a $65 billion market cap,” he said, adding, “There’s still a whole industry of crypto boosters trying desperately to keep all of these things up in the air — not too different from what happened with bad stocks during the dotcom collapse.”

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So the contrarian in me would suggest its time to get into it.
Nah, just won't happen.
Mick

The survey also indicated that a fair amount of crypto investors are turning sour on the asset class,too, as 42% of such respondents indicated to have a “somewhat or very negative view” of crypto.

Good morning
Reported last night (08/12/22) through News Corp Media:

Australian cryptocurrency exchange Digital Surge has collapsed into administration, with its 30,000 Aussie customers unable to trade or withdraw money.
The trading platform, set up in 2017, allowed customers to access more than 300 different digital currencies before its collapse.

KordaMentha Restructuring has been appointed as administrators and is working on a rescue package.
The directors of Digital Surge, based in Brisbane, will spend $1million of their own money on a repayment plan that aims to refund every customer what they are owed, the Australian Financial Review reported.

The bitcoin exchange froze trading last month after global competitor FTX went under, wiping the balances of all customers.

The $32 billion cryptocurrency exchange filed for bankruptcy amid bombshell revelations that the platform was poorly managed and little more than a Ponzi scheme.

FTX’s epic fall from grace has sent shockwaves around the cryptocurrency world.

Digital Surge had been using the FTX platform for some of its trading.

Another Australian crypto exchange, Swyftx, was forced to lay off 35 per cent of its staff in a second round of brutal cuts earlier this week.

The Brisbane-based company announced to employees late on Monday that 90 of them would be packing up their desks for good.
Swyftx’s joint CEOs, Alex Harper and Angus Goldman, informed workers of the “difficult decision” at a company-wide town hall and released a statement after.

Mr Harper blamed the mass sackings directly on the FTX collapse, including at Swyftx.

According to ASIC documents filed last week, Swyftx’s profit has declined 23 per cent. At the same time, however, they did see a 55 per cent increase in trade volumes.

Swyftx, which announced a $1.5 billion merger with online share trading platform Superhero in June, admitted it had expanded too quickly.

“The truth is that Swyftx grew too fast,” Mr Harper conceded.

KordaMentha’s Scott Langdon said he was very pleased with the cooperative and collaborative approach taken by the directors to understand Digital Surge’s financial position.

He also advised Digital Surge customers their funds were the administrators’ highest priority.

“We fully appreciate the uncertainty the voluntary administration will create. We will proactively and regularly communicate with customers to ensure they are fully informed on the progress of the administration,” he said.

The directors have commenced working with stakeholders to prepare a rescue package. The administrators anticipate this will be in the form of a deed of company arrangement (DOCA), which all creditors will have an opportunity to consider in due course.

How long till the ftx drama becomes a movie

FWIW. Locally, last night at the recently opened OTR servo I noted the advert accepting crypto payments.

Google Fu reveals OTR

World first - OTR offers in-store Cryptocurrency Payments​

Craton said:

FWIW. Locally, last night at the recently opened OTR servo I noted the advert accepting crypto payments.

Google Fu reveals OTR

World first - OTR offers in-store Cryptocurrency Payments​

Click to expand...

• There is significant interest in having the ability to make and receive payments directly in cryptocurrency, with 55% of both merchants and consumers saying they want to transact in cryptocurrency
  
  • But why? Just whip out your phone and use ApplePay or a credit card. The only reason to hold crypto is because, using whatever hopeful logic, one believes it's going to increase in price.
• Both merchants and consumers prefer to transact in Bitcoin and Ethereum but there is significant demand for an Australian dollar stablecoin
  
  • But why? If you transact in crypto you potentially create a taxable event and the mantra now is hodl and never sell anyway
• Both merchants and consumers (32% and 35%, respectively) would like to have the option of transacting online and in-store, but consumers are more focused on online
  
  • But why? You have so many secure options to buy online without using crypto
• One third of merchants say they are or will be ready within a year to transact in cryptocurrencies, and 60% within three years
  
  • But why? Presumably one more option using crypto as an intermediary to transact will increase sales?
• The lack of regulation, price volatility, and to a lesser extent, uncertainty about the tax implications, remain barriers to wider adoption of cryptocurrency transactions
  • Volatility, entirely on the downside. How many FTT tokens do you need now to buy a cup of coffee? With the vast majority of crypto "investors" drowning in red ink and their tokens going to zero at the speed of light, such a facility is unlikely to resuscitate the crypto corpse.

A service station accepting crypto for what are a routine, relatively low value transactions. OK, I can see the point if it gets them more customers - whatever sells fuel and things from the shop makes them money.

What did come to my attention though is this bit:

More than 1 million Australians currently own cryptocurrencies*** at an average individual value of more than $20,000​

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So there's over $20 billion worth in the hands of Australians?

So in round figures about 1% of GDP. Not massive but not totally insignificant either. In the event of an outright crypto collapse, there'd be at least some impact on the real economy wouldn't there?

Smurf1976 said:

A service station accepting crypto for what are a routine, relatively low value transactions. OK, I can see the point if it gets them more customers - whatever sells fuel and things from the shop makes them money.

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Doing business with Crypto.com entails significant business risk, CEO Kris Marszalek has a shady past...

Crypto.com CEO has history of red flags including bankruptcy and quick exits​

Smurf1976 said:

So there's over $20 billion worth in the hands of Australians?

So in round figures about 1% of GDP. Not massive but not totally insignificant either. In the event of an outright crypto collapse, there'd be at least some impact on the real economy wouldn't there?

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So, presuming such figures are roughly correct, that figure 12 months ago would have been close to $60 billion. That's already a lot of paper wealth destruction for 2022.

Smurf1976 said:

So there's over $20 billion worth in the hands of Australians?

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seems realistic to me. the total market cap of crypto is around 1.25T (AUD) at the moment, so 20B would be about 1.6%. that would be within the ballpark of Aust's nominal GDP as a % of world nominal GDP, and Aust is somewhere in the middle relative to the rest of the world in terms of crypto adoption amongst the population.

Trader X said:

• There is significant interest in having the ability to make and receive payments directly in cryptocurrency, with 55% of both merchants and consumers saying they want to transact in cryptocurrency
  
  • But why? Just whip out your phone and use ApplePay or a credit card. The only reason to hold crypto is because, using whatever hopeful logic, one believes it's going to increase in price.
• Both merchants and consumers prefer to transact in Bitcoin and Ethereum but there is significant demand for an Australian dollar stablecoin
  
  • But why? If you transact in crypto you potentially create a taxable event and the mantra now is hodl and never sell anyway
• Both merchants and consumers (32% and 35%, respectively) would like to have the option of transacting online and in-store, but consumers are more focused on online
  
  • But why? You have so many secure options to buy online without using crypto
• One third of merchants say they are or will be ready within a year to transact in cryptocurrencies, and 60% within three years
  
  • But why? Presumably one more option using crypto as an intermediary to transact will increase sales?
• The lack of regulation, price volatility, and to a lesser extent, uncertainty about the tax implications, remain barriers to wider adoption of cryptocurrency transactions
  • Volatility, entirely on the downside. How many FTT tokens do you need now to buy a cup of coffee? With the vast majority of crypto "investors" drowning in red ink and their tokens going to zero at the speed of light, such a facility is unlikely to resuscitate the crypto corpse.

Click to expand...

The only references I could find on OTR Convenience Stores search on duckduckgo was a website which was of little value in finding stores or what is sold there and a court case where they were found guilty of under and not paying workers.


I'll pass on shopping there.

I don't hold crypto, but if they do take it, it does not bode well for crypto unless they have significantly cleaned up their act.

The other point I'd make is that if one were in need of 2 litres of milk at 3am and were fortunate enough to find an OTR store what percentage is taken by Datamesh and the store for the transaction from Crypto.com who seem involved as well.

And how much would be taken for Coke... or Pepsi for that matter.

gg

Smurf1976 said:

A service station accepting crypto for what are a routine, relatively low value transactions. OK, I can see the point if it gets them more customers - whatever sells fuel and things from the shop makes them money.

What did come to my attention though is this bit:

​

So there's over $20 billion worth in the hands of Australians?

So in round figures about 1% of GDP. Not massive but not totally insignificant either. In the event of an outright crypto collapse, there'd be at least some impact on the real economy wouldn't there?

Click to expand...

So $20k on average per person but I would think it’s mainly people under 45 years old.

That kinda makes me said that we have so many young people wasting their productive years “investing” in this rubbish instead of getting into real productive assets.