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Is cryptocurrency the greatest market bubble of all time?

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ABC has a detailed outstanding story on the way 3 different people were scammed through crypto currency operators.

They had taken good care to verify the credentials of their advisors - but they lost their money just the same. The Federal police believe $100m has been scammed this year alone.

Cryptocurrency scams targeting Australians as scammers bank more than $100 million​

By consumer affairs reporter Amy Bainbridge and the Specialist Reporting Team's Lucy Kent
Posted 6h ago6 hours ago, updated 1h ago1 hours ago

Three families, three separate crypto scams. (ABC News)
Help keep family & friends informed by sharing this article

They're three families, all from different parts of Australia.

They have vastly different backgrounds and financial situations.

But one common thread binds them: they have all been embroiled in scams involving cryptocurrency, the decentralised digital currency.
These scams have crippled their futures, with hundreds of thousands of dollars funnelled into the hands of cybercriminals, and lost forever.

Australian Federal Police say cryptocurrency scams have "exploded" during the pandemic, with new figures from the Australian consumer watchdog showing a 172 per cent increase in losses between January and November this year, totalling $109 million.

What is cryptocurrency?​

  • Cryptocurrency, or "crypto", is decentralised "digital money"
  • There are more than 10,000 cryptocurrencies in use around the world
  • The Australian Tax Office estimates up to 600,000 Australians have invested in "crypto-assets"
  • Some cryptocurrencies have exploded it value over the past two years
  • The technology has been praised for its portability, inflation resistance and transparency
  • But criticisms centre on its exchange rate volatility and its susceptibility to illegal activity and scams

Eve and John were saving for a house deposit. Then they tried to invest in cryptocurrency and lost it all

Australian police say cryptocurrency scams have "exploded" during the pandemic. These three families were sucked in.
www.abc.net.au
 
Faramir said:
Well, what do I know? Crypto may go up forever and I have missed out on a lifetime opportunity?
Click to expand...

I own some cryptos. I am not a hater. It is very possible things we do not "yet understand" can become huge. Just like 1999 if you invested in Amazon, Microsoft at the lofty huge valuations you would still be VERY positive in the long term.

However in the short-medium term there are limits to how big an asset class can become before it can be classified as "without a doubt" insanely over-valued where anyone sensible should start shorting and buying put options with pretty much 100% success (if they can afford the margin calls).

This would be 1/3 of the market capitalization of the US which is $30 trillion. No way any single unproven, company or asset class can reach $10T (1/3 of the entire market cap, = to entire world capitalization of Gold) and stay there. Without having years and years of proven solid predictable financial performance.

Cryptos were around $3T. That means cryptos would only need to increase by 300% (very easy given the volatility of cryptos) before it becomes so insanely overvalued that there is no possible sustainable upside. It would be a case of people offering to buy your flower with their house.
 
I think you're half correct here joeno.


The analogy I use with the .com boom/bust is the internet - there was (is) the internet itself, and then there was (is) internet based companies.

In the .com bust, no shortage of companies were pump & dumps that people lost entire life savings on. Those companies vanished after people lost everything.

But the internet itself is bigger than ever and quite clearly not going away.

So the way I think of it is that cryptocurrency is like the internet and each individual currency is like one of the endless internet-based companies.

So like with the .com boom when people just heard ".com" and threw money at it without a 2nd thought we now get people hearing that something's some type of cryptocurrency and just throwing money at it without hesitation.

Some cryptocurrencies are total pump & dumps/bubbles, just like a lot of former .com's. But cryptocurrency as a sector is a winner, just like internet-based was.


So all you need to do is buy some of the amazon/microsoft/apple/google/etc of cryptocurrencies and you're golden.
 
I'm old, and though I am playing in the cryptocurrency space, I don't really understand how they have any value at all.

Gold maybe a pretty rock but in the end, there it is, and you can hold a God damned an ounce of gold in your hand.

It has a cost of production and a tangible result.

Bitcoin certainly has a cost of production but it doesn't have a tangible result.

Cryptos really only have value so long as enough people say they have value. That may be the same with almost everything.

Additionally they only survive so long as electricity survives.

If the ccp lets off a nuke in the stratosphere and takes out our whole electromagnetic system, crypto is f***ed.

But if that happens I still may have those ounces of gold and silver buried in the backyard.

Therefore I say that cryptos only exist by the good crace our technological system being up and running.

That could disappear rapidly.
 
over9k said:
So the way I think of it is that cryptocurrency is like the internet and each individual currency is like one of the endless internet-based companies.
Click to expand...

In late 90s I went on the internet and played games, researched for my homework, listened to music, looked for cheats for video games, downloaded video games, talked to my friends on AOL messenger. Adults were buying stuff on the internet already.

Let me know which coins allow you do cool stuff like the internet did and I'll buy those.

I feel like cryptos could become even BIGGER if governments across the world are exposed and become more corrupt, AND the people rise up against them. If we let governments rule us as they do today they'll hinder the ability of cryptos to upend the monetary and financial system.

They also need to build a mechanism in Bitcoin to FAIRLY distribute its coins to the population. This would involve people who have hoarded 100/1000s of bitcoins to lose out and be VERY VERY pissed.

I can't think of any other way. All other roads lead to cryptos being kind of a joke asset until they advance the technology to prove actual uses outside transactional use.
 
So you're saying the actual intrinsic value of crypto is no different to various precious metals, gems etc?

Because they're still bought as stores of value even now.
 
joeno said:
Just like 1999 if you invested in Amazon, Microsoft at the lofty huge valuations you would still be VERY positive in the long term.
Click to expand...
I'm seeing many similarities to 1999 with all this.

Only yesterday I saw an article in the mainstream media which said 17% of Australians now own crypto and a further 13% intend to buy. That's 30% of the population - take out children, elderly people with no interest in investing in anything other than a superannuation fund, people without any money to invest in the first place etc and a huge % of those who potentially could buy have either already done so or are about to.

Then last night I read the comments on a YouTube video which literally said that Warren Buffet has lost the plot, is outdated, doesn't get modern technology etc and should be investing in cryptos instead. Buffet being featured in the video.

That last point is almost exactly what was being said 22 years ago apart from the detail of dot com stocks versus cryptos and the platform used to express the view. It's the same thing though - people were saying Buffet's lost the plot etc and doesn't get it back then right before the crash. He got it alright.....

All seems rather toppy to me and very much like 1999 but as with anything, getting the precise timing right is hard.

Perhaps I should buy a new car? I did in fact buy a new car on the exact day of the March 2000 market top. Pure coincidence of course but still. If you spot me in any car showrooms then might be a good time to bail out....
 
Smurf1976 said:
I'm seeing many similarities to 1999 with all this.
Click to expand...

Cryptos are competing with Gold, not with technology stocks. At least right now - who knows what the future holds in store.

Problem with this is cryptos are unstable and created based on the assumption they will replace fiat currency. i.e. the USD.

Sure they're great in 3rd world country where local currency sucks and they can't buy dollars. But most 3rd world countries are poor and producing little to support the value of cryptos.

So let me know when the US government, federal reserve and CIA are fine with a bunch of internet dudes subverting and replacing the US dollar. As I said cryptos will go up when there is a coup-d'etat. Not business as usual.
 
joeno said:
Cryptos are competing with Gold, not with technology stocks. At least right now - who knows what the future holds in store.
Click to expand...

I think Smurf is suggesting that the current hysteria and bubble market conditions surrounding crypto was last observed in the late 1990s when we had the dot com boom. I agree with him.
 
The other thing is a currency is only of value if it is legal tender, like if I photocopy a $100 note it is just a bit of paper, whereas gold and material assets have some retained value in the fact, as you say that you can hold onto it or swap it for something else of value, make it into jewelry etc, what do you actually have with a piece of a bitcoin? A bit of a number?

if the Governments of the World decide to go digital and generate their own digital currencies that are in someway totalized on a world register that has its own encryption, how would these privately generated and ledgered coins be legal tender?

My guess is they all become worthless, I think the people who designed it have just done a lot of the R&D for the Goverments, but they've made plenty of money from it also, so kudos to them.
 
greggles said:
I think Smurf is suggesting that the current hysteria and bubble market conditions surrounding crypto was last observed in the late 1990s when we had the dot com boom.
Click to expand...
That's my point yes.

Different thing involved but the similarities are striking. It's like hearing a band cover a song that you remember from years ago. Some differences in style but it's the same song, the lyrics are identical.

Back then there was mass public involvement in the markets and enthusiasm over a new technology, people were quitting their jobs to day trade and the likes of Warren Buffett were being labelled as "past it" for not jumping on board. The asset in question was frequently in the mainstream non-financial news such was the degree of public involvement.

That's exactly what's happening now, it's all there word for word. Different band but it's the same song.
 
Smurf1976 said:
That's my point yes.

Different thing involved but the similarities are striking. It's like hearing a band cover a song that you remember from years ago. Some differences in style but it's the same song, the lyrics are identical.
Click to expand...

1999 everyone i knew at school used computers and the internet and loved what was on there. Whether the tech stocks were going down and up was irrelevant. It was a great, fun, useful technology. In 1999.

I don't get where crypto are going overall. And i don't know anyone who uses any single crypto for any purpose other than gambling on the price movements.

Yeah smart people are working on cryptos. That i do get. But are they improving the technology for practical revolutionary application? Or do they realise the technology itself is extremely limited and spend their genius on creating scam cryptos with funny sounding names and then advertising it for easy $$$ gains? I don't know. You guys tell me.
 
They're trying to get out from under the thumb of the petrodollar. Doubly so when it's being printed out the wahzoo.
 
sptrawler said:
My guess is they all become worthless, I think the people who designed it have just done a lot of the R&D for the Governments, but they've made plenty of money from it also, so kudos to them.
Click to expand...
Not only have crypto developers given governments/central banks a proof of concept for future digital currency introduction, they have laid the foundation for it's acceptance and ironically lead to inevitable restrictions, regulation or outright bans on their competition to legal tender digital fiat. More than this, governments monitoring China's success with the digital yuan, will use crypto as a means of surveillance, control and currency manipulation to an extent current crypto advocates should be wary of.

Crypto trading is a zero sum game, some have made fortunes by being early but it only takes a few whales to head for the exit to bring the crypto market crashing down. Musk and Tesla demonstrated this quite well. You can be certain the whales will exit first and leave millions of stunned Satoshi hodlers screaming for authorities to intervene. Will all competing crypto become worthless, perhaps not but it's hard to imagine the survivors will trade at anywhere near current levels.
 
Hello 1999, how are we doing?
 
On that note, I wonder if we'll see a Y2K for crypto?

You know, someone's found a fatal flaw with that's a ticking time bomb that will bring the whole system to its knees that all the engineers missed blah blah blah?
 
Cross-post:


Aaaaaand the inflation data is in:



Equity futures gone nuts everywhere about 0.5% in response, banks the best, everything's green as this was already priced in (because of course it was, you'd have to be an idiot not to think we were going to see numbers like this) but the best place to be with inflation is of course crypto, and most of that has run about twice as much as equities:



I have posted crypto's correlation to inflation about a thousand times for a reason. I have made solid bank tonight. If you aren't making crypto plays you are a fool at this point.

This is a 40 year high for inflation and it is NOT going to be transitory.

If I thought this inflation was going to subside, I'd agree with @Trader X, but because I don't, I don't.
 
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