The crypto bubble bursts… but is it a sign of a stock market crash to come?

[Kamaji]

The crypto bubble bursts… but is it a sign of a stock market crash to come? Digital investors lose fortunes as Ethereum loses 20% of its value in 24 hours, Luna drops NINETY-EIGHT per cent and Coinbase warns customers may lose ALL their money

By CHAY QUINN FOR MAILONLINE
12 May 2022

Digital currencies are plunging in value this morning in a so-called 'crypto winter' that has lost investors billions and is fueling fears that it is the harbinger of a wider stock market crash.

The world's second largest cryptocurrency Ethereum has joined the crash - plummeting in value by 20 per cent over the last 24 hours - in the digital downturn that is hammering investors who bought during the Covid years.

Cryptocurrencies are a form of digital money that use mathematics to create a unique piece of code that customers invest in.

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Source:  https://www.dailymail.co.uk/news/article-10808609/Ethereum-joins-crypto-plunge-Second-largest-digital-currency-loses-20-value-24-hours.html

[catfish1957]

Have always contended that crypto was the modern day version of Tulips of 400 years ago.

Even the bellweather benchmark BTC (Bitcoin) has been crashing.

Down 11% today, on volume of 88B.  Yep, B as in Billion

BTC is down 32.9% in the past 4 days.  Quite amazing since 4 days ago, the Market Cap of BTC was over $700B 4 days ago.  Or....   About $170B wiped out in the matter what constituted a long weekend.

So no surprise that most of the peripheral crypto is pretty close to becoming worthless.  Watch for a shakeout soon.

[Kamaji]

Have always contended that crypto was the modern day version of Tulips of 400 years ago.

Even the bellweather benchmark BTC (Bitcoin) has been crashing.

Down 11% today, on volume of 88B.  Yep, B as in Billion

BTC is down 32.9% in the past 4 days.  Quite amazing since 4 days ago, the Market Cap of BTC was over $700B 4 days ago.  Or....   About $170B wiped out in the matter what constituted a long weekend.

So no surprise that most of the peripheral crypto is pretty close to becoming worthless.  Watch for a shakeout soon.

NFTs will likely follow along as well.  That, even more than the cryptocurrencies themselves, would be a perfect analog to the tulip bubble.

[jmyrlefuller]

NFTs will likely follow along as well.  That, even more than the cryptocurrencies themselves, would be a perfect analog to the tulip bubble.

That bubble has already pretty much burst.

[Free Vulcan]

The problem is crypto, like precious metals, don't offer interest. So when the Fed raises rates it sucks capital right out of non-interest assets

[catfish1957]

The problem is crypto, like precious metals, don't offer interest. So when the Fed raises rates it sucks capital right out of non-interest assets

But OTOH, metals like gold, silver, platinum, have an intrinisic value that has thousands of years of supply/demand.  And can be fungible for tender if fiat currency becomes valueless.

Crypto is more like tulips....   Ridiculous evaluation, for basically nothing.

[berdie]

But OTOH, metals like gold, silver, platinum, have an intrinisic value that has thousands of years of supply/demand.  And can be fungible for tender if fiat currency becomes valueless.

Crypto is more like tulips....   Ridiculous evaluation, for basically nothing.

I will tell you right now, I guess I'm blond, but I don't understand how crypto works. Or mining crypto. It seems to me like a scam of some kind.

I can't buy groceries or gas with it. So what is the value?

[Sighlass]

What will the druggies use now to buy their "goods" online? Will they just buy and spend it quickly like Venezuela? 

[jmyrlefuller]

I will tell you right now, I guess I'm blond, but I don't understand how crypto works. Or mining crypto. It seems to me like a scam of some kind.

I can't buy groceries or gas with it. So what is the value?

The concept behind cryptocurrency is essentially that of a private currency, the supply of which is unregulated by government policy.

The mechanism was proposed by a guy who used a pseudonym and whose identity still remains unknown. For Bitcoin, one of the oldest and best-known "cryptos," the supply was fixed at the start, and to "mine" crypto, users basically had to go on a treasure hunt digging through the Internet for virtual coins. As time went on, and coins were claimed, they became harder to find. Furthermore, the structure of most cryptos, "blockchain," inherently becomes more bloated with time as each transaction adds to every other one on the "distributed ledger." It is, essentially, a game.

Now, in theory, if enough companies adopted a particular crypto, it could gain mainstream acceptance. But because Bitcoin was fixed, the value of it spiked far beyond what could be useful for basic commerce and nobody wanted to use it as a medium for spending. It became a vessel for speculation.

[Free Vulcan]

But OTOH, metals like gold, silver, platinum, have an intrinisic value that has thousands of years of supply/demand.  And can be fungible for tender if fiat currency becomes valueless.

Crypto is more like tulips....   Ridiculous evaluation, for basically nothing.

Depends on the crypto. Some like Bitcoin create scarcity by requiring computing power to process data into the blockchain. Others not so much and aren't much more than scams.

The evaluation issue with Bitcoin is that now they are more scarce and take much more 'mining' while demand skyrocketed. Even gold and silver are subject to the same types of forces and have those fluctuations.

I can see where crypto could be valuable in the online world. Can't see that so much in the physical world.

[catfish1957]

Depends on the crypto. Some like Bitcoin create scarcity by requiring computing power to process data into the blockchain. Others not so much and aren't much more than scams.

That's the whole cruxt that I can't comprehend.  Every Econ professor will tell you that there has to be some inherent value to a currency via some backing of tangible value.  Like currency being backed with gold, silver, or in our sad case the so called good faith and backing of the United States Treasury. 

I have never understood how some 0's and 1's streaming creating a virtual currency by some inherent value via creation via electronic means. Just how does this block chain create inherent value?  That is why I commented earlier about 17th century Dutch Tulips. Value is only quantifiable by the forces that see value in that form.   

There are one off's like the collectibles markets which operate on their own whims of scarcity, artistic merit, and subject.  You can spend $20 bucks and slosh on a bunch of paint on a canvas, but that doesn't correlate to anothet like a Pollock which for some reason may be worth $10M.  I don't think it is worth that, but I'd bet you could round up a 100 people at Sotheby's who says otherwise.

[IsailedawayfromFR]

That's the whole cruxt that I can't comprehend.  Every Econ professor will tell you that there has to be some inherent value to a currency via some backing of tangible value.  Like currency being backed with gold, silver, or in our sad case the so called good faith and backing of the United States Treasury. 

I have never understood how some 0's and 1's streaming creating a virtual currency by some inherent value via creation via electronic means. Just how does this block chain create inherent value?  That is why I commented earlier about 17th century Dutch Tulips. Value is only quantifiable by the forces that see value in that form.   

There are one off's like the collectibles markets which operate on their own whims of scarcity, artistic merit, and subject.  You can spend $20 bucks and slosh on a bunch of paint on a canvas, but that doesn't correlate to anothet like a Pollock which for some reason may be worth $10M.  I don't think it is worth that, but I'd bet you could round up a 100 people at Sotheby's who says otherwise.

[berdie]

The concept behind cryptocurrency is essentially that of a private currency, the supply of which is unregulated by government policy.

The mechanism was proposed by a guy who used a pseudonym and whose identity still remains unknown. For Bitcoin, one of the oldest and best-known "cryptos," the supply was fixed at the start, and to "mine" crypto, users basically had to go on a treasure hunt digging through the Internet for virtual coins. As time went on, and coins were claimed, they became harder to find. Furthermore, the structure of most cryptos, "blockchain," inherently becomes more bloated with time as each transaction adds to every other one on the "distributed ledger." It is, essentially, a game.

Now, in theory, if enough companies adopted a particular crypto, it could gain mainstream acceptance. But because Bitcoin was fixed, the value of it spiked far beyond what could be useful for basic commerce and nobody wanted to use it as a medium for spending. It became a vessel for speculation.

Thanks, @jmyrlefuller . Of course the statement that stood out to me is "it is a game".

I guess any currency only has the value of what is assigned to it by the government or people. I remember an episode of Twilight Zone where people froze themselves to go to the future with stolen gold. When they got unfrozen, the future people were confused about why they thought there was worth in gold.

[Gefn]