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posted by janrinok on Sunday May 15 2022, @01:43PM   Printer-friendly
from the every-cloud-has-a-silver-lining dept.

Crypto crash: almost $1 trillion wiped off markets as Bitcoin hits lowest level since 2020:

It's been a nightmare week for cryptocurrency holders as the market crashes and Bitcoin hits its lowest price since December 2020. Ethereum, BNB, XRP, and many other digital coins have also fallen to their lowest levels in a long time. The crisis came after stablecoin Terra, designed to trade 1:1 with the US dollar, collapsed.

TerraUSD (UST), the 11th largest cryptocurrency by market cap, is an algorithmic stablecoin that uses a set of smart contracts to ensure its value stays as close to $1 as possible. But after hovering at around $1 for about a year, it crashed to 29 cents yesterday, plunging its market cap from more than $45 billion to less than $5 billion. It has since rallied to 62 cents, but that's still far from $1.

Terra's support coin, Luna, has also plummeted in dramatic style, going from $86 at the start of the week to its current price of 20 cents. Terra is designed so traders can exchange 1 UST for $1 worth of Luna, no matter the price of UST

[...] Do Kwon, co-founder of Terra developer Terraform Labs, tweeted: "I understand the last 72 hours have been extremely tough on all of you - know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this."

Terra's collapse has impacted many cryptocurrencies, the most notable being the biggest one of all: Bitcoin. At the time of writing, BTC is at $27,236, its lowest value since before the crypto boom at the end of 2020. Bitcoin has now lost nearly two-thirds of its value since peaking at $69,000 in November 2021.

[...] The good news for non-crypto-owning gamers is that the freefall will doubtlessly make mining less profitable, and should push graphics card prices even closer to MSRP.


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  • (Score: 5, Insightful) by Thexalon on Sunday May 15 2022, @04:09PM (10 children)

    by Thexalon (636) on Sunday May 15 2022, @04:09PM (#1245128)

    You plainly don't understand what I mean by "financial fundamentals". Maybe I wasn't clear about that, but here's what I'm getting at: How does the financial asset reflect ownership rights over a thing you could do something with?

    For example, in real estate, the fundamentals are that there's a patch of land, and if you own that thing you have a bunch of things you're allowed to do on that land and in any buildings that might be on it that you can't legally do if you don't own it and don't have the owner's permission to do the thing.

    In the case of tech company stocks, the fundamentals are:
    - Their physical assets: Any offices they own rather than rent, workstations, servers, data centers, factories, etc.
    - Stuff that they like to call "intellectual property": Copyrighted code, designs and inventions that are still under patent, trade secrets, branding and trademarks, etc.
    - Ongoing sales contracts where some customer already promised to pay $X in return for service Y.

    So, in the event that a tech company goes completely belly-up, and nobody wants to buy them out, they'll sell off all of that stuff to get some cash to pay for, in approximate order:
    - Employee payroll not yet paid out.
    - Legal judgment creditors
    - Contracted creditors
    - Bond-holders and bank loans
    - Stockholders, who are admittedly the last to get a bite of the apple, but they can get a bite depending on the circumstances.
    And that's a big part of why the stocks of companies with valuable assets tend to be valued higher, because all that stuff can be used to reduce the risk.

    With crypto, though, there is nothing to sell off: The calculations that went into mining a coin aren't something that can be used by anyone else for any particular purpose. And that's an important difference. You don't even get a pretty flower out of it!

    --
    The only thing that stops a bad guy with a compiler is a good guy with a compiler.
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  • (Score: 0) by Anonymous Coward on Sunday May 15 2022, @06:01PM (3 children)

    by Anonymous Coward on Sunday May 15 2022, @06:01PM (#1245157)

    With crypto, though, there is nothing to sell off...

    Don't tell that to the people that did sell off and caused this little "crash". Now they speculate where the bottom is and will buy back. Sounds like any other day in the stock market

    • (Score: 1) by khallow on Sunday May 15 2022, @11:53PM (2 children)

      by khallow (3766) Subscriber Badge on Sunday May 15 2022, @11:53PM (#1245208) Journal

      Now they speculate where the bottom is and will buy back.

      But will they be buying crypto or dead cats armed with razor blades?

      • (Score: 0) by Anonymous Coward on Monday May 16 2022, @12:18AM (1 child)

        by Anonymous Coward on Monday May 16 2022, @12:18AM (#1245211)

        If they make a profit, who cares?

        • (Score: 0, Redundant) by khallow on Monday May 16 2022, @01:44AM

          by khallow (3766) Subscriber Badge on Monday May 16 2022, @01:44AM (#1245222) Journal
          I doubt few care one way or another.
  • (Score: 0) by Anonymous Coward on Sunday May 15 2022, @11:58PM (5 children)

    by Anonymous Coward on Sunday May 15 2022, @11:58PM (#1245209)

    "With crypto, though ..."

    You can almost say the same thing about fiat currency ...

    • (Score: 0) by Anonymous Coward on Monday May 16 2022, @06:47AM (3 children)

      by Anonymous Coward on Monday May 16 2022, @06:47AM (#1245255)

      You can say anything about anything. With fiat currency, the value is driven by the fact it's legal tender in some nation. Want a visa to Fooland? You have to pay for it in Foobucks. Want to run a business there? All the licensing requirements and taxes are in Foobucks. Nations use various legal frameworks and yes, coercion to drive a requirement to buy their currencies. You need USD because the USA says so. What entity exists that has a monopoly over something (such as land, and the resources it contains) and insists that you pay with crypto?

      • (Score: 0) by Anonymous Coward on Monday May 16 2022, @12:14PM

        by Anonymous Coward on Monday May 16 2022, @12:14PM (#1245285)

        What entity exists that has a monopoly over something (such as land, and the resources it contains) and insists that you pay with crypto?

        Well, there is El Salvador ... but then they also have USD and they don't make either.

        https://www.bloomberg.com/news/articles/2022-05-12/el-salvador-s-bitcoin-losses-are-as-big-as-its-next-bond-payment [bloomberg.com]

      • (Score: 0) by Anonymous Coward on Monday May 16 2022, @01:39PM (1 child)

        by Anonymous Coward on Monday May 16 2022, @01:39PM (#1245307)

        "With fiat currency, the value is driven by the fact it's legal tender"

        You mean like Venezuela

        • (Score: 0) by Anonymous Coward on Tuesday May 17 2022, @03:16PM

          by Anonymous Coward on Tuesday May 17 2022, @03:16PM (#1245667)

          And? Pointing out that fiat currency can go the way of Bitcoin is not a win.

    • (Score: 2) by Mykl on Tuesday May 17 2022, @10:52PM

      by Mykl (1112) on Tuesday May 17 2022, @10:52PM (#1245814)

      No, you cannot even remotely say this. Fiat currency may not be backed by gold, but there are plenty of government assets (land being only a very small part of it) that can be used to support owners in the event of a problem.