Bitcoin is taking a dive:
Today’s price action so far:
This looks like a margin-propelled crash with today’s 20% takedown. From peak (US$65,000) to trough today is just over a 50% haircut, and not many people have the intestinal fortitude to handle such a drop – especially when they are leveraged.
The question going on in my mind is cross-margining – have people collateralized loans with their Bitcoin holdings? If so, what else are they going to be forced to sell as a result of today’s price drop?
Always be conscious that a trade involves a swap of asset for cash; the amount of cash nor the amount of asset changes on net. Only the valuation of the asset in question changes.
Now you have the people speculating on BTC from the middle of February to yesterday all underwater; the people that speculated from the beginning of 2021 to the middle of February are roughly in a break-even position; while you still have a dedicated ‘fan base’ holding prior to that – all trading against each other in one massive zero-sum game. The only person that really doesn’t have much choice in the matter is Microstrategy (MSTR), who’s CEO cannot possibly reverse his decision as right now he appears to be willing to be the last bagholder.
The other way of speculating would be to mine btc / crypto and sell it off. Another interesting thing to watch would be the price of NVIDIA shares. If crypto prices drop and remain low, there’s going to be a flood of video cards in the market.
Bitcoin is like some terrible movie monster that just won’t die. Someday, somehow the market price will equate to its intrinsic value, which is zero (or lower). Cue the conspiracy theories for when that actually happens.
I know folks are generally dismissive of crypto here – while I do believe they are here to stay. There are real world use cases such as filecoin – the service of which is cheaper than cloud comparable. Smart contract in Ether where your counterparty is basically computer code has its own appeal.
In this cycle, there’s a lot of ways to make money in crypto other than speculating on prices of coins – Defi & Yield Farming has astronomical yield relative to traditional finance. Some of them involve only so-call highly regulated stable coins like USDC which you would have no trouble cashing out at highly regulated entities like Coinbase.
Regarding NVIDIA, the days of mining with graphics card are probably numbered.as Ether moves to Proof-of-Stake consensus and most cryptos are moving toward that.
Any opinion on the BTCC Will….. or anyone?