The schadenfreude continues


I don’t follow crypto religiously — there’s no way I’d ever invest in such an obvious grift, just like I avoid MLMs and Ponzi schemes — but I do have to occasionally chortle when the fraud becomes obvious. Apparently, this past week, Bitcoin dropped below a significant threshold.

Bitcoin had bobbled along all this week just above $20,000. Ether similarly bobbled along just above $1,000.

This was not a psychological level. There were large DeFi loans that would liquidate if the price number went down. Liquidations like this were what had just destroyed the crypto investment funds.

You could watch the charts as borrowers frantically poured millions of actual dollars into the markets, desperate to prop up the price. Often, a seller would dump straight into the pump, a minute later. Thanks for the exit liquidity!

This, too, worked until it didn’t.

This morning, Bitcoin broke below $20,000 at 06:51 UTC on Saturday 18 June 2022. It plummeted from $20,300 to $19,100 in just a few minutes:

Ether finally went as well, at 07:18 UTC. Someone on /r/buttcoin got live video of the $1,000 buy wall on Coinbase ETH-USD being destroyed. Beauty, grace and style, 10/10 from all judges.

They’re doomed. Really, the only reason I pay attention at all is for David Gerard’s entertaining descriptions of the circus.

It’s a huge Rube Goldberg machine slapstick custard pie clown car, where each custard pie triggers three more custard pies. A clown’s tie pops up, causing three other clowns’ ties to pop up. Several tons of organic cow manure fall from above. The clowns stick their heads up out of the poop, proclaiming how clean they are and what a mess everyone else is.

As long as you haven’t invested in crypto yourself, the show is totally free!

Comments

  1. KG says

    As long as you haven’t invested in crypto yourself, the show is totally free!

    Better than free! The destruction of cryptocurrencies would save huge amounts of climate-disrupting greenhouse gas emissions, as well as bankrupting some of the worst people on the planet.

  2. jellorat says

    My buddy made a lot of money on this. He got out right before the crash, and will never work again because he got out at the right time. He gave me enough to half my student loans with the advice to sit on it.

    I’m not a crypto person, because I am not into ponzi schemes, but it was nice to fantasize about being able to get out from under my student loans. I didn’t pay a cent into it.

    So here I am. An accidental participant. Not because I wanted to be, but because of that tiny sliver of hope for a few months that I could be debt free? It was nice while it lasted. Now back to the reality that I will never get those loans paid off in my lifetime, because the interest rate is so damn predatory.

  3. JoeBuddha says

    I was given the chance to get in on the original pyramid scheme. I demurred since I can logic, and he never could. Besides, it was a sales person scam, and I’m anything but.

  4. says

    Wow:

    Coinbase is unusually restricted by being a publicly-traded company — they can’t make material misstatements or material omissions. Imagine being a crypto company that isn’t allowed to just lie.

    So I suspect Coinbase is actually the player at the greatest immediate risk of failure. The offshore casinos can just lie and steal a bit more.

  5. Snarki, child of Loki says

    I, for one, prefer to use more traditional financial tools.

    Investments? TULIPS.
    Currency? GIANT STONE WHEELS.

    Working better than BitCon, it seems.

  6. erik333 says

    You only lose “money” if you sell low. Once China/russia/cia needs another VPN cracked im sure they’ll start the hype cycle up again.

  7. blf says

    I was given the chance to get in on the original pyramid scheme.

    Imhotep tried to recruit you?

  8. Rich Woods says

    @gijoel #5:

    What are you going to do when the latinum evaporates, leaving behind all that useless gold?

  9. ANB says

    Yet sad that all the “little” folks who bought into the scheme. I was talking to the grocery store clerk the other day, and he was blabbing about his “investment” in crypto. All I could say was “good luck.” He actually thought it was his way out of that job.

  10. muttpupdad says

    Reminds me of the story of Joe Kennedy explaining why he got out of the Stock Market before the crash in ’29. When he heard a shoeshine boy talking about how he was doing in the market, he knew it was time to get out.

  11. lotharloo says

    The r/buttcoin is pretty funny. One of the top posts is “Health Warning : An erection that lasts longer than four hours is a medical emergency.” Hehe.

  12. seachange says

    The most hilarious part of this very funny post to me, is that diagram. Jessica Rabbit is not bad, she’s just drawn that way.

  13. says

    I’m giddy. Graphics card prices are in free-fall and have fallen below MSRP for the first time in a couple years.

  14. says

    @1: > Better than free! The destruction of cryptocurrencies would save huge amounts of climate-disrupting greenhouse gas emissions, as well as bankrupting some of the worst people on the planet.

    In fact, total CO2 emissions went down a fraction of a percent specifically because this price crash made bitcoin and ethereum mining less profitable.

    @2: > So here I am. An accidental participant. Not because I wanted to be, but because of that tiny sliver of hope for a few months that I could be debt free? It was nice while it lasted. Now back to the reality that I will never get those loans paid off in my lifetime, because the interest rate is so damn predatory.

    This is precisely why crypto is predatory: people are desperate. I have a whole rant about this, which includes advice to the rich on how to avoid a slicey boi.

    @9: > You only lose “money” if you sell low. Once China/russia/cia needs another VPN cracked im sure they’ll start the hype cycle up again.

    This is actually a crypto marketing claim. In reality, you lost your money when you bought the bitcoins – it flew into the sunset, never to be seen again. You now have this thing. All you can do with it is try to sell it to the next sucker for more than you paid. Then all they can do is try to sell it on for more than they paid, etc.

    @14: > When he heard a shoeshine boy talking about how he was doing in the market, he knew it was time to get out.

    Shoeshine boys around the world breathe a sigh of relief that their customers might finally shut up about crypto.

  15. James Fehlinger says

    As long as you haven’t invested in crypto yourself, the show is totally free!

    https://www.nytimes.com/2022/05/18/technology/terra-luna-cryptocurrency-do-kwon.html
    ++++++++
    How a Trash-Talking Crypto Founder Caused a $40 Billion Crash

    Do Kwon, a South Korean entrepreneur, hyped the Luna and TerraUSD
    cryptocurrencies. Their failures have devastated some traders, though
    not the investment firms that cashed out early.

    By David Yaffe-Bellany and Erin Griffith
    Published May 18, 2022
    Updated May 20, 2022

    . . .

    Mr. Kwon dismissed concerns with a taunt: “I don’t debate the poor.” . . .
    ++++

    ;->

  16. torcuato says

    Yup, crypto is crashing catastrophically, as opposed to other investments, such as stocks, which are doing just fine… LOL!
    (And if you’re going to argue that the stock market crash is not as bad, take a look at the Nasdaq high-fliers, like Netflix, Tesla, Paypal, Facebook, Peloton, Moderna, Robinhood, Gamestop, etc, etc, etc.) At this point in time, crypto is tied to the stock market as a speculative investment. Stock market crashes, crypto crashes. Nothing to see here.

  17. PaulBC says

    torcuato@21 I have a great deal of exposure to the stock market, including giant blocks of undiversified shares from previous employers (because I just hate selling). Am I broke? Nah. There was a huge run up over the past 12 months. That has evaporated and a little more besides. Easy come, easy go.

    You do get that while stocks can be overpriced, they are backed by functioning companies with business models and revenue streams, right? Sometimes you get a collapse along the lines of the dot com bust or the subprime mortgage crash. I made it through those too. While you can make investments that turn out to be wrong or didn’t make sense in the first place, crypto isn’t backed by anything at all.

  18. says

    @21 torcuato

    The market will recover eventually. The cryptobullshit won’t. Why should anyone invest in something that literally produces nothing but hot air?

  19. PaulBC says

    As Paul Krugman wrote over a year ago and repeats in various forms:

    skeptics like me keep pressing for an answer to the question, “What problem is cryptocurrency supposed to solve, exactly?” And at some point the answer always devolves to some version of “Fiat money is doomed because the Fed won’t stop running the printing press.”

    As it turns out, the Fed is now tightening currency. Crypto has no such oversight. The idea that it could be more stable is completely laughable unless you’re already sold on “Big gummint can’t do anything right.” In fact, fiat currency works very well and has many advantages over alternatives, not just crypto but the gold standard as well. The only “application” I can think of for crypto is money laundering. That excludes the symbolic application of proclaiming your libertarianism, which I think is a big part of the sales pitch.

  20. says

    @22: Bronze Dog
    100% agree. All those assholes on Wall Street rake in millions doing what? Shifting money around? They produce nothing real yet they are obscenely wealthy. They’re an entire class of parasites. Consumers who don’t produce. Most money is just ones and zeros on a computer these days. I’ve spent my entire life living off the sweat off my back. Construction, cooking, fruit processing, brewing, packaging, warehousing, I work hard. I earn my wages. These guys click a few buttons on a computer and all of a sudden your 401K is in their pocket.

    ABOLISH WALL STREET!
    End of rant.

  21. KG says

    In fact, total CO2 emissions went down a fraction of a percent specifically because this price crash made bitcoin and ethereum mining less profitable. – David Gerard@19

    I specified the destruction of cryptocurrencies, which would end that “mining” altogether. Estimates of the amount of CO2 generated by cryptocurrency operations vary, and are generally given in not-particularly-useful terms such as “as much as the Netherlands”, but it’s certainly a significant amount, produced purely so a bunch of parasites can try to get rich without producing anything useful.

  22. weylguy says

    I’m reminded of comedian Steve Martin’s book, “How to Turn a Million Dollars in Real Estate into $25 in Cash”

  23. says

    As a major baseball fan, I was pretty pissed at the crypto exchange logo being worn by umpires this season. When FTX goes under, the patches will disappear. Wonder if it will be during the season or this winter?

  24. chrislawson says

    torcuato:

    Crypto cheerleaders always seem to drop in on these conversations. But, you know, the stock market for all its flaws and manipulations is still a place where people buy a share in companies that do things. And let’s do some comparisons of the 12 month progress of some indices:

    FTSE -2.3%
    DJI -11.8%
    NYSE -14.24%
    NASDAQ -23.6%
    Bitcoin -29.9%

    So the most stable cryptocurrency has done worse, often much worse, than US/UK stock markets. But this figure is misleading because cryptocurrencies show much more of a boom-bust picture which you can see by looking at those graphs (easily Googled). If we take the drop from this year’s peak value, instead of just comparing it to the value exactly 12 months ago, we find that Bitcoin was as high as $91K! Which means the equivalent losses since peak of each index are:

    FTSE -8.7%
    DJI -19.1%
    NYSE -18.6%
    NASDAQ -33.4%
    Bitcoin -67.7%

    But wait, there’s more. You describe cryptocurrencies as “speculative” investments. Indeed they are, but speculative of what? When people invest in speculative stocks like, say, Microsoft in the 80s, their speculation is that the company will achieve something such as global domination of PC operating systems and office suite software. When people invest in cryptocurrency, they are speculating that the value will increase in and of itself.

    And, it’s not all schadenfreude for me because of the low income workers who invested in crypto because they were desperate to escape the increasingly entrapped inequality in Western economies which makes it difficult (now nearing impossible) for a low-wage worker to save up to buy a home.

  25. says

    It would be one thing if crypocurrency worked as a currency, but it became a get rich investment instead and is way too volatile. Could you imagine if you had $50 and one week you could buy a loaf of bread and you still had over $45 left but the next week you’re lucky if you had $20 in change?

  26. chrislawson says

    Also, the particular examples torcuato used of dropping stock prices are themselves examples of shares that were overvalued for reasons more to do with marketing / exaggeration / wild speculation than with fundamental attributes.

    My favourite example there is Netflix, which despite a huge headstart in streaming and a captive audience due to a pandemic is starting to burn out for two main reasons. The first isn’t entrely their fault: the major media companies realised they can offer their own streaming services, particularly Disney which can leverage people to join their platform just to see their shows. (Netflix has some fault here: it tried to counter by spending a fortune on its own exclusive productions…a good strategy in theory, but they spent far too much money on far too little quality.) But the other factor is entirely their doing, and that is relying on a “new subscriber” metric as its fundamental measure of success. While Netflix itself is not a Ponzi scheme (because it relies on new customers, not new investors), this is still a Ponzioid business model in that it demands perpetual exponential growth in customers that the real world cannot supply for more than a few happy years.

    Pointing out that cryptocurrencies are on par with other manipulated, overvalued investments is not really a rousing defence.

  27. says

    I tend to think more of the South Sea Company than Tulip Mania when it comes to cryptocurrency. (Walpole did it.)

    Tulips can be planted to make a pretty garden. They have a use outside of selling them for a profit. Even the South Sea Company had the ghost of a whisper of a promise of trade with South America backing it. Near as I can tell, cryptocurrency is fundamentally a lottery prize for turning useful electricity into waste heat that generally goes to whoever can afford the most processing power and thus the most metaphorical tickets.

  28. rorschach says

    I’ve said this here before, yes it is a Ponzi scheme not backed 1:1 by fiat currency, yes it is a pump and dump game for the whales that screws over the Robinhood crowd by constantly taking out their short timeframe stops etc.
    But, and this has to be said, if you were not blindly putting your money into crypto and HODL’d, BTC and ETH actually traded reasonably technically consistently. These instruments could be traded on a daily timeframe basis following technical analysis tools, eg the crash from 65000 was telegraphed by a giant head-and-shoulders pattern that played out perfectly below 53500. Same with the fall below 28000.
    The chart shown above in the op is a 1-minute chart(one price candle per minute), more noise as signal. You want to survive trading crypto, up or down, because money can be made both ways, you want to trade on a minimum 4-hour chart imho.

  29. torcuato says

    @30 chrislawson
    You are doing exactly what I said shouldn’t be done: compare Bitcoin with other market indices instead of with other volatile stocks, which I think is more appropriate.
    As for “the stock market … is still a place where people buy a share in companies that do things”, that might have been true in the 60’s. Today’s stock market is more like a casino. What “things” did GameStop exactly do in 2021 to justify its price going from $20 to $450 in a couple of weeks? What “things” did AMC do to make their price jump from $10 to $70? And the list goes on…
    I’m not particularly a crypto cheerleader, I’ll go wherever the money-making opportunities are.

  30. says

    @35 torcuato

    You know, pubicly traded companies employ people, pay them benefits and wages and might even produce useful goods. None of that applies to the cryptocrap. It’s scammers and morons all the way down. Not one single decent person has a net-benefit from crypto-currencies, but all of humanity is blighted by the emission of greenhouse gases caused by crypto-mining.

    The day crypto dies should be made a global holiday.

  31. says

    The day that crypto died…
    We were singin’…
    Bye, bye, Mister Anarchist bloke!
    Clicked my laptop on a crap-spot, but the block-chain was woke
    Them good ol’ boys were smokin’ sensei and dope
    Singin’ this’ll be the day I go broke
    This’ll be the day I go broke…

  32. chrislawson says

    @35–

    We all agree that the stock market is rife with manipulation. But GameStop is a video game retail chain and AMC is a cinema chain. These are real business models based on customers spending money for goods and services, not smoke fundament like Bitcoin.

    And yes, I’m sure you chose those two cases because they are examples of the wallstreetbets reddit community manipulating the stock price (in this case, not to make a meaningful investment, but as a way of punishing shorters). But, again, defending Bitcoin by pointing out some of the worst crap in the share market is not all that persuasive. And of your examples of terrible stock loss, Robinhood managed an astonishing 91% drop in value from peak…to a large extent due to its exposure to cryptocurrency.

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