Tag Archives: Cryptocurrencies

2022: The Year that Imploded … Bigly, by David Haggith

2022 was not kind to most asset prices. From David Haggith at thegreatrecession.info:

2022: The Year that Imploded … Bigly

Falling housing prices may cause Housing Market Crash 2.0.

This was the year where it seemed everything imploded. For the economy, it started with two quarters of receding GDP that everyone refused to call a recession. Whether you stand with the crowd on that or not, it was certainly not a good change and was certainly a collapse of the economy toward a smaller state based on production. But that was just where it all began. What follows is an amazing overview of a world in a state of collapse.

The stock market’s north-pole polar-bear plunge

Right from the start, 2022 became the year the stock market imploded with all major indices down and down … and down some more all year long. So far, this is the year Santa’s sleigh didn’t soar into some kind of end-of year rally. Instead, the Grinch stole the sleigh and just went down the hills and through the snow like sleds are supposed to go.

The Grinchy Dow started bounding down the mountainside at the top of year in an endless series of leaps off bluffs and is currently down 11% for the year. At its lowest point of the year, it fell 22% into a full bear market that it remains mired in.

The S&P also started going downhill at the top of the year; but it ran down in front of the Grinch like his dog, trying to keep the Dow from hitting him in the butt, to where the S&P is currently down 20% from its all-time high. At its lowest point it fell 25% from its peak.

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The Contagion: Fallout and Lessons from FTX and SBF, by Sam Hill

The third part of Sam Hill’s series on Sam Bankman-Fried and his cryptocurrency exchange, FTX. Will there be any consequences for Democratic darling SBF? From Sam Hill at bombthrower.com:

 

This is the third and final part in our recap of the collapse of FTX. In the first two issues we covered what happened in the weeks leading up to the failure of the exchange and how Alameda Research and FTX became so entangled and fraudulent in the first place.

Today we’ll cover the contagion and fallout throughout the Crypto industry and some lessons learned by Crypto investors and industry insiders.

Leveraged Unwind

The Contagion that we are seeing from the failure of FTX is mainly an unwind of built up debt between Crypto companies. This is acting with a lag as a majority of companies with financial problems were already on the ropes from earlier in the year as a result of the collapse of Luna/Terraform labs and Three Arrows Capital.

The list of Crypto lenders that have so far filed for bankruptcy as a result of these earlier problems include Voyager, Celsius and BlockFi. Gemini’s yield program has halted withdrawals. Nexo has announced that they will exit US markets but have not yet announced financial problems.

If you haven’t already, you should strongly consider whether any of the yield generating accounts at Crypto companies are worth the risk.

 These failures are all a result of counterparties defaulting on loans. Essentially, Crypto hedge funds and other entities took on loans from these lenders during the bull market and have failed to repay this year. To compound this issue towards the end of 2021 and in early 2022 the Crypto lending space was so competitive that loan terms were extremely favorable.

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Where Crypto Went Wrong, by Charles Hugh Smith

Cryptos have become just another way for those who have to get more. From Charles Hugh Smith at oftwominds.com:

You want to fix the world with finance? Then fix this: wages’ share of a financialized, globalized, speculative-bubble dependent economy have been falling for decades. Fix this and you really will change the world. Anything less changes nothing.

Let’s start by stipulating my perspective on cryptocurrencies is neither positive nor negative in the usual context of “to the moon” or “worthless,” nor does it track any of the conventional narratives (decentralized finance will conquer the world, etc.)

I’ve thought a lot about “money” and its role in the economic-social order, and its role in the extreme asymmetries of wealth-power-income inequalities that are dismantling the social order in broad daylight. I’ve also thought a lot about work and its role in social cohesion, individual fulfillment and a productive, level-playing-field economy.

I’ve written two books on “money” and the potential utility of cryptocurrencies in reversing the extremes of wealth-power inequality that are destabilizing the social order. I invite you to read both books if these topics interest you:

Money and Work Unchained (2017)

A Radically Beneficial World: Automation, Technology and Creating Jobs for All: The Future Belongs to Work That Is Meaningful (2016)

Once you grasp the potential of community-based labor-backed cryptos, you realize cryptos took the greed-soaked path to the Dark Side of a destructive asymmetry of wealth and power: those who issued blockchain cryptos (in all their forms) would become the new Extractive Elite, the new Power Elite, the New Parasitic Elite, buying the wealth generated by the labor of others for peanuts.

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Another Big CBDC Flop… Here’s What Really Comes Next (Hint: It’s Not What the Elites Hoped For), by Nick Giambruno

People are shunning central bank cryptocurrencies and flocking to the private alternatives. From Nick Giambruno at internationalman.com:

CBDC Flop

Last year, Nigeria launched its much-ballyhooed eNaira, Africa’s first central bank digital currency (CBDC).

Central bankers, academics, politicians, and an assortment of elites from over 100 countries hoping to launch their own CBDCs have closely followed the eNaira.

They used Nigeria—Africa’s largest country by population and size of its economy—as a Petri dish to test their nefarious plans to use CBDCs to enslave the people of North America, Europe, and beyond.

The jury is now in.

The eNaira has been a massive failure.

According to Bloomberg, only 1 in 200 Nigerians use the eNaira. That’s even after the government implemented discounts and other incentives as desperate measures to increase adoption.

This came as a surprise to the elites.

Nigeria has one of the highest Bitcoin adoption rates in the world—ranking #11 among all countries.

Bitcoin’s ability to bypass the government’s capital controls—which restrict the use of foreign currencies and sending and receiving money from abroad—was a big draw for Nigerians, as it is in other countries with these repressive policies.

A long history of rampant currency debasement in Nigeria—including six devaluations in recent years—also helped spur the adoption of Bitcoin, which is totally resistant to inflation.

In short, the elites have miscalculated. They figured Nigerians wouldn’t be able to differentiate between Bitcoin and the eNaira—they are both digital currencies, after all.

The Bloomberg article admitted, “Nigerians’ passion for cryptocurrencies doesn’t extend to the central bank offering.”

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The War on Crypto Privacy Intensifies. Automatic Reporting of All Trades and Transactions Soon Mandatory. by Wesley Thysse

The regulators are coming after cryptocurrencies big time. From Wesley Thysee at DecentralizedLegalSystem.com:

Massive overreach of international regulators to force all service providers in the industry to:

  • Record ALL crypto trades on exchanges, DEFI and DEXs;
  • Record (large) purchases from private wallets;
  • Record all transfers to cold storage and make lists with private wallet addresses;
  • Send all this info annually to the (tax) authorities;
  • And finally, force governments to pass these rules into domestic law.

The war on privacy continues. The aim: to tackle anonymous spending and exchanging of crypto.

As you’ll discover, these new regulations force upon us a system of complete surveillance and control.

This report explains exactly what to expect from the latest developments launched in October 2022…

What is Going On?

​ Last year, the crypto world was shaken to its core when the Financial Action Task Force (FATF), acting in behalf of the G20, released their guidance on virtual assets.1)

This document laid out a set of rules regarding stablecoins, distinctions between private and hosted wallets, extensive KYC requirements, the tackling of privacy tools, and more.2) FATF has also provided a final definition of the type of service provider tasked with reporting on crypto: the Virtual Asset Service Provider.

Fast forward to today, and these rules are quickly being implemented across the world.3) But as usual, it didn’t stop there. Another international regulator, the OECD, is already building on this framework in an attempt to massively increase the grip of authorities on crypo.

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Doug Casey on the Rise of Alternatives as the US-Led Global Order Falters

Gold will emerge as the world’s money because nobody trusts fiat currencies. From Doug Casey at internationalman.com:

US-Led Global Order

International Man: Since the invasion of Ukraine, we’ve seen the US and its European allies institute unprecedented sanctions on Russia. In a bold move, the US government also froze the US dollar reserves of the Russian central bank.

In response, Russia demanded payment in rubles in exchange for its energy.

What’s your take on this new phase of economic warfare?

Doug Casey: It’s a massively stupid and destructive move on the part of the US. There’s no upside to what the US is doing in fighting this economic war against Russia—or, for that matter, in backing the Zelensky regime in the Ukraine—but huge downside from every point of view.

Essentially the US and Western powers have confiscated hundreds of billions of dollars of assets from the Russian government, as well as individual Russians. It’s theft, pure and simple. It acts as a warning shot to everybody in the world: Your assets are not safe in Western countries. It’s a reason to get out of the US dollar and use something else.

It’s backfired on the US. It’s helping devastate Western economies by cutting off the flow of Russian oil, and especially natural gas, to Europe. Further, the Russians now demand payment in rubles. The ruble is now a much stronger currency because, in order to pay the Russians, the world has to buy rubles. The Russians have taken a page from the US playbook. Decades ago, the Saudis said they would only accept US dollars in payment for oil. And so, people had to buy dollars if they wanted Saudi oil.

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The Stock Market At The End Of The World, by Ed Zitron

Things are not always what they’re billed to be in the cryptocurrency world. From Ed Zitron at ez.substack.com:

Yesterday, as cryptocurrency prices crashed and many lost their shirts and asses due to overleveraging, Celsius Network, a loan platform for cryptocurrency, chose to pause all withdrawals, swaps, or transfers between accounts, citing “extreme market conditions.” To be clear, this means that billions of dollars of funds are being held hostage on a non-specific timeline by a company that several people have suggested may not have the liquidity to handle a full withdrawal of funds. It’s a bit like if you went to a bank and put money in there, but there was a rough day on the stock market, so now your debit card doesn’t work, and you can’t transfer money to anyone.

Binance, one of the largest cryptocurrency exchanges, also paused withdrawals of Bitcoin, citing a “stuck transaction,” a hold that lasted for three hours. In the last 48 hours, I’ve watched Bitcoin crumble from just under $25,000 on Monday to just over $21,000 as I write this – a number I’ll likely update multiple times before I finish writing this – and people are despairing. The Celsius Network subreddit includes some of the more depressing posts I’ve ever read, with users saying stuff like “they can legally just steal all our money?” and “Fuckfuckfuck” and “Bruh I was gonna exit today too RIP.” Crypto.com and BlockFi have both announced layoffs, and Coinbase retracted hundreds of job offers from people who had agreed to them, including at least one person who needed it for a visa.

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Matt Damon Makes New Commercial Apologizing For Telling You To Buy Crypto

From The Babylon Bee:

PACIFIC PALISADES, CA—After the spectacular crash in the cryptocurrency market this week, Matt Damon and his publicists worked overtime to produce a new commercial to apologize for convincing amateurs to invest in cryptocurrency.

“History is filled with ‘almosts’ – and my crypto commercial was almost a good idea.” In the new commercial, Damon speaks while walking under a freeway underpass, then past a tent city, then stepping over newly-bankrupted derelicts.

“I had been seeking another space script since ‘The Martian,’ so my heart skipped a beat when I heard this ad would say ‘fortune favors the brave’ and show astronauts walking around! I was excited to embrace the moment, but I should have considered my responsibility as a trusted public figure like Tom Hanks, Bill Gates, or Will Smith.”

Many first-time crypto investors took to Twitter, complaining that they had waited to sink their family savings accounts into cryptocurrency until a celebrity told them to be bold. “I was waiting to buy until the peak, to be sure of proven value–and when you gave that speech over swelling music, it convinced me to bet the college fund. Thanks a lot, Matt!”

Twitter user @0wnCrypt0N00bs54321 concurred, sharing his astute strategy: “My crypto portfolio cratered, so I’ll sell off the rest now–sell the trough to cut your losses!”

At publishing time, Matt Damon has signed on for a commercial about NFTs, but multiple production assistants are still trying to explain it to him.

https://babylonbee.com/news/matt-damon-makes-new-commercial-apologizing-for-telling-you-to-buy-crypto

Crypto is Now Less So, by Eric Peters

A lot of the wind has gone out of crypto enthusiasts’ sails. From Eric Peters at ericpetersautos.com:

While we’re awaiting the collapse of the dollar, let’s have a look at the collapse of crypto – aptly named because it’s so difficult to understand, the almost-axiomatic clue that  a scam’s afoot.

The value of a Bitcoin has melted away like a mid-May frost. In fact, it has almost no value left anymore – relative to the value it had just a couple of weeks ago. The crash was on par with that of the Stock Market in 1929 and probably for the same or very similar reasons.

Both being the result of speculation and other variants of flim-flammery.

The actual value of Bitcoin was . . . what, exactly?

Here we had – in a purely abstract sense – a unit of money without physical existence, based on a fictitious “coin” that was divvied up into obscure denominations – e.g., “.00000345 Bitcoin” – whose value derived from the willingness of people to accept that it had value. People were told that, unlike the physical (and digital) money printed (or conjured) at will – i.e., dollars – the value of these Bitcoins was secure from inflation – that is, from devaluation – because the supply of them was strictly limited.

Supposedly, by “miners” who had a self-interest in ensuring too many weren’t “mined” – though in fact no one ever “mined” anything, in the way that word is generally understood. Nothing was dug up out of the earth, refined and minted. Various calculations – or some such – were performed.

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The evolution of credit, by Alasdair Macleod

The West’s fiat currencies are reaching the end of the line. From Alasdair Macleod at goldmoney.com:

After fifty-one years from the end of the Bretton Woods Agreement, the system of fiat currencies appears to be moving towards a crisis point for the US dollar as the international currency. The battle over global energy, commodity, and grain supplies is the continuation of an intensifying financial war between the dollar and the renminbi and rouble.

It is becoming clear that the scale of an emerging industrial revolution in Asia is in stark contrast with Western decline, a population ratio of 87 to 13. The dollar’s role as the sole reserve currency is not suited for this reality.

Commentators speculate that the current system’s failings require a global reset. They think in terms of it being organised by governments, when the governments’ global currency system is failing. Beholden to Keynesian macroeconomics, the common understanding of money and credit is lacking as well.

This article puts money, currency, and credit, and their relationships in context. It points out that the credit in an economy is far greater than officially recorded by money supply figures and it explains how relatively small amounts of gold coin can stabilise an entire credit system.

It is the only lasting solution to the growing fiat money crisis, and it is within the power of at least some central banks to implement gold coin standards by mobilising their reserves.

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