Cryptocoin Value and Market Trend Discussion

[LFaWolf]

Of course you can adjust the time period of the charts to show there are more money supply than ever. The US Gov pumped $8 trillion into the economy since the pandemics. So many ways to spin stats and charts. But since Jan 2022, after the Fed has raised the interest rate, M1 and M2 are down.

M3 is no longer published by the US Central Banks. Money deposited into the banks, while still out there, are not in "circulation" buying stuff and causing inflation.

 

[RandallFlagg]

Combined with famine and war.

Maybe not in the west, we're too insulated and typically exporters of food, but we'll certainly see problems.

Hopefully Crypto sticks around, it's useful for keeping money honest (theoretically).

Yes, it's not something I hope for an for the most part, not something I'm prepared for. I expect the Fed to get this under control. The problem I see, is that there is tremendous political pressure on them to do things that will *not* get it under control.

The big thing here is, in not inflation adjusted terms, the formulae for GDP is Velocity of money X Money supply. They jacked up money supply to the moon to get GDP to recover.

Their problem now is velocity picking up. They can lower velocity by raising rates, but while there is that much extra cash floating around you can bet at some point it will get unleashed. Something will happen, some market(s) will go nuts to the upside and the banks will throw their money out there, or supply will crater on something and they'll throw their money at that. They have to remove the cash.

Of course you can adjust the time period of the charts to show there are more money supply than ever. The US Gov pumped $8 trillion into the economy since the pandemics. So many ways to spin stats and charts. But since Jan 2022, after the Fed has raised the interest rate, M1 and M2 are down.

M3 is no longer published by the US Central Banks. Money deposited into the banks, while still out there, are not in "circulation" buying stuff and causing inflation.

So you admit that the money is still there. That was my point. Interest rates do not reduce money supply, they reduce velocity of money which tamps down on GDP and demand. The Fed selling its assets does remove money. They bought treasuries with newly printed money. They remove money by selling those treasuries they bought, the money they are paid is destroyed.

That asset sale, 300B so far, is what reduced money supply. This isn't that hard.

If you want to get into more detail, look for the answer to these two questions :
What happens to the interest paid on treasuries that the Fed holds?
Where does the money to pay banks 3.8% on the 2T they have deposited with the Fed come from?

The answer to both of those questions is inflationary.

 

[LFaWolf]

Yes, it's not something I hope for an for the most part, not something I'm prepared for. I expect the Fed to get this under control. The problem I see, is that there is tremendous political pressure on them to do things that will *not* get it under control.

The big thing here is, in not inflation adjusted terms, the formulae for GDP is Velocity of money X Money supply. They jacked up money supply to the moon to get GDP to recover.

Their problem now is velocity picking up. They can lower velocity by raising rates, but while there is that much extra cash floating around you can bet at some point it will get unleashed. Something will happen, some market(s) will go nuts to the upside and the banks will throw their money out there, or supply will crater on something and they'll throw their money at that. They have to remove the cash.



So you admit that the money is still there. That was my point. Interest rates do not reduce money supply, they reduce velocity of money which tamps down on GDP and demand. The Fed selling its assets does remove money. They bought treasuries with newly printed money. They remove money by selling those treasuries they bought, the money they are paid is destroyed.

That asset sale, 300B so far, is what reduced money supply. This isn't that hard.

If you want to get into more detail, look for the answer to these two questions :
What happens to the interest paid on treasuries that the Fed holds?
Where does the money to pay banks 3.8% on the 2T they have deposited with the Fed come from?

The answer to both of those questions is inflationary.

But then you said someone is flat out wrong, even though in two articles that I posted, they said higher interest rates do reduce the money supply. Hmmm

The answer is not as clear cut as you made it out to be. Both M1 and M2 are down.

 

[RandallFlagg]

But then you said someone is flat out wrong, even though in two articles that I posted, they said higher interest rates do reduce the money supply. Hmmm

The answer is not as clear cut as you made it out to be. Both M1 and M2 are down.

If you actually read the article, it does not say that. You're over-simplifying it.

It's talking about Fed policy. When the Fed is raising rates, money supply "should go down" is what they say. That's because the Fed would be trying to do two things at once, raise rates and reduce money supply. They are not the same thing.

Like I said, the Fed already reduced money supply by 300B by selling assets.

And besides, as I said before when a bank deposits money at the Fed, that's not reflected in M1.
M1 "(1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions"

That money that they exclude, it's still there. If inflation spikes, and I as a banker can buy a AAA rated corporate bond with a 15% yield, I'm going to pull my money out of that Fed bank and buy that bond.

The Fed has other tools to remove money from general circulation. For example, they can require higher reserve amounts of banks. This would force the banks to deposit or otherwise keep a higher percentage of their deposits - not loan them out. They haven't taken those steps yet, which tells me something else is going on.

 

[LFaWolf]

If you actually read the article, it does not say that. You're over-simplifying it.

It's talking about Fed policy. When the Fed is raising rates, money supply "should go down" is what they say. That's because the Fed would be trying to do two things at once, raise rates and reduce money supply. They are not the same thing.

Like I said, the Fed already reduced money supply by 300B by selling assets.

And besides, as I said before when a bank deposits money at the Fed, that's not reflected in M1.
M1 "(1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions"

That money that they exclude, it's still there. If inflation spikes, and I as a banker can buy a AAA rated corporate bond with a 15% yield, I'm going to pull my money out of that Fed bank and buy that bond.

The Fed has other tools to remove money from general circulation. For example, they can require higher reserve amounts of banks. This would force the banks to deposit or otherwise keep a higher percentage of their deposits - not loan them out. They haven't taken those steps yet, which tells me something else is going on.

Of course I read the articles. Of course I know what I am talking about, because I worked in these fields. Higher interest rates should reduce money supply. They have an inverse relationship. I am not saying you are wrong, but the other guy is also not wrong. There is no clear cut answer to the question.

 

[RandallFlagg]

Of course I read the articles. Of course I know what I am talking about, because I worked in these fields. Higher interest rates should reduce money supply. They have an inverse relationship. I am not saying you are wrong, but the other guy is also not wrong. There is no clear cut answer to the question.

Interest rates by themselves do not reduce money supply. There's an assumption that other things are being done when people say that. Otherwise, you would be able to explain how a high interest rate removes money from the economy - but you won't be able to, because it doesn't.

As a point of fact, if done with no other policy changes, raising rates will increase money supply.

 

[LFaWolf]

Interest rates by themselves do not reduce money supply. There's an assumption that other things are being done when people say that. Otherwise, you would be able to explain how a high interest rate removes money from the economy - but you won't be able to, because it doesn't.

As a point of fact, if done with no other policy changes, raising rates will increase money supply.

They do. Both articles showed you how, years of working in this space showed me how.

Again, my final reply is, the answer is complicated.

 

[RandallFlagg]

They do. Both articles showed you how, years of working in this space showed me how.

Again, my final reply is, the answer is complicated.

As what, a financial advisor? I've known many, they are mostly idiots, sorta like saying a real estate agent is a good person to talk to for a real estate investor.

I'm perfectly ok if people want to believe that fallacy. It is complicated, but raising rates merely means the Fed pays more interest on deposits from banks - that inflates money supply. That is a fact. Those deposits though, mean that money is stationary, it's not moving around in the broader economy. Its velocity is almost zero, except for the new money being printed to pay the banks the interest.

You haven't really said anything here to discount any of that. You just keep saying that interest rates lower money supply, with no facts or logic.

 

[LFaWolf]

As what, a financial advisor? I've known many, they are mostly idiots, sorta like saying a real estate agent is a good person to talk to for a real estate investor.

I'm perfectly ok if people want to believe that fallacy. It is complicated, but raising rates merely means the Fed pays more interest on deposits from banks - that inflates money supply. That is a fact. Those deposits though, mean that money is stationary, it's not moving around in the broader economy. Its velocity is almost zero, except for the new money being printed to pay the banks the interest.

You haven't really said anything here to discount any of that. You just keep saying that interest rates lower money supply, with no facts or logic.

Both articles stated so. How much "facts" do I need to provide? If you are in any financial space, you would know that there are many factors that can make the economy move, but apparently you don't work in that space so it is okay. Even the Fed cannot just push a button and make the market moves the way they want.

I worked for a huge investment bank that shamelessly asked for government bailout, not a financial advisor.

 

[dragontamer5788]

Yo, you know I love a good inflation discussion like everyone else. Except... Cronos, Crypto.com's token, is collapsing right now. -51% in just the past week. You can also see the 1-month statistic to see how sharp of a dropoff this all is.

Big speculation that Crypto.com is the next exchange to go bust. I'm not sure how related they are to FTX / FTT or any of the stuff from last week, but this price action is pretty severe and bodes poorly for Crypto.com.

 

[ShiBDiB]

Just saw coinbase is up almost 13% on friday. They're gonna gain a bunch of customers that fled FTX and flee crypto.com.

The best crypto investment right now is probably buying coinbase stock and not buying actual crypto.

 

[RandallFlagg]

Yo, you know I love a good inflation discussion like everyone else. Except... Cronos, Crypto.com's token, is collapsing right now. -51% in just the past week. You can also see the 1-month statistic to see how sharp of a dropoff this all is.

View attachment 269841

View attachment 269842

Big speculation that Crypto.com is the next exchange to go bust. I'm not sure how related they are to FTX / FTT or any of the stuff from last week, but this price action is pretty severe and bodes poorly for Crypto.com.

I don't see why anyone would continue to use an *unregulated* crypto exchange, except pure convenience or stupidity, believing they can deliver on super high yields (20% some of them claim). I would imagine that all of them are frauds to varying degrees.

A savior for crypto, if it appears, will likely come from the regulated traditional investment companies. Ones that you can trust will not run off and do stupid things with your crypto, like apparently any of these exchange could do - and not even go to jail for it.

I imagine Fidelity will make money from the transactions themselves, scraping some fraction of a % for their service. That's what I would look for in this space, not some company promising 'yield' on your crypto. Paying 'yield' means they are investing your crypto, and they are unregulated, so they could be doing anything with it.

 

[dragontamer5788]

The best crypto investment right now is probably buying coinbase stock and not buying actual crypto.

Coinbase is -5% this past week and -75% year-to-date.

Coinbase is a play on volume. They make money the more people are buying/selling cryptocoins. Volume is down, SEVERELY down, all across the board. The number of cryptocoin users / traders has shrunk to massive lows. Bitcoin transactions-per-day have been declining all year long.

 

[ShiBDiB]

A savior for crypto, if it appears, will likely come from the regulated traditional investment companies. Ones that you can trust will not run off and do stupid things with your crypto, like apparently any of these exchange could do - and not even go to jail for it.

That's already coinbase. It was shunned because it has higher fees, but being a publicly traded company it is held to a standard that the other exchanges are not.

They sent out an email after the FTX news dropped explaining this.

Coinbase is -5% this past week and -75% year-to-date.

Have you looked at the stock market? Everything is down, crypto is also shitting the bed. I'm just speaking in general terms that coinbase seems like the safer long term investment than any coin at the moment.

 

[dragontamer5788]

Have you looked at the stock market? Everything is down, crypto is also shitting the bed. I'm just speaking in general terms that coinbase seems like the safer long term investment than any coin at the moment.

If you started the year with $100,000 and invested into VTI, you'd be at $75,000. If you invested into COIN instead, you'd be at $25,000, or 3x worse than normal stock market stuff.

-------

Anyway, I have another topic for stocks: https://www.techpowerup.com/forums/...ccounts-bonds-stocks-options-and-more.298118/

You know what has done really well this past year? Cash, strangely enough. I've been holding some. Its the ol' bear strategy, hold cash through a crisis. Its an oldie but a goodie strategy. Anyway, I'd suggest we talk about stock market / bond market stuff in there rather than here.

This topic is nominally about cryptocoins. And the current big mover right now is crypto.com.

 

[lexluthermiester]

Folks were getting off topic...

 

[RandallFlagg]

This seems to be turning into a trend...

There is an old saying in the markets.

Panic early and beat the rush.

This is indicative to what I've been seeing on many threads :

 

[lexluthermiester]

The collapse of FTX is going to have far-reaching, long-term effects. BTC and ETH seem to be holding there value ok, but a lot of the rest are tanking severely.

 

[dragontamer5788]

The collapse of FTX is going to have far-reaching, long-term effects. BTC and ETH seem to be holding there value ok, but a lot of the rest are tanking severely.

Important Update: Forward Through Adversity

At AAX, we have always put our users first, and we would like to share with you the following updates regarding our current situation. We are hopeful that as a community we can brave through these troubling times together.

trends.aax.com

In this light, withdrawals have been suspended to avoid fraud and exploitation.

Erm... bullshit. The only thing to fear is a bank-run, except pausing withdrawals will cause bankruns. I'm definitely getting that "domino effect" feeling, lots of different exchanges are looking bad right now, causing users to withdraw funds en masse, causing more crypto-tokens / exchanges to get into trouble. Good ol' fashioned bank run.

Apparently, AAX isn't related to FTX directly at least, in that AAX doesn't have any FTT or funds stored at FTX. So this is an example of that "far reaching" effect you're talking about.

 

[mb194dc]

If you think an exchange might have a similar model to FTX, leveraging client funds? Then it's quite rational to pull your money out.

If they're pausing withdrawals it's because they don't have the money?

 

[trog100]

it seems the herd is being culled.. bitcoin and eth have just had a slight uptick.. not much but noticeable..

trog

 

[Bomby569]

there is still a lot to go down for all the coins, and a lot more scams around crypto to go bust in the way. Fun times ahead

 

[dorsetknob]

Just Waiting for the First State sponsered/controlled C Currency to go tits-up Crystal bollocks says it will eventualy happen

 

[lexluthermiester]

it seems the herd is being culled.. bitcoin and eth have just had a slight uptick.. not much but noticeable..

trog

It was a slight bounce-back. Everything seemed to have had one.

there is still a lot to go down for all the coins, and a lot more scams around crypto to go bust in the way. Fun times ahead

Things have stabilized for the moment, but you're right, every thing could take a big tumble.

 

[R-T-B]

Just Waiting for the First State sponsered/controlled C Currency to go tits-up Crystal bollocks says it will eventualy happen

That would really require the state going tits up, which given the right country, could happen, but it wouldn't really be the currencies fault.

If the state controls the chain, then you can only blame the state.