[manquer]

Each scam is draining some money from the market. All these scammers are siphoning of real money from the ecosystem each time.

Fanatic and devoted fans there maybe, however they don't have limitless fiat money to play with. In the recent past, new found mainstream popularity has fueled inflows into all kinds of crypto products sustaining the strong bull runs despite significant and clear risks.

This popularity has little to do with widespread belief in distributed / unregulated financial systems, and more because these assets have outperformed traditional instruments spectacularly, the allure of making ton of money fast. Eventually it will fade either because there is not enough new people who can/will put more money or an unsustainable growth tapers off.

When ( not if) the second set of players leave inevitably after enough scams, the hardcore fans that will remain and prop up the market and keep it going yes. However without non fanatic users there is not enough money to come roaring back like in the past.

To be clear, it may take a few years or more and few cycles of what you say, markets can stay irrational for a very long time, it is unstable equilibrium nonetheless, and eventually will correct permanently

[hackingforfun]

How do you feel about stocks that have completely unrealistic P/E ratios? Is that not the same speculation that happens in crypto? And yes, I agree, prices don't go up unless people are putting more in, but I'm just saying that crypto is not unique here. Yes, traditional companies can liquidate their assets, but my point is, a lot of what's going on in stocks, at least ones greatly differing from traditional P/E ratios, is also speculation.

Also, in terms of siphoning of "real money" from the ecosystem each time, if some of the money going in is fake, i.e. Tether printing without having 1:1 USD backed up, and that is going back into crypto, then how do we quantify that exactly, in terms of "real money" lost? Is it because "real money" is also buying at the inflated prices, or is it because some of the Tether that is buying other crypto is backed up by "real money"? I'm trying to understand the argument here.

[BobbyJo]

Stock P/Es, while high, have a non-zero denominator, so it's hard to consider the same as crypto speculation. I think both have a lot of the same driving factors (low interest rates, get rich quick culture, etc.), but, to me at least, crypto is a much riskier endeavor considering the net negative nature of its value.

[manquer]

There may not be $70 billion actually in tether, but some fraction of that people have paid them in exchange for the coin, a good chunk of that is already mis-managed/lost. A bank run would lose even more.

Issuing more tokens than the money they have is basically inflation and devalues all holdings.

Yes non profitable without a clear path to profit, or pre-revenue companies is a lot of smoke for risky value, however in most revenue generating companies there is underlying asset which generates some cash every year and that is always worth something.

With currency everything is abstract and depends only on trust in the system for its intrinsic value.

This is why U.S. is able to use the reserve currency status of dollar and issue a lot of new currency without equivalent inflationary pressures other currencies would face, they are basically leveraging trust in to generate seigniorage.

[LurkingPenguin]

A high P/E ratio simply means that investors are willing to pay more for each dollar of earnings. But there are actual earnings. There are no earnings backing crypto.