[setgree]

We learned about the fraud because of macroeconomic factors!

inflation -> rising interest rates -> crypto less attractive [0] -> people ask for their deposits back -> company can't meet obligations -> company folds -> scrutiny -> fraud revealed

Is my basic model of things.

[0] from https://marginalrevolution.com/marginalrevolution/2022/11/th...: "When interest rates are very low a dollar in the far future is worth almost as much as a dollar today. Thus, in a regime of low interest-rates, crypto and other projects with (speculative) long-run payoffs could be valued highly. As interest rates rose, however, long-run speculative returns began to look much less attractive than say T-bills and money flocked out of assets in the long-run sector causing prices to plummet."

[woodruffw]

I completely agree! My point was that it's very funny to blame the macro (and even funnier to blame geopolitics), when it's clearly just serving a revelatory purpose.

[function_seven]

So you're saying that when I get arrested for public indecency, my defense should start with "due to tidal forces and the changing orientation of our Moon, my nether region emerged above the water's surface"

Or something like that?

[setgree]

My advice is to repeat Warren Buffet's adage -- "only when the tide goes out do you discover who's been swimming naked" -- and adamantly deny that it has any non-literal meaning whatsoever.

Warren was just telling us about something he observed at the beach one time

[danenania]

Swimming naked feels great and is plainly superior to swimming in a bathing suit. If you read between the lines, Buffet was clearly recommending that everyone swim naked and put their full net worth into crypto.

[setgree]

"I recant! I recant!" screams Warren Buffett as he runs ashore covered in jellyfish

[Obscurity4340]

> Covered in Kraken

[woodruffw]

I don't know if I'd recommend it, but it'll be roughly as convincing as blaming geopolitics!

[SkyMarshal]

Rising inflation and correspondant rising interest rates would have resulted in a major crypto market decline with or without the fraud. Bitcoin had already fallen from $60k+ to ~$20k before the waves of failures even began happening.

All of cryptocurrency is a risk asset. When credit and money is cheap and flowing freely, it flows into risk assets like crypto, driving up their price and forming bubbles. When rates rise and credit and money is no longer flowing freely, it flows out of risk assets into safer havens, popping the bubbles. That's what happened to crypto this year.

The collapses and fraud revelations were a consequence of that, not the cause. Blaming the macro is accurate.

[WeylandYutani]

It's been 15 years now I think? And still cryptocurrency mainly revolves around speculation. It's adoption as a currency has been... lacking.

[SkyMarshal]

Close, almost 14yrs. Launched Jan 2009. Bitcoin's economic design incentivizes saving rather than spending, so it's no big surprise that's what's happening. DeFi currently is all about using loans to make money speculating, so yeah, but it's still kinda new so jury's still out on whether it might develop into something more broadly useful.

[automatic6131]

>but it's still kinda new so jury's still out on whether it might develop into something more broadly useful

Lol. Lmao, even.

[killjoywashere]

I'm not an economist, but it does seem like the inflation is primarily attributable to geopolitical factors: the various spending programs countries embarked on during the pandemic, China's zero-Covid policy, the Russian invasion of Ukraine putting a premium on both oil and grain.

Are you suggesting that crypto is to blame for inflation? how would that work?

[woodruffw]

> Are you suggesting that crypto is to blame for inflation? how would that work?

No. The only claim is that crypto is sleeping in the bed it made, bedfellows included.

[BlandDuck]

Spot on. Warren Buffet put this succinctly:

"When the tide goes out you discover who's been swimming naked."

[Kye]

They would have gotten away with it, too, if it weren't for those pesky feds.