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NhanH

If Tether massively breaks the peg, there is a non-trivial chance of sub $2k BTC tomorrow

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Would BTC be worth buying at sub-$2k?

I never saw the use-case for it.

I’d sooner use a faster, cheaper, more energy-efficient, more centralized crypto like XLM or XRP.

But even then: for payments it’s hard to compete with Visa/Mastercard for speed and safety.

And as a store of value all crypto is crazy volatile.

If BTC goes sub $2k, would anybody reasonably want it anymore or would the emperor have no clothes?

I'd definitely put a significant amount of money to buy it at $2K, and almost literally everybody I know would too.

Then it won't hit 2k unless you only believe that and wouldn't actually act on it.

Not calling you dishonest, it's just intentions and actions aren't always as connected as we want to think

I'd probably buy more before it reaches 2K anyway. I was talking more like in a hypothetical scenario where I wake up in the morning and BTC is 2K.

If it was I'd honestly pull back.

Cryptocurrency has a future and Bitcoin is as necessarily part of it as much as Netscape and Yahoo were necessary for the web. (Or US robotics and compuserve, pick your loser)

The thing itself can survive the collapse of the current winners.

That is a possibility, but I think the point is that if BTC was $2k tomorrow, then whether or not it survives in the long term, it seems highly unlikely to at least some of us that it wouldn't bounce back to substantially above $2k again whatever it's long term fate is. It's a gamble, and I certainly wouldn't put money I can't afford to lose on it, but at some threshold the potential upside becomes significant enough to justify the risk. Where people put that threshold will vary. For me it's well above $2k.

Regardless of the value of Bitcoin, anyone should ALWAYS only invest (or gamble, in one sense) amounts that they can afford to lose.

I don't know why anyone does otherwise.

That's true, but there's a significant difference between a gamble on something like Bitcoin, and, say, putting your money in an index fund. My point was that even with that substantially elevated risk, there is a level where some will find it a worthwhile bet even in the middle of a massive drop.

BTC was at $5k on March 2020, before reaching $60k in April 2021. I wouldn't say it's ever gonna die.

There's probably still some value in it for darknet activities like sales of illicit goods, ransom payments, etc.

I think what the poster is asking, is why wouldn't communities/darknet activites deal with other cryptocurrencies which are objectively better than Bitcoin in terms of functionality although they have a smaller community and network at the moment.

I believe most markets already encourage the use of other privacy oriented tokens like XMR.

You guys are funny. Bitcoin is one of the largest currencies in the world with over 100 million users. Read the Bitcoin Standard to understand why.

Pretty much all under the table crypto transactions are in Monero, Zcash, or other privacy coins. Bitcoin’s utility is horrible compared to most other cryptos, its purely a store of value.

I think BTC will always be a gambling ecosystem at minimum. There will be ebbs and flows between it crashing and spiking for its entire lifetime.

To me that math doesn't add up very well.

Let's assume that 5 minutes from now, Tether drops to zero. Turns out Tethers were approximately 100% unbacked.

There are currently ~$80B USDT in circulation. Even if you also assume 100% of USDT holders were also Bitcoin maxis who were using USDT as a "stable store of value" when they periodically want to exit their BTC position, the market cap of Bitcoin is still ~$500B, so the $80B -> 0 drop is still only 16% of BTC's market cap (and obviously USDT is not only being used to exit BTC positions but also ETH and every other crypto besides).

This isn't how it works. You need to look at how much of the flows into BTC (supporting the price) are coming from Tether. You will find this is a whole lot more than 16%. So if it drops to zero 5 minutes from now (not going to happen, but just to use the same scenario), then all those flows which supported the price drop to zero. A comparison between the relative market caps doesn't tell you much, it's the buying volume it supplies.

The 24 hour trading volume for Tether is $175B. The 24 hour trading volume for BTC is $80B (as I write this). Tether is the money in the system.

That's not really how it works either. If the 24hr USDT volume is $175B, that just means people are trading the same USDT for other things multiple times in a 24 hour period. That's it. But two people cannot use the same Tether to buy different things at the same time, so market inflation due to USDT can never really be beyond its market cap.

Tether is a vehicle, not the money in the system. People use Tether because it can be traded against your favorite coin on your favorite exchange. For example Binance (the largest crypto exchange) doesn't offer any USD pairs, so if you are someone with a lot of dollars you buy some USDT with your USD at 1-to-1, then you go trade that USDT for whatever you want.

USDT causes a crash in crypto based on two properties: actual fraud / funny money shenanigans and market sentiment. I was only really addressing the former in my analysis, because "market sentiment" is basically impossible to do anything useful with in a future-telling sense.

Thats not really how it works either :).

If you and I both agree to trade 0.000001BTC @ a price of $1,000,000/BTC, meaning the total value of our trade is $1, and we both know that the supply of bitcoin is 19,000,000 coins. Does that make the "Market cap" of bitcoin 1.9Quintillion dollars? Obviously not.

Market cap is a historically bad metric to track when comparing things like this.

So back to your question at hand, how would a $80B USDT market cap topple a $500B market cap. Well, first we realize based on the above silly example, $500B isn't necessarily the real value. If Bitfinex (tether) has been printing USDT and using that to buy bitcoin, then the market cap of BTC is inflated by an asset effectively worth $0.

Once this realization sets in, panic selling starts, and there is an overwhelming greater number of sellers than buyers, and it doesn't take $500B worth of trades to topple a coin with a $500B market cap (if that market cap is inflated by hopes and dreams).

Market cap is not the sum of all money put in, but the total supply multiplied by the latest price. The entire market could, conceivably, be supported by only a few billion in real dollars. I won’t try and guess the correlation between USDT price and BTC price, but if USDT goes to zero, it’ll be a lot more than a 16% hit — before even considering USDTs broader role in the market.

Especially since it’s the primary form of liquidity.

It's more about the lack of confidence in crypto ecosystem and other second order effects (bitfinex going bankrupt, all others exchange on shaky ground etc) rather than the direct selling of btc/usdt

Given that almost all of BTC’s daily exchange trade liquidity is based on having USDT and especially for margin… you best believe it’ll implode. Not to mention every other cryptocoin.

You can’t just use market cap in that way. USDT collapsing would send BTC back to the Stone Age

Or, even more comically, "$"20,000,00 BTC, as people try to escape from a sinking tether.

Stabilization by symmetric bank runs.pdf

Yeah, this shit creates chaos and makes it impossible to get a good read on the market. Wouldn't be surprised to see a record BTC ATH, though for ignominious reasons

Still don't think it's likely but agree with non trivial. I've got my popcorn ready.

*klaxons blaring*

Or sub $20 BTC.

There is a correlation between BTC and GPU / graphics card price. And there's the stupid quantities of energy devoted to mining.

At some point, processing bitcoin will become uneconomic. It will then be unspendable, and the price will then drop to zero.

If blocks aren’t being mined fast enough, the difficulty level automatically goes down, resulting in a higher reward for the same hash rate. So in theory, processing bitcoin should never become uneconomic.

Yes, the problem is it only does that around every two weeks - and that’s at a normal block rate.

If hash rate were to suddenly drop say 90% then it could take months to adjust

This. It can never be economically zero as it has been "bootstrapped" once, in 2009. Someone will always have incentive to mint cheap.

Yes, apart from everyone's views on crypto itself.

As a programmer or system designer I urge everyone (who hasn't already) look at the "system design" of bitcoin ! It's beautiful and elegant, like a self-correcting organism ! Ja sure it's not perfect, but dammit it's a hell of a lot better than what I could have come up with :)

I'm of course ONLY talking about the system-design components here: (difficulty, mining, minting rate, consensus, ledger etc)

YMMV

After two weeks the difficulty factor should be going down to match the reduced hash rate of the network.

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