It's a Macro crash. SP500 is down -%5 YTD. Meta -37%, Netflix -65%. Lots of pain spreading. You shouldn't gloat or be happy. Give it a couple of more months like this, and lots of the HN audience would be worried about layoffs.
The security of your average software developer job is strongly tied to market cycles.
If you want a place to direct your hate and bitterness, I would do it at the architects of the BOOM/BUSTS cycles that keeps happenings and destroys people lives.
Comparing the stock market crash to LUNA/UST crash is not the same thing.
Luna went from $100 to 1 cent.
UST was also meant to be a stable coin, it was sold as being equivalent to stacking your money in a savings account, just stable currency that follows the USD value. Lots of people took their money OUT of many coins, and moved it to UST for "stability" thinking that their nest was safe during the storm. (Of course their trust was misplaced as it was not equivalent to keeping your money at the bank, but that's what they were led to believe)
It's equivalent as if banks were bankrupting all over the place in the United States with no bank insurance from the government.
No common measure comparaison with the SP 500 being down for a few months (or even a few years).
LUNA going down is the equivalent of a single stock collapsing, and a fairly minor one at that. OP is right, this is a generalised withdrawal of equity from volatile investments of all kinds. Exactly the same thing happened with the last market crash.
Only if you consider top 10 coins and top 10 stocks to be of equal quality / stability. IMO, only Bitcoin and Ethereum are "blue chip" cryptocurrency. All others are pink chip.
The crypto market was worth $3 Trillion in November, and it's worth 1.5 Trillion today. It's A LOT of money, but it's a popped cyst at best in comparison to the smallest securities market.
So it's a seismic event, for sure, but it's not systemic. Comparing it to the banking system collapsing with no insurance doesn't make much sense.
The market crash is the inevitable consequence of stopping the pandemic liquidity faucet. We were waiting for this for quite a while now, and with the FED having to rein in two years of crazy, a massive market correction was inevitable. The fundamentals of most companies are still firmly there, so they're mostly underperforming. There'll be casualties, but this was a much needed purge.
Just don't check your 401k balance for the rest of the year.
Says a lot about this site's bias that this even needs to me said (how under a rock do you have to be not to know the macro crash happening right now isn't localized to crypto?). Your comment should either be so obvious that it isn't necessary or so obvious that its the top comment.
More goalpost shifting. I've been hearing "Bitcoin is the new gold" and "Bitcoin is a hedge against inflation" since the beginning.
Gold is down 2% and Bitcoin is down like 30% or something.
Also please keep in mind this isn't Reddit, this is HN. The people here were there right at the beginning, and most of us played with the funny money while it was worthless. Some even became rich (Not me lol)! So don't fucking gaslight HN.
I can't count how many times people have explained here that Bitcoin is a "store of value". A store of value that can be down 40% YTD is...problematic. I mean, I guess the value is still there....
Most people using bitcoin as a store of value are willing to accept volatility, given that we know for certain that fiat is a store with built-in leaks — leaks that we can all see are getting bigger and there's good reason to believe will become a sieve.
The crypto believers told me US dollar would enter hyperinflation very soon and Bitcoin will be the only viable currency because it has a finite supply.
Why something that has a finite supply would be viable as a currency.
Since it's deflative all the incentive is holding, not spending. Why buy a house for 5 bitcoins now, if I can get it at 4 bitcoins 3 months from now..What if I could get it at 1 bitcoin in 3 years...crazy right..?
And no one spends, because the incentive is not here.
Our economies are all based on people wanting to spend or invest rather than stock money.
Finite supply doesn't even matter anymore since exchanges are now operating like banks with fractional reserves, loans and everything. Through credit they can inflate away the value of cryptocurrencies as much as they want. The entire financial system was reinvented on top of bitcoin, it's the worst possible outcome.
"The Markets" aren't what's causing a downturn in "the markets" or in crypto. The Federal Reserve's monetary policy has a direct effect on the price of everything.
The "crash" in MT FAANG (that's a thing?) (-25%,-40%,-45%,-23%,-38%,-72% (whoa),-24%) is very likely people moving money out of stocks that they put into stocks because they could not get any return on bonds and other assets. It's a financial crash; none of the fundamentals have markedly changed.
Of course, the fundamentals have been horrible because the economy has been in a bad way for several years (certainly, after March 2020, but it wasn't great before then) but the stock market has been divorced from the actual economy longer than that.
Dow / GDP Ratio https://www.macrotrends.net/2574/dow-to-gdp-ratio-chart (Yeah, the Dow is a horrible index, but check out that period from 1966 to 1982. The 1970s were not a happy time, either economically or financially.
The architects of boom/bust cycles are...you. I hope you picked up on the lessons from 2000 and 2008 and saved some of that six-figure average software developer pay.
Boom & bust cycles seem to be a built in “feature” of market economies. The architects are not trying to create booms and busts per se, but they are trying to manage them so they aren’t as devastating as 1929.
But they're booming much harder and busting much harder...
Should the fed have stepped in to prevent a flash freeze in liquidity in March 2020? Probably. Did they go way way way too far? Maybe. Did they go way way too far in Aug 2020 and Nov 2020 and Dec 2020 and Jan 2021, etc? Definitely.
Viewing boom-bust cycles as "something that just happens, we have no theory to explain why" is the great failure and embarrassment of mainstream (that is to say Keynesian) economics.
But a comprehensive theory exists. It won Friedrich Hayek the Nobel Prize in 1974. You should at least be familiar with it.
Permanent poverty is built into this economy for all but a very very lucky few. We can do better, and framing the options as market-economy (what we have) and non-market-economy (everything else) is a false dichotomy. Markets can exist without the second-guilded-age capitalism we're in right now.
Yeah - the existence of this post is really an example of it.
"Is anyone else <obvious case of pandering to common HN tribal confirmation bias for a dominant position on HN>" -> lots of upvotes and in-group people agreeing with each other.
It's basically just hating on an HN out group.
Good crypto/finance conversations HN on are unfortunately not possible. I just flag posts like this, they're just flame bait.
Wow this thread is incredibly toxic. People openly admitting to passionately hate groups of people they don't know. I thought this website was better than this.
The only thing more annoying than people talking about crypto is people complaining about people talking about crypto. You're just perpetuating the attention cycle.
I've been DCA'ing ETH for a few years now and have somehow managed to both not make it my entire identity, and not constantly complain about the people who do.
The only time I hear about crypto outside of my crypto-specific social spheres is people dunking on crypto and NFT's completely unprompted. We get it, you don't like it, move on.
I wouldn't be surprised if they got tired of the constant negativity when anything related to crypto is mentioned.
I thought this was supposed to be a forum of like minded people interested in technology and its potential applications. Ever since the start of this last bull market it's felt incredibly hostile to anyone even remotely interested in blockchains and related tech. Maybe it's always been like this, I've only been here a couple years.
HN has always had its knee-jerk negativity and dumber biases on some topics, but the extremeness around the crypto stuff really is something novel imo. I find it not worth engaging on the topic here at all anymore (and I've tried earnestly a few times).
No one is every happy with the fed - they lower interest rates: they're encouraging inflation and de-valuing the dollar. They raise interest rates: they're toying with people's livelihoods. What is the correct action to take, in your opinion?
People like to put up binary choices. Bitcoin Vs. Dollars, Gold Vs. Yuan, Private bank money vs. really bad managed money supply.
I am in the opinion that we should experiment with models other than a bunch of academics with no real practical experience getting together every month and deciding on the fate of the world economy. I am sure we could come up with something better.
The Islamic financial model has not been looked at properly by non-Muslims. It works, but it won't allow a few people to get rich by manipulating the market or by lending out money as we have in the rest of the world today.
Considering it forbids making interest, that would be a seismic shift, although it is interesting and worth looking into. Wikipedia makes it sound like Muslim countries are having difficulties sticking with the 'no interest' premise, though:
"Islamic banking and finance — the industry built around avoiding interest and other financial practices found in violation of sharia (Islamic law) — has been both praised and criticized by observers.
The industry has been praised for turning a "theory" into an industry that has grown to about $2 trillion in size; for attracting banking users whose religious objections have kept them away from conventional banking services, drawing non-Muslim bankers into the field, and (according to other supporters) introducing a more stable, less risky form of finance.
However, the industry has also been criticized for ignoring its "basic philosophy" and moved in the wrong direction over the decades — leading both outsiders and rank and file Muslims to question it. This has happened first by the sidelining the original finance method advocated by promoters — risk-sharing finance — in favor of fixed-markup finance of purchases (particularly murabaha), and then by distorting the rules of that fixed-markup murabaha, effectively delivering conventional cash interest loans following conventional interest rates, but disguised with "ruses and subterfuges" and burdened with "higher costs, bigger risks".
Other issues/complaints raised include a lack of effort by the industry to help small traders and the poor; the question of how to deal with inflation, late payments, the lack of hedging of currencies and rates or sharia-compliant places to park short term funds for liquidity; the non-Muslim ownership of much of Islamic banking, and the concentration of what ownership is in Muslim hands."
Islamic finance goes back way before the present day manifestation. Many "Islamic finance providers" aren't Islamic FYI. So when reading a wikipedia article or any other source, that must be taken into consideration. For example, the "fixed markup" financing has been heavily criticized by Islamic scholars as basically nothing but interest. We definitely need better financing models.
Yes, prohibiting interest is a seismic shift, but at the end of the day, it's going to be better off for everyone. Islam lays outside the capital-communist spectrum, and is basically the best of all worlds.
Islamic finance goes back way before the present day manifestation. Many "Islamic finance providers" aren't Islamic FYI. So when reading a wikipedia article or any other source, that must be taken into consideration.
Yes, prohibiting interest is a seismic shift, but at the end of the day, it's going to be better off for everyone. Islam lays outside the capital-communist spectrum, and is basically the best of all worlds.
Please propose a theory of change then instead of handwaving[1]. We need effective people to make the world better. I've seen lots of complaining about the fed from crypto people but almost no theory on how to manage our economy and incentive systems to bring a more prosperous world.
The whole crypto system is basically a real, evolving mechanism of evaluating different monetary systems. Don't like it how Bitcoin is structured? Fork it and see how the market reacts.
Wants a centralized version of Ethereum when checks and balances? Israel is building that.
You can even build an Islamic monetary structure enforced by smart contracts (addressing sibling comment: historically Islamic financial systems collapsed because they are enforced by corruptible people).
Like all things, most experiments would fail (and most people shouldn't put their savings in experiments!). We might end up with even a worse monetary system (unlikely imho, because I believe the markets are free to accept and reject those experiments). I won't fight it though - the markets are brutal, and in time, kills bad ideas. I do want the experimentations to happen though!
Look at how Islam addresses these problems. From prohibiting interest, to having a built in "wealth tax" (Zakat), to prohibition of selling what you don't own, to no gambling, etc. Solid principles that work.
There's a silver standard and multi-metallic standards, and I'm really hoping there's a hilarious story behind this sentence from wikipedia: "Great Britain accidentally adopted a de facto gold standard in 1717 when Sir Isaac Newton, then-master of the Royal Mint, set the exchange rate of silver to gold too low, thus causing silver coins to go out of circulation." (https://en.wikipedia.org/wiki/Gold_standard) (Apparently, the US's introduction to the gold standard was also accidental, caused by the 1849 California gold rush.) Unfortunately, those systems didn't prevent a crash about every decade. (https://en.wikipedia.org/wiki/Financial_crisis#19th_century)
Or you could let things float, like exactly nobody else does. I'm sure that won't be rife with corruption, bank failures, and its own boom and bust cycles.
I am happy that capitalism is working as intended.
Also, if you make software developer salary, you should absolutely be hedged against losing your job, having plenty of savings in reserve to last you well over a year.
Yeah because the fed is hiking rates due to crypto causing inflation? Or it was crypto that was used for extreme QE? Or was it crypto that caused companies to inflate their stock values via buybacks?
Not to mention crypto marketcap and volume is a drop in the bucket compared to securities.
The point being, regardless of whether or not the crypto marketcap is a lie or not, is that it pales in comparison to the marketcap of securities. Meaning, the crypto market has little to no weight in influencing traditional markets.
I doubt crypto is the driver. Seems more likely that institutional investors are pulling out of cryptos as inflation spikes. So crypto crash is an effect, not a cause.
The security of your average software developer job is strongly tied to market cycles.
If you want a place to direct your hate and bitterness, I would do it at the architects of the BOOM/BUSTS cycles that keeps happenings and destroys people lives.