My intent here was not to discuss other topics, but this is of prime importance. The short version:
Current events are playing out as an attack on
the use of Bitcoin as a reserve currency - the thing that we are urging whole countries to do.
I’m thinking this was an attack on bitcoin, not really Luna, but used Luna to attack bitcoin..
[...]
Prime target.. Bitcoin..
I largely agree with the above-quoted portion, but not with the analysis of what the attack is. And I strongly disagree with some other people's posts wishing for Terra to go bankrupt.
WO is the wrong place to debate altcoins, so I will minimize talk about Terra here other than to disclose upfront that I recently bought an economically negligible amount of LUNA. I am obviously in
no position to be making altcoin investments, much less to gamble on whether Terra can recover from a death-spiral. I did it on principle. I am marking my endorsement of
permissionless currency, and I am protesting against Yellen, the Fed, and USG. Yellen called out and targeted UST by name, so Terra must be doing
something right.
Yellen's yellin' against UST? I
must hold some LUNA - even a token amount, so to speak, bought for almost-nothing with the almost-no-dollars I had available. Whether or not you agree with me, you can probably see whence I come.
Beyond that: This is about Bitcoin, and I am here to talk about Bitcoin.
There is now propaganda chatter out there urging Terra to abandon Bitcoin as useless, and backstop themselves with USDC instead. Pause to contemplate why.
It all boils down to attacking public confidence in Bitcoin - starting with Bitcoin's viability as a reserve currency, then proceeding to general confidence in Bitcoin
(the thing which, when lost, sent Terra/Luna into a death spiral). And Bitcoiners wishing bankruptcy on people who rely on Bitcoin as sound money are
not helping.
I declare that Bitcoin is sound money. This means that if a large holder has an emergency where they
must dump to meet their obligations, I can't criticize them for relying on "Bitcoin reserves" to do what that says on the tin. To the contrary.
If El Salvador had a national crisis tomorrow, and they urgently needed to dump their BTC to feed their people, then I would be pleased at the demonstration that BTC could save a whole country. Complaints about the temporary effect on the price, similar to what I am seeing from a few people here, would be tantamount to telling everyone that you are allowed to pump BTC by buying in bulk - but if you very urgently need that money, then Bitcoiners will publicly insult you, ridicule you, and wish you to get wiped out.
Thus,
even though this market crash is what got me liquidated, I do not blame Terra. I blame myself for having put myself
in a ridiculously stupid position where I could lose BTC from a dip. If my BTC had been in my wallet where it damn well belongs, I would not even be upset right now!
If a large entity urgently needed to swap huge amounts of XAU/USD in a hurry, then gold would dip, too. I think that gold is a rock-solid, reliable reserve currency. And I think that Bitcoin is an
excellent reserve currency!
I should also note, I suspect that the
direct effect of Terra's BTC sale is probably overestimated here.
We are now deep into the territory of cascading liquidations of every margin-account idiot who lacks the resources to survive a drop deep below $30k (including myself). On my exchange, a few hours ago, there was a BTC dump that smashed through the order book as low as $24,760 when the mid-market price was still well over $28k. I am no mood to analyze this more than superficially now, but I am pretty sure that must have been a huge liquidation - one of many! As I was writing this, another order sliced down as low as $26,377 with the mid-market over $27,300. It just keeps going, and going... The market is now being flooded by an extreme long squeeze.
I also see indications that shorts are
increasing, not covering. Someone out there with sky-high capital is pulling out all the stops to dump us as low as possible, as fast as possible.
Thus, I suspect that at this point, we are suffering from many factors other than the direct effect of the Terra dump - while it mostly gets blamed on Terra.
Look over there! Neat trick.
If margin-account idiots
(including myself) had not conveniently lined themselves up like dominoes to get knocked down by Terra's dump, then I think that the Bitcoin market
would have been sufficiently robust to absorb the shock without opening an opportunity for highly-capitalized shorters to amplify the damage - knocking the dominoes down further and further, in a vicious cycle of Terra dumps, cascading liquidations, and massive shorts. Anyway, that is my current theory - based on the "ground truth" of what I am seeing happen.
I have confidence in BTC. I welcome anyone and everyone to rely on BTC as a cash reserve asset. MicroStrategy with their corporate cash reserve. El Salvador with their national reserve. Terra with the reserve backstopping LUNA for their peg obligations. Everybody should use Bitcoin!
My confidence in BTC makes me dearly want to keep some, so that I’m not totally left behind when the price recovers and rockets off again. As Jay says, people prepare for downside, but not the upside - I only fear the downside when that could take away my upside, due to bitcoins being not in my wallet where they belong. Please, Bitcoin, find some support. $26,600 is low enough for a local bottom; please don't crash to the $25k range where I could get liquidated again... Or at least give me some time, some room to breathe here... Yes, I should probably stop writing forum posts, and return to the task of struggling to scrape together enough assets to free my remaining piece of a bitcoin. It’s hard, when this margin account already ate almost everything in my futile attempts to avoid liquidation.
From my post history, you can see that I am so strongly against selling BTC, I just lost BTC to liquidation around $28,500 because I refused to sell $35k margin buys at $47k. But my
extreme aversion to selling BTC at any price is a personal thing. I do not seek to impose it on others - although of course, I do tell others when it is economically stupid to sell BTC.
Usually, it is economically stupid - when you have a choice. Terra has no choice.
In the past, I have sometimes rationed my food intake to avoid spending too much BTC. No joke. But that is a personal decision - and on the flipside, Bitcoin has literally saved my life at times when I had no other money. Am I "overinvested"? Eh, probably.
I promote
Bitcoin as money. That means I can't criticize people for relying on Bitcoin to satisfy their obligations. Terra has an obligation to use all of their available resources to make UST holders whole at a rate of $1.00 for 1 UST. If they are spending/selling Bitcoin for that - well, Bitcoin
is money!
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