nrd525 Market Tracker

[exstasie]

This guy is forecasting a recession.  Pretty technical video.
https://www.youtube.com/watch?v=V7zEXiqiiqA

I'd be interested to see people on the other side doing a similar level of analysis and saying things are going great.

Everybody everywhere seems to be predicting the same thing: recession. Makes me wonder if the equity markets are really at the top yet.

It seems like too many people are short or hedged for downside and the direction of max pain is still up. The crash will come after euphoria, when the market least expects it. Right now we're still climbing the wall of worry, which could mean a couple more years of bull market. That would be a good thing for Bitcoin.

[nrd525]

Equity markets are very bullish. Bond markets are saying recession.

[nrd525]

For most major cryptos the rates are only 4%. What are the risks?  How is their collateral secured?   For starters, they are based in NY which boggles my mind. How is the state not banning them?
https://celsius.network/

They offer slightly higher rates if you take payment in their token (the fact that they are offering tokens in NY state is a risk).

Also they are working with Bitfinex (among others), so that could add to risk.

I miss the good old days when I got 10%+ apr lending out funds.

...

Looks like Bitcoin is in a bearish downward sloping triangle. Have we ever broken to the upside on a triangle like this???  Search trends are bearish. I'm leaning bearish but not selling (also trying to not trade on time frames under a year).

...

I'm wondering if the UK Conservative party is going to split.  Fascinating to watch and globally there is a rise of populist parties of the the left, center and the right - and the decline of the establishment ones.  If the trend gets a lot bigger, we could see a centrist party emerge in the US (more like 2024 than 2020 though).

[exstasie]

For most major cryptos the rates are only 4%. What are the risks?  How is their collateral secured?   For starters, they are based in NY which boggles my mind. How is the state not banning them?
https://celsius.network/

They offer slightly higher rates if you take payment in their token (the fact that they are offering tokens in NY state is a risk).

Also they are working with Bitfinex (among others), so that could add to risk.

Maybe the BitLicense regulations don't cover lending services. They don't appear to be dealing in securities so they might be in the clear.

The odd thing is the Bitfinex connection, which appears to be confirmed as of a couple weeks ago. Bitfinex is already embroiled in a legal battle over offering services to New York persons and is liable to close such accounts at any time. Celsius even publicly lists their headquarters address in NYC!

Looks like Bitcoin is in a bearish downward sloping triangle. Have we ever broken to the upside on a triangle like this???

In Elliott Wave terms, it's not a complete triangle. I'm guessing it will morph into another pattern. Bitcoin often forms 3-swing corrections (called ABC or WXY in Elliott Wave) where the 3rd swing is a higher low. That may be what happened here with that last dip to $9,300.

[nrd525]

It looks like Celsius Network and Blockfi are the two competing services that let US residents lend out BTC and several other currencies.

Blockfi's 6.2% rate for up to 10 BTC (and then only 2.2% after it!), addmittedly subsidized by their venture capital investors, might be a good deal while the subsidy lasts.

https://blockfi.com/rates/

Celsius Network's rate is 3.75% (I think), and slightly more if you are willing to take their token (not available or at least not sellable in the US).

The history of bitcoin lending has been fraught with fraud.  The first wave was ponzis and lending on this forum to people who systematically scammed or failed to pay back the money. By contrast the websites where you lend USD to people seem to be doing ok (does anyone know?).  The lack of collateral and proof of identity was a big problem.  Then you had a wave of very early lending for speculators, first at Bitcoinica and then more spectaculary at Bitfinex where the USD rates went as high as 1%/day in 2013.  BTC rates would spike at times (notably during the bitcoin cash fork), but were generally relatively low (with a general trend to 2% APR or even less).

The two major losses to lenders of USD and cryptos (that I'm aware of) were the 36% Bitfinex haircut in 2016 (which ended up being anywhere from 0% to 30% depending on whether you held the IOU tokens), and the more recent Poloniex 16.2% haircut to all loaners that was caused by CLAM plumetting (talk about unexpected risk).

There is also general exchange / project risk where you can be attacked by hackers, scammers, or a bad business model.  If you move coins from a hardware wallet to an exchange or project to lend them, then this risk matters. If some of your coins are sitting on the exchange already - then this risk won't be increased by lending them (so you'll only have the risk of a lender haircut).

Both of these projects are new, so it is hard to judge the quality of their team and their security methods.

[nrd525]

Signed up for BlockFi but three issues
1.  Annoying noise that the "support bot" makes. Seriously what exchanges use sounds?
2.  Bug that didn't let me use "_" as a special character in my password.
3. Tried to deposit bitcoins and they only provide a QR code. That isn't going to work on desktop.  Hmm - on second attempt it does show an alphanumeric code. Weird.

Is their development team idiots?  Did they not do any testing?  Might be worth staying away from them.  Unsure.

[nrd525]

Interesting review of Blockfi, Celsius Network, and a couple other alternatives.
https://medium.com/@7uring/lending-bitcoin-for-dolphins-ca9e4b224ade

[nrd525]

Interview of BlockFi founder with some hard hitting questions.  Has some good answers, but I'm not sure on some things (like will the venture capitalists really eat up the losses instead of socializing them?  And how effective is subsidizing btc lending rates when there has almost never been a good market for lending btc, other than the hard fork period or the occasional spike in rates?  For that matter, ETH rates at Bifinex have regularly been below 1% APR.)
https://www.youtube.com/watch?v=CRvIen9bdbQ

[nrd525]

If they are doing 50% or less Loan To Value (and they say 20% to 50%), that means the loans are only half the size of the borrowed money.  In one way this is the opposite of margin trading on an exchange where you can get a 3:1 Loan to Value ratio (Bitfinex) or more - so presumably less risky.  On the other hand, this means their rates should a be a LOT lower.  For instance, if you have to give them $100 in Bitcoin as collateral to borrow $50 in USD - you are losing the interest rate on the $100 in Bitcoin (6% = $6) and paying say 12% on the USD = so your total cost of borrowing is actually 24%.  This falls to 16% (2*2%+12%) for amounts greater than 10 BTC (as the opportunity cost falls, or 19% if you include the opportunity cost of not lending on Celsius Network)

(Unless they pay interest on your collateral? which i doubt)

https://www.theblockcrypto.com/post/32006/zac-prince-interview

[nrd525]

More evidence that bitcoin is hard to trace. Downside: regulatory risk.
https://www.coindesk.com/cybercriminals-selling-hacked-fiat-money-for-bitcoin-at-10-of-its-value

[nrd525]

Nobody uses bitcoin for exchange value.  Transaction fees dropping again.  35 cents gets you in the next block.

https://bitcoinfees.info

[exstasie]

Nobody uses bitcoin for exchange value.  Transaction fees dropping again.  35 cents gets you in the next block.

https://bitcoinfees.info

You mean as a medium of exchange? I use BTC to pay for goods all the time. In general I think speculation will precede currency usage. People come for the speculation but they stay for the permissionless currency.

Network fees seem to correlate to speculative activity. Speculation is dead right now in this sideways market, so low fees aren't surprising. They will pick up again when the bull run does.

[nrd525]

Ok, nobody was an exageration. I may occasionally use bitcoin for exchange value as well.  But it's clearly not enough to cause significant transaction fees.

...

I'm doing more thinking/analysis/debate on Celsius Network and BlockFi.

I was wondering how they could loan money out at lower rates that they provide as interest.  Seems very troubling and ponzi like.  However their solution is at semi-honest. They are comingling the funds and lending out your collateral to other users!

This is fine if the risk is uncorrelated.  If the risk is correlated, then you have a problem.  Risk can be correlated due to flash crashes (we've had several examples of flash crashes all the way to zero or $1), bear markets (bitcoin could fall 95% and other altcoins could fall even more), bull markets (people aren't going to replay crypto that goes up 100x or 1000x), global economic conditions (like a recession), bitgo (could get hacked and insurance that protects the colleral could fail or take years to pay out), and other things that I haven't thought of.

[nrd525]

I also just realized that when you overcollateralize a loan, you have loans that create your own supply. Why do they need depositors?

Ex. To borrow $100, deposit $200 in collateral.  They can now lend out $200 and get $400 in collateral for that.   Not only that, but they are getting the collateral at 0% interest (or really negative interest, since you are paying interest on the loan!).

The only reason to have depositors if there is an imbalance in the supply/demand for a specific currency.  Notably they are likely to have a shortage of USD and a surplus of cryptos.

Edit: or they might be using half of the collateral as real collateral (that they can liquidate if necessary) and the other half is used to offer additional loans. This is still risky.

If the collateral is held by Bitgo they might have issues liquidating it.  For instance a flash crash could happen in 5-15 minutes, they'd need to wake up someone who had a lot of authority, and then transfer the coins from Bitgo to an exchange.  Bitgo might have them in cold storage (hopefully) - so this could take hours or more!  They might be able to take some short positions until they get access to the Bitgo coins, but if you are talking about $2 billion in holdings - this is going to be very hard to do (and could further aggravate the flash crash / major correction).

[nrd525]

Bought 0.81 btc at 8960 down to 8160.  Got bids down to 3k.  Not that I'm expecting 3k, but you never know.

[nrd525]

This kind of looks like the start of the dump at 6k that brought us down to 3k.

[figmentofmyass]

This kind of looks like the start of the dump at 6k that brought us down to 3k.

yeah, sort of like a mini-version of it. the 2018 triangle lasted like 9 months.....this one for 3 months. i wonder if that means the losses won't be quite as severe this time around.

tbh it feels like this thing is just gonna keep crashing though. the fear is real. i'm scared to buy back. usually when i get this feeling it means the bottom isn't far off.

[nrd525]

It'd be hilarious if Bitfinex starts paying people interest on Tethers =)
https://www.coindesk.com/coinbase-to-pay-users-1-25-interest-on-usdc-stablecoin-holdings

I'm wondering if moving my orders over the to BTC-USDC market is worth it.  It's a lot lower volume, so there'd be more variation, especially during a sudden move.

[exstasie]

It'd be hilarious if Bitfinex starts paying people interest on Tethers =)
https://www.coindesk.com/coinbase-to-pay-users-1-25-interest-on-usdc-stablecoin-holdings

I'm wondering if moving my orders over the to BTC-USDC market is worth it.  It's a lot lower volume, so there'd be more variation, especially during a sudden move.

That must be why they're doing this, to inject liquidity into the USDC markets. They aren't paying interest on our USD holdings, so obviously they want us to switch to USDC.

Beyond USDC, Coinbase’s Branzburg says similar programs could exist in the future for other cryptocurrencies on the exchange.

I wonder if they're talking about paying out staking rewards. It's a smart idea. I think they already do that on their custody platform.

[nrd525]

The scary scenario is if 14k was a lower high and we go down to 3k (or even just 5k).  If bitcoin stops have bull cycles that hit all-time-highs, then a lot of people are going to leave the market.

I think the community/ecosystem is big enough that we'd sustain 1k, and maybe 3k.  3k might break with enough bearish conditions.