I don't pretend to fully understand markets but movement on BTC, etc with all of these developments is just further proof to me there is no connection between any of these coins and reality.
As another example, when Ethereum successfully moved to proof of stake without a hitch (an ultimately impressive and challenging development) the price actually went down.
Lots of events are already "priced in" before they happen. That is, investors have anticipated the upcoming event (eg Ethereum upgrade) and the stock/token price has already moved accordingly.
It's not clear to me that the collapse of corrupt crypto exchanges should make the price of bitcoin drop.
What is the mechanism exactly? It's not like FTX holds a shitload of bitcoin and now suddenly they have to sell it all, driving down the price.
Is the mechanism just some kind of psychological thing, where a centralized criminal enterprise is associated with "crypto", even though it was mostly esoteric shit like FTT and MobileCoin and not bitcoin, but since bitcoin is also "crypto" then people who hold it would sell it because FTX folded?
It's like saying the collapse of Bear Stearns and Lehman Brothers should somehow make US dollars worth less.
1) I would expect a fairly large portion of people are selling their cryptocurrencies on exchanges and wiring out in fiat instead of undertaking the relatively technically challenging process of moving them on chain to somewhere/something else. While we can see on chain activity acknowledged numbers citing "withdrawals" from exchanges don't provide specifics. I personally know several people who have just said "Yeah turns out the entire thing is a scam, I don't trust anything and I'll just cut my losses and be done with it all".
2) Bear Stearns and Lehman Brothers were not a total loss that resulted in the founder being arrested and charged with multiple counts of fraud within weeks with multiple reports from the guy who handled the failure of Enron (John J Ray) expressing public incredulity on just how crazy the whole thing was. Failed crypto institutions aren't receiving TARP loans or being absorbed by other institutions. I'm not saying what caused the 2008 financial crisis wasn't criminal but as we all know no one went to jail over it, which if nothing else highlights the differences in terms of public opinion and treatment by regulators.
3) Any comparison between crypto (individual coin or the entire ecosystem) and the world's reserve currency backed by the world's largest economy is dubious at best. The complete collapse of a couple of even the largest banks barely puts a dent in USD in terms of circulating supply, activity, etc. USD has this status because it's backed by what is considered to be the most financially stable institution in the world - the United States. In the minds of many if crypto is "backed" by anything it's people like SBF, the VCs this kid was able to hoodwink, etc.
4) The collapse of FTX has had an incredible ripple effect that has caused at least a dozen other entities (that I've tracked) within crypto to fail.
5) Over the past few weeks there has been increased focus and media attention on the shadiness of Binance, Tether, and virtually every other crypto exchange/institution up to and including Coinbase.
This is all reflected in a survey from a couple of weeks ago that indicates just 8% of Americans have a positive view of cryptocurrencies[0]. I'm sure if they ran that survey again now that number would be even lower.
So yeah, I would expect crypto prices to move downward significantly.
Okay, then to summarize, you're saying there's lots of shady stuff with centralized exchanges, and more of them could go bankrupt, and people with fiat and shitcoins and bitcoin on deposit there could lose it.
There's a run on the bank, people want out, and the easiest way to get out is to sell your shitcoins and your bitcoin, and wire transfer dollars to your bank account.
With all the selling of bitcoin to raise cash, the price of bitcoin must drop.
And yet the bitcoin price is up six percent in the last seven days, so there must be some other mechanism at work.
More or less - exactly but like I said in my original post, almost nothing in this space makes sense to me. I'm trying to decide if there's something I'm missing (happens a lot) or like Theranos, mortgages and real estate in 2006, WeWork, etc (which I always knew were off) it's all being propped up by who/what knows what and it's just a matter of time before it crashes and burns.
I moved to Florida in 2006 and have distinct memories of meeting sleazy and disgusting mortgage brokers from Countrywide, real estate agents, etc flaunting their fast cash while thinking all along "this doesn't seem right". I basically watched "The Big Short" in realtime... Same goes for Theranos (it's been 10 years, where is your product?) and WeWork (wait aren't you just leasing out office space?).
Crypto is 14 years in and absent a few extremely rare use cases like fleeing a dictatorship, dealing with currency destabilization in developing nations, etc no one uses it for anything other than trading on exchanges, which at this point seems like Russian roulette.
It's as though the last remaining "widespread" use case for crypto has now almost been effectively wiped out.
