According to CryptoCompare, the value of assets under management for all crypto investments fell 14.5% in November. Here's a chart showing crypto AUM for the past year:
Notice that the y-axis is denominated in $Billions, with a B. Total crypto AUM is down two-thirds over the past year and currently amounts to about $20 billion.
Give or take a bit, AUM for normal assets (i.e., money) comes to about $110 trillion, with a T. This means that crypto accounts for ~0.002% of all assets under management worldwide.
If you're wondering why nobody on Wall Street seems to care much about the collapse of FTX, this is the reason. To them, $20 billion is a rounding error, not a catastrophe.
Good point. I doubt that the average American household is even indirectly invested in crypto currency. Houses, cars, phones, TVs, appliances are the things that matter.
True. I'd bet all but a slim few percent of Americans even know how to invest in crypto.
Yet, there are articles this year saying stuff like this:
...46.5 million Americans who have never purchased cryptocurrency before say they are likely to invest in crypto for the first time next year, according to a survey from The Ascent, a Motley Fool service. Those Americans will join the 145 million American adults -- about 56% of the U.S. adult population -- who say they own cryptocurrency or have invested in crypto in the past.
Another Motley Fool article:
56% of American adults, or about 145 million people, own stock.
The same number of Americans who invest in stocks invest in crypto? I don't think so. Virtually everything you read about crypto is horse manure.
Invest in crypto or got infected with malware and have to pay to unlock their files???
Happened to a guy I know indirectly. Meaning I indirectly know him, not that it happened indirectly
Smart guy decided to use computers from his small business too. He paid the ransom
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Yeah, I'm sure a fair number of Americans own bitcoin. Well, a fractional bitcoin - assuming they still have access to the encryption key and the wallet/exchange hasn't gone under, which they seem to be doing quite a bit of lately.
The distribution inequality, according to an article I saw in Kos not long ago is even worse than the wealth distribution inequality in actual money (as opposed to "collectibles" like crypto-currency and NFTs. Of course, as Alameda, FTX, and other exchanges go under, that issue seems to be resolving nicely on its own...
That's assuming that the crypto had any value in the first place.
But yeah, we're lucky that the contagion here is likely fairly well contained (I mean, apart from the folk who lost their life savings, of course, but that's not a 'crypto' problem per se.)
Who doesn't like apes? Who? And heroin. Who doesn't like apes and heroin?
“The prototypical face of crypto is young, white, techy, and male, but perhaps no other demographic group has been harder hit by the crypto bust than Black Americans, who are half as likely to own stocks as their white counterparts but significantly more likely to own cryptocurrencies. Because Black investors piled into the crypto market at or near its most recent top, many of those investors are now in the red.”
Hilarious
Soulless monster Justin sticks his head out again from his mother’s basement, sees Black people losing all their money in a scam, cackles loudly.
About as funny I suppose as punching down at trans people, undocumented people and homeless people to the internet troll crowd.
Foolish people... nothing more than that. Who are these "investors"? Drug dealers and gang bangers?
Nobody can take anybody who says "gang bangers" seriously. All we can think about is porn.
I should have provide more context. See… god told them to invest in crypto.
“As I celebrated the opening of Litchain Corp, one of the nation’s largest Black-owned crypto datacenters, I knew my life’s purpose – and what God had called me to do – had come full circle.
I was at the precipice of helping to disrupt centuries-old oppressive practices used by the government to prevent people of color from achieving the American Dream and financial freedom.”
https://news.yahoo.com/opinion-crypto-expand-black-wealth-125417366.html
Nothing new to see here… just your garden variety con artist with god as the extra special sauce. A hustler. And the rubes of all kinds fell for it.
Anyway… when Mr. Drum started picking on black men (Black men are more likely than other lawyers to be accused of wrongdoing in the first place.) it reminded me of this other issue.
Black men are just messed up! I think because of Austin. I don’t really know any so I can’t say. Why are all of Austin’s black friends so messed up?
What a dick. May the Bird of Paradise fly up your nose and call in a drone strike.
Really? The article I read in Kos a little while ago (with good cites) showed the inequality of distribution of bitcoin was even worse than the inequality of distribution of more tangible forms of wealth. And for the same reason - "them as has, gets". You need a lot of money to acquire much crypto - directly as in purchasing, or indirectly to acquire the powerful computers needed to "mine" it.
axis in billions, crypto "assets" in range of 20 to 60(ish) billions--so 0.02% of AUM assets. Doesn't change the conclusions.
Even though crypto is a small fraction of assets under management, the small "investor" who got sucked in will be taking a bath.
For reference, Stellantis valuation is ca. $45 billion, Tesla ca. 10x that (though numbers bounce around a bit)
Total crypto market cap is now about $768 billion, still a small fraction of total market cap (and shrinking):
https://www.tradingview.com/symbols/TOTAL/
If that much money completely disappears it could have some effects. Of course it was sort of imaginary in the first place and about twice this much has already disappeared from the peak earlier this year. Many of the suckers have already taken their bath.
A data point for comparison:
Total US stock market is down from about $50 trillion to about $40 trillion this past year.
Crypto's losses of $2T so far, and more potentially, are not in the same ballpark.
(FWIW: market cap for a single US stock, Tesla, is down almost $800 billion since its peak this past year.)
I'd like to know how crypto assets are valued. A common situation for a new coin is for the volume actively traded being a tiny percentage of the outstanding coins -- the FTT token is a good example. Its price was set by some small number of trades between interest parties (FTX and Alameda), with most of the coins held by FTX.
The market cap is fictitious, as is the price. The coin may officially be priced at $5, for example, but there's no way that there's a market for billions of dollars of the coin at that price.
So, one reason the disappearance of so much crypto value doesn't matter is that it never actually existed in any real sense.
Hmm. I think this implies that from a macro perspective, the real destruction of value happened not with crypto's decline in market price but when people took actual money out of circulation, or out of potential use as deposits to be loaned against, in order to buy entries on blockchain ledgers (that, as I understand it, have no value as collateral). So maybe it's been more like a gradual small leakage of value, and not so much a sudden collapse. Kind of like putting money in collectibles, except less stable and maybe even less liquid in the long run.
Not to say there aren't casualties outside the macro level; individuals who did this have certainly been hit, and electric utilities in certain places stand to lose revenue as the bitcoin miners close down. And people in parts of the world that have needed crypto because they don't have functioning banking systems have been hurt.
Indeed
In the end Crypto is/was Penny Stocks rebooted for the 21st century (rather similarly to the boiler-rooms pump and dump sales of the early 20th century pre regulation).
Manipulated trading in thin markets with related parties pumping up price for fictitious valuations to sell to the rubes.
They are crypto lottery tickets, not assets.
lotto tickets are at least worth the paper their printed on....with crypto, there is no paper.
Admiring how much you can accomplish with slave labor,
https://old.reddit.com/r/pics/comments/zp5c42/elon_musk_hanging_out_with_jared_kushner_at_the/
Desperate to feed his Twitter as it hemorrhages, hoping to raise cash without panicking SpaceX and Tesla investors.
Can he fail to manage it?
Arabs will swallow it whole, and he'll never notice they're clueless.
The world of crypto seems pretty inbred, with crypto companies intermingling with each other, but traditional finance mostly staying away.
With individual investors there seem to be a lot of dabblers: lots of people who have miniscule amounts of crypto. We tend to focus on the people in any bubble who invest in it to an extreme amount, but there are a lot of people who own three beanie babies, a couple unopened Star Wars lego sets, a handful of silver coins, and a wee bit of crypto.
Unfortunately, crypto has worked very hard to pull in extremely unsophisticated investors. Even though a thousand dollars in crypto isn't much, those are the people who can't afford to lose even that small an investment.
The big danger to the economy as a whole comes when there is substantial borrowing on dubious assets, in other words leverage. For example the bundled shaky mortgages which were given phony AAA ratings were "security" for the asset-backed paper on which the shadow banking system was based.
So have people been borrowing a lot on their crypto "assets"?
That's sort of what happened to Alameda/FTX - a whole hell of a lot of under the table transferring of assets from FTX to Alameda followed by Alameda putting the funds into highly speculative (risky) investments, followed by losing lots of money, investors starting a run on the "bank", followed quickly by bankruptcy. Basically fraud all the way down, according to the interim CEO appointed to investigate the mess.
The amount of economic activity in the real world that is motivated by cryptocurrency is pretty much zilch. That's why nobody in the real world is concerned by the collapse of crypto.