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Eik

Fair warning: there might be a bubble

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https://www.reddit.com/r/Bitcoin/comments/683rpa/are_the_markets_in_a_bubble_built_by_tether/

The serious question from /u/florbagast made me think seriously why all crypto's are growing in price these days and made me wake up in the middle of the night.

USD tether is not any more traded 1:1, but rather at 0.90-0.94 USD. Whatever the underlying reason (bitfinex, not-redeemable at tether.io, etc.), this discrepancy is not known to everyone, also not to e.g. my trading app that tells me crypto prices. The fact that not everyone knows this, causes buying behaviour because 'the price is rising on other exchanges'.

What actually happens is that at some exchanges crypto prices are indicated in USDT and at some exchanges, prices are indicated in USD. Take for example Poloniex, it indicates prices using USDT and happens to be the largest exchange around. Due to the discrepancy, the indicated price is higher than at exchanges like e.g. Kraken which indicates prices using USD. If people do not know this discrepancy (only needs to be a fraction that doesn't know), they will buy crypto's on their exchange where the price is 'still lower'. Market effects then cause the USDT listed cryptos to increase too, therewith creating a reinforcing cycle.

Don't take my word for it. Definitely don't take my trading advice. But I urge you to think about this potential bubble yourself.

To close, I leave you with a zerpbox excerpt:
 

Quote

 

PunishmentOfLuxury Today 4:00 AM: @Eik Or lots know but as long as the good times roll, they'll go with it. Wait until BTC starts to crash

Eik Today 4:04 AM: @PunishmentOfLuxury fair enough, I did my part. If it comes down it might** come down quickly. Enjoy the ride then

 

** I actually used 'will' here, but meant to say 'might'.

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I think it is clear that Crypto, in general, is in a bubble, and this is just another symptom. When the good times are rolling no one stops to do their homework but they make huge profits nonetheless. They then feel prescient and doubledown on their risky behavior.USDT, the DOA and many other projects are an example of the bubble mentality. Startups are raising unsustainably large amounts of capital through crypto, (amounts they could never dream of from any VC firm,) despite often appearing to have uncertain or no real world use case, and even many of the blue chip coins like ETH and BTC have market caps I just can not square with the level of regulatory risk, obsolescence (in the case of BTC,) or technical/practical limitations which still might cause their hypothesised uses to fail to materialize. Even if the evenchual winners end up being HUGE we will still likely see something like the dot-com crash along the way. 
You can make money on craziness, but make sure to take your profits, and don’t bet the house. The reality of bubbles is that you woun’t be the first one out the door once everyone is scrambling for the exit. 

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I agree with @Apollo. Many of the ICOs on Ethereum are clearly motivated by greed, pure and simple. A thread of a shadow of a half-decent idea is spun into a world-changing, me-too, must-have innovation of the most urgent importance. It's the Wild West gone global. "Is that a white paper in your pocket, or are you just pleased to see me?"

If you need innoculation against the madness, read this:

https://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds

 

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LOL! "n later editions, Mackay added a footnote referencing the Railway Mania of the 1840s as another "popular delusion" which was at least as important as the South Sea Bubble. Mathematician Andrew Odlyzko has pointed out, in a published lecture, that Mackay himself played a role in this economic bubble; as leader writer in the Glasgow Argus, Mackay wrote on 2 October 1845: 'There is no reason whatever to fear a crash'" 

Just goes to show you no one is immune. 

I love that book! I used to have a lot of downtime at one of my old Jobs which I would fill with almost any book I could get my hands on. This was one of my favorites. 

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10 minutes ago, plipolip said:

XRP is up 40% in 24 hours without any new money entering RCL or any significant buying of XRP on RCL..... 

 

 

Driven by btc/xrp trade on poloniex.

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im so confused... is the price just going to enlessly keep going up, or will it come down too? I mean im glad for it to keep going,. but i wanna buy some more as well....

 

 

I know, you don't have crystal ball.

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Beer and bubbles...

http://www.businessinsider.com/nucleation-points-bubbles-glass-side-dirty-pint-beer-fizz-2015-9

Yes we're in a bubble- but don't fear the bubble...just like when we were kids we wer amazed by bubbles...So too now(speculators and seasoned traders alike)...Remember Bubbles with dirt on them also form but qwikly pop- because they are not pure enough to handle the weight of expectations aswell as the weight of their own short comings.Only the purest bubbles get bigger and bigger(XRP). Investing in a crypto with pure value may start off as a small and slow bubble but it will eventually get bigger!

    I'm forever blowing bubbles,
    Pretty bubbles in the air,
    They fly so high,
    Nearly reach the sky,
    Then like my dreams,
    They fade and die.
    Fortune's always hiding,
    I've looked everywhere,
    I'm forever blowing bubbles,
    Pretty bubbles in the air.

bubble-dreams-23.jpg

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37 minutes ago, bronn said:

USDT try to be something that it is not! USDT is not USD. But anyhow the volume of USDT is not really high,...

It's the 'reserve currency' on Polo which is why its importance cannot be undervalued as Polo is the biggest exchange. A lot of people are going to be caught short if/when USDT/Polo/Bitfinex fails. In much the same way if the US government comes out and bans unregulated cryptos then say goodbye to 99% of coins on the market and a lot of unhappy bagholders.

Edited by xrpwizard

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