How come stopping mining of cryptos made the prices crash? Supply and demand theory should predict that the price would rise because of consistently rising demand and consistently decreasing supply (more people buy than sell)

Look at streetwear. If a company stops making a shoe, the resell value typically rises. Why is this different?

@realcaseyrollins At least for bitcoin, it's the other way around - the bans reduce demand rather than supply. It's counterintuitive, because we think of mining as producing bitcoin, but mining is effectively "buying" bitcoin with computing resources, and so it's really a form of demand.

The rate of production of bitcoin is fixed (halving events every 210k blocks), so supply is constant - but a miner's expected value for a given contribution of computing resources isn't. With less competition as regulations ban mining in other jurisdictions, a given miner has a greater likelihood of earning the reward and thus a higher expected value for his exchange. That is to say, less demand among miners for newly minted coins depresses the price in computing resources of the average mined bitcoin.

@khird

I wanted to add some details here...

ultimately what the miners are doing are validating transactions. Since China banned the miners but can not ban the actual buying, selling, or transfering of coins the number of transfers per minute remain the same (relatively, this assumes interest int he coin has drastically changed).

So if you cut the number of miners in half, then while you all those miners are now earning twice the reward, they also have to handle twice the number of transactions. Since the capacity of the network went down and this isnt possible the network responds by halving the difficulty to produce the coins.

So yea miners are now getting twice the reward for the same effort in such a scenario. But does that have a significant effect on demand in general? I'd say not, as the qty minted is a very very small percentage of overall supply.

Most of the price change we see in bitcoin isnt really related to the miners or network integrity at all.. its people being scared that china, one of the largest world markets, wont be adopting the tech.

@realcaseyrollins

@khird

To put it another way, miners do not equate to supply, They equate to the rate of change in the supply, which as kyle said is fixed, but also VERY slow. Removing the miners had no noticeable impact on the overall supply now or into the near future.

@realcaseyrollins

@freemo @khird @realcaseyrollins

Just buy #SHIB, this is the way

@JackMeinoff

I'm all for altcoins, but #shib is a horrific choice. Ethereum for the near-term, ADA for the long term are your top choice

@khird @realcaseyrollins

@freemo @khird @realcaseyrollins tell that to my returns (banked, into ETH...) and the current metrics. For weeks it has beaten the market when the underlying value is simply ETH.

@JackMeinoff if your day trading, sure, by all means add #SHIB to your day trading routine. When someone famous mentions it, buy it, then sell it in a few days, rinse repeat.

But long term it hasnt really outcompeted anything. It reached its inital peak after launch which took about 2 days to hit, and then has trended down ward consistently ever since without rebounding. After 2 weeks it was down to 1/3rd its peak price and since then has continued to fall and now even lower than that. What small recoveries it had it crashes almost immediately after.

Having a good week where it raises a few minor percentage points isnt anything to write home about given its overall trend.

The important thing you need to ask yourself is, what does it have going for it? It literally offers nothing and brings nothing to the table that would suggest it will have future value.

@freemo Sorry there, but your analysis of SHIB is way off. It reached it's peak long after 2 days, spurred by the community spreading the word at the time of ATH's in the overall market. Now what you didn't do is actually compare or overlay those charts. Compare price, total valuation, number of holders and other metrics of health and it's beaten even the flagship crypto.

Mind you, this isn't FOMO due to Musk hype. It's due to normal folks. And we're not even yet to see what the devs have next

@JackMeinoff

I attached the analysis for you...

Here we see the same pattern we see of all coins that are on their way to the graveyard...

First it is listed on the public exchanges, which is when trading publicly begins (red arrow). After 4 days it hits its initial peak, then 12 days later crashes, then rebounds (typical of every new coin). At that point it continually trends downward, never recovering, and aside from the usual stochastic noise is headed right on down to 0.

Not once was it ever able to hit its post-crash value again (horizontal line). Its literally the worst trend line for buy and hold you could have. Only way you can make long term money off of it is to day trade it and play off its volatility as it crashes. consistently crashes.

@freemo but that trend line is formed by so many other factors like Musk tweets and other nonsense that made other coins take a larger dip... it wasn't listed on those exchanges then either. That came after. Each exchange listing in 2021 has utterly crushed a coin - lives were ruined by the hype behind Internet Computer for example.

There is a lot more to this, and it's easy to ignore if you're a BTC maxi or what have you...

@JackMeinoff No BTC is a bad coin too, its only advantage is that it is the oldest, so it will hang on longer.

You are literally investing in a coin that has absolutely nothing to bring to the table, has never shown any sliver of success, and since its public opening went nowhere but down...

What possible argument could you even make in support of the coin? Ethereum itself has an argument to be made, as do many other coins like ADA, or even ripple... Shib literally has nothing one could argue for in its favor.

@freemo Agreed on BTC, by definition it's a shitcoin and SHIB has better fundamentals...

Now, your claim that it's gone no where but down isn't true and you see it in the charts and if you actually looked at any period other than "all time", especially today, or value growth with market cap / holders grow... you'll see where and why the value is growing.

The value of SHIB thus far has ONLY been through word of mouth, the community coming together and the collective pump....

@freemo ...so now that it's taken off, hitting the top coin listing and such there is some dev work coming that would *maybe* add some excitement to the economics of it...

But in reality it's value is the same as BTC, fiat, etc. Everyone came together and agreed on this as a value store and along with it pumped in value.

When that dies, the coin dies.

@JackMeinoff It didnt take off... the value spiked after 2 days because it went public on exchanges (as every coin does)... it then crashed and its value made a b-line right back to 0.. its fundementals and performance is shit and frankly is one of the poorer performing novel coins ive ever seen.

No it never hit "the top coin listing" It hasnt even made it in the top 10 let alone the top, or the top 25, or the top 50!!! It is in about the 76th place in terms of how strongly held it is.

No the value of BTC isnt some arbitrary thing people just decided had value. It produced novel functionality (such as the ability to transfer money across the world in minutes without a third party or regulation), THAT and other features of BTC is where its value derrives from, not some made up arbitrary agreement. Shib does not offer any new functional value however, unlike other coins like ETH or Ripple or Ada which are all bringing new features to the table.

@freemo

And again, go look at the coins put on major exchanges like Coinbase this year, your analysis is all wrong. Each time they've tanked.

@JackMeinoff its not uncommon for a coin to rise then tank after going on an exchange.. but generally then dont continue tanking over the long run as Shib has, key difference.