Whale Games: Hiding Value Underwater

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whalecryptomoney.png

This is actually a concept that I didn't really even know existed until I experienced it myself. It's honestly a pretty weird one that you don't even think about unless you happen to be a very big fish in a small pond. When I was aggressively entering/exiting tokens in the LEO ecosystem (LEO/CUB/POLYCUB) it became much more apparent to me.

Example

Say we own $50k on a token that only has a market cap of $500k. That's 10% of the entire network; a huge amount. However, what happens if we want to buy even more than 10%? What if we pump another $50k into the protocol? How much money do we have after the purchase?

Logic dictates that if you started with $50k and then you buy $50k more of something, you end up with $100k, right? Duh! Yeah, no, that's not how it works. What if you x10 the price of the token by pumping $50k into a $500k market cap? All of a sudden the first $50k you had is now worth $500k on paper and the total market cap is $5M. Wow, that was weird! Obviously this is an exaggerated example and the actual numbers I was dealing with were lower, but the affect was the same. Buying in big after having already bought in big made it look like I had more money than I actually did.

If I already had tokens on the platform I was buying into, then pumped the price of the token 10%, it looked like the tokens I was already holding also gained another 10% value, which is super weird and also not accurate. This is why market cap is an extremely poor measurement of value, and also why LUNA could have never hoped to pay back the UST debt during the recent death spiral. If a market cap is $500k, it is impossible to extract even half that much actual USD from any market's cap. It's possible to pump or dump a market by x10 more than the actual dollar amount that gets pumped into a market or extracted from it. Thin liquidity is thin.

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Could this happen to crypto via the stock market?

I've brought up this idea a couple of times now. The stock market is obviously exponentially bigger than the crypto market (for now). What would happen if some big players in the stock market decided to jump ship into crypto? If they are willing to bury themselves underwater in the way I've described above (high market cap but low exit liquidity) it's possible this could be the last mega-bubble crypto ever gets with mainstream adoption coming shortly after.

I think there's a very real (albeit low) chance that this could even happen during a recession. Imagine the stock market drops 50% and Bitcoin drops 50% right along with it. Sure, I'd expect nothing less. However, I do believe that Bitcoin (and crypto in general) could end up recovering much more quickly than the rest of the economy. If that happens we could see several figures on Wall Street abandon ship on the stock market and get into crypto.

One of crypto's biggest deterrents is the volatility.

We live and breath volatility.

  • HODL
  • WAGMI
  • DIAMOND HANDS
  • PAPER HANDS
  • HAVE FUN STAYING POOR.
  • NGMI
  • BUY THE DIP
  • ETC ETC

volatile.jpg

What happens if the rest of the economy becomes just as unstable as crypto with none of the upside that crypto has to offer? Clearly, in that case, it would be stupid not to ape into cryptocurrency because there are no safe havens left. If everything is risky as hell might as well put your money where it's going to eventually moon rather than just trade sideways during the entire GREATEST DEPRESSION everyone has been talking about.

Of course the argument could be made that crypto would just be twice as volatile in this scenario, but I'm not sure that it would be. There's a very real chance that crypto becomes the safest thing out there because there's simply no more trust left within the legacy economy and all the piss poor forms of collateral being used to leverage debt. Crypto doesn't have this problem because crypto isn't based on debt. Crypto is collateral itself.

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Bitcoin mines the truth

This is why so many people have fallen for the propaganda that Bitcoin "wastes energy". They don't know what the value proposition is. They don't know what the energy is being used for, and thus it must be a waste, right? As if the financial sector is such a trustworthy place? Please.

At the end of the day when the legacy economy crumbles like a stack of cards and is laid bare for that pyramid scheme that it really is, in my opinion there's a very good chance this will be crypto's time to shine. After all, crypto's only value proposition is that it is a system that can be trusted more than other corrupted centralized systems. That is literally the only thing good about crypto, and it pales in comparison on every other metric. Turns out, trust is pretty important. Enough so that we now have the luxury of sacrificing every other variable to implement these networks on a polar opposite frequency as their legacy systems counterparts.

Conclusion

Is it possible that legacy finance whales could dump their value into crypto when the old ways completely fail them? It's possible; probable or even guaranteed on a long enough time line. The real question is: wen?

However, even if such a thing never happened, the ability to hide value in illiquid and low market caps will always be a thing. Pumping your own bags is a real strategy at the top-end. This is especially true now that crypto cranks out new projects on the daily. Will they all succeed? Of course not. However, the ones that do are going to make excellent safe havens on the long-term. Even Bitcoin hasn't priced out the little guy yet. Keep stacking those sats, fam. The legacy system will capitulate eventually.

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84 comments
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5 years this has been happening to me, it started here, around people that are still here. Homeland security has done nothing at all, they are not here to protect us. Dont we pay them to stop shit like this? The NSA, CIA, FBI, Police and our Government has done nothing. Just like they did with the Havana Syndrome, nothing. Patriot Act my ass. The American government is completely incompetent. The NSA should be taken over by the military and contained Immediately for investigation. I bet we can get to the sources of V2K and RNM then. https://peakd.com/gangstalking/@acousticpulses/electronic-terrorism-and-gaslighting--if-you-downvote-this-post-you-are-part-of-the-problem

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All I can say is crypto is all about logic.

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Lol no...

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Lol ok...so what is it then?

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Logic dictates that if you started with $50k and then you buy $50k more of something, you end up with $100k, right? Duh! Yeah, no, that's not how it works.

Anything but logical.

That’s why a crypto that does absolutely nothing will have a higher marketcap and users than legit crypto solving actual problems

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I do believe that Bitcoin (and crypto in general) could end up recovering much more quickly than the rest of the economy.

I would say this makes sense. When risk off is in the air, the high flyers get hit early and hard. However, I think the reverse is also true. When people move to the risk on, they dont jump into Clorox or Home Depot. They start piling into AMZN and TSLA.

So Bitcoin and other crypto should be at the front of the curve. Plus, as you cited, the smaller size of the market allows for large sums of money to have a bigger impact.

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It happened in March 2020. I'd say though that when it comes to risk on assets Bitcoin might be more accessible to buy now and even more popular than stocks such as AMZN or TESLA.

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I wouldnt go as far as to say it is more popular than AMZN and TSLA. Those companies have huge followings. But I get your point. There is a lot of opportunity for Bitcoin (and other tokens) to bounce back quickly.

And a bit of big money moving over will really move things.

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This would happen a not faster as countries are willing to adopt and regulate crypto officially. Even Nigeria's Stock Exchange Commission made a recent statement on that.

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Agreed.

  • Blue Chips always do well.

  • People trust them not to go to zero, and they trust them to lead the recovery.

  • It may be a self-full-filling prophesey, but seems historically correct.

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The "green" argument drives me crazy. It's such a blatant targeted attack. I'm all for being green, but they are aiming at the wrong target with that one. It is just silly.

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I'm a big enviro and whenever that comes up I just say, ok, POW systems like Bitcoin use a f*ckton of energy, yeah. But POS systems like Hive don't.
Some people listen to me explain it, and others are just so deadset convinced that all crypto is bad that they don't care that not all crypto is Bitcoin.

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I totally agree. POS is definitely better than POW and people need to be educated about that. I am not entirely convinced that POW uses any more energy than the global banking or financial system though. I think it is hard to quantify that and just a scapegoat excuse to hate on crypto at this point.

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But the POW networks are making more Boise and seems to have filled the media timelines earlier and faster.

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Even if it was true the first time the claim was made, that doesn't mean it's true today. It's the same deception made about IC cars being dirty. Their exhaust may be dirtier compared to that of an EV, but it's 99% cleaner than the exhaust of an IC car from 1990.

Just as progress has been made in making exhaust for IC cars cleaner to the point of being trivial, much progress has been made to make crypto mining more green and energy efficient.

Incentives matter.

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Funny you should mention that. I read a while ago that it is much harder to kill yourself these days from car exhaust because it is so much cleaner. Not sure how true that was, but interesting nonetheless.

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(Edited)

There wouldn't be any of the dirty or grimy pollutants for years past, but carbon monoxide is still a problem. I'm not going to be the one to confirm that detail!

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There comes a time where stock investors will get bored and feel outdated, when is that time? No one knows, crypto is getting adopted globally gradually, if there is a token representing gold on cryptocurrency technology (PAX GOLD), this just shows how gradually we are making progress

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I am not sure stock investors get bored. There is still a ton of volume an the market will dwarf crypto for some time.

The stock market will drift away when tokenization takes it over. Synthetics will likely become popular.

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Yeah, I thought of tokenization. Imagine companies choosing tokenization over others.

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Personally I think everything will end up being tokenized. Keep in mind that most of our financial system was developed before the Internet. Thus we are still using legacy systems.

And we are just now really getting into some experimentation with tokens.

By the end of this decade, it will be a completely different world in terms of how we deal with assets.

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I've played this game first hand by stacking Alpha Flesh Golems. (more than 1/3 of supply)
I could own $10 million worth instantly by just dropping $10,000 into the market.
Handy if somebody was accepting them as collateral for loans.

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it's possible this could be the last mega-bubble crypto ever gets with mainstream adoption coming shortly after.

We haven't had a mega bubble since 2017 and if we take in consideration what is happening in El Salvador and the orange pilling process that the president is into, then all of this makes a lot of sense.

We still need more time to see whether the crypto market has indeed changed patterns or we're still in the four years traditional ones.

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Crypto is under a lot of attacks. For this reason we are going to see the continued FUD. We just have to keep pushing forward and developing in spite of all that.

In the end, that is what will provide the value.

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Over the past month we are seeing real progress with Bitcoin adoption, Airlines, Nations deeming it legal tender, and wall street and stock markets adopting markets for it.

The plain truth is using crypto is still pretty hard for most, but it is catching up for sure, and the big money will come for more than one reason. Opportunity and also hedging their fiat investments.

Enjoyed this post!

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Ease of use is not our forte. In this regard, it is a lot like the internet. I can remember when I joined it was not very user friendly. However, within a few years everything changed including the mass rollout of broadband in the US.

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We can see how leofinance interface has evolved with the lightening db.

We now have an easy to use interface for all lions, this was not the case some years back and will not be the case in some years from now.

The crypto space is
evolving and now has a mind of its own that will make it harder to control as time goes on

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The development is continuing. We are now getting word that other things are in the works. Listening to the AMA and getting the update on the Community pages.

So interesting stuff.

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I have been pretty inactive in twitter due to power outrage but I will be present in the next AMA.

I did attend once and it was very satisfying to hear a whole lot that's coming in the future of HIVE.

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Yes. Though, there's some more work to do to retain the new users that are joining us on Leofinance to stake their LEO and not just earn it. This is so that we can keep spreading the base.

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That's a very important part, but the first step is to sign up, show up and with time the support and commitment will come naturally or not, depending on how much you understand what's going on here.

Many will fail, but the few who stay and build will attract more like minded, like themselves.

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Hahaha your calculations got me both confused and surprised 😅 how is that even possible? It is with crypto!!! (Me asking and answering) 😂

We live and breath volatility

Life of a cryptopreneur 😅 we hodl millions sometimes but enjoy being poor during those times... Then we still have to buy the dip to stay in the game... What a live and breath votalility life 😂 really cool.

Nice evaluation by the way.

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Not really calculations. Just a simple point he is making where if one is a whale in a small pond, the ability to influence price is there. Hence if one is buying a lot, the price moves up, which affects what is already held.

Of course, try doing it with selling and a similar thing happens to the downside.

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Thanks s lot for the explanation 🙈 still learning and really learning a lot here.

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Take your time and keep active. You can learn a lot by engaging. None of this stuff comes to any of us very easily.

Therefore, keep biting off bigger chunks each day. Over time, things will come together and click.

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That explains how I ended up #1 on the SWAP.CUB Richlist earlier this month when I bought 97+ SWAP.CUB and LeoDex showed me as a millionaire. It was a very small pond I stepped into that day.

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For when legacy finance do fail, I see no other option to hop onto than crypto, even the ones that have been giving Bitcoin a bash will quietly jump onboard.

Imagine that really happens, it will be crazy fun around here!

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The legacy system will not fail as much as be migrated. If cryptocurrency can provide viable alternatives, then more money will shift towards there.

That will be the ultimate barometer. Where is the cash flowing to?

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If cryptocurrency can provide viable alternatives

This should a factor considered when building project(s) around cryptocurrency, that way it becomes irresistible to ignore and ultimately pull cash flow from legacy systems.

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I agree completely. We have to look at what is out there and seek to give people true options.

Without that, people will not switch and the existing system will just keep plugging along.

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Interesting read and very understandable how you made your point.

Bitcoin has a lot of use cases and it with the other ones that have will recover more quickly.
There will be for sure many that will come towards Crypto. But like you say, when? We need to make sure that more people know about it and understand what would be possible.

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It seems like you enjoy digging into things. I would love to have another set of eyes on something I have been researching off and on since 2014 to help me connect the dots. DM me @wanderingmoon#5871 on discord if your interested.

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But what´s the points of fake-increasing the market cap, if that whale will never be able to get out of that asset without dumping back that token? Yes, on the paper the market cap looks great, but as soon as he sells big, the low liquidity will immediately lead to a crash.

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Well if it was a pump and dump, the idea is to get others to jump in so that the stake could be unloaded.

The point of the article is not that he was doing it to raise the market cap. It was simply an outcome of buying so much of the whole.

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That's the effect of low liquidity. Perhaps faking the Market Cap would invite other investors to buy in. It's high time many drew value out of Crypto beyond the price and market caps.

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Yes, but if you want to sell those quantities, the opposite effect takes place and you won´t be able to sell for that higher price, because during selling the price will go back.

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If liquidity is close to non-existent in the small pond, it's not really worth dipping into that small pond.

It also helps to know what's in that small pond to begin with. I still don't know how to determine how much liquidity is present for any transaction I want to make at LeoDex. Is it at simple as checking the info widget, or is there some calculation I need to make?

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If everything is risky as hell might as well put your money where it's going to eventually moon rather than just trade sideways during the entire GREATEST DEPRESSION everyone has been talking about.— exactly ! What’s the worst that could happen?! Big risks comes with big rewards ..

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I believe that some of the traditional stock market money will find it's way into crypto, as people usually try to diversify.

In one of my posts I did a comparison between my SPS and Stock market investment, and currently both are performing similarly. I now need to see how both will recover.

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I'm positive sps will recover first before there's any changes in the stock market.

but who knows, I hope to see how it turns out when you make a post about the recovery

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Both crypto and stocks are correlated in the same direction. It's just that the crypto market turns on a dime when change is needed while the stock market takes longer because it has to make wider turns and then other corrections.

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This is why market cap is an extremely poor measurement of value.....

However, even if such a thing never happened, the ability to hide value in illiquid and low market caps will always be a thing. Pumping your own bags is a real strategy at the top-end.

The shit memecoin community would like to have a word with you lol. Its this on an even more volatile, illiquid manner. Sometimes with no real direction or owner. Some lessons are read, others are learned the hard way.

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I personally would want to learn more about Memecoin if it has some future looking roadmap.

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It's possible for a memecoin to be bought out, brought under new management and development, and have a "Grand Re-Opening" with a different mission or purpose. How many of these memecoins could have been used by the Canadian truckers of Winter 2022 and those who supported them had they been re-released earlier as re-purposed altcoins?

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Interesting read.

I see everything, including crypto as being debt based. Every valuable thing in the world only has the value that can be extracted from it in the future. Gold has value today because we expect it to have value tomorrow. The house you live in is expected to provide value going forward so it has value today. Companies have value based on future profits and the use it expects to be able tog et out of its assets. With crypto mantra "we're early" its especially basing its current value on what can be extracted from it tomorrow. Even sentimental objects get thrown away once the value a person thinks they will get from holding on to it longer is eclipsed by the cost of holding it another day.

If you apply the definition of debt as future value pulled forward, everything is debt which is why monetary systems being debt based has always made sense to me.

It's just a philosophical thing really but I think about it any time I see the distinction between debt based systems and non debt based systems. "debt based" systems actively try to put a number on tomorrows value while other systems are doing the same thing but without putting the label onto it. But if bitcoin had no expected value going forward, there wouldn't be another one minted. If dollar had no expected value tomorrow, they wouldn't print another one. If a coin has an ICO, it would have no success selling if people weren't buying i expecting future even greater value to come from it.

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If you apply the definition of debt as future value pulled forward, everything is debt.

I enjoy the philosophical logic, but no one defines debt this way.
Debt is value owed back to another known party.
All fiat is owed back to the entity that issued it.
The same dollar can be owed back to more than one party with fractional reserve banking.

Bitcoin and the vast majority of crypto isn't owed back to anyone.
It's a completely different system on a fundamental level.
Especially true considering the open source nature of it all.

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No trust left in the legacy economy

I definitely felt that one

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There's a very real chance that crypto becomes the safest thing out there because there's simply no more trust left within the legacy economy and all the piss poor forms of collateral being used to leverage debt.

I agree with this. Eventhough volatility seems to be the bane of crypto, I believe it more than overcompensates with the fact that it is the most trustworthy financial system on the planet. This makes it easy for more people to pitch their tent(projects) using the blockchain technology.

Thanks for this post @edicted

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(Edited)

I was a lotus mega whale mostly just cause I wanted the project to succeed so I get it, though it didn't and my stack is currently worth less than $200 I think.

I played these games just to figure out how they work a little bit.

This is why wide distribution is so important. Without it, price manipulation is far too easy and with that it’s easy to control market sentiment and continuously gain more stake, and we aren’t even considering the power that longs and shorts, media or social influence, and all the other tools people can use.

Ideally nobody has anywhere close to 1% of the circulating supply. But people like to consolidate power. Maybe when cities, nations and other organizations hold most of the bitcoin, some will establish a kind of shared ownership between all members. I still can’t imagine how it will work but it’d be cool if every citizen of El Salvador technically own the bitcoin in the countries treasury (equivalent of El Salvador’s bitcoin divided by total population). This is also a form of distribution.

Just casually brainstorming

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I would say the spreader the better. There's always a hint of future fail if one user can do that 10x price move and eventually contributing over 10% of the entire market cap.

I learnt to observe that quite recently.

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Since the market cap is a poor measurement of value, what specific metrics do you propose to assess whether a certain project is really solid or not?

If that happens we could see several figures on Wall Street abandon ship on the stock market and get into crypto.

Curious to see who will be the first to abandon such a sinking ship?

Crypto doesn't have this problem because crypto isn't based on debt. Crypto is collateral itself.

I am just wondering how influential the current system is to make financially sophisticated Wall Street guys incapable to see crypto's power.

. . . in my opinion there's a very good chance this will be crypto's time to shine.

I will keep myself focused while waiting for that day!

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Interesting ideas to contemplate.

Size

I started thinking and reading on the size of the cryptocurrency economy when the US Senators first starting fretting over Russia using Bitcoin to avoid sanctions. The amount of money Russians ove couldn't be hid on the Bitcoin blockchain no matter how much they spent.

In addition the Bitcoin stolen from Mt. Gox was never hidden, everyone knew where it was, and when it moved.

Liquidity

Size, liquidity, exit liquidity, entrance liquidity, these things all matter. But one thing you said and I sense in the Luna disaster is that the money in the legacy financial suystem dwarfs the cryptocurrency market, and the master manipulators of the legacy trad fi system are going to have a field day raising funds and shorting the crypto market.

Are we doomed?

We may be witnessing only the beginnning.

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