Crypto and ERE?

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tylerrr
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Crypto and ERE?

Post by tylerrr »

Hey everyone,

I haven't posted here in a long time....

Have any of you changed your Investment strategy to include Bitcoin or other crypto?

I worry that typical stock market returns of 8% wont' even keep up with inflation in the future?

Bonds are so unstable with the massive printing of money by USA and other major governments.

Full Disclosure: I do own Bitcoin and some of the top 10 cryptos in addition to my Stocks like VTI, MGK, etc.

I welcome any advice/ideas on this from your ERE perspectve.....

Thanks

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unemployable
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Re: Crypto and ERE?

Post by unemployable »

tylerrr wrote:
Sun May 28, 2023 2:46 pm
I worry that typical stock market returns of 8% wont' even keep up with inflation in the future?
I hope everyone thinks this soon, because at that point it will the best time to buy stocks

tylerrr
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Re: Crypto and ERE?

Post by tylerrr »

unemployable wrote:
Sun May 28, 2023 5:32 pm
I hope everyone thinks this soon, because at that point it will the best time to buy stocks
Not sure what you mean?

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Seppia
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Re: Crypto and ERE?

Post by Seppia »

I guess he means that common sentiment is usually inversely correlated with future returns.

In topic I own zero crypto and don’t plan to buy any going forward. It’s been around for a relatively long time and still don’t understand the use case, plus I don’t like the whole “consumes the same amount of energy as the whole country of X just to stay on”

bostonimproper
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Re: Crypto and ERE?

Post by bostonimproper »

I don’t think crypto overlaps with ERE more or less than any other investment asset.

We have about 20% of our portfolio in crypto tokens. The vast majority is in ETH with a small amount in a smattering of alt L1’s (Cosmos and Solana specifically) and Ethereum aligned L2’s (Optimism, Arbitrum, and Polygon). No money in Bitcoin because of the large carbon footprint.

My two cents: if you aren’t deeply interested in the technology/community, I would strongly advise not putting money into it. There are so many negative takes on crypto by the media and general public and as an asset class it is extremely volatile. Unless you are really bought into it as a concept, there’s a good chance you’ll liquidate during a crash.

frihet
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Re: Crypto and ERE?

Post by frihet »

I like the idea of a 75% gold 25% BTC allocation. That way you rebalance into something that has always been money. You have the chance of high returns but if BTC goes belly up you still have the gold. Just food for thought and I don’t hold this exact allocation myself and got the idea from reading the full interview I posted in the portfolio charts thread.

https://ingoldwetrust.report/wp-content ... -Order.pdf

Page17
“Ronnie Stöferle
We are one of the few fund managers that are very open to gold and Bitcoin. We have funds that combine physical gold with Bitcoin. It’s 75/25 gold and bitcoin. We make use of the volatility of Bitcoin. I would regard both as a sound money asset, and the main reason for that is Bitcoin’s very, very high stock-to-flow ratio. The fact that it cannot be inflated at will is really unique, and that’s what makes gold and Bitcoin so secure.”

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Re: Crypto and ERE?

Post by jacob »

frihet wrote:
Mon May 29, 2023 12:34 pm
I would regard both as a sound money asset, and the main reason for that is Bitcoin’s very, very high stock-to-flow ratio.
I would draw the opposite conclusion because this is saying that the market price of BTC is set by a "very, very" shallow trading book. It would not take much trading flow to significantly move the price up or down which means that the relationship between price and value is not very robust.

Since neither have much of any use outside what other people will pay for it, being able to exit a position without moving the price too much is crucial. This is very different from owning equity or bonds which still pay out regardless of what other people are willing to pay for the asset.

frihet
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Re: Crypto and ERE?

Post by frihet »

Thanks for your input Jacob, I have to admit that my mind doesn’t work well with detail. So both of your arguments go over my head a bit. I think your point is that with BTC you can’t be sure to be able to exit without moving the price? Or maybe exit at all?

I can’t see how that matters to the idea though? Especially for a small player like us on this forum. If you rebalance into something that always has value you can’t go broke and the volatility is instead a strength. Obviously i’m not suggesting to put all of ones money into this allocation....

This was more posted as an dea to think and contemplate on...

tylerrr
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Re: Crypto and ERE?

Post by tylerrr »

Seppia wrote:
Mon May 29, 2023 6:31 am
I guess he means that common sentiment is usually inversely correlated with future returns.

In topic I own zero crypto and don’t plan to buy any going forward. It’s been around for a relatively long time and still don’t understand the use case, plus I don’t like the whole “consumes the same amount of energy as the whole country of X just to stay on”
You might consider that all bank branch buildings in the USA consume far more energy than Bitcoin.
Who has ever complained about the amount of electricity that bank buildings use across the world?
Nobody....

That whole argument is fallacious and designed by enemies of Bitcoin who definitely want it to go away.
It's obvious why people like Jamie Dimon, Elizabeth Warren, and Biden want Bitcoin to go away.

It's a direct threat to their power structure.

tylerrr
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Re: Crypto and ERE?

Post by tylerrr »

jacob wrote:
Mon May 29, 2023 12:49 pm
I would draw the opposite conclusion because this is saying that the market price of BTC is set by a "very, very" shallow trading book. It would not take much trading flow to significantly move the price up or down which means that the relationship between price and value is not very robust.

Since neither have much of any use outside what other people will pay for it, being able to exit a position without moving the price too much is crucial. This is very different from owning equity or bonds which still pay out regardless of what other people are willing to pay for the asset.
Yes, but will the price volatility mellow out as more billions/trillions are put into BTC?
Or will that price sensitivity always exist as it is today?

Are you saying BTC doesn't pay a dividend like Stocks/Bonds do in interest/dividends?
If so , I agree this is a weakness of BTC...It doesn't provide any yield/dividends.

But in the big picture, is this a weakness if you consider that BTC has gone up about an average of 100% per year since it's existence(on average).
And it will probably continue to outperform stock index funds or bonds for the next 10 years in price appreciation?

Jacob, also how do you contend with inflation getting worse and thereby traditional investments like stock market, etc. not even beating inflation annually?

I'm honestly asking these questions because I struggle with how much I should allocate to BTC.

I do believe it's a great asset to hold because of price appreciation and the utility of its Network via Lightning Network, etc.

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Re: Crypto and ERE?

Post by Western Red Cedar »

tylerrr wrote:
Tue May 30, 2023 12:38 pm
You might consider that all bank branch buildings in the USA consume far more energy than Bitcoin.
Who has ever complained about the amount of electricity that bank buildings use across the world?
Nobody....

That whole argument is fallacious and designed by enemies of Bitcoin who definitely want it to go away.
Curious what your source is for evaluating energy use by banks? Where are you getting this information and how is it being measured?

In the Pacific Northwest there has been a huge demand for cheap, hydroelectric power to mine cryptocurrency over the last five years. It has had a real impact on some of the real estate markets in small communities, but provides little in the form of jobs or other benefits. In discussions with friends and colleagues who work for utility companies, there is a very real impact on energy markets and prices in the western US as a result of that demand. Energy that could be resold on a secondary market that was more dependent on coal or natural gas is now being used for crypto mining.

I don't really have strong concerns about disruptive technology as I think that is fairly natural in technological progression, but I struggle to see the value added with energy-intensive crypto. It seems quite anti-ERE to me as an investing strategy considering the environmental ethos.

take2
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Re: Crypto and ERE?

Post by take2 »

I see one very important use case for Bitcoin - the ability to quickly and easily get money out of somewhere with nothing but some (very long and complicated!) numbers memorised in your head.

This use case is broadly useless to many in the Western world, but invaluable if you are say, in the Ukraine, Venezuela, Lebanon, etc. The volatility will not matter to you at all if it’s a matter of having the ability to easily get [some form] of currency across a border that you are fleeing.

In practice many [in the western world] can accomplish the same thing by having multiple passports and/or multiple bank accounts and/or multiple properties in different jurisdictions/geographies. BTC makes this easier for anyone to have a backup plan in the event SHTF.

Outside of this use case I see it as a pure speculative investment, akin to a Ponzi scheme. That’s not necessarily a negative comment as in many ways gold, property markets, S&P500 and other asset classes all have an element of Ponzi scheme attached to it in the sense that the value is skewed more by who’s willing to buy than the underlying value of the asset. However stocks also are comprised of underlying businesses who generate cashflows so there is some underlying value, and property can be rented which also generates cashflows. Even gold has some industrial uses (but nowhere near enough to justify its market price).

BTC’s value is purely attached to what people are willing to pay for it. If you decide to invest just know you’re really betting on more and more people deciding to also buy it.

FWIW I own some crypto (mainly BTC/ETH) for a combination of the two reasons above. I don’t care about volatility and if I lose it all I wouldn’t lose a night of sleep over it. If you do care, or would lose sleep than stay away as it’s a terrible investment for anyone without a 10+ year timeline investing money they need.

take2
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Re: Crypto and ERE?

Post by take2 »

I should add a third reason recently has been the ability to tax-harvest losses against gains in stocks in a legal way without exposing myself to crypto volatility (exchanging BTC for wBTC and ETH for wETH, holding for >30 days and swapping back).

That’s a somewhat fancy way of saying I’ve taken advantage of the fact I’ve lost money on it :D

tylerrr
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Re: Crypto and ERE?

Post by tylerrr »

Just the fact that someone/country/bank cannot confiscate my Bitcoin or crypto unless they get my seedphrase is a Huge use case.
the Canadian government froze bank accounts of people who were donating to Truckers during the protests.
Bank accounts in Lebanon, Argentina, etc. have repeatedly been frozen and people are left without access to their hard earned money.

So the individual property rights/self-banking of crypto is revolutionary in my opinion.

That is one thing I don't understand about some people in ERE. Maybe I'm wrong, but it seems like a lot of people here trust their government and don't have any kind of instinct to be independent of government control.

Why would I want to align myself with Jamie Dimon, Elizabeth Warren, and Gary Gensler over my own financial and personal freedom?

I thought ERE is more aligned with personal freedom, personal control over their own lives?

Bitcoin is reviled mostly by control freaks who believe they know "what's best for you".

IMHO

chenda
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Re: Crypto and ERE?

Post by chenda »

tylerrr wrote:
Wed May 31, 2023 10:54 am
That is one thing I don't understand about some people in ERE. Maybe I'm wrong, but it seems like a lot of people here trust their government and don't have any kind of instinct to be independent of government control.
ERE attracts a wide range of views. Some are very pro-government, but there are libertarians of various types as well.

I'm not sure how independent crypto currency really is though. It can and has been seized as part of criminal investigations. It's rather like a electronic version of bearer bonds which have existed for generations and have never really undermined government control.

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Seppia
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Re: Crypto and ERE?

Post by Seppia »

@tylerrr
I think physical gold and silver are much better positioned to achieve the goals you mention above.
Maybe it’s posturing from the authorities, but it does seem that they can actually tack and claw back Bitcoin and others.
Physical gold is untraceable and one can transport a lot of wealth in a very very small package.

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Re: Crypto and ERE?

Post by chenda »

Seppia wrote:
Wed May 31, 2023 1:07 pm
Physical gold is untraceable and one can transport a lot of wealth in a very very small package.
I've heard it said this is why many Jews got involved in the diamond and gold industry. As they were frequently kicked out in pogroms and forced to leave their property behind keeping a few diamonds in your pocket was a secure way of transporting wealth.

tylerrr
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Re: Crypto and ERE?

Post by tylerrr »

Yes, I see the advantage of gold and silver in small amounts....The problem is, how do you transport one million of gold through an airport without being detected?

This is one of the big qualities BTC proponents mention...That you can go anywhere in the world with a memorized 12 word seed phrase in your head and access your BTC wherever you arrive.

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Re: Crypto and ERE?

Post by jacob »

tylerrr wrote:
Wed May 31, 2023 4:27 pm
This is one of the big qualities BTC proponents mention...That you can go anywhere in the world with a memorized 12 word seed phrase in your head and access your BTC wherever you arrive.
This would also be one of its big risks. It's a bigger risk than being held up by robbers at gun point or whatever until you spill your PIN code because in this case, you don't even need to have your credit card on you. Once a certain level of 'noia is reached/suspicions are spiking sufficiently, all systems have weaknesses. It's only a matter of how much an adversary has reason to spend.

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Re: Crypto and ERE?

Post by Ego »

jacob wrote:
Wed May 31, 2023 4:34 pm
It's a bigger risk than being held up by robbers at gun point or whatever until you spill your PIN code because in this case, you don't even need to have your credit card on you.
It is always interesting to read through the most recent attacks.
https://github.com/jlopp/physical-bitcoin-attacks

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