Bitcoin on the rise

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mouseyo22
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Re: Bitcoin on the rise

Post by mouseyo22 »

The Monetary Fed doesn't have to do anything other than stop printing money. The Crypto bubble has a lot of things going against it already:
1) Its volatility. Though about 70% people claim they are buy-and-hold investors, there will be massive sell-offs whenever there are news of gov crackdowns, institutional buyers dumping the coins, etc...it doesn't take much for people to get spooked.
2) Its usage of leverage/margin trading. How much leverage is in the Crypto space? Nobody knows really, since it is different in each exchange. This one has a positive feedback loop with 1) as it increases volatility then volatility attracts swingers who are thrilled to jump between highs-and-lows.
3) Tether crisis which is gaining public focus.
4) China with worse crackdowns coming.
5) People need electricity to trade Bitcoin. If there's a power outage and people cannot access the network, there will be flash crashes.
6) Its scammers, MLM, and financial gurus who attract FBI's attention.

white belt
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Re: Bitcoin on the rise

Post by white belt »

mouseyo22 wrote:
Tue Jun 29, 2021 10:43 am
The Monetary Fed doesn't have to do anything other than stop printing money.
You really think it’s that easy for the Fed to simply stop printing money? What percentage do you think the stock market would sell off in the event that the Fed put expires? How much of the US economy is driven by the wealth effect? What happens to all the pensions and retirees who have almost all their assets in the stock market?

I do largely agree your other points are valid. I think the biggest threat is governments targeting the on/off ramps to make trading crypto much harder. They don’t need to ban it outright to cause a lot of problems for crypto holders. The world is watching what China does, but it’s still early as they haven’t even outright banned crypto (really it’s a directive to banks and others that broadcasts the CCP’s views).

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mouseyo22
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Re: Bitcoin on the rise

Post by mouseyo22 »

@white belt: The Fed is expecting 2 interest rate hikes by the end of 2023. So yes, I think it will be easy and the Fed needs to look like it's doing something about inflation.
There are 3 bubbles feeding off each other in real estate, stock and crypto. While fear of deflation (as in the case of Japan) is holding the Fed back right now, it will need to burst the bubbles before they get too big. Maybe they are already too big? Fed has announced plan of reducing its purchase of mortgage-backed securities once it reaches 2% inflation. I cannot say which bubble will go first or they will all go at once but soon in 2022-2023.

white belt
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Re: Bitcoin on the rise

Post by white belt »

mouseyo22 wrote:
Tue Jun 29, 2021 10:43 am
The Monetary Fed doesn't have to do anything other than stop printing money. The Crypto bubble has a lot of things going against it already:
1) Its volatility. Though about 70% people claim they are buy-and-hold investors, there will be massive sell-offs whenever there are news of gov crackdowns, institutional buyers dumping the coins, etc...it doesn't take much for people to get spooked.
2) Its usage of leverage/margin trading. How much leverage is in the Crypto space? Nobody knows really, since it is different in each exchange. This one has a positive feedback loop with 1) as it increases volatility then volatility attracts swingers who are thrilled to jump between highs-and-lows.
3) Tether crisis which is gaining public focus.
4) China with worse crackdowns coming.
5) People need electricity to trade Bitcoin. If there's a power outage and people cannot access the network, there will be flash crashes.
6) Its scammers, MLM, and financial gurus who attract FBI's attention.
1. There is high volatility because there are virtually no market controls. There is no central bank backstopping the market like there is in the equity and credit markets.

5. What asset class does not require electricity to transact in this day and age? Paper cash and gold/silver coins are the only two I can think of and both are quite rare. Most people I know pay for everything with their credit card or their phone, both of which require electricity and internet connectivity.

mouseyo22 wrote:
Tue Jun 29, 2021 2:28 pm
@white belt: The Fed is expecting 2 interest rate hikes by the end of 2023. So yes, I think it will be easy and the Fed needs to look like it's doing something about inflation.
There are 3 bubbles feeding off each other in real estate, stock and crypto. While fear of deflation (as in the case of Japan) is holding the Fed back right now, it will need to burst the bubbles before they get too big. Maybe they are already too big? Fed has announced plan of reducing its purchase of mortgage-backed securities once it reaches 2% inflation. I cannot say which bubble will go first or they will all go at once but soon in 2022-2023.
Right. The Fed says a lot of things. People have been saying the stock bubble is too big and should be burst for 5+ years and yet still the Fed has not been able to raise rates (they've tried to taper and backed off after the market wobbles). The US is at all time high corporate debt, government debt, and personal debt so raising interest rates will cause the whole house of cards to tumble down.

Then there is the political question. Jay Powell is no Paul Volcker and I can guarantee any political party in power is not willing to be blamed for causing a recession when the Fed raises rates because that will mean almost certain loss in the presidential and congressional elections.

If you believe the BTC as digital gold argument then you could say it is a hedge against fiat currency debasement. If you don't think fiat currency debasement will continue through QE then it doesn't make sense to own BTC. I don't know the future, so I have a small allocation in my portfolio as a hedge in case the money printing continues.

Here's a mainstream article about this topic: https://www.barrons.com/articles/what-i ... 1622063791

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Jean
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Re: Bitcoin on the rise

Post by Jean »

It looks more like the USD Bubble bursting than a Bubble in everything else.

white belt
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Re: Bitcoin on the rise

Post by white belt »

Jean wrote:
Thu Jul 01, 2021 10:56 am
It looks more like the USD Bubble bursting than a Bubble in everything else.
Perhaps. The thing is the USD is still in better position than pretty much any other currency in the world, so there aren’t a lot of good alternatives. The central banks of the developed world have been operating in almost lockstep in their money printing.

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giskard
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Re: Bitcoin on the rise

Post by giskard »

white belt wrote:
Thu Jul 01, 2021 3:15 pm
Perhaps. The thing is the USD is still in better position than pretty much any other currency in the world, so there aren’t a lot of good alternatives. The central banks of the developed world have been operating in almost lockstep in their money printing.
There is no alternative (TINA) is not a position of strength, it's a position of weakness and means there will not be a smooth transition to something else, just a lot of fracturing as the USD system continues to lose legitimacy and stability.

The increasing amount of capricious sanctions the USD system imposes to lock participants out, the interest rate manipulation, the debasement to fund populist programs, the corruption (obvious Cantillon effects & bailouts to the politically powerful) - all of this is visible for everyone to see but people have to keep using USD grudgingly so they slowly hedge their bets into multiple other ecosystems.

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mouseyo22
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Re: Bitcoin on the rise

Post by mouseyo22 »

@white belt: I do not think Crypto's volatility is a bug. If the field is not speculative, it would not trade as high as it is now. Yeah everything uses electricity but the value of a dollar won't move as fast as Bitcoin. If you have a password problem with your bank or cannot access money for a week, you can afford to wait it out. With Bitcoin, you cannot as one day it trades for $40k and the next for $35k. Then it can just go down indefinitely while you twiddle your thumbs.
As for the U.S bubble, the consequence of people believe it will explode soon and throwing their $$$$ into Crypto/housing/stock would be 1) inflating these three bubbles and 2) expose more people to be risky with their investments in the bubbles b/c they see huge price gains 2) remove excess dollars out of circulation which if these bubbles burst, will erase the excess dollars Fed had printed.
I guess the counter-argument would be Crypto won't burst. It will outlast the dollar, gain widespread acceptance everywhere because people have had enough. Except no business in its right mind would accept Bitcoin as the sole payment for goods or borrows it to finance operations. No investor in their right mind would invest in such business either since a solvent business one day turns insolvent next day.

MegaRigger
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Re: Bitcoin on the rise

Post by MegaRigger »

The tether problem is a double one:

1. It pretends not to be a fractional reserve bank but behaves exactly like one and is not regulated like one. They are not backed by usd, but only by usd-like paper.
2. $USDT is possibly used for market manipulation. Binance (and the likes) receive millions of usdt and give debt paper in return. This usdt is used to buy btc. If prices crash and people want to cash out usdt for real usd, there is an obvious problem. This creates a huge incentive for binance to borrow more usdt to keep markets afloat.

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Seppia
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Re: Bitcoin on the rise

Post by Seppia »

Tether Executives Said to Face Criminal Probe Into Bank Fraud

https://www.bloomberg.com/news/articles ... bank-fraud

Plus, see the recent wipeout in Chinese shitcos + the fact that Tether continues to avoid confirming/denying if their commercial paper is from said shitcos.

Things could get really interesting

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Mister Imperceptible
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Re: Bitcoin on the rise

Post by Mister Imperceptible »

Seppia wrote:
Mon Jul 26, 2021 4:08 pm
Chinese shitcos + the fact that Tether continues to avoid confirming/denying if their commercial paper is from said shitcos.
https://mobile.twitter.com/TheLastBearS ... 5557110785

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Seppia
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Re: Bitcoin on the rise

Post by Seppia »

Yes very interesting thread, I follow @Bitfinex’ed Who I think retweeted it a while ago.
Tangent: Twitter is the only social media that I would say can have a net positive effect on my life (which is why it’s the only one I have an account on*).
The amount of great info one can find by accurately selecting a few follows is incredible.
It’s my 2021 version of an RSS feed

*well, plus LinkedIn.

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Ego
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Re: Bitcoin on the rise

Post by Ego »

China's shutdown of bitcoin mining coincided with the Taishan nuclear situation. Coincidence? Today they announced they would be shutting down one reactor due to cracked fuel rods.

https://www.rfi.fr/en/science-and-techn ... ivity-leak

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giskard
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Re: Bitcoin on the rise

Post by giskard »

This is getting so interesting. Still not convinced tether blowing up will be anything worse than China FUD, legislation FUD, etc. but it would be really fascinating to see how China handles a debt market implosion. A lot of macro thinkers are talking about how they expect China to devalue their currency soon to get out of this kind of a situation.

Seems like we are building up to something... what will it be? BTW I'm working in crypto now doing some DeFi stuff. I can tell you I see most actively avoiding tether and doing everything in USDC / DAI, literally any other stable coin. Look at Polygon's main DEXs. Tether is not the largest stablecoin on any of them by a long shot. Tether has become a pariah, the damage will be limited imo.

WFJ
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Re: Bitcoin on the rise

Post by WFJ »

Is this a crypto or a penny stock from the 2000 tech bubble? (use max chart)?
https://seekingalpha.com/symbol/SCON

Crypto is a speculative asset, with a few whales and mostly small holders. It is like a theater with thousands of people inside, where a few have preferred seating near exists when the movie ends. When the movie credits start rolling, most whales and only a few small holders will be able to get out.

My humble prediction is the end will occur when rent moratorium, student loan moratorium and direct payments to individuals ends, not before. I think the rent moratorium has ended in many states, student loans payments are set to start in 2022 and there hasn't been a direct payment for non-working individuals in a few months (there are exceptions to all of the above and why the bottom won't drop out but will be a slow and lumpy draining of the pool).

In my younger days, I traded several penny stocks and cryptos are basically digital penny stocks. I only remember one former penny stock, SCON chart above, I traded 20+ years ago that is trading at $2 today that had a split adjusted high of $45,000,000 in 2000. Most of these penny stocks ripped from Y2K liquidity and most crypto ripped due to the above mentioned moratoriums and direct payments.

Crypto evangelist remind me of Jim Cramer and Henry Blodgett in 2000. One can just replace speculative tech companies with speculative crypto assets today (notice he doesn't recommend AMZN, AAPL, MSFT which were all trading then).
https://en.wikipedia.org/wiki/Jim_Cramer

Performance of Cramer's investments
As manager of his hedge fund, Cramer claimed to have realized a "rate of return of 24% after all fees for 15 years" until he retired from the hedge fund in 2001. He self-reported a 36% return in 2000, at the peak of the dot-com bubble.[39] However, this performance has not been independently verified.

In January 2000, close to the peak of the dot-com bubble, Cramer recommended investing in technology stocks and suggested a repeat of the stock performance of 1999.[40]

In February 2000, the year in which Cramer claimed to have produced a 36% return, Cramer claimed that there were only 10 stocks he wanted to own and he was buying them every day. These stocks were 724 Solutions, Ariba, Digital Island, Exodus Communications, InfoSpace, Inktomi, Mercury Interactive, Sonera, VeriSign, and Veritas Software.

white belt
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Re: Bitcoin on the rise

Post by white belt »

@WFJ

I think your comparison of crypto to penny stocks during the tech bubble is germane. I also like how that chart shows the insane returns that were possible in the tech bubble if you knew how to time things right and exit parabolic moves near the top before a crash (just like we see with various cryptos).

Jim Bianco was on Macrovoices last week and made a similar point that blockchain technology will absolutely be a gamechanger (just like the internet was), however you don't know if the popular coins today are going to be like the Pets.com of that era. Google has clearly been a winner when it comes to the internet trend and leveraging the new technology, however it didn't go public until 4 years after the tech bubble burst.

Edit: One counter-argument to this perspective is the exponential age hypothesis that is proposed by Raul Pal and others, which seems to argue that early adoption matters more due to compounding network effects.

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Ego
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Re: Bitcoin on the rise

Post by Ego »

This got buried beneath the news that regulators are racing to create rules for stablecoins....
Twitter built one product that anyone in the world can use called… Twitter. Using Twitter, I can tweet at someone in Central America, that person in Central America can tweet at someone in Europe, that person in Europe can tweet at someone in Africa, so on and so forth. Anyone in the world can tweet at anyone in the world. Anyone in the world can receive tweets from anyone in the world. Communication between users on Twitter is instant, free, and borderless...

.....Now, extrapolate this idea to any internet company; Facebook, TikTok, Google, etc., and you realize the open standard of communication that is so important in connecting us all doesn’t have a financial counterpart to close the loop.

That is, until Bitcoin and the Lightning Network. With Bitcoin and the Lightning Network, the world now has its first open, global, singular monetary protocol for everyone on the planet. A natively digital bearer instrument in bitcoin, and an open monetary network in Lightning, together achieve instant, free, global cash finality anywhere in the world. The communication protocol for the world now has a monetary network that achieves the same properties. What the internet did for communication, Bitcoin and the Lightning Network is doing for money.

Now, what if an internet company took their existing global communications network and made it interoperable with the world’s global monetary network? What if an existing online network that spanned the globe integrated a monetary network that was inclusive to everyone? What if allowing people to settle value with each other was as easy as sending tweets to each other? What would that look like?
Twitter just integrated the Strike API. That means it is now possible to send a bitcoin remittance from anywhere to anywhere within Twitter using the Lightning network. For free. Big deal.

https://twitter.com/jackmallers/status/ ... 0628177933

WFJ
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Re: Bitcoin on the rise

Post by WFJ »

white belt wrote:
Tue Sep 21, 2021 4:31 pm
@WFJ

I think your comparison of crypto to penny stocks during the tech bubble is germane. I also like how that chart shows the insane returns that were possible in the tech bubble if you knew how to time things right and exit parabolic moves near the top before a crash (just like we see with various cryptos).

Jim Bianco was on Macrovoices last week and made a similar point that blockchain technology will absolutely be a gamechanger (just like the internet was), however you don't know if the popular coins today are going to be like the Pets.com of that era. Google has clearly been a winner when it comes to the internet trend and leveraging the new technology, however it didn't go public until 4 years after the tech bubble burst.

Edit: One counter-argument to this perspective is the exponential age hypothesis that is proposed by Raul Pal and others, which seems to argue that early adoption matters more due to compounding network effects.
What is the longest running "network effect" profit producing company?

When was the last time anyone rode on a Wright Brothers airplane? Of course this was only the invention of flight, a computer program solving basic math problems is far more complex than achieving human flight. How much does it cost NASA to bring a lb to space vs (insert more advanced technology)? Is Bitcoin the first invention to reward early adopters and never become obsolete? Will Bitcoin be the first network effect profit center to last forever or will it be replaced by a better/faster/more efficient network? The only way Bitcoin holds any value is if all answers to above questions is yes. Otherwise it will be as valuable as the WB 747, AOL, Netscape, Friendster, Napster networks (the list is long).

10 years on, what is the "killer app" of blockchain? At first, it was championed as an efficient and cheaper payment system compared to the banking system (still not true). Then crypto was championed as a "store of value". The latest is that is will somehow usher in "world peace". It is still more costly and risky to move any amount of money using crypto than any US based financial institution. Store of value, when a government can make any transaction illegal in a second, this is the opposite of a store of value outside of government control and have no idea how paying Bitcoin to people to Tweet will usher in world peace.

WFJ
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Re: Bitcoin on the rise

Post by WFJ »

Can a HODLer please explain how it is a great that El Salvador adopted Bitcoin as a currency (the evangelists that buy ad time on the financial networks were nauseating during this period) and also great that China appears to slowly be banning all Crypto activity (mining/transactions/hashing)?

This is equivalent to an index investor proclaiming "It's great that S&P 500 companies earnings are trending to 20% above estimates, now is a good time to buy the index". And then next month proclaiming "It's great that S&P 500 earnings are trending 20% below estimates, now is a good time to buy the index".

If actually using crypto is positive for crypto, the China ban is a death sentence. If crypto use/adoption has no impact on the price, then it's a Ponzi scheme, totally dependent on new buyers funding existing HOLDers an nothing to do with adoption or use.

I only know one HODLer who has been burned by several Ponzi/get rich schemes his entire long life (not just 20-somethings in this asset). When I compared crypto to all the other times he's been scammed, it didn't go well.

white belt
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Re: Bitcoin on the rise

Post by white belt »

WFJ wrote:
Fri Sep 24, 2021 1:32 pm
10 years on, what is the "killer app" of blockchain? At first, it was championed as an efficient and cheaper payment system compared to the banking system (still not true). Then crypto was championed as a "store of value". The latest is that is will somehow usher in "world peace". It is still more costly and risky to move any amount of money using crypto than any US based financial institution. Store of value, when a government can make any transaction illegal in a second, this is the opposite of a store of value outside of government control and have no idea how paying Bitcoin to people to Tweet will usher in world peace.
I think we are in agreement in regards to the skepticism about the longevity of "network effect" companies. BTC and ETH don't have a monopoly on blockchain technology. I think the network effect argument holds a bit more water when we are talking about something like ETH which can serve as the backbone for various smart contracts, but even so at the moment ETH is probably too slow to effectively accomplish that at scale. Like any other field, something comes along with faster/better technology and outcompetes the legacy players. The difference so far is that the decentralized nature of crypto makes it more difficult to take monopolistic/anti-competitive actions like Microsoft, Facebook, Amazon et al have done to maintain market dominance against faster/better competitors.

Erik Townsend has made the argument that we will see the FAANG giants rolling out their own digital currencies which is likely to bring the regulation of crypto in the US to the forefront. Facebook already tried to do this with Libra, but was shutdown right away. Facebook has nearly 3 billion active monthly users, so leveraging their network effects for a digital currency might be a legitimate threat to the hegemony of central banks. Amazon has similar gamechanging power with AWS combined with their logistics networks. Maybe the "crypto network effects" investment play is just the tried and true FAANG stocks?

You are correct that it is more risky to move money using crypto than US based financial institutions. The biggest users of crypto are not in the US, but are the unbanked in the developing world:
The world’s top 10 crypto countries, according to the Statista data, are:

Nigeria: 32%
Vietnam: 21%
Philippines: 20%
Turkey: 16%
Peru: 16%
Switzerland: 11%
India: 9%
China: 7%
U.S.: 6%
Germany: 5%
Japan: 4%
Source: https://www.yahoo.com/now/countries-usi ... nPhX7ZkFcb

In other words, it seems like crypto is mostly used as a speculative asset in developed nations with robust banking systems, while it is actually used as a medium of exchange in developing nations that lack stable financial systems. Therefore, I believe crypto will continue to take off in the developing world and in situations where populations are otherwise unbanked. I've heard speculation that China's crackdown on crypto, along with ongoing fintech "reforms", is in response to the threat that digital currencies pose to the CCP's control of the financial system. I suspect it's also paving the way for their own CBDC rollout in the near future.

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