Bitcoin

winkyincanada posted:
Kevin Richardson posted:
winkyincanada posted:

Where then, does the money come from?

I sell something at a price that is good for me to a person that wants what I have at a price that is good for them. No different than any other asset. Only time will show which side made the bad trade. Many people are happy to sell after a week with a 50% profit. The buyer might hold it for a year and make 10,000%.

The difference is that these "assets" have no value. Value is not being created, just transferred. Value is of course also being destroyed by the mining process, so someone has to pay for that, too.

So BTC no different than USD?

Some people get paid in crypto so there is some value entering the market. 

winkyincanada posted:
Kevin Richardson posted:
winkyincanada posted:
Kevin Richardson posted:
Frank Yang posted:

Today is my wife's birthday and GBTC has treated me well, I bought loads of it @ $9.60 on Feb 5th and now it is $19.99 at the close today, a jump of more than 100 % in less than 2 weeks.

My friend is range trading GBTC and has been very happy. (He actually sold at $20.20!) Personally GBTC is too risky for me since it trades at a huge premium over NAV. That premium can dissipate much faster than BTC can crash.

Anyhoo... Congratulations!

NAV? There is no underlying NAV for these things.

GBTC is an ETF that holds BTC. It currently trades at a 70% premium above the value of BTC/share. I think 1 GBTC = .001 BTC and was trading at 20.20 when BTC was around 12,000. So the NAV was only $12.

What is happening there is that what appears to be an arbitrage opportunity may, in fact, be unrealisable at an appropriate level of risk due to frictional costs and counter-party risk in the period between deal and settlement. If it is a genuine arbitrage opportunity, the market should quickly correct the pricing. If the market is inefficient, and you're sharp, yes you can can profit. But I'll reiterate that trading is a less-than-zero-sum game and any profit is, and must be, someone else's loss. This is particularly true in crypto, where the things being traded have zero fundamental value, so market-making and the correct pricing of capital is not a relevant, nor useful outcome.

I think GBTC is a close ended fund. Not a typical ETF where you can create or destroy shares on demand.

Kevin Richardson posted:

So BTC no different than USD?

Some people get paid in crypto so there is some value entering the market. 

I don't invest in USD either. Each has a an agreed price that makes it useful as a means of transaction. USD is far, far more useful for now. The "durability" of that price might also differ (it is absolutely terrible for crypto), but I don't hold significant quantities of either, so I don't really care. What's your point?

As for people being paid in crypto, I don't really see how that changes much. But if my employer wanted to pay me in crypto, I'd insist they carried all the CAD:BTC rate risk. I'd want my salary designated in CAD and the equivalent BTC calculated and transferred instantaneously on payday. I'd then sell the BTC immediately.

Simon, you are 'partially' right in the world of cryto. I think there are 4 main factors (I could be wrong in this market):

1) Momentum vs volativity
2) Good news vs. bad news
3) This in turn leads to un-critical analysis, un-informed intuitive reasoning, herd's mindset of the small sardines
4) Big whales' (intraday) trading strategies

I was tracking GBTC traded on the NYSE Global OTC exchange, and my simulation model suggested a worst-case scenario of a downside of approx. 10-15 %. Today it went down at ~5 %.

winkyincanada posted:
Kevin Richardson posted:

So BTC no different than USD?

Some people get paid in crypto so there is some value entering the market. 

I don't invest in USD either. Each has a an agreed price that makes it useful as a means of transaction. USD is far, far more useful for now. The "durability" of that price might also differ (it is absolutely terrible for crypto), but I don't hold significant quantities of either, so I don't really care. What's your point?

As for people being paid in crypto, I don't really see how that changes much. But if my employer wanted to pay me in crypto, I'd insist they carried all the CAD:BTC rate risk. I'd want my salary designated in CAD and the equivalent BTC calculated and transferred instantaneously on payday. I'd then sell the BTC immediately.

If you own real estate then you are investing in local fiat. 

It looks like much of the hype and euphoria of late last year has slowly ebbed away and a degree of relative normality is returning to the Crypto world. I suspect many of those who jumped on board to get rich quick have now jumped off disillusioned and we are back to where we were 12 months ago in terms of adoption. Perhaps it demonstrates how hype, euphoria and greed are bad things.. as they allow people to be so easily taken advantage of.

Simon-in-Suffolk posted:

It looks like much of the hype and euphoria of late last year has slowly ebbed away and a degree of relative normality is returning to the Crypto world. I suspect many of those who jumped on board to get rich quick have now jumped off disillusioned and we are back to where we were 12 months ago in terms of adoption. Perhaps it demonstrates how hype, euphoria and greed are bad things.. as they allow people to be so easily taken advantage of.

Bad for the sardines, but it proves that bitcoin is resilient, a real mc coy,  not tulip as some people claim.

Simon-in-Suffolk posted:

It looks like much of the hype and euphoria of late last year has slowly ebbed away and a degree of relative normality is returning to the Crypto world. I suspect many of those who jumped on board to get rich quick have now jumped off disillusioned and we are back to where we were 12 months ago in terms of adoption. Perhaps it demonstrates how hype, euphoria and greed are bad things.. as they allow people to be so easily taken advantage of.

Crypto is a longterm bet. We may have a longterm bear market but it will comeback someday. BTC is still around $7,000 USD and that is pretty amazing considering it was $1,000 in 2017.

"Unlike past peaks in Bitcoin prices, the survey evidence, based on our modeling, suggests that the speculative bubble in crypto currencies may have passed its peak," the bank said as part of its annual Equity Gilt report this week.

Barclays Research's prediction:

The prediction comes as part of a larger comparison between the cryptocurrency craze of the past year and epidemiological models.

The team of analysts, led by Joseph Abate, says there's a striking similarity between bitcoin's rise in popularity and the spread of viruses like influenza.

"Applying this model to speculative behaviour in crypto currencies, it suggests that once a large enough share of the population susceptible to speculation becomes aware of and holders of crypto currencies, upward pressure on prices stalls," the team writes. "To the extent that holders' attraction to Bitcoin was speculative — as our empirical analysis of historical prices suggests — those holders then become sellers, initiating an accelerating downward spiral."

Bitcoin in GBP had its largest sustained rise over the last 24 hours  since early February...(around 12%)  in fact there were large rises across the crypto board many a lot higher... , Ethereum is up around 20% over the last week,  I wonder what’s up... a lot of money has started to come in again... perhaps the cycle is starting to repeat again... like it always has done..

Simon-in-Suffolk posted:

Bitcoin in GBP had its largest sustained rise over the last 24 hours  since early February...(around 12%)  in fact there were large rises across the crypto board many a lot higher... , Ethereum is up around 20% over the last week,  I wonder what’s up... a lot of money has started to come in again... perhaps the cycle is starting to repeat again... like it always has done..

There is no money "in" the market. The people who sold the bitcoins in the transactions have it.

Frank Yang posted:

Hot news - Goldman Sachs to Open a Bitcoin Trading Operation.

Actually, it is not really hot news as it has been a common knowledge for more than a year.

A friend of mine interviewed for a position with the BTC team. I'm not convinced GS is super serious about crypto.

Charlie Munger had more colourful words than Buffet on the topic:

“I like cryptocurrencies a lot less than you do,” replied Munger, 94. “To me, it’s just dementia. It’s like somebody else is trading turds and you decide you can’t be left out.”

Yes. Here are more Mungerism:

 

  • "I do not think you can trust bankers to control themselves. They are like heroin addicts."
     
  • "I'd rather throw a viper down my shirt front than hire a compensation consultant."
     
  • [In reference to how the Internet and technology offer both benefits and risks] "When you mix raisins and turds, you've still got turds."
     
  • "If mutual fund directors are independent, then I'm the lead character in the Bolshoi Ballet."
     
  • "What's the best way to get a good spouse? The best single way is to deserve a good spouse because a good spouse is by definition not nuts."
  • “I think that, every time you saw the word EBITDA [earnings], you should substitute the word “bullshit” earnings.”

 

When the big institutions start putting their money in (and they are preparing to do that)  then things will get interesting. Question is, which tokens will be the winners?

Wish I could come up with a good way to invest in blockchain outside of the nuisance that are the crypto exchanges.

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