In order for the dollar to maintain its pole position, China could force Trump and the Fed into difficult decisions about the future of the Hardwood Floor Refinishing Marietta financial system.
My big question about BTC is what happens to it when they turn off the internet? Serious question, since yes you can and it has been turned off both on purpose and by accident (both nefarious and arbitrary)…
Also, I am pretty sure ( correct me please) the fossil fuels required to just keep the ledger “running” will ultimately prove that “holding/mining?” bitcoin will cost you more and more energy (=$money) and that is both an economic and ecological tax. I know there are solid state (physical) crypto wallets, but can they transfer value between parties without the mothership?
3rd and final serious question, I heard crypto uses “distributed” in the sense that “many” different proxies have to validate a transaction (I don’t think I articulated that well buy you may get my drift), what if an overwhelming number of nodes “voted” (like 1 billion nodes in China vs say 10 million nodes somewhere else), could the system then be “hacked/compromised” i.e. there could still be a physical/digital quorum/monopoly and if so, the altruistic side of crypto might be a bit overhyped?? Again- ASKING the question, I don’t know the answer…anyone with true expertise please enlighten me! Thanks in advance…
I think these concerns make me think buring a few silver or gold coins may be far less complicated, and has worked for my ancestors for thousands of years, so I am not so sure this 21st century stuff is fully baked in historical terms. But then again, I still like tulips… you can eat them if all else fails:-) gold and bitcoin, not so much… Cheers.
“Editorial decisions” - do come on, Mast. PP would not influence what Dave has to say. If he had decided to write about BTC for half of his YIR, that would have been fine.
The reason why BTC doesn’t have prominence at PP or in the YIR is that it’s still pure speculation. Just look at the price action today - a 25% drop within hours - that’s penny stock action.
Most people here (99%) want to INVEST money, not SPECULATE. BTC might be a long-term investment worth while, but most people can’t stomach these huge swings in the short-run, and therefore, don’t consider BTC an alternative asset to be considered.
ETH = OUCH!
Hope no one here got in late when FOMO was mounting and running high.
Little hint. When the upslope on a 1 yr. chart on an asset passes 45 deg., start getting your exit strategy in place. When the upslope hits 60 deg., it’s usually time to cash in your chips, at least in the short term. The reversion-to-mean mallet is about to give you a pounding.
That being said. I wouldn’t be surprised to see both bounce back in fairly short order. For the early adopters, it’s not a problem to hold on. For the late adopters though, they just got scalped.
That’s why dollar-cost averaging is IMO a good strategy for BTC accumulation.
I have been buying a little for a couple of months, every month on the 15th or 16th, regardless of price, and always the same amount. I don’t want to be swayed by the price swings. There is almost no way to “time it”, getting in at a low.
BTC could be $45,000 in two weeks, or $15,000, who knows. It’s not fundamentals. It’s all speculative buying, with the marginal buyers swinging it big.
…by Bitcoin except day traders and their close cousins. Investors are fine, even if they bought right at the top.
This kind of consolidation on the bull run is typical of BTC at this stage in the post-halving cycle. In fact, this cycle the retracements have been smaller, percent-wise, than in the last 2 cycles. For instance, the left-hand chart that compares 2017’s bull run with this year’s to date.
What we see are weak hands selling off to strong hands. That clears the upside for more dramatic gains.
There’s still a lot of run to go before we hit the cycle top. That will come late summer (August) to early fall (September). Meanwhile, the right-hand graph shows the latest update by Plan B from yesterday tracking this cycle compared to the last two. Notice it’s running right up the middle. Also take note of the dollar scale indicating where this run is going.
In an uncharacteristically well timed purchase (for me), I was able to buy in to Grayscale BTC Trust (GBTC) this morning when BTC was hitting a low point of $31,000 (down ~25% from the peak of $41,000) and the premium-to-NAV on GBTC had retreated significantly, for a very good purchase.
I have no crystal ball, but I’m in for the long term with about 7% of my retirement savings account.
I am betting on the long-term global utility of BTC.
OMG. This means I’m a HODLer.
Obviously, I don’t know with certainty that this is right, but it is where I have placed my bet.
BTC is a ponzi scheme, by definition, no different than tulip bulbs. There is no underlying asset which has any inherent value other than the belief that people in the future will continue to desire it, and that more people will jump into it to flee failing “real” money. The fact that it has to be “mined” with CPU power doesn’t give it any inherent value, it just limits how much is available.
Money is defined as what is accepted by, or forced on, the masses as a means of transaction, and some would say, savings as well although with high inflation the savings component lessens. Will BTC ever be allowed to be the primary means of transaction in day to day activities? Not a chance.
Will BTC continue to function as a “money of the free”, living on in the background as the government institutes forced digital currencies of their own? LOL good luck with that. The new digital currency will include full tracking of every transaction so if you want to cash in your BTC to buy something real like a house, it probably won’t be allowed.
The thing about the BTC proponents that concerns me is that they have so much confidence in what’s going to happen in the future and that they have thought of everything and BTC WILL SURVIVE!!! How do they know that?
Having said all that, I’m not all anti-BTC and pro-gold. I think BTC has been a fantastic opportunity for short term gains simply because it is a ponzi scheme outside the control of the monetary authorities to clamp down on. But it won’t take much for that to change. It’s too bad I missed out on its rise. It might still go to $400 k, or drop back to $10k, who knows.
One could argue that gold is also a ponzi scheme because it has little real world value beyond people holding it with the idea that future people will also value it. Yes, that’s true. However, it’s been that way for 5000 years and gold that’s stored outside the system will still be there no matter what catastrophies happen around it, short of a nuclear war, and it will come back in the future to provide an alternative means of wealth storage. But I’m not deluding myself that gold is the answer. Both BTC and gold have advantages and disadvantages and if I were to bet which one will still be around in 20 years… we all know which one that will be.
Oh, Hi SP, we posted at the same time… I think diversifying into BTC is a good idea. That’s been my undoing the last decade, is not diversifying enough.
@Mark_BC, now you’re just being silly. By definition BTC is certainly not a Ponzi scheme. You might want to look up the definition.
Confidence in BTC’s path forward comes from several directions. Most importantly, it is adhering beautifully to the Stock-to-Flow model developed by PlanB. I’ll attach it, but you’d learn more by accessing his Twitter thread (@100TrillionUSD) and doing some reading. Similarly, you could learn a lot by reading Willy Woo’s Twitter thread (@woonomic), which focuses on analysis of onchain data, and by accessing institutional investment strategist Lyn Alden’s 2 excellent newsletters addressing her turn from neutral to bullish on BTC (lynalden.com). Confidence also comes from having been in the space long enough to have gone through this cycle a couple times. This one is not only evolving just as past cycles have , it is not demonstrating as much volatility. As expected. My appended charts in comment #25 show both points.
Study this PlanB chart (dated Jan 7). The more you look at it and grasp what it’s telling you, the clearer you’ll become about what’s unfolding before our eyes. You’ll begin to understand the point I keep trying to make to traditional stock traders: BTC does not operate by the same rules; they’re analogous, but different. Twin factors are involved with BTC that are not present in the traditional stock market: the highly predictable, regularized issuance of new BTC toward its hard cap of 21 million; and the clockwork of its halving cycle, which has the effect of both inspiring and regulating human greed and disappointment into a repetitive cycle. (It borders on Pavolivan!) It’s game theory in action, producing technicals unlike what’s possible on NASDAQ or NYSE.
As for fundamentals, the issue has to do with Bitcoin’s value proposition. It was created with the intention of providing a distributed, non-centralized free market money to supplant fiat currencies. The lack of payment rails invited the alt-coin universe, and the various moderations of the initial proposition. Most recently, the pop narrative, including among many BTC bulls as been that it’s more a Store of Value than a Means of Payment. However, its original purpose statement has never been lost by the deep core, and it’s returning as technological innovation catches up with Satoshi’s vision. If you take the time to watch this interview, you will see that this month Bitcoin as a better payment rail is starting to roll out. Pay particular attention to how it will replace some major name payment rails, free of charge to users, and help bank the unbanked across the globe.
It will take an hour of your time. There’s a lot of fundamental understanding of BTC packed into that hour. What’s happening is the future, if the free market embraces it, which it will because of its utility.
Jack Mallers interview: https://www.youtube.com/watch?v=7rExf6EKHW4
@Mark_BC,
Why, lookee here. Lyn Alden has just posted an article entitled, appropriately, “Why Bitcoin is not a Ponzi Scheme.” It begins with a proper definition, and then addresses it point by point.
Worth a read for anyone wondering.
https://www.swanbitcoin.com/why-bitcoin-is-not-a-ponzi-scheme-point-by-point/
Good move Sand Puppy.Way to buy the dips. The miners took a lot of profit, and the dollar rallied. I don’t think the dollar rally will last very long with about $7 trillion on the way.
Time preference is a key to investing in Crypto. If you are a day trader you have an extremely short time preference. If you are a HODLER your time preference is on the opposite end of the spectrum.
If one looks at the daily swings one might become concerned with the volatility especially if one has a short time preference. I played golf with a guy I had never met before, last week. We got to talking about crypto. he said He wished he had gotten into it. I of course said “It is not too late” and gave him some info and links to do some research.
At the time it was $32k. It went up to $42 k in a week. It hit $31k today. Was he kicking himself and then thanking god for both swings.
I have said many times here the smartest thing to do is HODL. In any 4 year period you would be in the black. Since the beginning BTC has reached higher highs and higher lows.
Time preference plays a large role in fiat currency, though most don’t pay too much attention to it. Because you are actually losing money by holding it, savings accts are pretty stupid. Thus fiat is not sound money (news flash) BTC encourages savings thus it is one reason it is sound money.
BTW I stand by my prediction of $100k BTC and $2.5k ETH by the end of the year.
The generation divide is quite clear. Millennials have a long time preference so they “stack Satoshis” Boomers have a very short time preference so volatility scares the shit out of them and they come up with all kinds of nonsense to put BTC down.
This is why I recommended against Scaramucci’s SkyBridge Capital for buying into BTC … a 7.5% loss in 2020, a year where you had to work to lose money … plus, he has the gall to reframe it as a bounce back since the fund was down 24% in March. He’s been hanging around the Washington crowd for too long.
Would you buy a used car from this man?
His company uses a global network to convert local currency to BTC, send it anywhere in the world, then convert back to the local currency. (I understand that part of the network, Lightning, is proprietary, though the global BTC network is open and non proprietary.)
This is a (near) zero cost, near instantaneous method of money transfer. This technology is disruptive to existing networks (paypal, visa, ACH, SWIFT, etc.)
Pretty impressive disruption.
Here’s a question that has been bugging me for a while.
If all you crypto enthusiasts out there (and I’m theoretically one, since I’ve done probably more work than any of you in the crypto space - written code to mine actual coins - please raise your hand if you’ve ever mined a coin yourself) could answer me this one question, I’d be really appreciative:
1) Why do the same people that give us no treatments for a pandemic, allow us to have crypto - a money system that goes entirely around their primary axis of control? (i.e. banking, and the monetary system) 2) And how long do you think they will keep allowing this escape hatch to exist?Oops. Two questions. Since I have a pretty big stake in this space already, I'd love for the answer to be 1) because they love freedom, and 2) forever, but I'm concerned these aren't the actual answers.
My answers (and I have absolutely no experience with anything crypto except seeing bitcoin at like $.15 after the mtgox hack and deciding not to bother with it)…
- Incompetence is one easy answer. It seems impossible but look at the vaccine rollout which is so important to them: There are officials who have announced that any nurses or doctors who want to come out of retirement to help distribute the vaccine must first have diversity training. Is it possible that government is braindead as a rule?
- b… If I was a BIS or FED intellectual thinking about the future of money, I might fancy a fully digital currency that stores a record of every transaction for all time in a system distributed widely enough to withstand an event that ends life for 90% of the planet.
But how do you know when the system you’ve designed is robust enough to serve as money? You can’t put it out there like an IOT device and deal with raging security holes as you go.
So you put out an alpha version of the code under a mysterious pseudonym. Run the price up a bit and get every crazy genius on the planet to examine it, improve it, hack it etc for free. Watch all the major branches and subbranches for a while.
Then if you see a version that looks robust, you take a fork of it, make it the new money and declare all others illegal. You get all the benefits with none of the risk or growing pains.
- I dont know but you might not have heard this interview:
https://hiddenforces.io/podcasts/rohan-grey-stable-act-cryptocurrency/
Rashida Tlaib of Michigan and congressmen Jesús García and Stephen Lynch of Illinois have put together a bill to regulate crypto. But from the interview it sounds like its only stable coins they are after. I found that fact to be really interesting.
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Dave
- every transaction that converts fiat to crypto or crypto to fiat that uses any financial institution influenced by the US (all US/European/Japanese banks and related firms and crypto exchanges for starters) must be reported to the Fed. This is shared with the IRS.
- every institution (on the planet) that exchanges fiat for crypto or crypto for fiat and does not report to the Federal Reserve will be declared a terrorist organization.
- every US citizen must report any gains or losses in crypto to the IRS every year. (there is or will be a line on the tax form for this).
- Any crypto “investor” who fails to report gains or losses and to pay tax on gains can expect a visit from a 5 member fully equipped SWAT team with guns pointed and ready to shoot any barking dog or gun owner, after breaking down the offender’s front door between the hours of 2 to 5 AM.
- The MSM will teach everyone that the federal reserve loves us and is protecting us from criminals such as drug dealers and rapists. Most everyone will believe this. Those who disagree will be deemed domestic terrorists.
I am interested to see what will happen in June after the paper gold exchange folks in London have to keep a minimum 85% asset to gold ratio. Do you think the gold price will change?
TPTB move slowly, but carry a big stick.
Up to this point crypto has only been an intrigue, but this latest leg up has seen it gain more widespread traction and there are increasing rumblings from financial authorities that it cannot be allowed to threaten their money monopoly. “We must do everything possible to make sure the currency monopoly remains in the hands of states.”
I think it is only a matter of time before they are made illegal.