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Bitcoin Low
Old 11-19-2018, 03:13 PM   #1
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Bitcoin Low

Who invests in bitcoin and associated spin offs? Apparently there are about 12 million users. As it hits a 15 month low, makes me wonder how markets are related.

I'd guess that most here on ER have a basic understanding, but I've never gotten too interested. Now I'm digging in a little bit here on Wikipedia.

https://www.wikiwand.com/en/Bitcoin

Would you expect that Bitcoin would generally follow the stock market? Do you think that professional investors deal in bitcoins, and if so, how much?... Or is this a kind of far out "toy" that people deal in as a hopeful experiment? A place to play with spare change?

Are there bitcoin futures?

If bitcoins in process can be related to dollars, how big is the bitcoin market?

Just wonderin'.
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Old 11-19-2018, 04:03 PM   #2
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I am a millennial, so Bitcoin kind of fits my generation for "investing." I was seriously considering getting into it early this year, but the crash slowed me down. Since I felt like I had more time to do some research, so I did. You know what I found? Nothing that was worth anything. Bitcoin/Cryptocurrency is a completely unregulated market. There aren't any kind of financial statements from any of these software companies, so you have no idea if they have a decent product or have a really good marketing team with zero product. You have no idea how fast they are burning through cash and can likely go bankrupt the next day.



I have come to the conclusion that cryptocurrency is no better than gambling. Because the "market" is completely unregulated, the big fish can pump and dump with impunity. I believe one is better off trading stocks or options over crypto.
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Old 11-19-2018, 04:39 PM   #3
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Bitcoins and other digital 'currencies' have no intrinsic value. They are useful if you want to avoid taxes, don't trust the government, want to make money gambling, etc. Bitcoin mining led to a great % of their increase in value, and in public awareness, but now that it's no longer cost-effective, the allure is gone.

I personally believe that at some time in the future, correlated with stock market losses, or not, Bitcoin will cease to exist with any real value (close to $0/bitcoin). I may be monumentally wrong, or I may be right, or it may just stay where it is. But companies (with real physical presences) that have no profit eventually cease to exist. I don't see a strong future in non-regulated, non-backed digital offerings. JMHO.

Since we're talking about gambling, maybe it's time to short them?
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Old 11-19-2018, 05:11 PM   #4
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Tulip Mania from a couple of hundred years ago would be a good comparable IMO.

https://en.wikipedia.org/wiki/Tulip_mania
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Old 11-19-2018, 06:01 PM   #5
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Thank goodness for bitcoin hedging against the recent volatility in equities.....oh, wait.....never mind.
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Old 11-19-2018, 08:12 PM   #6
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Originally Posted by jazz4cash View Post
Thank goodness for bitcoin hedging against the recent volatility in equities.....oh, wait.....never mind.
Nobody promised it would be a hedge. Just that bitcoin is not highly correlated with the stock market SP500 up a tiny bit year over year (plus a small dividend yield) while bitcoin down 42%.

See, it's working! Not much correlation at all!
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Old 11-19-2018, 09:59 PM   #7
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Originally Posted by imoldernu View Post

Would you expect that Bitcoin would generally follow the stock market? Do you think that professional investors deal in bitcoins, and if so, how much?... Or is this a kind of far out "toy" that people deal in as a hopeful experiment? A place to play with spare change?

Are there bitcoin futures?

If bitcoins in process can be related to dollars, how big is the bitcoin market?

Just wonderin'.
Will try to answer your questions.
No, bitcoins (crypto currencies) are not correlated to the stock market.
If you mean professional traders or institutional Investors, then yes they do. Many Investment banks have set up trading desks for their largest clients, Now that Yale's endowment fund has invested in the space, you can expect others to announce as well.

Yes, Bitcoin futures ar traded out of Chicago. Incidentally, their trading coincided with the high's in the market a year ago and some believe the ability to short on a regulated exchange is a major reason for the "bear market".

The Bitcoin is just one of many crypto's whose total value is usually reported daily (especially in times of volatility). To get the $ value of Bitcoin, I would just multiply the current price of 1 coin by about 17 million and that should be in the ballpark. ( I do not know the actual number mined to date out of the 21 million to be mined).
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Old 11-20-2018, 11:07 AM   #8
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I believe it is seeking it's intrinsic value

https://www.zerohedge.com/news/2018-...s-towards-4000
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Old 11-20-2018, 11:13 AM   #9
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Last year, my final year of my law school "experiment", there was a younger student with a new kid on the way and every day, he was trading bitcoin (and not paying a lick of attention to the professors) and continually making comments about how it was going nowhere but up. He also bragged with those fantastic gains, his student loans would be paid off a month after graduation. I wonder how he's doing these days?
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Old 11-20-2018, 12:32 PM   #10
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The interesting thing about bitcoin is that the underlying technology, block-chain, is itself something of value and may possibly evolve into an industry. But unfortunately it is convoluted with the particular application of block-chains as a cryptocurrency, and it is the latter that most people "invest" in. Cryptocurrency is a fetish investment, you just buy it and hope someone else wants to buy it for more money in the future, but there is no real reason for someone to pay more for it other than a stronger desire to own it. In other words, a fetish.
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Old 11-20-2018, 12:59 PM   #11
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The interesting thing about bitcoin is that the underlying technology, block-chain, is itself something of value and may possibly evolve into an industry. But unfortunately it is convoluted with the particular application of block-chains as a cryptocurrency, and it is the latter that most people "invest" in. Cryptocurrency is a fetish investment, you just buy it and hope someone else wants to buy it for more money in the future, but there is no real reason for someone to pay more for it other than a stronger desire to own it. In other words, a fetish.
Kind of reminds me of Beanie Babies and olympic pins (1984 craze).

Both ended badly, but now we have the internet to juice things up and suck cash out of the "players".
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Regulators investigating
Old 11-20-2018, 04:45 PM   #12
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Regulators investigating

Could be one reason...

https://www.cnbc.com/2018/11/20/regu...illegally.html
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Old 11-20-2018, 05:03 PM   #13
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Many Investment banks have set up trading desks for their largest clients, Now that Yale's endowment fund has invested in the space, you can expect others to announce as well.
Important addendum: Yale is not in bitcoin I believe, but in the broader underlying technology and its applications.

Investment banks like Goldman Sachs are profiting of the trades their clients are doing, as far as I know not their own money at risk. Selling picks and shovels to goldminers basically.
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Old 11-20-2018, 05:44 PM   #14
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Important addendum: Yale is not in bitcoin I believe, but in the broader underlying technology and its applications.

Investment banks like Goldman Sachs are profiting of the trades their clients are doing, as far as I know not their own money at risk. Selling picks and shovels to goldminers basically.
No not directly. Swenson is invested in the "Space". More specifically, Yale has investments spread among two crypto-currency funds. At least Paradigm holds crypto but as it is a hedge fund they might be short Bitcoin for all I know.
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Old 11-25-2018, 01:24 PM   #15
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Bitcoin Plunges to $3,738

Ouch!

The scam is folding...

Quote:
Bitcoin plunged to $3,738 at the moment. Down nearly 40% from two weeks ago, and down 81% from peak-mania of $20,078 on December 17, 2017. It’s back where it had first been on August 12, 2017. It looks like a magnificent bubble that is imploding, but “bubble” is a misnomer; it’s a magnificent scam, where people paid a lot of money – many billions of dollars – to get an essentially useless digital entity whose price then dissolved into where it had come from.
Read here:

https://wolfstreet.com/2018/11/25/bi...e-funds-stuck/
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Old 11-25-2018, 02:41 PM   #16
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Disclaimer: I still hold a little bitcoin and bitcoin cash, according to Coinbase my account is worth about $400 as I post this.

I bought $100 of Bitcoin in April 2015. Sold $500 worth @ 17K 12/7/2018, figuring I would have 5X on my "investment" no matter what.

Bought $190 of it 2/6/18 @ 6K, hoping for a bounce at that support level. Got a bounce, but I didn't sell it. Kept it as it appeared (even after falling back down to that level) that $5700 or so was a good support level.

When it broke my support level, I sold almost all of it ($1700) @ the $5500 level. I was going to dump all of it, but wanted to keep a little just to have some to use if desired. In any case, I figured once that longer term support level was gone, look out below (at least for a while).

So now here we are @ just under $4k/BTC. Yet in Sept 2017 it was lower than it is today. That wasn't all that long ago.

One point that people might be missing here: Bitcoin has been a leading indicator (on Steroids) of stock prices. In November 2017, it's boom preceded the Jan equity top.

Maybe Bitcoin is worthless - I dunno. But to say a large scale crash in its price (after such a crazy run off) means that it will be worthless misses other asset classes that have also had a large runoff, a blow off top, a crash, followed by years of misery but eventually coming back. One only needs to look at the Dow Jones average from 1920-1940 to see this, or in terms of more recent history the dot com bubble. Amazon's IPO price in 1997 was $18. It peaked over $100, and fell to under $10 after the bubble burst. And yet here we are with AMZN over $1500 (even with the big recent drop off).
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Old 11-25-2018, 03:12 PM   #17
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Alarm bells go off when I hear comparison of bitcoin volatility to DJIA. Here is what stuns me: The owner of Overstock.com is getting out of retail to focus on blockchain. I do accept there is value in blockchain technology but the timing seems weird.
Overstock.com plans to sell retail business https://seekingalpha.com/news/3411826
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Old 11-25-2018, 03:16 PM   #18
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Under $3500 now.
Bitcoin extends losses, slides under $3500 to lowest since September 2017 https://www.cnbc.com/2018/11/25/bitc...mber-2017.html
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Old 11-25-2018, 03:56 PM   #19
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I'm not a crypto believer, but I did buy a couple bitcoins when they were ~$300. I was buying
some scotch from an online seller in Scotland that gave a discount for using bitcoin. I ended
up using .6 btc for purchase and the remaining 1.4btc languished on my laptop
until I remembered it and sold it last Dec @ $17.4K/btc. The $200 bottle of scotch
I bought with bitcoin ended up costing me over $10K, but I did book a $24K profit on btc by dumb luck.

I understand what I've read about the technology behind bitcoin, but I don't understand any
of the economic/investment rationale for it. I do know from experience that using it as an
alternative to currency for buying things is pretty cludgy and not really fit for duty.
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Old 11-25-2018, 04:39 PM   #20
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Alarm bells go off when I hear comparison of bitcoin volatility to DJIA. Here is what stuns me: The owner of Overstock.com is getting out of retail to focus on blockchain. I do accept there is value in blockchain technology but the timing seems weird.
Overstock.com plans to sell retail business https://seekingalpha.com/news/3411826
I compared it to DJIA because it (the DJIA) was off 89% in the Great Depression.

Bitcoin might be just a (now deflating) bubble, never to return similar to many dot com stocks from the late 90's. *ALL* I am saying is that price action alone nor a link to an article is not enough to know whether this is in fact true.
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