The Cryptocurrency Thread 2

[MichaelB]

Quote:

Originally Posted by Markola ^^^^ Wow. There is great pressure on US regulators to allow a Bitcoin ETF here rather than making investment companies like Fidelity contort their prospectuses in order to buy the Canadian ETF. How long can the SEC keep its finger in the dyke?

No contortions, no dikes (so), no need for such overstatement.

Bitcoin can’t be an asset, a security and a currency all at the same time, which is what it’s various proponents seem to want. It has been defined as property by the IRS. The SEC has not challenged or tried to redefine this and the US Central Bank is studying it as well. There is no need to rush, and a poor decision, made in haste, is something we want to avoid.

Anyone wanting to buy a crypto today has a number of crypto brokerage options, such as Coinbase.

[Markola]

As the crypto asset class matures into its second decade, we’ll likely see a distinction in the terminology between the thousands of coins competing to be “digital currencies” and “digital securities”, which people spend and trade using various apps, vs. Bitcoin, which is far and away the strongest “digital asset” or “digital property.” Bitcoin’s limited supply makes it desirable for people own and hold, as an improvement upon gold and as something like a Manhattan land REIT that is increasingly valuable but is traded infrequently and doesn’t pay dividends. It’s a new asset class, with unique properties that defy perfect analogy with traditional asset classes.

In summary, my bet is that we’ll see in the next decade:

1) The vast majority of the sh*t coins wink out after a lot of bad press and resulting regulation;

2) The remaining few useful networks, (Ether, Cardano, and Solana, apparently at present) compete to produce useful spending apps for consumers. Some will be more like currencies and some will be more like securities.

3) Another tranche of stable coins with government backing will settle out. Tether is one controversial early mover;

4) NFTs, DAOs and other blockchain-based experiments happen with varied success;

5). Bitcoin, uniquely, first exceeds gold’s market cap and then expands further in utility or various types of buy-and-hold investors. There will be apps built on top of it too to improve its velocity but that is not a requirement for long term holders like me, who are fine with it being as inert as possible in cold storage wallets.

That’s my dissection of the fascinating, present blockchain space. No one has to agree with me, my prediction can certainly be proven incorrect, and I don’t care whether others decide to participate or not. I’m also comfortable that some people are hostile to crypto, understanding that disruptive technologies are always quite threatening. But that is my own look at the next 5-10 years that my growing personal research into this space so far is pointing toward. YMMV.

[joesxm3]

I was thinking about what people like Michael Saylor of Microstrategy and Greg Foss (30 years of bond trading experience) have said.

Saylor describes bitcoin as a "corporate treasury asset". He started out by moving all of the loose cash in the company into bitcoin, although he later has leveraged out to buy more.

Foss said in an Invest Answers interview that "if you are 40% in bonds, you are misallocating your funds in the current environment" (maybe not a verbatim quote). But Foss said that if you wanted to get bitcoin exposure it would be good to reallocate some or all of your bond holdings.

This got me thinking that they are describing bitcoin a part of the fixed income portion of a balanced portfolio. When I started to investigate bitcoin, it was in an effort to replace some of my dead cash with something that would provide some yield.

It would be interesting to dig into the prospectus of the Fidelity Canadian 60-40 All-In-One fund to see which side of the portfolio they consider bitcoin to be in.

Invest Answers has several time referred to a Fidelity analyst who uses a chart of gold compared to bitcoin to project future bitcoin prices. So, it would seem that at least part of Fidelity is viewing bitcoin in the same bucket as gold.

[LJ Dem]

I have a general question: I bought piddly amounts 2 years ago -ish {who can tell time anymore?} just to learn & play with (~$200) and they have both grown both inside Coinsquare and Coinbase (mostly ETH & BTC but some tiny others)
But I don’t *quite* grasp the wallet concept despite my readings so I’ve just left them there in those accounts. ‘Zat bad?

[needful]

I'm in the position of considering FIRE due to my perhaps overexposed position in BTC.


It happily pumps or dumps 20% or more in a week so its difficult to get to the point of pulling the trigger because you never know if another 80% drawdown is around the corner. I guess volatility is the price you pay.


I've just turned 40 so im considering rotating a portion into real estate or equities. Both markets seem equally bouyant and perhaps overvalued at the moment. Cap gains makes me hesitant though and seeing as im currently quite happy in my fully wfh job which pays rent and bills etc so i dont have any urgent need for the liquidity.



Part of me just thinks to carry on and play the long game as ive been through several bull and bears already. I can't really see much value elsewhere although granted im unsophisticated wrg to investments. At the same time as fun as the volatility is it makes it hard to plan I kind of enjoy the ongoing drama as well i suppose.



This seems like a relatively level headed forum so i thought i would canvas some perspectives.

[Markola]

needful, looks like you just joined the forum. Welcome. Your Bitcoin story must be interesting. Personally, I watched for a few years until I was more certain and missed a lot of run up. My choice, though, and I just wasn’t ready until I got ready. I heard a podcaster say that every person thinks they got in late, which helped ease my regret and FOMO. It still seems SO early. Hope so. Cheers.

[captain3d]

Quote:

Originally Posted by LJ Dem I have a general question: I bought piddly amounts 2 years ago -ish {who can tell time anymore?} just to learn & play with (~$200) and they have both grown both inside Coinsquare and Coinbase (mostly ETH & BTC but some tiny others) But I don’t *quite* grasp the wallet concept despite my readings so I’ve just left them there in those accounts. ‘Zat bad?

Considering the small amount there is no real problem leaving it on Coinbase. Normal password security applies.

If you wanted it off the ‘brokers’ books and under your own personal control you would move it to a private wallet where you are fully responsible for remembering all passwords and not sending it to the wrong address.

[captain3d]

Quote:

Originally Posted by needful This seems like a relatively level headed forum so i thought i would canvas some perspectives.

If I was going to be 100% crypto then I would need to able to live off an asset that has no problem dropping 80%

I personally look at my total portfolio of stocks bonds gold crypto property etc and consider some worst case scenarios as a group. If I do not like what I see I take some of the crazy and convert it into some of the boring.

I presume crypto goes down 85% in my calc

[needful]

Beside crypto i've got enough cash for about 3 years of expenses, the last couple 80% drawdown/bears have been more mentally challenging than really impacting my day to day lifestyle. So im not 100% crazy more like 90%.

[captain3d]

Maybe the cash will turn out to be the crazy.

So why not consider more diversification? Stock bonds etc

[tothemoon]

Quote:

Originally Posted by LJ Dem I have a general question: I bought piddly amounts 2 years ago -ish {who can tell time anymore?} just to learn & play with (~$200) and they have both grown both inside Coinsquare and Coinbase (mostly ETH & BTC but some tiny others) But I don’t *quite* grasp the wallet concept despite my readings so I’ve just left them there in those accounts. ‘Zat bad?

crypto is still largely unregulated. since you don't have the keys to your wallet, if the company you're dealing with goes under, or gets hacked, etc., you could very well lose your funds forever.

if you move funds to your own wallet where you own the private keys. now if you forget your password, there's literally nobody to call, no one to verify your identity, nothing, to get your money bank.

lastly, traditional banks have things like FDIC insurance and there are also tons of laws in place. if a bank goes under, your money doesn't disappear, it gets automatically transferred to another bank.

that being said, all the winners in the crypto era will end up having similar protections as traditional banks, which is why coinbase goes through great lengths to work with the US government.

[Markola]

+1. That’s how I see it. For Bitcoin to be a mainstream asset, Coinbase and other exchanges need to be easy and secure to use.

I understand the appeal of private hardware wallets and “not your keys, not your coins” is hard to argue with. However, after consideration of the options, I’m choosing to hold mine in the Coinbase Vault, which is easy to use and requires two days and some added security to retrieve coins out of the offline, geographically-distributed vault. Thefts have occurred recently of assets left on Coinbase’s trading exchange but never from their Vault.

https://www.coinbase.com/vault

Still, the modest effort required for storage also makes a good argument for a Bitcoin ETF from reputable companies, like Fidelity, not to mention that such an ETF could be owned in a Roth IRA.

[joesxm3]

Quote:

Originally Posted by needful Beside crypto i've got enough cash for about 3 years of expenses, the last couple 80% drawdown/bears have been more mentally challenging than really impacting my day to day lifestyle. So im not 100% crazy more like 90%.

I sent you a private message, but am not sure if users have to have a certain number of posts to get them or possibly to reply to them. Let me know if you don't get it.

[Markola]

Quote:

Originally Posted by joesxm3 It would be interesting to dig into the prospectus of the Fidelity Canadian 60-40 All-In-One fund to see which side of the portfolio they consider bitcoin to be in. Invest Answers has several time referred to a Fidelity analyst who uses a chart of gold compared to bitcoin to project future bitcoin prices. So, it would seem that at least part of Fidelity is viewing bitcoin in the same bucket as gold.

Interesting question. I looked into that Fidelity-Canada link and the all-in-one fund is just at the press-release stage and unclear.

I’m going to guess a publicly-traded Bitcoin ETF will be allocated on the equity side of various funds-of-funds, like a REIT or some exotic publicly-traded SPAC would probably be, and since Bitcoin ETF pays no interest. My .02.

Somewhat related, I heard an interesting Bogleheads podcast about how Vanguard, of all places, plans to add private equity to its target date funds. It’s another unsettling indication that these massive companies just don’t see adequate returns on the horizon from traditional assets.

[LJ Dem]

Quote:

Originally Posted by LJ Dem I have a general question: I bought piddly amounts 2 years ago -ish {who can tell time anymore?} just to learn & play with (~$200) and they have both grown both inside Coinsquare and Coinbase (mostly ETH & BTC but some tiny others) But I don’t *quite* grasp the wallet concept despite my readings so I’ve just left them there in those accounts. ‘Zat bad?

I’ve now read through more of the thread since posting and have gathered a bit more info. I’ll find a wallet.
Thanks all!

[Tetto]

I'm considering investing in crypto funds via Fidelity; does anyone do this already? It seems you need to create a separate account from the normal brokerage account, any folks try them out?

[joesxm3]

Quote:

Originally Posted by Tetto I'm considering investing in crypto funds via Fidelity; does anyone do this already? It seems you need to create a separate account from the normal brokerage account, any folks try them out?

If you are in the USA, you are limited to the closed end funds GBTC and ETHE or to bitcoin proxy stocks like MSTR or the bitcoin miners. You can buy these in your normal brokerage account. They may do a pop-up making you swear that you realize these are more risky than normal funds, but I think they will not stop you.

Fidelity also has the subsidiary that allows accredited investors to invest in bitcoin with a $100,000 minimum investment, but I don't know much about that.

If you are in Canada, I imagine you can buy the Fidelity bitcoin ETF directly. I am not sure if you can buy the Canadian ETF from a USA Fidelity account. I asked them once about buying a stock on the Toronto exchange and they said it could be done but had a $70 or so extra charge and maybe had to be done on the phone. The company I was interested in was listed under a different symbol on the USA OTC market so I did not pursue this.

[captain3d]

If anyone is considering buying the US close end funds that hold Bitcoin GBTC or Ethereum ETHE it is always good to check the premium/discount. I use these two links for a realtime calculation...

https://flagticker.com/prem-to-nav/GBTC
https://flagticker.com/prem-to-nav/ETHE

Currently -23.7 GBTC and -17.8 ETHE

Those are some huge discounts right now. These funds have a 2.0/2.5% annual fee but I am hoping they will convert to a spot ETF this year at which point the discount should go away.

My allocation is already full but these discounts are very tempting.

[captain3d]

Also worth checking the Fear & Greed Index to make sure you are buying when everyone is fearful and selling when everyone is greedy.

https://alternative.me/crypto/fear-and-greed-index/

[Markola]

^^^^ That index is super cool and I bookmarked it. Nov. 9 was a recent peak in both Bitcoin price and greed. Thanks.