Bitcoin Low

[Milton]

Is Tom Derderian still at GBTC? What a great coaching record he has.

 

[copyright1997reloaded]

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).

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

So I got a bit of a bash here when I compared Bitcoin to the DJIA (in the great depression) and AMZN (in the dot com bust). I also mentioned Bit Coin crashing as not being a good thing for the equity market.

Here's an article (from today) in Forbes where the author compares it to.....Amazon in the dot com bust and also suggests a coming equity crash: https://www.forbes.com/sites/investor/2018/11/26/bitcoin-crash-escalates-equity-crash-developing/#363d8ab1c708

Maybe the Forbes author read my post?

 

[FUEGO]

My PETS.com and TOYS.com never did recover though...

At least all of us investors ("investors") get a big fat capital loss carry forward!

 

[brucethebroker]

Bitcoin: soon to be renamed "bit the dust" coin.....??

 

[copyright1997reloaded]

My PETS.com and TOYS.com never did recover though...

At least all of us investors ("investors") get a big fat capital loss carry forward!

No, they didn't. To draw an analogy here, I'd ponder a guess that even if AltCoins go on to great things, many of them (here) will go to zero never to be seen again (like pets.com and many other dot com busts).

 

[FUEGO]

No, they didn't. To draw an analogy here, I'd ponder a guess that even if AltCoins go on to great things, many of them (here) will go to zero never to be seen again (like pets.com and many other dot com busts).

So is Bitcoin Amazon or Yahoo or Pets.com? Or are one of the hundreds of altcoins the crypto-Amazon? Or has the one true virtuous altcoin yet to be developed and marketed? Serious questions!

 

[Texas Proud]

So I got a bit of a bash here when I compared Bitcoin to the DJIA (in the great depression) and AMZN (in the dot com bust). I also mentioned Bit Coin crashing as not being a good thing for the equity market.

Here's an article (from today) in Forbes where the author compares it to.....Amazon in the dot com bust and also suggests a coming equity crash: https://www.forbes.com/sites/invest...calates-equity-crash-developing/#363d8ab1c708

Maybe the Forbes author read my post?

Or maybe YOU are the Forbes author!!!!

 

[1-31-18]

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.

Like the US dollar. Backed by nothing. Collected simply because others own it and desire it. “A fetish investment.”

And one whose supply is driven by the decisions of the same unaccountable government bureaucracies that brought us near the apocalypse in 2007-08. Yes, it’s the USD I’m talking about.

Feel better about BTC yet? Invented precisely because (and when it was shown that) central government could not be trusted. Never mind the distrust, bordering on revulsion, for banksters.

It’s called blockchain, BTW. No apostrophe. Like fintech.

Cheers.

 

[1-31-18]

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?

Well, if he bought in 2013 or earlier, his gain through 2017 would have been at least 100x his investment. I know several people, now retired, who bought and sold at opportune times.

Like every industry, crypto will boom and bust several times in its early days. Indeed it already has. That’s why it’s best bought as an extremely long-term hold, or “hodl” as bitcoin bulls call it.

The leading consumer tech companies all crashed about 90 percent or more from 1999 to 2001-02. But they soared again afterward.

An alternative investment, BTC should have a small piece of a portfolio. Not only Yale, mentioned here, but also Harvard, MIT, and other leading endowments have begun to buy it as long-term holds.

Have a good day.

 

[flintnational]

Like the US dollar. Backed by nothing. Collected simply because others own it and desire it. “A fetish investment.”

Except the USD is backed by the ability to legally tax 330 million of the richest folks on earth.

 

[CaliKid]

I own none but know a couple of smart people who have invested and have explained a lot to me. As a couple people have indicated above the currency is not so much the thing as is the block chain system. There are many big companies working to utilize the block chain. If the block chain does start to be utilized then, I believe, the premiere block chain currencies will have actual value. I would not write this off like the Beanie Babies quite yet.

 

[1-31-18]

Except the USD is backed by the ability to legally tax 330 million of the richest folks on earth.

Actually, not. The Treasury and the Fed have no taxing powers. But you are right that the same government that can print as much money as it would like can also raise taxes to pay for its profligate spending. All you are guaranteed to get for $1 is $1, regardless of its value in hard assets.

Appealing to the power of a united central government doesn’t work for freedom-loving, government-wary people. Venezuelan is perhaps the most recent extreme example of government gone badly wrong. BTC is used commonly in Venezuela. It is far more useful there than the Bolívar. There are countless other examples of governments debasing their currency. I spent the early 1980s helping US banks restructure Latin American debt.

Today, US government debt (at all levels) approximates US GNP. Off-balance-sheet liabilities net of assets are at least 2x that. Possibly as much as 10x. Greece, anyone?

If you think it can’t happen here, you’re probably a no-coiner. But if you think about safe havens in faraway lands like New Zealand and Norway, you are probably thinking about gold and BTC, too.

 

[flintnational]

Actually, not. The Treasury and the Fed have no taxing powers. Methinks you are confounding fiscal policy with monetary policy. All you are guaranteed to get for $1 is $1, regardless of its value in hard assets.

That aside, appealing to the power of government doesn’t work for freedom-loving, government-wary people. The Venezuelan Bolivar is the most recent and extreme example of government gone wrong in the financial sphere. But there are countless others. I spent the early 1980s helping US banks restructure Latin American debt.

Today, US government debt (at all levels) approximates US GNP. Off-balance-sheet liabilities net of assets are at least 2x that. Possibly as much as 10x. Greece, anyone?

If you think it can’t happen here, you’re probably a no-coiner. But if you think about safe havens in faraway lands like New Zealand and Norway, you are probably thinking about gold and BTC, too.

I did not mention the Treasury or the Fed. Not sure where you go that. The ability to tax rests with congress. The belief that the USD is extended or doomed to failure does not ensure the success of bitcoin. And, if I thought the dollar was doomed, I would buy gold or another hard asset with monetary and intrinsic value. Crypto, in theory, may provide the same hedge against the USD as gold but it does so without the backing of any intrinsic value. Since it has no intrinsic value, it only has value if crypto survives and if bitcoin is the coin of choice (Two very big "ifs".). Both are speculative outcomes. Time will tell. I am short bitcoin all the way down to zero. Even if crypto survives, it will not be bitcoin. But, please don't let me stop anyone from buying in at these bargain levels.

 

[bobandsherry]

I own none but know a couple of smart people who have invested and have explained a lot to me. As a couple people have indicated above the currency is not so much the thing as is the block chain system. There are many big companies working to utilize the block chain. If the block chain does start to be utilized then, I believe, the premiere block chain currencies will have actual value. I would not write this off like the Beanie Babies quite yet.

The technology has a value, but it's not based on a per coin basis. The current price is supposedly based more now as a commodity and therefore on the basis for cost to mine, which has no basis of the technology value. The price is more driven current by speculation, FOMO....

And this "expert" continues to push the value of Bitcoin at end of this year. He was originally set at $25,000/bc, lowered it earlier this month to "only" $15,000/bc. Like really, going to go from $4K to $15K in 45 days? And this guy (Tom Lee) actually gets air time and credibility on CNBC? SMH.

https://www.cnbc.com/2018/11/16/wal...m-lee-slashes-year-end-forecast-by-10000.html

 

[copyright1997reloaded]

So is Bitcoin Amazon or Yahoo or Pets.com? Or are one of the hundreds of altcoins the crypto-Amazon? Or has the one true virtuous altcoin yet to be developed and marketed? Serious questions!

I have no real idea. I'd guess the vehicle has to have the following attributes:
1) Fast transaction execution time
2) The ability to scale lots of transactions per second
3) Anonymous
4) Low transaction cost
5) Leverages network effects to drive out competition and establish trust.
I don't think traditional Bitcoin is excellent in meeting these criteria (except for #5).
6) Somehow tied to a basket of goods and services.
I added #6 because 'trust' is hard to establish unless backed by taxation and force. So to get over that hurdle, people have to have faith in the stability of the platform. Bitcoin (and other alt coin) pricing has been all over the place - that makes it hard to establish stability and trust in the pricing mechanism.

Or maybe YOU are the Forbes author!!!!

I was almost going to add that to my post! Maybe I have a new career option!

 

[1-31-18]

I did not mention the Treasury or the Fed. Not sure where you go that. The ability to tax rests with congress. The belief that the USD is extended or doomed to failure does not ensure the success of bitcoin. And, if I thought the dollar was doomed, I would buy gold or another hard asset with monetary and intrinsic value. Crypto, in theory, may provide the same hedge against the USD as gold but it does so without the backing of any intrinsic value. Since it has no intrinsic value, it only has value if crypto survives and if bitcoin is the coin of choice (Two very big "ifs".). Both are speculative outcomes. Time will tell. I am short bitcoin all the way down to zero. Even if crypto survives, it will not be bitcoin. But, please don't let me stop anyone from buying in at these bargain levels.

This is interesting. I’ve had similar conversations with other no-coiners, starting about two years ago (when BTC was lower than it is today). They all claim they would short it, but none of them has actually put his money where his mouth is.

Since you claim to be short, how big is your short position? Or is that, ahem, just talk? (I’m long the “JT” option.)

I’m guessing you also think the endowment managers at Harvard, Yale and MIT are all idiots also. Mentioned because they are all long crypto.

Hmmm. Have a good day.

 

[flintnational]

This is interesting. I’ve had similar conversations with other no-coiners, starting about two years ago (when BTC was lower than it is today). They all claim they would short it, but none of them has actually put his money where his mouth is.

Since you claim to be short, how big is your short position? Or is that, ahem, just talk? (I’m long the “JT” option.)

I’m guessing you also think the endowment managers at Harvard, Yale and MIT are all idiots also. Mentioned because they are all long crypto.

Hmmm. Have a good day.

You have convinced me of the errors in my thinking. I particularly liked the appeal to 'freedom-loving" people and the invoking of "authorities" at Yale and MIT. I am selling my stocks and bonds and I am all in on bitcoin. Man, I hope you are right! Got to go now. I have to convert my stocks and bonds into soon to be worthless USDs and give them to the benevolent people that are kind enough to take my soon to be worthless USDs in exchange for the soon to be very valuable bitcoin. I hope they don't read your posts or they may not take my USDs.

FYI, the terms "short or long" can also be used metaphorically. But, I am still with you on your analysis!

 

[1-31-18]

Thanks for that lecture, too.

I noticed that my long call option that your “short” was “JT” just paid off....

Or it would have, were there a market available to make that bet.

(On casual forums like this one, people can voice strong opinions without backing them up by their conduct. Financial professionals can’t do that. They need to eat their own cooking.)

In that vein, there IS an options market for BTC, which is why people who bought physical BTC five years ago, like my early-retired daughter, are gleeful today. And also why this year’s shorts are in the money. The market is the only place that matters in terms of expressions of opinion about a new asset class. Money talks much more than JT.

As for the future, who knows? I think I know this:
New asset classes always crash. Multiple times. Investors in new technology should expect it. Imagine the investor who shorted Big Tech in 2002 because it had just lost 95% of its market value in the prior 3 years. How did that turn out?

Per our studies, about 50 percent of crypto asset holders self-identify as libertarians. Anecdotally I figure it’s higher than that. Self-identification is usually under-inclusive. So, actually, this is indeed a “freedom-loving” group ... by its own description.

Sorry if the mention of Ivy League endowments offends some people here. They are my kind of people, those Harvard and Yale guys. And the data is convincing that their endowments have been extremely successful investors over the long haul. So I’ll continue to pay attention to them. They make very-long-term bets and put their money where their mouths are.

In parting for now, here’s my two cents — Long BTC. Short the banksters.

Cheers.

 

[flintnational]

^^Here is the irony in our disagreement. I identify as a libertarian, dislike government fiat currency and feel the banks were propped up to our detriment. I actually would love for a bitcoin type currency to take hold. But, and this is where we disagree, there is nothing that currently makes bitcoin or any other crypto anything but pure speculation. It is not an investment in the classical sense. Therefore, I cannot participate. I do not speculate.

 

[aja8888]

If U.S. dollars are thought to be worthless by the bitcoin community, then why are they taking them in exchange for the valuable bitcoins?

 

[jazz4cash]

So I got a bit of a bash here when I compared Bitcoin to the DJIA (in the great depression) and AMZN (in the dot com bust). I also mentioned Bit Coin crashing as not being a good thing for the equity market.



Here's an article (from today) in Forbes where the author compares it to.....Amazon in the dot com bust and also suggests a coming equity crash: https://www.forbes.com/sites/invest...calates-equity-crash-developing/#363d8ab1c708



Maybe the Forbes author read my post?

Sorry I lost my appetite for the Bitcoin is just like AMZN argument when I read the author’s disclaimer in the beginning of the article.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

I do agree that bitcoin crashing is dangerous for equities in general.

 

[corn18]

Geez, there are over 100 crypto currencies out there. What makes BTC so special? And if BTC goes bust, the world economy won't even notice:

 

[steelyman]

Maybe it’ll shake out eventually like the “browser wars”, with just a few coming out stable(-ish).

I’ve had no interest in cryptos at all. I don’t understand them and haven’t yet seen a reason to investigate so it’s just background hum to me.

 

[1-31-18]

^^Here is the irony in our disagreement. I identify as a libertarian, dislike government fiat currency and feel the banks were propped up to our detriment. I actually would love for a bitcoin type currency to take hold. But, and this is where we disagree, there is nothing that currently makes bitcoin or any other crypto anything but pure speculation. It is not an investment in the classical sense. Therefore, I cannot participate. I do not speculate.

Agreed that it’s not a “classical” investment. No earnings, no revenues, no cash flow, no multiples of same. Same as US dollars, by the way.

This is not, however, how investors value coins and tokens. They are valued for their networks of users. Like Airbnb and Uber.

The same is true of the USD. It’s the network of users that supports its value. If and as confidence and use erode, watch out below. I would not want to have most of my assets in USD-denominated financial instruments the day after the Chinese decide to stop buying US government debt because entitlements are out of control and too many dollars have been printed to pay for it, debasing the USD. That is a non-trivial risk, IMO.

People who don’t understand crypto dynamics’s are wise to stay out of crypto. Buffett said it’s rat poison squared (or something like that), but then Buffett (whom I admire) is (1) long the banksters and (2) notoriously slow to the tech party.

Stick to your circle of competence — I agree with Buffett on that.

FWIW, I think the best plays are BTC, being the first mover with the biggest user base by far; and the supply chain of “picks and shovels” sellers (exchanges, brokers and the like — the supply chain). All of the latter are private investments, inaccessible to the general investing public.

These are very-long-them holds. I would expect them to soar, then crash, several times (as has happened already). I wouldn’t buy anything else. And I wouldn’t buy any of them if I weren’t already FI, unless I happened to be a tech geek like my Millennial daughter who made 100 X 100K and called it a day. She now teaches data science to Ph D candidates at our alma mater as her encore career. She’s smarter than her old man.

None of this is investment advice. YMMV. Cheers.

 

[1-31-18]

If U.S. dollars are thought to be worthless by the bitcoin community, then why are they taking them in exchange for the valuable bitcoins?

I don’t understand the question, but:

No one is 100% invested in BTC. And suggesting that (the right) investors “get off zero” does not imply “go all-in.”

Also, and more obviously, in the US USD are needed to buy goods and services.

BTC is not really a currency. It is best understood IMO as a store of value and a long-term hedge against systemic collapse by Western democracies on the road to serfdom via entitlements. In that vein, it’s already proving mighty useful outside the US as a means of avoiding confiscation of wealth by the government. See “Venezuela, Collapse of” ....