The Cryptocurrency Thread

[51notout]

I can buy GBTC via TDAmeritrade. ETHE also hit -16% discount today.

Also can buy in a Fidelity Roth.

 

[yakers]

Also can buy in a Fidelity Roth.

Is it better to have crypto in taxable or tax favored?

 

[Dash man]

Is it better to have crypto in taxable or tax favored?

Taxable, so you can deduct the losses against stock market gains! [emoji12]

 

[Running_Man]

ETHE trades today at a 14% discount, which is good because the annual management fee is 3%. Since it is pretty easy to buy Ethereum itself with no fee, actually could easily invest with a crypto payment, there is no pressing reason to buy the ETF with a 3% management fee unless there was a substantial discount, since there is no mechanism for the ETF to arbitrage the difference on a daily basis.

 

[OverThinkMuch]

Taxable, so you can deduct the losses against stock market gains! [emoji12]

By losses you mean 2019 when GBTC doubled, or 2020 when it quadrupled?

 

[captain3d]

You can buy GBTC and ETHE in accounts that do not provide access to crypto directly. That is one reason. Also they are both planning to convert to ETF when they are allowed where the premium would revert to zero

 

[captain3d]

Taxable, so you can deduct the losses against stock market gains! [emoji12]

I have been booking crypto losses all year while making over all gains. There is no wash sale rule so just sell when it drops and immediately buy back for the opposite volatility.

Thanks $100k Roth conversion at 0%tax whiles making gains in the base asset

Win win

 

[Markola]

I just finished all 17 episodes of the Michael Saylor Series on the What is Money Podcast, at 1-1/4 speed ;-). It was a very fulfilling project to absorb all of this material. It is also hard to imagine a better theoretical framework for Bitcoin, grounded in engineering and history, as developed by someone with a rate mind and vast skin in the game to the tune of hundreds of millions of dollars worth. I sense the tectonic plates of global finance already shifting. Recommend.

 

[Fermion]

By losses you mean 2019 when GBTC doubled, or 2020 when it quadrupled?

You can get into big trouble by investing in the past.

From 2009 to 2013, Seadrill looked awesome. It was paying a massive dividend and invested in new drill ships with handsome lease rates. It more than quadrupled.

Then it lost 99.999%. That kind of loss would be like bitcoin going to a dollar.

 

[OverThinkMuch]

You can get into big trouble by investing in the past.

From 2009 to 2013, Seadrill looked awesome. It was paying a massive dividend and invested in new drill ships with handsome lease rates. It more than quadrupled.

Then it lost 99.999%. That kind of loss would be like bitcoin going to a dollar.

You ignored the entire context of my post, which was to poke a hole in the theory that Bitcoin always has losses.

Taxable, so you can deduct the losses against stock market gains! [emoji12]

 

[Markola]

This may deserve its own thread, but what software is everyone using to organize crypto transactions throughout the year, for tax prep?

I’ve been keeping a log on my own… but I recognize there are software packages which would make life easier.

I stumbled on this Coin Tracker service, which might be worth looking into. https://www.cointracker.io/

Coinbase is building its own internal tax-reporting service for clients but some parts of it are still in beta.

 

[indiajust]

https://taxbit.com/consumer

Strictly for generating 1099's and keeping track.

 

[Markola]

Apparently, the “Where Do You Park Your Cash These Days?” thread was edited and nearly shut down by the mods, because several people, not me, mentioned that they prefer crypto for that purpose. Mods urged people to use this thread instead.

I’ve been sincerely studying the asset class for a few months with an open mind and I like sharing what I’ve learned to date, so I’m glad for this thread. I’d say the spark of interest happened thanks to this thread. IMHO, “crypto” needs regulation and a major shakeout to identify a few coins with actual utility as regulated “securities” for doing specific things in their respective networks. 99.9% will never be accepted broadly as money, so I’m choosing to ignore all of those noisy, shiny object speculations.

However, Bitcoin has emerged alone as a kind of “Digital Property”, which is more like real estate and gold, except that its supply is capped, its transaction and holding costs are practically nil, it is highly liquid and its location is not fixed in any country or jurisdiction. Its unique qualities and utility are why family offices, hedge funds and even a few public companies, are eagerly gaining some exposure to it. Bitcoin’s spot price is growing at an average of 160%/year to date, because it is proving too useful and attractive in a portfolio alongside traditional asset classes that are all currently over-bought and over-priced.

Even though the Bitcoin price has risen in one decade from a few cents to $47,000, my assessment, as a long time, traditional, buy and hold Vanguard index fund purist, is that the tectonic plates of global finance are rumbling and we’re probably in the very final stage of buying Manhattan for glass beads. Happy New Year and YMMV.

 

[captain3d]

When we can talk about crypto assets in other threads we will know it has been accepted.

 

[Markola]

^^^^ I don’t mean to monopolize this morning, but I was thinking the same. The “proof of work”, if you will, required for an individual to understand, appreciate and adopt Bitcoin is falling rapidly. Ten years ago, only a software engineer could participate. Now, even a history major like me can listen to several podcasts, watch some YouTube, read a book, get a free Coinbase account and start buying. It’s like the internet, which was first a creature of universities and the defense department and then became gradually adopted before Google and other FAANGs finally cracked it open into everyday utility. Early proponents were probably annoying in their enthusiasm. Remember the early Yahoo! tv ads in bowl games? This week, there were crypto ads featuring Matt Damon during the Orange Bowl. Of course, by the time the internet was commonly accessible and accepted, FAANG stocks were out of sight.

 

[captain3d]

Lots of people annoyed by crypto. I am annoyed we are not at $100k Bitcoin yet. It is 2022! [emoji3]

 

[joesxm3]

Lots of people annoyed by crypto. I am annoyed we are not at $100k Bitcoin yet. It is 2022! [emoji3]

You need to ask to speak to a manager.

 

[explanade]

Even though the Bitcoin price has risen in one decade from a few cents to $47,000, my assessment, as a long time, traditional, buy and hold Vanguard index fund purist, is that the tectonic plates of global finance are rumbling and we’re probably in the very final stage of buying Manhattan for glass beads. Happy New Year and YMMV.

So the current value of BTC is analogous to the valuation of Manhattan after it was just purchased with glass beads?

 

[turbo89]

Apparently, the “Where Do You Park Your Cash These Days?” thread was edited and nearly shut down by the mods, because several people, not me, mentioned that they prefer crypto for that purpose. Mods urged people to use this thread instead.

Guilty as charged! Lol

When we can talk about crypto assets in other threads we will know it has been accepted.

This comment is spot on.

I personally don’t believe that crypto is equivalent to cash (because it’s not)… but it’s been around long enough, with impressive performance, so it’s an asset class which is hard to ignore.

Stable coins are unbelievably attractive, [relatively]”safe” alternatives to money markets. I’m currently getting between 8 and 12 % on stable coins, and significantly higher rates on other crypto assets (not considering asset appreciation).

 

[Markola]

So the current value of BTC is analogous to the valuation of Manhattan after it was just purchased with glass beads?

Ask me again in ten years.

 

[OverThinkMuch]

... and even a few public companies, are eagerly gaining some exposure to it.

Do you mean Tesla? I don't think most CEOs follow his lead. There's investment companies like Grayscale Bitcoin Trust and Microstrategies, both almost exclusively buying Bitcoin. And in last place, AMC Theaters accepting Dogecoin - apparently some bizarre form of respect from one meme to another.

I haven't seen other public companies embrace bitcoin.

 

[joesxm3]

Micro strategy is still a software company although now 98% of its value is bitcoin. Square also has some I think.

 

[Markola]

Do you mean Tesla? I don't think most CEOs follow his lead. There's investment companies like Grayscale Bitcoin Trust and Microstrategies, both almost exclusively buying Bitcoin. And in last place, AMC Theaters accepting Dogecoin - apparently some bizarre form of respect from one meme to another.



I haven't seen other public companies embrace bitcoin.

There are now some Bitcoin miners who are public, and more expected to go public this year. Those companies are raising massive equity investment for mining rigs and to hold Bitcoin.

The accounting rules make it difficult for very major companies, like Apple, Google, etc. to adopt Bitcoin in the way that Microstrategies did. It requires a charismatic, majority share owning CEO, like a Michael Saylor or Elon Musk, to push the systems, accountants and other shareholders to accept Bitcoin on the balance sheet, because GAAP requires the volatility to be counted as a loss, which is hard to explain to investors when it happens. There are efforts underway to change the GAAP rules about this. Until then, it will probably be confined to miners and the Microstrategies type of a public company that can do it. There might also be some other Bitcoin holding SPACS that come public, which have Bitcoin in their core DNA rather than existing business lines based on dollar denominated balance sheets that have to be converted.

In my opinion, this seems a good thing, because once there are a few dozen or more public Bitcoin-based companies, an ETF could form that buys only them, creating a proxy ETF for Bitcoin, much like gold ETFs that buy the stock of gold mining companies rather than hold gold bullion. Such an ETF would be a bridge to a future with a pure Bitcoin ETF that is legal in the US. ARK Investments and others have ETFs of firms working in the ecosystem, but my sense is the underlying investments are involved in all sorts of crypto, not just Bitcoin.

 

[explanade]

How does AMC take crypto?

You got to the theater and buy movie tickets and popcorn by what transferring some non-whole dogecoins for a purchase somehow? You give them your wallet address or something?

 

[MichaelB]

^^^^ I don’t mean to monopolize this morning, but I was thinking the same. The “proof of work”, if you will, required for an individual to understand, appreciate and adopt Bitcoin is falling rapidly. Ten years ago, only a software engineer could participate. Now, even a history major like me can listen to several podcasts, watch some YouTube, read a book, get a free Coinbase account and start buying. It’s like the internet, which was first a creature of universities and the defense department and then became gradually adopted before Google and other FAANGs finally cracked it open into everyday utility. Early proponents were probably annoying in their enthusiasm. Remember the early Yahoo! tv ads in bowl games? This week, there were crypto ads featuring Matt Damon during the Orange Bowl. Of course, by the time the internet was commonly accessible and accepted, FAANG stocks were out of sight.

Just to follow your example, if cryptocurrency is indeed like the internet, what are the investment options today that are equivalent to the FAANG stocks of yore.