TwoCitiesCapital

The most recent 'What Bitcoin Did' podcast with Preston Push was interesting IMO. Two accompanying slides stood out to me The first showing $ cleared on-chain versus payments cleared by Visa/MasterCard. This doesn't reflect Lightning Network Transactions which I think is the more apt comparison, but definitely goes to show that Bitcoin is a force to be reckoned with in terms of clearing value. The second showing price and time both in log-scale which is a new representation I haven't yet seen. Not sure I quite grasp the intention behind the log of time, but it's an interesting visualization of the tops/bottoms on the cycle, when it provides good value (like now), and the accompanying 'mooning' after the historical halvings.

Mayhaps. I'll know more when I get my payment due Celsius, but my cousin was in BlockFi and was made whole on his entire Ethereum stack - not the USD value on the date of their filing. So there definitely IS a difference somewhere.

You said they weren't tethered to the US economy, but rather the the global economy, as an explanation for why the stocks might be doing well while the US economy overall wasn't. I was just pointing out that they appear untethered from ANY economy seeing most of them aren't doing hot.

The US is one of the better economies globally. Eurozone basically in contraction and its stocks are basically as cheap as they e ever been relative to the US. China not doing so hot. P/E of 12 on the A-shares index. Hong Kong index hitting levels first touched in 2000. Japan also in contraction judging by PMIs. What are these global economies lifting the Mag7, and others, if not the US?

Ah, interesting! Hadn't caught that. Is there a reason FTX bankruptcy is paying out dollar denominated claims as opposed to the underlying crypto? BlockFi paid back depositor claims in the respective crypto that was deposited. Celsius hasn't paid back yet, but it's supposed to be some denomination of BTC/ETH and equity in the surviving subsidiary - not some $ based claim as far as I've followed. Why is FTX doing $ claims and being treated differently than the other bankruptcies in the space?

What investments of FTXs hit it big? My understanding from all the coverage was they supposedly lost hundreds of millions in Terra Luna. Hundreds more in failed investments in other crypto startups. They bailed out BlockFi and Voyager for hundreds of millions apiece - both of which went under after FTX did. I know some money was able to be clawed back from real estate, Robinhood stake, and executive comp, but what "bet" paid them back for the hundreds of millions in losses in Luna, BlockFi, Voyager, etc that were financed by customer funds? Am legitimately curious. Because I'm unaware of any coverage of monster successful trades they've made that covered the supposed losses. As it unravels, it seems like the money was always there and just not in the correct accounts and what was lost was the net equity of the firm - not deposits or money needed for creditors/liabilities. Which is still problematic, still a crime, and still a very real black-spot on their risk controls - but not quite the same as taking customer funds to Vegas.

I didn't say legal. My post actually used the word "illegal". And the money wasn't technically siphoned - it ALL started off in Alameda, even if the deposit was intended for FTX, which is what the case against Silvergate Bank is about since they were processing those transfers. So was it fraud? Or just a case of money being in account it shouldn't have been in and then returned? To illustrate: I once deposited a return of my security deposit via mobile deposit. Over the next 2-3 days, it hadn't shown up in my balances which was typically a same-day occurrence. So the next day so I re-deposited it thinking it was an error with the initial deposit. Another 2-3 days go by and then the deposit showed up twice in my account. I figured the bank would catch the error, but a 2-3 weeks later the duplicate funds were still in my account. I called the bank, told them of my mistake, and the funds were removed. Did I commit fraud because there were funds in an account they shouldn't have been in for ~15-20 days. Or were there just loose controls that allowed a double deposit of a the same check twice that was eventually rectified with no criminal deposit fraud committed?

FTX Expects to Repay Customers in Full, Bankruptcy Lawyer Says https://www.bloomberg.com/news/articles/2024-01-31/ftx-expects-to-repay-customers-in-full-bankruptcy-lawyer-says I haven't yet read Michael Lewis's profile yet, but it's on my list next. I'm familiar with his take that Sam probably isn't as bad as the media portrays him, but that illegal stuff was absolutely going on. But if this is true, then perhaps he was right. If there are no losses to creditors/depositors, was any fraud really perpetrated? Maybe just really loose/sloppy controls for an organization of that size.

Good news for us long-term accumulators. Less frenzy to compete against with my DCA every 2-weeks. Really hoping we head back to 30k one more time.

Never tried with a HELOC, be t as others have mentioned, I do this with balance transfer offers on credit cards. 0% interest with fees ranging from 3-5% of transfer amount for 12-18 months. Regularly am floating 50-70k this way. Getting hard to find competitive offers to roll the debt though, but still occasionally receiving worthwhile offers to extend the portions nearest to charging interest. I've never seen promotional HELOC or LoC offers, but I'd be much more open to using my those than balance transfer offers if someone has suggestions on where to look for those.

I think by far the bigger factor has been the 5-7 billion that has flowed OUT of GBTC and others 'selling the news' which discussed as a possibility. Hard for me to tally the exact outflows with the price movement, but it's somewhere in this ballpark. Net flows still appear to be positive across ETFs, but once better against the outflows of GBTC it seems quite a bit less impressive. Between the limited upfront flows, the sell the news, and the fact that we had a massive run-up into the ETF announcement, it's really not surprising that we're taking a breather and is still well within the volatility, if not less than, BTCs history of ups/downs.

+1 Even Buffett said when he switched strategies that it was likely to result in lower returns and more risk/volatility. But you just can't invest tens of billions into cigar butt like stocks due to size/flow constraints and constantly turn the portfolio over. He saw the writing on the wall of compounding insurance float early on and had to come up with the "buy quality/hold forever" strategy. Buying cheap for the sake of cheap still seems to work - but the 80-90% drawdowns you can experience when doing it blindly as per quantitative screens is probably intolerable for most.

JLS was my most recent buy. ~15% discount to NAV, limited duration, and a 9-10% yield from mostly mortgage-type securities. Early evidence is NAV gap is closing via price appreciation. DLY I was a little early in buying in late 2022 and 2023. Was a 10-15% discount to NAV, but the gap closed largely by NAV coming down and not price going up. Still collecting 8-9% yields with very little price impairment. Looked at WIW and WIA which are leveraged TIPS/inflation-linked funds trading at 10-15% discounts and 7-8% yields, but never pulled the trigger. Liked mortgages a little better than I liked real yields at that point. Plenty of CEFs trade at discounts stilp, but we're entering a period where they tend to have weak seasonal performance so am waiting to see how the opportunities unfold.

I do tend to focus on assets more than earnings - but I dunno if that alone is a "cigar butt" investor or just a traditional deep value approach. I like to buy things @ clear discounts to assets. Fairfax in 2020. Fairfax India from 2019 - now Exor from 2015 - now Fixed income CEFs in Q4 of last year GBTC in 2021-2023 Etc. etc. etc. All demonstrated asset plays with easily verifiable discounts to NAV and typically some sort of reasonable track record in growing it. I just feel far more comfortable holding those, and knowing when to buy/sell them, versus trying to project earnings/revenues into some distant future and then determining an appropriate discount rate back.

Yea, I'm still long and wrong on this over 10 years later, but at least it's come way down from the 10% position it was as my other position as have grown. Basically no longer a drag on my performance to keep holding it, but is a lottery ticket that can impact it if I ever do get par. They stopped the net worth sweep and replaced it with a mechanism that accomplished the same thing. The companies were allowed to retain capital, but the treasury's ownership of them increases for each dollar retained. The money still "belongs" to the Treasury and not shareholders - it's just being kept in Fannie/Freddie specific capital accounts now instead of being able to be spent by the next administration. It was more to sabotage Democrats if they won rather than do the right thing for the GSEs and their shareholders. Was Trump better than Biden or Obama? Sure. But seeing as Biden/Obama were the ones to rob them in the first place, it's a real low bar to measure success from. They've all been pretty shitty for the GSEs and unfortunately the courts have proven largely useless in acting as a counterbalance here

I mean, Google did it. So it's not impossible as he seems to be implying.

I don't pay capital gains on currency conversions when I travel to a foreign country and spend the money. I don't pay capital gains tax when my credit cards do the conversion for me and post the charge in USD. I don't understand why BTC has to be different. What are the probabilities of that? I dunno - I find it very difficult to handicap the incompetence of Congress and/or decisions by courts. But it's not 0 and the courts/regulators have consistently been surprising to the upside when it comes to n Bitcoin so I'd guess is quite a bit higher than what you think it is. I'd argue the ETF approval increases the odds simply because it makes the asset class more accessible which likely makes it more acceptable in the eyes of many over time. And then instead of having endless debates of 'bitcoin is for criminals and money launderers' the conversation can move to 'what can we actually do with Bitcoin' and what regulations need to change or be put in place to make that happen.

It doesn't entrench it anymore than futures contracts entrenched their tax status to match that of spot commodities as mentioned. Just because I don't address every point of nonsense doesn't mean they're difficult to address. It just means I know I'm largely wasting my time in every engagement where we debate and we often rehash the same sh*t over and over. Futures are taxed differently than spot commodities/currencies and other investment assets. There is absolutely no reason to believe an ETF precludes BTC from any changes to tax treatment going forward. They can choose to tax Bitcoin ETFs differently than spot, or tax BTC used in transactions differently than brokerage transactions, just like we tax commodities futures differently than we tax commodities. They may not. That's definitely a possibility. But it has absolutely nothing to do with the approval of the ETFs nor do they entrench anything other than BTC as an widely available asset class

So we're in agreement that the taxable status of BTC has absolutely nothing to do with the ETFs just launched/approved - nor do those ETFs preclude changes to changes in its tax treatment for use in payments at a later date. Glad we got on the same page there.

The capital gains is a tax policy. Not because of the ETFs. Tomorrow Congress/IRS could agree to tax it differently and it would be taxed differently even with the existence of ETFs. Or they can provide guidance that the structure matters when it comes to taxes and treat ETFs in a brokerage account differently than spot just like futures contracts are taxed @ 60/40 long term/short term regardless of holding period unlike the spot/physical holdings. The approval of an ETFs in no way changes the tax implications or usefulness in transactions or cements that tax status. It's an entirely separate discussion.

Are currencies capital goods that are useless in transactions because there are futures/forward products that trade based on their value?

Is it strange? I mean the man lied about the health of Tesla publicly when battling David Einhorn, misrepresented the reasons for the Solar City acquisition which was clearly just to bail out his cousins, lied publicly about taking Tesla private @ $420, etc etc etc Governance and integrity have largely been lacking at Tesla for years and years and investors didn't care because they continued to get fabulously wealthy. As long as 'line go up', nobody cares about his self dealing, misrepresentations of fact, or the lack arms length/independent negotiations between his various entities when dealing with one another. It only becomes a problem that they'll care about when the stock goes down in a sustained basis.

Now that they've locked in duration, I too am far less concerned about the next few years. Having some foresight into a certainty of a level of earnings regardless of the economic scenario is great

Tell me how else you've gone from pennies to 40k/coin in 15 years? That's been a 200-300% growth rate per annum. I'm taking a pretty large haircut to what it's demonstrated in its prior history for the intermediate term of its growth - which is actually incorrect to do according to the S curve. Growth might actually accelerate from here. This is no different than the adoption of the Internet or telephones and etc which demonstrated similar adoption patterns/growth rates.