TwoCitiesCapital

This happened last time too. Fairfax was excluded from the entire run-up in BB, but fell sympathetically with it when it collapsed. Was a decent time to be adding shares on the offchance that they were able to monetize. I see a similar set-up now.

Yearn.Fi released their first quarter report. Made over $5 million in Q1. 30% more than the entirety of 2020 in a single quarter and are still launching more vaults/strategies. Think of Yearn vaults as mutual funds that aggregate investors' capital to lower fees (transaction fee to move $20 is the same to move $20 million and significantly less than 1 million people each moving $20). This puts Yearn token at a P/E of like 100x (total capitalization/annualized Q1), but how many years do you need to grow as at 4-6x before that becomes reasonable? 1-2. And 2 weeks ago you could've had it for 40% less. DeFi is blowing up.

It's fairly difficult to get traditional fiat into and off of DeFi rails. Stablecoins that exist on the ethereum network help fix this. If the digital currency that the US gov't creates is compatible with the ethereum network, this would also fix this - but I doubt that it will be. In most cases - you can't "buy" stablecoins with fiat. Most of them are issued to institutional investors similar to ETF creation/redemption. You can open an account on an exchange like Coinbase and buy Ethereum (or some other ethereum based token) and immediately sell it for stable coins that exists on that exchange (USDC for coinbase). There are also other financial intermediates like BlockFi that accept fiat deposits and automatically convert it to stablecoins (GUSD in the case of BlockFi). Within the DeFi space, there are DEXs where you can transact tokens into stablecoins (UniSwap for instance) or trade between stable coins (Curve).

I too was hoping for a retest of the low 30s upper 20s. My expectation is that we'll bounce again, around 30-32k where I hope to buy, and then start a more sustained uptrend again - hopefully to new highs once confirming this bottom. Obviously I could be wrong and this could just be the start of a long "crypto winter" a la 2018 - 2020, but I don't think this bull market is done yet - definitely some frothiness to valuations vs network utilization but still very shy of prior crypto peaks.

You're correct. Used lazy logic to get there and wasn't thinking about the total amortization over time impacting the payment estimate. The monthly payment (principal & interest) would rise by ~40% as you've said. But for an expense that a typical homebuyer spends 30-50% of their take-home pay on, I don't know if +40% is feasible either even it's better than 100%.

I hadn't realized either! Thanks for sharing! The downside to how crypto is taxed is very apparent in the Ether/DeFi world. Ether is spent on every transaction and is a consumable input - much like a commodity would be. And every spend of Ether is currently a taxable capital gain - but since the Ether is "spent", that spend can be capitalized into the new basis of whatever activity you're initiating. Lots of gains and adjusted basis to keep track of since it's not as simple as looking at a fixed $ commission but rather a fluctuation gas cost and a fluctuating price of Ether. Just imagine if real 'gas' was taxed that way - you realized a capital gain/loss on the gasoline used every time you drove somewhere to generate economic activity based on what the price of gasoline was at when used versus when you purchased it. Weird.

https://www.wsj.com/articles/cryptocurrency-has-yet-to-make-the-world-a-better-place-11621519381 /\/\ Another decidedly negative take on BTC, but at least one that has some numbers behind it and sources cited. Chainalysis, a crypto security firm, estimates ~$5 billion of illicit activity in 2020 which was ~0.3% of total transaction volume (source go.chainalysis.com/2021-crypto-crime-report). Meanwhile, Thiel's guy is saying 40% in hit hit-piece while providing nothing to back up that 130x discrepancy.

While we've all been going in circles on Chinese bans (again), illicit transactions (again), energy intensity (again) over the last few days, I wanted to put forward some other headlines: 1) Goldman Sachs has come out in support of the idea that Bitcoin is it's own unique asset class with its own idiosyncratic risks 2) DBS (largest bank in Singapore) has said Bitcoin is a potentially a better store of value than the USD and "provides opportunity that [fiat] money cannot buy" 3) Ray Dalio, longtime Bitcoin critic, has suggested he now personally owns some and prefers it to bonds on this environment None of this is "new" news per se - many have suggested BTC is it's own asset class or is an inflation hedge or a store of value. But just demonstrates every day there are more and more prominent people/institutions joining that chorus

Probably won't kill housing demand, housing prices on the other hand? A 30-year mortgage with less than 10% down is like 90% interest on the first few years of payments. A jump in rate from 3% to 6% nearly doubles that monthly payment assuming prices don't move. So 1) first time home-buyers get comfortable owning a LOT less house (seems unlikely if we're counting on millennials doing household formation to keep the demand up) 2) first time home buyers get content with paying 50-60% of disposable incomes towards mortgages instead of the 20-30% they typically pay now or 3) transaction volume screeches to a halt and only a handful of buys/sales get made a year from the most desperate buyers/sellers 4) Prices come down some and new build supply goes up some. Not sure which of the 4 is more likely, but doesn't really sound super positive for any of them, right? I'm also skeptical of rates getting above 3% for any prolonged period of time. We couldn't handle 3.25% on the 10-year for any amount of time with a healthy economy, the lowest unemployment rate in decades, and tax cuts juicing it. Still had a manufacturing recession, negative PMIs, and an inverted yield curve all pre-covid pointing to a recession. I doubt we can get to 3.25% with elevated unemployment after the pandemic - at least not sustainably.

I don't really think he makes great cases against Bitcoin. It's especially hard since no sources are cited and no data provided to back any of the claims. It's even harder when I've seen dramatically different figures elsewhere so would like to see him back his claims up. It's hard to get an accurate picture, but most estimates I've seen have it closer to 50% of the hash rate. His 90% estimate is highly suspect without data supporting it - particularly in light of the recent hostilities China has launched against miners specifically. Regardless of what the actual rate it, most agree that it has been falling over time. Peter Thiel himself has backed a U.S. based miner in West Texas using solar energy. Many other mining co's have announced start-ups including one in a small town in GA next to a hydroelectric station. I'd imagine the guy managing Thiel's money would know this and would have know there has been a multiyear trend in mining moving westward as renewable utilities become more competitive on pricing. Again, no source cited and no numbers provided. I've heard many complain about Bitcoin's use in illicit activities, but have rarely seen them come up with a specific amount. He seems to do that here but provides no details. Other crypto advocates (obviously biased) have done similar analysis and determined it was ~1-2% or less. I imagine the truth is somewhere in between and will naturally come down with greater scrutiny and regulations in place. And honestly, if this were true, it'd be SOOOO easy to find the criminals using it. Just throw a dart at any Bitcoin transaction. You've got a 2/5 chance of hitting an illegal one and then you can publicly trace all of the transactions from the illicit wallet through various wallets until you can identify the offramp into fiat - most of which now have KYC requirements to have an account and withdraw cash. Or maybe they just spend it all online on porn and VPN's which is another ridiculous claim of his... Again, would love the source. It was my understanding that while many do HODL, many others spend using lightning network for various online payments, large settlements for car/home purchases, and at individual merchants via Square's cash app. It's actually crazy to me to think in a time of accelerating institutional adoption and payment acceptances that we've seen over the past year that we could even make this claim with a straight face. Bitcoin on-chain transactions have exploded over the last 2-3 years and have regularly averaged the volumes at the 2017/2018 peak-mania. I don't have the ability to decipher how much of that is trading activity and how much is payments activity, but it certainly shows that transactions as a whole have exploded - which is weird if you actually believe everyone is HODLing/hoarding. Then again, given the taxable liability many Bitcoiners now face from being so successful, I personally know people borrowing fiat against their BTC for spending needs to avoid the capital gains tax - so maybe there is some truth to payments usage coming down as the price goes up.

This is the wild west. Until regulators enter the space, this will continue to happen. No one is safe, but there are certainly protocols that have been around for some time with billions in volume/loans/transactions with limited issues (Aave, Compound, Curve, Yearn, Uniswap, etc). These are probably the safest bets since they haven't yet stolen billions in cash locked into them. This is also why I imagine that CeFi will be here for a bit and places like Coinbase and BlockFi will still play a major role going forward. DeFi has major advantages (like not shutting down during the crypto crash last week - looking at you Coinbase!) but currently has a huge learning curve with limited regulatory infrastructure

I would generally argue being backed by repos, t-bills, commercial paper IS being backed by US currency. We consider these things "cash & equivalents" everywhere else in the financial system. And the 20-25% in corporates is still USD backed - just with a small potential of capital loss which DOES seem reckless (again - not defending them). This isn't any different than your deposits at a bank. The bank doesn't hold 100% of that in cash. They hold 10-20% of it in cash. The remainder gets disbursed into Treasuries, repos, mortgages, credit cards loans, corporate loans, etc. No one is claiming your deposits at the bank aren't backed simply because they're not 100% cash... I don't use tether. I don't support tether. I would love it if Tether were audited. wouldn't trust tether holding 20% in corporates and loans myself. But that's not the same thing as claiming it isn't backed. Until there is a default on those bonds, they are.

I guess we gotta ban cash transactions in USD and only accept electronic payments with a paper-trail since cash increases the expected value of a crime. Not to mention you can snort blow with cash which is a crime in and of itself and should also be factored into the equation. The things that make crypto attractive for crime are the same things that make it attractive for every day use: the ability to carry large sums, securely, and transact instantly.

I'm not going to defend Tether because they're shady and non-transparent - but pointing to the 3% in cash backing it is disingenuous. Repos, repurchase agreements, treasury bills, etc. are ALL very liquid and can typically be turned into cash instantaneously in most environments and can be used to fulfill withdrawal requests 99.9% of the time. We can debate whether or not it's a good idea to have such exposure to credit risk via corporate and secured loans and if this will function as efficiently as a stablecoin as others that are backed solely by cash, but suggesting that it's only backed 3% by 'cash' is intentionally misleading seeing as how our financial system considers those things as "cash & equivalents" in every other respect.

Just to prove the point: https://www.businessinsider.com/china-eliminates-all-cryptocurrency-trading-2018-2 https://www.cnbc.com/2018/09/03/china-clamps-down-on-cryptocurrency-speculation.html https://fortune.com/2018/01/17/china-bitcoin-cryptocurrency-crackdown/ /\/\/\ articles from 2018 talking about China banning crypto trades. https://www.cnbc.com/2019/11/25/bitcoin-sinks-to-a-6-month-low-as-china-accelerates-crackdown.html https://cointelegraph.com/news/chinas-crackdown-on-cryptocurrency-trading-a-2019-recap https://www.japantimes.co.jp/news/2019/11/28/business/chinas-crackdown-cryptocurrencies-claims-first-victims/ /\/\/\articles from 2019 talking about China banning crypto trades https://www.cnbc.com/2019/07/18/mnuchin-says-us-will-ensure-bitcoin-doesnt-become-like-anonymous.html https://www.cnbc.com/2018/01/25/treasury-secretary-mnuchin-explains-why-hes-really-looking-closely-at-bitcoin.html https://www.marketwatch.com/story/treasury-secretary-mnuchin-says-there-is-strong-support-to-regulate-digital-currencies-2020-12-07 https://www.bloomberg.com/news/articles/2020-12-18/treasury-proposes-cracking-down-on-virtual-currency-transfers /\/\/\ Mnuchin on Bitcoin and regulation (2018 -2020) Point is - there really isn't anything new occurring today. China/Xi have been critical of crypto the entire time - have been enacting regulations to make it difficult to access and trade-in the whole time. It is unclear what the new regulations do seeing as it was already very difficult to engage in crypto trading in China to begin with. Mnuchin was critical of crypto in 2018/2019/2020 and has talked on multiple occasions of enacting regulation to better monitor, track, and identify the transactions. Yellen has said similar things since day 1 in office. Pretty sure the recent narrative has NOTHING to do with colonial pipeline hack and is just a continuation of the exact same narrative that existed in 2018, 2019, and 2020.

We also track USD transactions over 10k for exact same reasons and the amount of money laundering, tax evasion, and terrorist financing that occurs in USD vs Bitcoin is a staggering multiple higher. The Treasury has long commented on crypto in this fashion. Steven Mnuchin had similar thoughts as Janet Yellen has now. Maybe even Geithner back during Obama, but I wasn't part of the community back then to know. The Treasury has already said they intend to regulate, not ban, cryptocurrencies and BTC. The SEC head, who would be charged with the regulation, has called it a "digital, scarce store of value" and literally taught classes on the subject. Regulation will be what legitimizes crypto and results in mass adoption. We have the Treasury/SEC to thank for the possibility this hits 100k. You can build whatever narrative you want around Colonial - the fact was that both Treasury secretaries, and China, and India were all critical of it and have made similar comments about it before Colonial occurred and they're all saying the same things today. Doesn't seem to me that Colonial has changed much of anything.

Not sure it's coincidental or not, but I have a family member in Missouri who was also just cancelled on after something like 17 years with the same company. Maybe this is more broad than just caution about hurricanes in Florida? For what it's worth, they were with State Farm.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3356098

The primary risk to Bitcoin would be the 1 million coins currently owned by wallets attributed to satoshi that haven't moved since Bitcoin's founding. And that's primarily a temporary risk of supply hitting the market. At this point, I don't think it actually matters who Satoshi is/was. It has been @ a 15-20% discount for a few days as compared to a 40% premium back in December. Primary reason is because there are now ETFs in Canada (that trade OTC in the U.S.) where the same BTC exposure can be had for far more cheaply so demand for GBTC dropped sharply at the same time institutional investors lock ups ended. And because Greyscale is a trust, there is no mechanism to arbitrage it to NAV risklessly. They have stated they're actively working to morph it into an ETF. I expect it'll trade back to NAV at that point. In the meantime? Trade the expansion/contraction of the discount in an IRA. I was buying at single digit premiums and selling at 20-40% premiums all throughout 2019/2020. Now I'm buying 15-20% discounts with the intention of flipping it at a 5% discount when sentiment improves. I agree, but I do think 20% is bit on the high side. 5-10% is what I'd expect as long as the possiblity for ETF conversion is being dangled. I use metamask and DeFi. Very, very promising but there is a real argument on transaction fees. It's barely viable for me and I imagine I'm going at this with quite a bit more capital than the average Joe. I know there are supposed fixes with ETH 2.0, moving to PoS, and layer 2 solutions, but a lot of uncertainty around the implementations and additional friction that may be introduced (by various layer 2 solutions for instance) by them keeps me wondering. Ultimately, I don't think ETH is quite ready for prime time yet, but if it gets there it will upend finance/banking as we know it.

If you're in it for long-term accumulation, I think prices in the 20ks-30ks make a LOT of sense to begin a DCA. The present value of the network value per coin in BTC is close to 20k and is growing by leaps and bounds each year. Paying a 50% premium that it will grow into in 12-24 months isn't much different than paying an above average multiple on a stock with high growth. BTC also has a history of trading at multiples of this number (like ~15x at the peak in 2017 - a valuation that we've already grown into) so I'm not even certain we'll see the low-20s even if this is the "bust". I think the network value will be ~50k/coin minimum by 2023. I am willing to buy up to prices around that area. My last DCA (and highest priced one) was in late February at 47k. After that, I accumulated stable coins to prepare for the potential of a 50+% correction as witnessed in prior bull markets. Why didn't I sell it all @ 65k? 1) Bitcoin has a history of trading at many multiples of its network value in a bull market (~15x at the top in 2017 - a valuation that we've now grown into just 4-years later) 2) This rally has been very shallow compared to historical ones from 2011, 2013, and 2017. It would not shock me if the ultimate termination is in the 150k range. It remains to be seen if this is just a 50% correction on the way to higher highs a la 2017 or the "bust" we've all been waiting for a la 2018. I'll be accumulating at prices below 40k and selling at prices above 100k and holding everything in between. I don't know Binance's processes/operations. I know they've temporarily suspended withdrawals before and came back online shortly thereafter. It makes sense to me though. This AM, the cost of Gas was ~1,500. This means it would have cost ~$100 to process a simple transfer of coins (not even execute a smart contract) which would have been hundreds, if not thousands, of dollars. A few months ago, anything above 100 gas would have been unheard of. Most recent highs during intense congestion were gas of 200-500. I can understand why Binance may not allow withdrawals if it's eating the $100 cost each time OR if the type of panic behavior that leads to 1,500 gas is also driving volumes they can't keep up with. This is one of the downsides of centralized exchanges. In DeFi you can get out at any time assuming you're willing to pay the fee for the transaction. Binance doesn't even give you that option. +1 As I've said before, the price at the high in 2017 was ridiculous - but we grew into it in just 4-years. I don't think we'll view 65k any differently in 4-years (assuming this was in fact the high).

Can you name a single financial institution that DID provide access to Bitcoin before this announcement? Can you even quantify what impact this has on network value currently? As far as I know, it was already difficult to buy it and required a VPN and the use of peer-to-peer exchanges as is. So please tell me what about this announcement makes the situation different than yesterday?

1) How many of Bank of America's clients do you envision are based in China? How could it ever demand a $350 billion valuation without them?!?!? 2) How many search results for Google come from China to support it's $1.5 trillion valuation? How could Google every hope to support it's business without any users in China?!?!?! 3) How many Chinese citizens own U.S. stocks on U.S. exchanges? How could the S&P ever be worth 20 trillion in aggregate capitalization without Chinese citizens buying it?!?!? There's value to the world outside of China/India because what matters is aggregate incomes and wealth. While both of them are improving, they're still not as impactful as the developed world economies. If both of them permanently ban it then than of course it's maximum value will be lower than if both of them supported it. But that doesn't mean it's worth 0, or that people won't find value in a network that excludes China/India, or isn't worth it's current value of $43,000 without them. We literally saw announcements like this all throughout 2019 and 2020. It still went to 65k and network usage/wallets/participants exploded. There is nothing new about criticalness from China/India, or from the power usage arguments, or crime arguments all of which get continuously get recycled here.

China has been negative towards crypto from the start. There were posts back in 2019/2020 talking about how Xi wanted to ban it and he'd bad-mouth it and it'd crash 20% overnight - this happened on multiple occasions. While it would be more bullish if China (and India) were onboard with BTC (growing network and all), I don't think China's continued stubbornness in this regard is anything new to be concerned with. Ultimately, those savvy enough will still have access if they want it and this isn't a permanent bar on mainstream access - yet. DeFi on Ethereum has exploded. 20x increase in transaction volume YoY and 71% increase in active user addresses YoY. The "crash" in BTC prices has taken us back to highs from just 3-months ago while ETH is back to where it was 3-weeks ago. We keep rehashing the same debates and arguments and everyday the network value is growing for both both BTC and ETH.

My bad - had you and the other guy confused for a second. I deleted the comment.

I can also make up examples that bear no relationship to reality. If you think the ONLY benefit to Bitcoin is it's ability to help extortionists, kidnappers, and degenerate gamblers it's because you have willfully ignored everything BTC supporters have said in the thread.