TwoCitiesCapital

How do you quote the value of the dollar if not in relative terms of what it can buy? Whether that be in goods, labor, or other currencies, the only value of any currency is relative. Why would crypto be different? I fundamentally disagree with you. I just moved 15k from a high-yield savings account to my checking account. Took 7 calendar days because of the weekend and the U.S. holiday on Monday. 7 days isn't fast. Even excluding the holiday and weekend, it's still 3-5 business days for ACH. That is NOT fast. If I wanted it immediately, I could have wired it, but that typically costs $25-35 pending your financial institution and there are also problems associated with that (see above comment from compoundinglife back on 2/10 on wiring money from one investment account to another). Ok so if ACH isn't fast, and a wire isn't cheap, what about the immediate liquidity of credit cards with 30 days to move the money to pay it off before interest? Merchants pay a 2% swipe fee which means YOU pay a 2% swipe via higher prices on goods/services to reflect this additional cost to the business. So when it comes to moving USD it's either cheap or fast - but you don't get both. For comparison, when I transferred 15k of BTC from Coinbase to my personal wallet a few months back? Cost me ~$10 and was confirmed in ~10 minutes. Faster and cheaper than both wires and credit card swipes. A bit more expensive than ACH, but significantly improves upon the end result so am ok with the fee. People DO buy virtual things like that in some respects (see games like Second Life or World of Warcraft or other big MMO games where people use real money to purchase digital goods). But ultimately in this instance, the coin/token IS the network. It is the coin/token that enforces the protocol by which you are transferring money (Bitcoin) or settling a contract (ethereum/tokens). The logic/code/security is built into the coins/token. You must have the coins/token to participate in the protocol that makes these transactions available. They are simultaneously the pipeline AND the oil flowing through it is how I tend to think about it i.e. it is simultaneously both the value of the network and the asset flowing through it.

Yep, looks like you called this one right! It was up like US$5/sh on Friday (the day after the earnings release), and then another US$15/sh on the second trading day after earnings. It's funny, but predictable. SJ That's efficient markets for you

I have some questions for anyone with any insight into how public companies securely hold Bitcoin on their balances sheet. 1) How do they secure the BTC from theft, both internal and external, and what tools to they have to detect attempts? 2) How is BTC handled in an audit? How do auditors confirm the claimed amount is securely held, and not stolen or fraudulent? My guess would be they're using custody services from either a custodial bank or an established crypto exchange. How do those counterparties secure it from theft? I'm sure it varies, but probably have measures around it just like they would cash, or physical gold, or securities. How can it be audited? The third party custodian should be able to report the value at any given time OR could allow auditors read access to the wallet in which the BTC is stored.

It has a futures market. But the best way to do it directly in increments as small as a fraction of a coin would be to work with th DeFi platforms that exist to service these types of financial transactions. If you have USD backed stabled-coins that you can post as collateral, you can borrow BTC on Aave or COMP and sell it. You pay interest on the loan (like paying borrow on the short) and have to return the same BTC as you sold. You can also short BTC directly on DeFi exchanges like Synthetix that provides derivative exposure to a dozen or more assets.

I think you're probably wrong about corporate adoption. I certainly think it'll take time for it to become "mainstream", but Saylor just hosted an event where apparently hundreds of corporate executives were in attendance with the sole topic of the event being "how to adopt Bitcoin in your business". Whether as a means of payment, a treasury asset, or as a business plan. I don't think that the adoption rate will be 0% from that event given that it was self selecting audience with executives already interested being in attendance. You probably won't see $500 million or $1B purchases from most of them, but a handful of $100-200 million purchases would still be meaningful. And the thing about these companies adding it for their balance sheet means that generally it's removed from supply in the intermediate term - this further squeezes a market that is defined by it's scarcity. My thesis for the last several months was that prices had to go higher to satisfy even a small amount of corporate adoption - we're now up 400+% since PayPal announced it's adoption 4 months ago. Do I think it goes higher? Yes. Will we see 400% over the next 4 months? Doubtful. The other consideration is asset management. Asset managers can afford to take a flyer on a 1% position on something that his this level of beta. 1% of AUM at several asset managers would still be representative of billions in demand. Hard to be as excited today as I was when it was 10k, but historical booms have all been more than 10x events from where they started accelerating. We're only at ~4x from where this one started taking off so I think there's more juice over the next 12-18 months.

I'm beginning to come around to that idea. Might be 1998. The top isn't signaled by retailers who've never show interest in the stock market getting interested. It's the disinterested retailers getting interested and then getting "rich" that marks the top and I'm not sure we've seen that yet. Maybe another 12 months or so? Still conservatively and cautiously positioned, but I'm beginning to think we still have a little ways to go.

Then you rail another line and get back to the club

So theoretically, they can go out, borrow a bunch of money, do a massive buy-back, share price spikes and the counterparty has to pay them a small fortune .... theoretically, yes. But the reason they didn't so that to begin with is they can't just borrow a bunch of money because of covenants and leverage ratios. Also, there are other demands for that cash - capitalizing the subs in a hard market is one. Repurchase of securities from Riverstone is another. Pay down revolver is a third (not intended for long-term financing). So probably not going to happen as was structured this way precisely because it uses significantly less cash up front.

Is there a reason to assume that the TRS are held at the holdco and not scattered across the subs? Given that FFH is currently ahead on the swaps, it would be nice if that occurred at the holdco... SJ Hard to say. I'm not familiar enough in the regulatory side to know, but it would certainly be easier to open a single contract at the holdco for the entire amount then multiple contracts across all of the subsidiaries. Trading these things requires an ISDA (or at least used to) and probably easier to not have every single subsidiary having to have one

I am also curious to see how the market responds - historically it pops like 2-3 days AFTER earnings are announced. Will be interesting to see if it's flat tomorrow and up big in Monday or Tuesday.

Typically they're cash settled on a monthly or quarterly basis. So in March, it's likely Fairfax gets cut a check for $50-100 million pending it's price on the reference date. Obviously they could always be on the hook to send that cash back if the share price dips the next quarter, but but all in all it's brilliant. 1) only requires 10-15% of the cash an actual repurchase would while entitling them to 90-99% of the returns 2) Allows them to lock in a sizable repurchase without triggering leverage ratios 3) could actually be a liquid benefit at the hold co as the shares appreciate as cash would be delivered to Fairfax as payment on the swap.

Not only were they able to do it, but they apparently didn't have to disclose the swap in the same way they have to disclose market purchases. Which makes me think that a TRS on Blackberry was also possible without disclosure. Time will tell. We can live in hope! SJ Very great quarter. Laughed when I saw the TRS on themselves. Have been speculating they would do that for the BB position - never imagined they would use it for repurchase purposes and as away around leverage ratios. Prem always surprises! A little disappointed with the Brit sale - it was established yesterday... If they needed cash, they could've gotten that from selling some of the BB shares. The sale of Brit suggests that they probably didn't sell/trim BB for that cash. We'll see what they say tomorrow, but I'm not optimistic that BB was hedged/sold anymore.

Yea - at this point, it's probably not worthwhile to send small amounts like $10 anywhere. I've made a handful of BTC transactions over the last 18 months - sending to BlockFi, hardware wallet, and to Coinbase. Typically pay $5-$10 each time. That being said, the amounts I'm moving are regularly 5-15k so the $5 fee is hardly noticable compared to what a traditional wire fee would be. And it's near instantaneous which has spoiled me. Moving cash from my AmEx high yield savings account back to my checking account takes 3-5 business days. I'm so spoiled with BTC. Back in 2014 I arbed the cost of AWS GPUs and the price of DOGE when the price first spiked. Traded majority of it for (sans AWS costs) for BTC (which I still hold), but stashed a decent chunk of DOGE for kicks. Got about 10k for it this week! I had to scramble to figure out where the DOGE was and where I could sell before the hype wore off. All of the crypto exchanges I have used except for Coinbase are a PITA to get USD out of. I ended up trading it for BTC and sending it to Coinbase because I didn't want money tied in one of the other exchanges. Point being, moving BTC around between accounts and having land in minutes it is very nice. Schwab doesn't charge me for wire fees and they have most of my assets so I don't worry about the fees. But I always hate how wires are basically sending money into the ether and hoping it arrives on the other end with no transparency. Being able to the see the transaction hit the blockchain and see consensus happen in near real time is quite nice. I recently tried to wire money out of an old etrade account into IB. I spent the 5-10 minutes filling out the wire form and double checking it. They debited my account, the money never landed. Eventually (days later) they rejected the transaction and gave me my money back. Decided to just by the stock I wanted in my etrade account and leave it there. Yea. I started buying BTC speculatively about 18-20 months ago. Was a long term skeptic having watched it since 2012. I finally appreciated it had staying power and use cases and was glad to buying it after everyone lost interest in the 2018 bust. It's pretty incredible to see what is going on in the DeFi space now and how quickly my expectations for how money should move have changed given my limited involvement. I can't tell you that these tokens are going to "moon" or "rocket", but this innovation will be the future of finance for mang IMO.

Yea - at this point, it's probably not worthwhile to send small amounts like $10 anywhere. I've made a handful of BTC transactions over the last 18 months - sending to BlockFi, hardware wallet, and to Coinbase. Typically pay $5-$10 each time. That being said, the amounts I'm moving are regularly 5-15k so the $5 fee is hardly noticable compared to what a traditional wire fee would be. And it's near instantaneous which has spoiled me. Moving cash from my AmEx high yield savings account back to my checking account takes 3-5 business days. I'm so spoiled with BTC.

Well annual silver production has been in decline for the last 6 years. We're basically back to a similar stock-to-flow as gold at these production rates - and since incentive rates for Copper and Nickel and etc have been so low in recent years, new production is unlikely to materialize in the near term. I don't think it's a long-term secular argument for silver, but I do think in the near-to-intermediate term it should be trading rich to it's history verse gold and right now we're still relatively neutral-to-cheso relative to gold depending on how far you want to look back. I think $40+ an oz for silver is in the table over the next 12 months with, or without, reddit.

Also, would add there are a half dozen threads right now talking "stop buying silver guys! Citadel owns it" or "stop buying silver guys, it's a HF scam" which suggests that even some members of WSB believe that it's them buying it - probably because they saw the threads last week. One can never be certain with these decentralized systems, but just because the board seems against it today doesn't mean it wasn't the board buying it over the weekend b/c they weren't so against it last week.

But last week, there were a half dozen of legitimate articles that were pro silver in WSB all talking about squeezing JPM. There has been a sentiment change/bifurcation on WSB once they realized that Citadel is long silver IMO. I don't buy the hedge fund manipulation narrative yet. Edit: I've gone back and looked at the users who posted the 4 that I could locate again. All 4 were reddit members for 2-9 years and active on other WSB threads. Not bots or new accounts like I've seen claimed (though that may be true for some of the commentaries on threads as opposed to starting the threads themselves). Seems to me that there was a legitimate push by WSB users to push silver that has only JUST been reversed/fought due to the realization Citadel owns like 1% of the SLV ETF. Unclear if that is in response to MM activities to field the demand for clients or if it's a prop position though.

So the inevitable infighting begins. Volume is up 10x today from normal. Retail is behind us. Secondly, while all these reddit posts are saying it's a scam by hedge funds who are long....I've found 4 very detailed write ups on WSB about going long silver to orchestrate a squeeze and all 4 are reddit accounts that have been active for 2-9 years. None of them are recent. Seems to me the narrative changed as soon as they found Citadel is long silver....but if Citadel was seeing order flow from Robinhood buying a shit-ton of silver, it makes sense that they got long silver to meet that demand as the primary market maker so who really knows what is going on All I know is doesn't matter if reddit is behind it or not. The MSM thinks they are and are pushing that story and so other people are buying with that expectation. Maybe other people buying is enough. I'm not looking for $100, but I think $40 oz is reasonable given where gold is presently trading and the outlook for negative real rates for the foreseeable future. This is why I've owned it for months to begin. I'm just hoping Reddit/MSM being enough attention to it that end point is realized sooner rather than later. SLV or physical or something else? I've been rolling SLV call spreads since last spring and SLV volumes were what I was referencing.

So the inevitable infighting begins. Volume is up 10x today from normal. Retail is behind us. Secondly, while all these reddit posts are saying it's a scam by hedge funds who are long....I've found 4 very detailed write ups on WSB about going long silver to orchestrate a squeeze and all 4 are reddit accounts that have been active for 2-9 years. None of them are recent. Seems to me the narrative changed as soon as they found Citadel is long silver....but if Citadel was seeing order flow from Robinhood buying a shit-ton of silver, it makes sense that they got long silver to meet that demand as the primary market maker so who really knows what is going on All I know is doesn't matter if reddit is behind it or not. The MSM thinks they are and are pushing that story and so other people are buying with that expectation. Maybe other people buying is enough. I'm not looking for $100, but I think $40 oz is reasonable given where gold is presently trading and the outlook for negative real rates for the foreseeable future. This is why I've owned it for months to begin. I'm just hoping Reddit/MSM being enough attention to it that end point is realized sooner rather than later.

I, too, saw this news. Already owned silver call spreads, but rolled the short legs to higher strikes just in case if they're successful in pumping this

In theory, I don't like using interest rates to determine the fair value of an investment. 1) rates change - sometimes dramatically and 2) low rates imply low growth which does NOT support inflated multiples. In practice, low rates make businesses seemingly more robust (roll debt at lower and lower rates) and provide consumers with access to cheap financing which allows more spending in both the real economy and in capital markets. These are boosts to the capital markets and the economy. But it's all fictitious - businesses/consumers lever way up b/c the cost of carry is so low and the entire foundation is precarious for even the slightest economic blip OR slightest rise in rates. My preferred route is to have a reasonable, absolute discount rate and a reasonable expectation of growth/profits over the cycle. Take all of this with a grain of salt though - my approach/concerns have cost me investment wise because I didn't appreciate that this could literally go on the better part of a decade.

This should be illegal. This whole system is so messed up. I don't get it. Why should it be illegal? Perhaps it should be legal for doctors to prescribe medicine and then "retire" and get a "consulting" job at a pharmaceutical company making 4x their previous salary too? I mean, surely the doctor wouldn't be biased at all when making the day to day decisions when they know how lucrative "consulting" is if they play their cards well, right? I'm of the opinion that public service should be just that. Not a way to enrich oneself. Jimmy Carter should be the standard - not the exception. Note, I'm not trying to take this into a political direction! I generally agree. While I don't think ones professional endeavors should make one unsuitable for public service, it's certainly something to be considered when they're taking the job. And vice versa - the roles that they can assume when exiting. I'm not yet convinced anything nefarious is happening here. I find it way easier to believe the plumbing and capitalization of the US financial system never conceived that 1 million reddit users would bid an irrelevant company up to a $30 billion valuation using calls and margin and thus wasn't prepared for it - or the obvious repercussions.

I'd echo the same concerns others have expressed - I don't trust RH's risk management to want to be with the crowd who bids Hertz up to $5 in bankruptcy, pays 50% premiums to NAV oil ETFs because they believe they're buying at negative prices, or yolo on margin on OTM options on GameStop. Plenty of brokers offer free commissions now - I occasionally use Schwab. But ultimately am happy paying IB the occasional small commission for better fills, international access, and greater certainty of execution. Enjoy no commissions at Schwab, but also note the limit orders there don't always fill even if prices are below my limit.

What many BTC bulls have been saying for years now... But what prompted him to revisit his stance? I think it's obvious due to the rise in the BTC price and sustained momentum... He cannot ignore it anymore. Isn't this the same as a person jumping on to some mania bandwagon? He's been making the turn over a few months. He admitted recently that there was something he might've missed and was asking for direction and info from market participants on twitter to explain it to him. In other news - looks like Elon is on board now too.

The MacroVoices podcast also interviewed the Logica guy (BTC bear) last week. I think he made a better case there than on this podcast. I just really felt like this whole thing was bogged down and debating semantics and words and papers (papers that they both agreed were low quality) instead of getting into the crux of BTC. I wish Grant did a better job moderating.