Cryptocurrencies

[TwoCitiesCapital]

1 hour ago, Spooky said:

 

Explain this to me like I'm 5. There is a limited supply of gold in the world, how is Bitcoin any different in that regard? 

 

What is the source of the demand for Bitcoin? 

 

What is the case why Bitcoin would outperform the S&P over the long term? 

 

 

 

Gold has a fixed supply that's above ground and new supply added each year from additional mining. That ratio is called stock-to-flow. In general it's about 70x (i.em there is 70x more gold above ground than added in new supply meaning new supply is only slightly inflationary).

 

Many people consider this ratio important in describing general scarcity and relative value of commodities. Why is gold capitalized as more valuable than silver and platinum? It's stock-to-flow ratio is significantly higher. New supply is significantly more scarce. 

 

BTCs stock to flow is currently ~55x. At the next halving, it'll be ~110-120x. Significantly more scarce than gold on a relative basis and significantly less inflationary. At some point, annual supply basically drops to 0 and BTC becomes deflationary as people will still occasionally lose coins. 

 

Who is buying it? I've already covered sources in a prior post from yesterday. People are buying it for use in payments, people are buying it as a differentiated asset class, people are buying it for a balance sheet store of wealth given it's relative scarcity, Russia is considering it's use in global trade to avoid USD sanctions, central banks might be considering it as an alternative to gold and USD assets now that CB bank reserves have been weaponized, etc. 

 

Lots of use cases - some good and some bad. That network of people is generally growing every year and this demand for the coin is growing every year while new supply slows. 

 

Why is BTC going to outperform the S&P? Over what time frame? 10-years? 20-years? Because it's in a secular growth trend of growing demand and decreasing new supply making it highly inelastic. Price moves are explosive as we've seen time and time again.

BTC could go to $1 million tomorrow and the number of new BTC issued in supply doesn't change. The only way to incentivize additional supply coming to market is paying a high enough price to convince someone to sell. 70+% of BTC in circulation hasn't moved in over a year - there aren't many sellers in these desperate times, how many do you expect when times are good and they're being rewarded for holding?

 

Eventually BTC will trade at a significantly higher enough capitalization that forward returns will be pretty minimal as holding a currency should be. That point doesn't occur until mass adoption has happened which we're only seeing the beginning of. Lots and lots of new market participants have come around to accepting BTC since 2018 and I believe more will come around. 

Supply and demand. 

 

59 minutes ago, Dalal.Holdings said:

"Bitcoin is disinflationary/deflationary by design."

 

Yet over the last 12 mo, the value of the dollar has declined at rapid rate and Bitcoin's dollar value is waay down...

 

Why? Interest Rates.

 

Rising rates are the nail in the coffin for this and everything like it. Buyer beware.

 

And yet over 3-year, 5-year, and 10-year periods BTC is trouncing the dollar despite being down 80% while the dollar is at 20-year highs? Which one was the real store of value over the intermediate-to-long term?

 

Would also add last time BTC boomed was in 2017...when interest rates were rising. The top coincided with rising interest rates this time around. Interest rates didn't matter to it in 2016/2017. And interest rates weren't moving in 2013 when it had the prior bust. Pretty sure we can say historically over the 3 boom/bust cycles that there is ZERO correlation to interest rates. 

Edited November 15, 2022 by TwoCitiesCapital

[UK]

1 hour ago, TwoCitiesCapital said:

Eventually BTC will trade at a significantly higher enough capitalization that forward returns will be pretty minimal as holding a currency should be. That point doesn't occur until mass adoption has happened which we're only seeing the beginning of. Lots and lots of new market participants have come around to accepting BTC since 2018 and I believe more will come around. 

Supply and demand. 

 

What is your estimate of "significantly higher"? ~500 K USD if ~on par with gold? It would mean we just went from possible upside 10x to 30x in say 10 years? But even more important question: how low it go down further? Is it possible for BTC to trade below 10.000 USD at some point in the future? 1.000 usd?

 

 

[dealraker]

Elaborate complex rationalizing does seem to be popular with Bitcoin promoters.  I am literally unable to stay attentive to the presentations.

 

Much prefer my high school friend, he too was a high IQ lover of disruption.  Riding with him in the mountains in his Jeep CJ5 in 1972 going uphill on a curvy two lane road he passed three 18 wheelers staying in the wrong lane for some time.

 

He looked over and said, "Left lane's just as flat as the right."  That made perfectly good sense to me.

[Gregmal]

29 minutes ago, UK said:

 

What is your estimate of "significantly higher"? ~500 K USD if ~on par with gold? It would mean we just went from possible upside 10x to 30x in say 10 years? But even more important question: how low it go down further? Is it possible for BTC to trade below 10.000 USD at some point in the future? 1.000 usd?

 

 

My thesis which I detailed here was simple. Retail beat institutional investors to the punch. 2017 was the first act. I bought between $3,500-10,000 and figured the old high of $19,000 would be taken out once institutions jumped on the money train. That happened. I scaled out my basis and plenty more and planned to hold forever, or at least through the cycle. But in late 2021 got scared shitless when somebody I know who is the epitome of “dumb as a rock” told me he mortgaged his only asset, his house and told me he owned 13,000 BTC at $66,000. I put in a stop at $40,000 and parted ways with everything at that point. The “institutional buying” thesis played out…you see the “tutes” now. All these bullshit “crypto hedge funds” and brokers who rode the wave. They’re swimming nude.(swimming nude actually seems and is quite liberating in a different sense lol) but there was so much bs built in and really, it’s all pegged to BTC so how TF do you have a “fund” when they’re all correlated to the best asset, BTC? That whole scenario has played out…what’s left? I have no fuckin clue. So I’m out and just twiddling my thumbs. Maybe I’ll take a flyer when there’s clear capitulation…maybe soon. I think there’s more to it than “zero value” but less to it than “ultra gold of the internet”. So I guess we shall see.

[UK]

https://www.bloomberg.com/news/articles/2022-11-14/-broken-crypto-fund-hits-record-42-discount-as-etfs-hum-along

 

What about this one? Would it be possible to liquidate it some day if SEC denies approval? At least an extra 40 per cent discount? Why not vs BTC?

 

“As far as GBTC goes, I don’t know what stops this thing from sinking into a further discount,” said Bloomberg Intelligence ETF analyst James Seyffart. “There’s also an argument to be made that the widening discount is reflective of a lower probability or at last a longer time frame before GBTC is able to convert to an ETF.”

 

Edited November 15, 2022 by UK

[Gregmal]

Not gonna lie. GBTC is actually somewhat interesting, on several different fronts. 

[backtothebeach]

 

[Parsad]

1 hour ago, backtothebeach said:

 

 

My Grandma passed away in September, and I miss her dearly.  But I have to say, I'm going to miss these two farts (Buffett & Munger) nearly as much when their time comes.  Especially Charlie's straight forward, take no prisoners vernacular!  Cheers!

[matthew2129]

The whole FTX debacle is just another prime example of why we need start bullying nerds again

[Gregmal]

6 minutes ago, matthew2129 said:

The whole FTX debacle is just another prime example of why we need start bullying nerds again

100%.
 

Besides, bullying builds character. Getting bullied taught me how to fight. 

[Ulti]

https://theankler.com/p/hwood-ftx-frenzy-as-michael-lewis

should be an interesting book as hes been tailing \interviewing Sam for the last 6 months

[rkbabang]

2 hours ago, Gregmal said:

Not gonna lie. GBTC is actually somewhat interesting, on several different fronts. 

 

 

You'd be betting on SEC approval for an ETF.  If that approval never comes the gap with NAV will only keep widening.  I have no way to gauge how likely that approval is. The market certainly doesn't think that it's inevitable. 

[Charlie]

Now you can ask yourself why is Munger doing all this anti-Bitcoin interviews?

 

Does he want hurt Bitcoin-investors? Of course not.

He thinks that the US is a little bit to permissive with bubbles/wretched excesses. 

Because when these bubbles are going long enough, they have terrible consequences

for a lot of people. And the longer the bubbles go, the uglier the after-math.

So it is important to deflate a bubble as early as possible.

Munger is doing the country a service, because nobody else is doing it,

because people get hated for it and nobody earns money saying it.

 

Who cares? Bitcoin is up some percentage...

 

[TwoCitiesCapital]

15 hours ago, UK said:

 

What is your estimate of "significantly higher"? ~500 K USD if ~on par with gold? It would mean we just went from possible upside 10x to 30x in say 10 years? But even more important question: how low it go down further? Is it possible for BTC to trade below 10.000 USD at some point in the future? 1.000 usd?

 

 

 

All things are possible, but I think 1k is highly improbable. 10k I think is also unlikely, but could happen as sentiment grows even darker from the recent FTX scandal and the soon-to-be-seen collateral damage. 

 

I thought the prior lows of 16k might've done it. Now I think it's 50/50 that we go as low as 12-14k, but am absolutely open to being wrong on my bottom call. Just continuing to DCA. 

 

As for highs? I don't think several hundred thousand per coin is out of the realm of possibility. Is a question of how many countries have adopted it at that point, how many central banks have onboarded it, whether or not it's being used as a CB reserve asset or for a portion of int'l trade, etc. All supply/demand and sentiment based. But I've seen credible models that consider network effects and hypothesized values of networks suggest upwards of $500-$1M in the next decade if the network growth follows similar S-curve dynamics of prior tech trends (phone, internet z Facebook users, etc). So far it's been tracking higher than those prior trends.

Edited November 15, 2022 by TwoCitiesCapital

[TwoCitiesCapital]

10 hours ago, UK said:

https://www.bloomberg.com/news/articles/2022-11-14/-broken-crypto-fund-hits-record-42-discount-as-etfs-hum-along

 

What about this one? Would it be possible to liquidate it some day if SEC denies approval? At least an extra 40 per cent discount? Why not vs BTC?

 

“As far as GBTC goes, I don’t know what stops this thing from sinking into a further discount,” said Bloomberg Intelligence ETF analyst James Seyffart. “There’s also an argument to be made that the widening discount is reflective of a lower probability or at last a longer time frame before GBTC is able to convert to an ETF.”

 

 

I own GBTC in my IRAs. I own Bitcoin in my hardware wallets. No reason no to own both, but I prefer direct custody of my BTC. 

 

Only buying GBTC because of the current discount and that I trust a spot ETF will eventually be a thing here in the US and am willing to wait years for it to happen since I'd be holding the BTC for years anyways. 

[Dave86ch]

23 hours ago, Spekulatius said:

Al is not a collectible. It has value because you can do something with it, like build cars or airplanes for example.

The utility of BTC is fairly limited at this point. The #1 application by far is gambling right now. It is a collectible right now, similar to a bored Ape NFT or a baseball card.

 

The exit option and the bank for bankless are already here.

Edited November 15, 2022 by Dave86ch

[rkbabang]

1 hour ago, Charlie said:

Now you can ask yourself why is Munger doing all this anti-Bitcoin interviews?

 

Does he want hurt Bitcoin-investors? Of course not.

He thinks that the US is a little bit to permissive with bubbles/wretched excesses. 

Because when these bubbles are going long enough, they have terrible consequences

for a lot of people. And the longer the bubbles go, the uglier the after-math.

So it is important to deflate a bubble as early as possible.

Munger is doing the country a service, because nobody else is doing it,

because people get hated for it and nobody earns money saying it.

 

Who cares? Bitcoin is up some percentage...

 

 

I have no doubt you are 100% correct about his motives. He is doing what he thinks is right and has no desire to hurt anyone.   You and he are correct in that bubbles do hurt people even if the asset which is bubbling has significant long term value, the crashes in price can cause significant pain to those not expecting it or prepared for it.   I just think he's wrong about the long term value.

 

Edited November 15, 2022 by rkbabang

[Luca]

https://www.cnbc.com/2022/11/15/charlie-munger-says-crypto-is-a-bad-combo-of-fraud-and-delusion-good-for-kidnappers.html

 

The Legend.

 

Berkshire now coming out with: Mungercoin

[UK]

2 hours ago, TwoCitiesCapital said:

 

I own GBTC in my IRAs. I own Bitcoin in my hardware wallets. No reason no to own both, but I prefer direct custody of my BTC. 

 

Only buying GBTC because of the current discount and that I trust a spot ETF will eventually be a thing here in the US and am willing to wait years for it to happen since I'd be holding the BTC for years anyways. 

 

Thanks for response!

[Xerxes]

What if we get to that last iteration where we get very close to the cap of 21 million and than miner is able to create 1 more, and than 1 more past 21 million.

 

Whhhhhops. the cap is not real !!!. It was a fiction. 
 

 

[rkbabang]

11 minutes ago, Xerxes said:

What if we get to that last iteration where we get very close to the cap of 21 million and than miner is able to create 1 more, and than 1 more past 21 million.

 

Whhhhhops. the cap is not real !!!. It was a fiction. 
 

 

You are now predicting what will happen 120 years from now?   I'm not sure what will happen next year.

 

 

EDIT:  But to seriously answer your question.  If some nodes tried to do this, they would just succeed in creating a valueless fork of the blockchain.  Anyone can fork the chain at any time.  This has been done numerous times already.  

 

Edited November 15, 2022 by rkbabang

[TwoCitiesCapital]

19 minutes ago, Xerxes said:

What if we get to that last iteration where we get very close to the cap of 21 million and than miner is able to create 1 more, and than 1 more past 21 million.

 

Whhhhhops. the cap is not real !!!. It was a fiction. 
 

 

It would require a change to the protocol and a hard fork of the BTC Blockchain. Which has happened before. 

 

Go look at Bitcoin Cash (BCH) or Bitcoin Satoshi Vision (BSV) or Doge Coin. All are forks/copies of the BTC protocol with something changed. None have retained anywhere near the value of BTC in the long-run and will likely fade to obscurity. 

 

Any new hardfork likely faces the same fate. The only way it DOESN'T result in a hardfork is if you get a consensus amongst BTC market participants to take away the primary characteristic that gives BTC its relative value - it's scarcity.

 

Why would the industry come to a consensus and change the protocol against their own best interest?

 

[Xerxes]

It was a late Tuesday humourless humour.  

[rkbabang]

21 minutes ago, Xerxes said:

It was a late Tuesday humourless humour.  

 

I prefer Taco Tuesday to Humourless Humour Tuesday myself.

 

[fareastwarriors]

3 hours ago, rkbabang said:

 

I prefer Taco Tuesday to Humourless Humour Tuesday myself.

 

 

I'm down for some  s and marg's

Does the place accept BTC or ETH?