Cryptocurrencies

[TwoCitiesCapital]

I know Panama, Paraguay, and El Salvadore aren't on anyone's radar. I know that by themselves they don't constitute much additional demand than say MicroStrategy issuing 2 billion in coverts to buy BTC. 

 

But just think back 12 months ago when people thought it was laughable and ridiculous that ANY country or company would accept BTC. 'It's too volatile'. 'Why would they give up their sovereignty over their own money'. ETC. ETC. ETC. 

 

Now those same arguments are having to be walked back and watered down. Those individuals now have to explain why Paypal and Square and Visa are all working in cryptos. Why Mass Mutual, Paul Tudor Jones, Stanley Druckenmiller, etc. are all investing in it. Those people are having to justify why Panama and Paraguay and El Salvadore don't matter and have to explain why this isn't the start of something bigger. Every day, the bear argument gets diluted and watered down while the bulls are justified.

[changegonnacome]

12 hours ago, TwoCitiesCapital said:

I know Panama, Paraguay, and El Salvadore aren't on anyone's radar. I know that by themselves they don't constitute much additional demand than say MicroStrategy issuing 2 billion in coverts to buy BTC. 

 

But just think back 12 months ago when people thought it was laughable and ridiculous that ANY country or company would accept BTC. 'It's too volatile'. 'Why would they give up their sovereignty over their own money'. ETC. ETC. ETC. 

 

Now those same arguments are having to be walked back and watered down. Those individuals now have to explain why Paypal and Square and Visa are all working in cryptos. Why Mass Mutual, Paul Tudor Jones, Stanley Druckenmiller, etc. are all investing in it. Those people are having to justify why Panama and Paraguay and El Salvadore don't matter and have to explain why this isn't the start of something bigger. Every day, the bear argument gets diluted and watered down while the bulls are justified.

 

Price action disagrees with the above - as BTC today hits $32k, 50% off its ATH of $64k………..but yes the above pieces of the puzzle coming together ala El Salvador etc. could be the start of a sovereign adoption journey….…..but it could also be a head fake…depends what confirming evidence your searching for. I remain skeptical, you seem certain @TwoCitiesCapital the answer is between and the possible path for BTC is highly uncertain………and not inevitable as the laser beam eyed Miami peeps would have one believe.

[Spekulatius]

I am not sure if the headline reasoning is correct, but it seems funny that BTC is down almost 10% because it now turns out it is less useful for frauders than thought.

 

El Salvador is a bad example, because they cant even support their own currency. They work with the USD standard, so they have nothing to lose by allowing bitcoin or whatever else. It remains to be seen what other countries do.

 

Looking at the chart, if the ~31k Maginot line doesn't hold, I think BTC could easily fall to ~18k rather quick (which was consolidation zone on the way up).

 

Regardless of the merit of BTC, i find the interplay of the crowds psychology and the prices quite fascinating. It's great  asset to study, because there are no real fundamentals to speak of, just supply and demand based on mass psychology.

 

Edit: other explanation for the bitcoin decline could be that the WSB meme crowd moved back from crypto into stocks. I think there is some interplay here between the two as I suspect quite a few players move between those asset classes towards whatever has momentum currently.

Edited June 8, 2021 by Spekulatius

[Gregmal]

^ Yup. Its one of the purest exercises in trading and market psychology Ive ever seen. 

[TwoCitiesCapital]

2 hours ago, Spekulatius said:

I am not sure if the headline reasoning is correct, but it seems funny that BTC is down almost 10% because it now turns out it is less useful for frauders than thought.

 

El Salvador is a bad example, because they cant even support their own currency. They work with the USD standard, so they have nothing to lose by allowing bitcoin or whatever else. It remains to be seen what other countries do.

 

Looking at the chart, if the ~31k Maginot line doesn't hold, I think BTC could easily fall to ~18k rather quick (which was consolidation zone on the way up).

 

Regardless of the merit of BTC, i find the interplay of the crowds psychology and the prices quite fascinating. It's great  asset to study, because there are no real fundamentals to speak of, just supply and demand based on mass psychology.

 

Edit: other explanation for the bitcoin decline could be that the WSB meme crowd moved back from crypto into stocks. I think there is some interplay here between the two as I suspect quite a few players move between those asset classes towards whatever has momentum currently.

 

I would rather we NOT fall to 18k just given my sizable allocation to this, but if we do I'd be buying hand over fist.

 

I reinitiated my DCA once we fell below 40k and will be doubling it if we go below 30k. 

 

Price action in the short term means very little. We all know that. Momentum is broken, social sentiment is negative at the moment, but the fundamentals march onwards. 

 

Would add that few here saw the rise to 65k as confirmation that they were wrong and should be participating.  Dunno why the drop to 32k serves as evidence that they shouldn't be. Seems like a very selective use framework and is a recipe to get whipsawed in markets. 

 

In 3-years, I don't think it'll matter if you bought at 18k, 28k, or 58k. They'll all probably look like good deals in hindsight. 

 

 

Edited June 8, 2021 by TwoCitiesCapital

[Xerxes]

If BTC was in up-trend, the news about US Gov recovering the stash from the fraudster would have been seen as positive, in some weird way and the media would be building a narrative around that as to why. In a down market, everything (good or bad) is seen as bad news or at best neutral. Bottom line the news-feed is irrelevant.

 

The maximalist are all in, they put their last major buy in 2020 and early 2021. Saylor is in with his $2B+ exposure, but going forward he can only contribute marginally ($10-15 million at a time ... and not billions). Therefore, that marginal demand that will pull BTC out of the hole has to be new fresh money. I am thinking this will take a good six months before working itself out of the hole.

 

On Mass Mutual, Paul Tudor Jones, Stanley Druckenmiller, etc., all I remember was Saylor pumping BTC back in the fall of 2020, keep using these names. I got so use to see his face on TV with that ship-model behind him. Druckenmiller had himself said on record that, his exposure to Bitcoin was taken out of context. If institutional investor brought legitimacy to bitcoin, they also brought with them trader-mentality en masse. Interestingly, it is the retail that is largely buy-and-hold with institutional investors being the "swing-trader". But no worries, I think, the "swing-trader" will be back in 2022.
 

Over the long term, this will be another test that i think Bitcoin will pass and re-bound higher from here.

 

A super interesting video to watch on YouTube is the debate between Saylor and a gold mining executive. It is on YouTube and is called Bitcoin vs. Gold. I highly recommend and was filmed at the height of Bitcoin peak. My respect for gold actually went up after watching it.

 

(2) Bitcoin vs Gold: The Great Debate with Michael Saylor and Frank Giustra - YouTube 

Edited June 8, 2021 by Xerxes

[changegonnacome]

52 minutes ago, TwoCitiesCapital said:

 

I would rather we NOT fall to 18k just given my sizable allocation to this, but if we do I'd be buying hand over fist.

 

I reinitiated my DCA once we fell below 40k and will be doubling it if we go below 30k. 

 

Price action in the short term means very little. We all know that. Momentum is broken, social sentiment is negative at the moment, but the fundamentals march onwards. 

 

Would add that few here saw the rise to 65k as confirmation that they were wrong and should be participating.  Dunno why the drop to 32k serves as evidence that they shouldn't be. Seems like a very selective use framework and is a recipe to get whipsawed in markets. 

 

In 3-years, I don't think it'll matter if you bought at 18k, 28k, or 58k. They'll all probably look like good deals in hindsight. 

 

 

 

Cobf bot - remind me in three years time 

[Xerxes]

19 minutes ago, Xerxes said:

If BTC was in up-trend, the news about US Gov recovering the stash from the fraudster would have been seen as positive, in some weird way and the media would be building a narrative around that as to why. In a down market, everything (good or bad) is seen as bad news or at best neutral. Bottom line the news-feed is irrelevant.

 

The maximalist are all in, they put their last major buy in 2020 and early 2021. Saylor is in with his $2B+ exposure, but going forward he can only contribute marginally ($10-15 million at a time ... and not billions). Therefore, that marginal demand that will pull BTC out of the hole has to be new fresh money. I am thinking this will take a good six months before working itself out of the hole.

 

On Mass Mutual, Paul Tudor Jones, Stanley Druckenmiller, etc., all I remember was Saylor pumping BTC back in the fall of 2020, keep using these names. I got so use to see his face on TV with that ship-model behind him. Druckenmiller had himself said on record that, his exposure to Bitcoin was taken out of context. If institutional investor brought legitimacy to bitcoin, they also brought with them trader-mentality en masse. Interestingly, it is the retail that is largely buy-and-hold with institutional investors being the "swing-trader". But no worries, I think, the "swing-trader" will be back in 2022.
 

Over the long term, this will be another test that i think Bitcoin will pass and re-bound higher from here.

 

A super interesting video to watch on YouTube is the debate between Saylor and a gold mining executive. It is on YouTube and is called Bitcoin vs. Gold. I highly recommend and was filmed at the height of Bitcoin peak. My respect for gold actually went up after watching it.

 

(2) Bitcoin vs Gold: The Great Debate with Michael Saylor and Frank Giustra - YouTube 

 

My bad, Saylor just threw in $500 million more. He is putting in his last dollars now !

 

I am unsure if I am mixing the data, but it looks to be junk-bond +6% yield, while the big chunk of debt he issued early 2021, had a very low yield.

 

 

[rkbabang]

44 minutes ago, changegonnacome said:

Cobf bot - remind me in three years time 

 

Don't worry, we will be here to rub it in. 

 

[Spekulatius]

3 hours ago, Xerxes said:

 

My bad, Saylor just threw in $500 million more. He is putting in his last dollars now !

 

I am unsure if I am mixing the data, but it looks to be junk-bond +6% yield, while the big chunk of debt he issued early 2021, had a very low yield.

 

 

I have no idea if BTC is going up or down. My comment of the 18k resistance zone is based on my reading of the BTC chart. BTC could as well bounce back and go up.

 

I can understand why trades like BTC, it’s volatile and there are a lot of amateurs in the game who can be fleeced. I think some institution like Renaissance  Tech who can skim the social media and determine trends ought to be in a position to make huge bank here, as is someone like Druckenmiller.

 

Since there are no real fundamentals other than news that can be interpreted either way ( like some of the cryptic Elon Musk tweets) it is probably the greatest playground for traders there ever was.

[JRM]

The interview\debate with Michael Saylor reminded me a lot about the sentiment surrounding the railroad bubble and the internet bubble.  During both time periods similar arguments were made about connecting the world and living in a new paradigm of unity and equality.  Saylor even used a railroad analogy at one point.  Its hard to blame people for comparing the analogs.

 

It seems like if it was such a great place to park your money then you wouldn't want to share your secret with the world.  It comes across like a pyramid scheme when these guys buy up a huge position and then start promoting the hell out of it.

 

I thought Frank spent too much time attacking Michael and not enough support his arguments.  Either way, it was an interesting debate.

Edited June 9, 2021 by JRM

[JRM]

It's also hilarious that this elite Russian hacker group couldn't figure out how to secure their loot in a hardware wallet.

 

Politics aside, the whole Colonial Pipeline hack story sounds like BS.

[TwoCitiesCapital]

5 hours ago, Xerxes said:

 

My bad, Saylor just threw in $500 million more. He is putting in his last dollars now !

 

I am unsure if I am mixing the data, but it looks to be junk-bond +6% yield, while the big chunk of debt he issued early 2021, had a very low yield.

 

 

 

**Corrected** Deal was oversubscribed w/ $1.6 billion interest. 

 

Only $500 million in bonds issued, but 4x oversubscription of the initial offering can't be ignored - particularly in light of the 50% decline in price. 

Edited June 9, 2021 by TwoCitiesCapital

[Xerxes]

Wouldn't a large 4X oversubscription push the 6% yield to something much lower ? 

[Xerxes]

14 hours ago, JRM said:

The interview\debate with Michael Saylor reminded me a lot about the sentiment surrounding the railroad bubble and the internet bubble.  During both time periods similar arguments were made about connecting the world and living in a new paradigm of unity and equality.  Saylor even used a railroad analogy at one point.  Its hard to blame people for comparing the analogs.

 

It seems like if it was such a great place to park your money then you wouldn't want to share your secret with the world.  It comes across like a pyramid scheme when these guys buy up a huge position and then start promoting the hell out of it.

 

I thought Frank spent too much time attacking Michael and not enough support his arguments.  Either way, it was an interesting debate.

 

I actually consider Saylor to be a visionary of a sort.

 

But considering the fact that his company had a flat stock price for 15 years and then boom, i need to also add that he is a very good marketer. But I believe he genuinely believes what he says, I guess that's what it takes to be maximalist.

 

During a Bloomberg interview last week, the host had to ask him twice "why should investors bet on a company' specific capital structure (i.e. MSTR) vs. buying a business that has a growing competitive business that compounds". He couldn't answer. He kept talking about his line about treasuries losing value 20% per year till infinite.

 

5 years from now, we will look back and see late 2020- early 2021 as "peak liquidity", when baseball cards, limited edition toys, crypto, SPACs all soar, with their proponent painting a future that is set in stone and that was unchangeable.

 

Bitcoin has a future, but in the short term, it is stuck with the "too much liquidity" narrative, and will behave as such. It needs to raise above that.

 

[fareastwarriors]

 

Interactive Brokers will offer crypto trading by the end of the summer

 

https://www.cnbc.com/2021/06/09/interactive-brokers-will-offer-crypto-trading-by-the-end-of-the-summer.html

 

[Spekulatius]

Just now, fareastwarriors said:

 

Interactive Brokers will offer crypto trading by the end of the summer

 

https://www.cnbc.com/2021/06/09/interactive-brokers-will-offer-crypto-trading-by-the-end-of-the-summer.html

 

This is more bullish than El Salvador allowing bitcoin as legal tender, imo. It is probably not too bullish for Coinbase and other crypto exchanges.

 

Bullish for both BTC and IBKR...

[DeepSouth]

3 hours ago, Xerxes said:

Wouldn't a large 4X oversubscription push the 6% yield to something much lower ? 

 

Most large deals in HY are heavily oversubscribed as people pad orders to drive up allocations. While you can tighten pricing after initial price talk once, generally frowned upon to do big move from original guidance. Lastly, the deal was likely reversed from several large accounts with some sort of pricing color attached, limiting the move from original talk. 

[changegonnacome]

On 6/8/2021 at 3:12 PM, rkbabang said:

 

Don't worry, we will be here to rub it in. 

 

 

No doubt 

[Xerxes]

Thanks for the explanation DeepSouth.

 

Unrelated, MSTR said on a SEC filing that its expects at least $284.5 million impairment on its position by close of June 30. Perhaps similar picture will unfold for Tesla, whereby providing an opportunity for those that are interested in Tesla and its actual business (that is if Elon Musk has not been purchasing more BTC through Tesla, after causing a price depression via his tweets)  

[Xaston]

Nftfi is so cool.

 

Basically a smart contract that sits between both sides of a market:

 

1) Holders of premium NFTs who want access to capital.

2) Holders of capital who want to loan their capital, with an asset backing the loan.

Edited June 13, 2021 by Xaston
clarifying

[TwoCitiesCapital]

On 6/3/2021 at 8:24 PM, TwoCitiesCapital said:

https://www.wsj.com/articles/bitcoins-reliance-on-stablecoins-harks-back-to-the-wild-west-of-finance-11622115246

 

A fairly critical piece in the WSJ on stablecoins. Honestly - I agree. 

 

Stablecoins exist today out of convenience since there are no easy/quick on/off ramps to fiat. Digital currencies backed by CBs may change that (if ERC-20 compatible - or compatible with whichever smart contract chain dominates), but it is worth noting that crypto is STILL reliant on fiat stores of value. 

Maybe that changes once BTC becomes less volatile and wrapped BTC can replace stable coins - or some other alternative comes up - but it is an interesting reminder at the irony of the existence of stablecoins pegged to fiat. 

 

https://www.coindesk.com/iron-finance-defi-titan-iron-price-drop

 

Algorithmic stablecoin loses its peg. 

 

I have concerns about algorithmic stablecoins. They make more sense to me than fiat backed ones (to the extent crypto should NOT rely on fiat inputs), but I struggle with the incentive structure of maintaining pegs in environments of fierce selling.  

 

I know ones like DAI are overcollateralized which is great, but if there is a wave of selling and the collateral value falls, the solution is to liquidate more of that collateral and put more pressure on the price resulting in waterfall liquidation like scenarios. 

 

The primary way to reduce the threat of waterfall liquidations? Collateralize with something less volatile and uncorrelated with crypto in general - i.e. stablecoins issued by the likes of Coinbase (USDC) which makes DAI just as centralized and just as dependent on fiat.

 

It would be cool if DeFi could find a way to reliably fix this and have an algorithmic stable coin that is actually stable and not backed by fiat, but I don't think we're quite there yet. 

[Spekulatius]

3 hours ago, TwoCitiesCapital said:

 

https://www.coindesk.com/iron-finance-defi-titan-iron-price-drop

 

Algorithmic stablecoin loses its peg. 

 

I have concerns about algorithmic stablecoins. They make more sense to me than fiat backed ones (to the extent crypto should NOT rely on fiat inputs), but I struggle with the incentive structure of maintaining pegs in environments of fierce selling.  

 

I know ones like DAI are overcollateralized which is great, but if there is a wave of selling and the collateral value falls, the solution is to liquidate more of that collateral and put more pressure on the price resulting in waterfall liquidation like scenarios. 

 

The primary way to reduce the threat of waterfall liquidations? Collateralize with something less volatile and uncorrelated with crypto in general - i.e. stablecoins issued by the likes of Coinbase (USDC) which makes DAI just as centralized and just as dependent on fiat.

 

It would be cool if DeFi could find a way to reliably fix this and have an algorithmic stable coin that is actually stable and not backed by fiat, but I don't think we're quite there yet. 

Can you explain this to me, like I am a boomer (I am almost one). How can this this stablecoin drop from ~$60 to $0.000000035 in a short period of time.

 

FWIW, Mark Cuban deserves the title for the dumbest self made billionaire.

[TwoCitiesCapital]

3 hours ago, Spekulatius said:

Can you explain this to me, like I am a boomer (I am almost one). How can this this stablecoin drop from ~$60 to $0.000000035 in a short period of time.

 

FWIW, Mark Cuban deserves the title for the dumbest self made billionaire.

To be clear, it wasn't the stablecoin that dropped to zero. The stablecoin dropped to ~0.60 which was the amount of actual backing it had. Any shortfall from a dollar was supposed to be arbitraged by the issuance of the Titan tokens which were valuable at the time. 

 

Edited b/c this explains it better:

 

https://thedefiant.io/iron-finance-implodes-after-bank-run/

 

Edited June 18, 2021 by TwoCitiesCapital

[Jurgis]

4 hours ago, Spekulatius said:

Can you explain this to me, like I am a boomer (I am almost one). How can this this stablecoin drop from ~$60 to $0.000000035 in a short period of time.