Cryptocurrencies

[aws]

5 minutes ago, jfan said:

Luxor’s Aaron Foster on Bitcoin Mining's Growing Sophistication

 

First impression re: FPPS models is the disaggregation of bitcoin mining incentives from miners who get paid regardless of solving a block and further centralization of hash power/hosting sites under large entities. 

 

And is the financialization with hashrate forward contracts, a net positive thing for network security? If miners can stabilize their profitability, does this encourage more mining activity in the long-term?

 

 

 

Nicehash has operated under this type of model for ten years. Miners run their software, the buyers bid for your hashrate, and Nicehash takes a small cut of the revenue. The miners and Nicehash get paid no matter how many rewards are actually earned.

 

I don't think it does much for long-term profitability. Mining revenue is a fixed pool no matter how many people are chasing it, with the exception of short-term spikes in transaction fees. It's not a good business and no amount of financial innovation will change that. You just need to be a very low cost producer that can respond quickly to changes in network difficulty and price.

[jfan]

12 minutes ago, aws said:

 

Nicehash has operated under this type of model for ten years. Miners run their software, the buyers bid for your hashrate, and Nicehash takes a small cut of the revenue. The miners and Nicehash get paid no matter how many rewards are actually earned.

 

I don't think it does much for long-term profitability. Mining revenue is a fixed pool no matter how many people are chasing it, with the exception of short-term spikes in transaction fees. It's not a good business and no amount of financial innovation will change that. You just need to be a very low cost producer that can respond quickly to changes in network difficulty and price.

Thanks. That begs the question if long-term profitability is poor, why do miners continue to mine and their ecosystem continue to develop. Everyone can't be a gambling degenerate or a maxi that believes with religious furor. 

[aws]

Mining profitability swings wildly with network difficulty and prices. The first Bitcoin miners I setup back in 2011 were paying back 1% a day in revenue, and then a few months later the rewards wouldn't even cover the cost of electricity. New entrants jump in when profitability is high, and switch off when variable costs exceed mining revenue. 

[Dalal.Holdings]

Bitcoin held up vs rest of risk assets last week, but looks like it's now joining the party.

[Paarslaars]

4 hours ago, Dalal.Holdings said:

Bitcoin held up vs rest of risk assets last week, but looks like it's now joining the party.

It's the only thing you can trade on a Sunday. People are scrambling in fear for black monday...

[james22]

 

 

 

 

 

 

[Paarslaars]

Those graphs are a bit misleading at times. Here it is 70 days, others use 109 days...

 

If you go back further then the correlation is lost for substantial periods. So I am a bit skeptic here, I think we need some sort of catalytic event like US expanding SBR or more market stability/optimism from Trump... People are scared to invest in anything right now. But let's hope I am wrong. 

 

# of Bitcoin available on exchanges remains low so far so in terms of supply/demand we are still good.

Edited April 12, 2025 by Paarslaars

[james22]

6 minutes ago, Paarslaars said:

Those graphs are a bit misleading at times. Here it is 70 days, others use 109 days...

 

Sure. 

 

6 minutes ago, Paarslaars said:

If you go back further then the correlation is lost for substantial periods. So I am a bit skeptic here, I think we need some sort of catalytic event like US expanding SBR or more market stability/optimism from Trump...

 

Mostly agree.

 

6 minutes ago, Paarslaars said:

People are scared to invest in anything right now.

 

But fear might be a catalyst? BTC has held up pretty well, and if becomes seen as a Gold-like hedge?

 

Anyway, fun to see the relationship.

 

 

 

 

 

[SharperDingaan]

Step away from the charts ..... 

 

BTC price as a function of liquidity (M2). M2 is the U.S. Federal Reserve's estimate of the total money supply, including all the cash people have on hand, plus all the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs).

 

All across the US, tariff related volatility is triggering layoffs, and foreign tourism is way down (air, accommodation, meals, holiday spend). In the US people are starting to draw down on cash, savings, and CDs; and the same is happening everywhere else in the world. Price bias DOWNWARD.

 

Higher money in-flow into BTC depends upon increasing institutional adoption. With today's tariff related volatility, the conservative approach is to reduce exposure, and simply wait and see how BTC performs relative to the chaos. Price bias DOWNWARD.

 

Saylor has made recent comments that if price keeps falling, they might need to sell down some of their BTC holding in order to meet credit obligations. Not all whales are the same ... but if this one has to sell down some? Price bias DOWNWARD.

 

Crypto summits, better regulation, US BTC bonds are simply ideas being pitched ... promises, promises, not implementations. Maybe they raise inflows into BTC maybe they don't, maybe it's implemented competently maybe its another utter **** **.  Given the administration track record to date? Price bias DOWNWARD.

 

The daily tweet might spike the BTC price upward, but one has to think that it is against a downward price bias. Use the volatility ... but don't marry the crypto.

 

SD

   

 

 

      

[james22]

8 minutes ago, SharperDingaan said:

Price bias DOWNWARD.

 

Shorting?

[gfp]

5 minutes ago, SharperDingaan said:

BTC price as a function of liquidity (M2). M2 is the U.S. Federal Reserve's estimate of the total money supply, including all the cash people have on hand, plus all the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs).

 

 

 

How much of the recent rise in M2 is simply a reflection of the US Treasury spending down their TGA general account into the private economy?  Seems like that would reverse as soon as a budget / debt ceiling bill is passed and the TGA starts to be replenished.  

[SharperDingaan]

35 minutes ago, james22 said:

 

Shorting?

 

Swing trade. BTC-ETF proceeds into o/g, earning a fat monthly cash yield while we wait for BTC-ETF prices to fade. Sell the o/g and repurchase the BTC-ETF. Ideally we earn a long gain on the o/g, collect monthly dividends, and earn a short gain on the BTC-ETF for our swing trade risk.   

 

Seems fairly low risk, but obviously not for everyone.

 

SD

[james22]

3 minutes ago, SharperDingaan said:

Seems fairly low risk, but obviously not for everyone.

 

Seems risky to me.

 

1 hour ago, SharperDingaan said:

All across the US, tariff related volatility is triggering layoffs, and foreign tourism is way down (air, accommodation, meals, holiday spend). In the US people are starting to draw down on cash, savings, and CDs; and the same is happening everywhere else in the world. Price bias DOWNWARD.

 

Higher money in-flow into BTC depends upon increasing institutional adoption. With today's tariff related volatility, the conservative approach is to reduce exposure, and simply wait and see how BTC performs relative to the chaos. Price bias DOWNWARD.

 

And if increasingly seen as a hedge?

 

 

58 minutes ago, SharperDingaan said:

Saylor has made recent comments that if price keeps falling, they might need to sell down some of their BTC holding in order to meet credit obligations. Not all whales are the same ... but if this one has to sell down some? Price bias DOWNWARD.

 

You know that's boilerplate, right?

 

58 minutes ago, SharperDingaan said:

Crypto summits, better regulation, US BTC bonds are simply ideas being pitched ... promises, promises, not implementations. Maybe they raise inflows into BTC maybe they don't, maybe it's implemented competently maybe its another utter **** **.  Given the administration track record to date? Price bias DOWNWARD.

 

Don't miss one of the big moves with the announcement of any one of the upcoming catalysts.

 

 

[Paarslaars]

4 hours ago, james22 said:

But fear might be a catalyst? BTC has held up pretty well, and if becomes seen as a Gold-like hedge?

 

I do noticed that BTC was remarkably resilient this time, however when I talk to people around me, they all think BTC is still the riskiest thing you can do with your money.

[gfp]

At least is has been so far.  I wouldn't assume "this time" is a past tense thing just yet.

 

Big ole downtrend might be broken on the 'close' today, whenever that is.  Gotta start somewhere if you wanna stop going down

 

[james22]

39 minutes ago, Paarslaars said:

I do noticed that BTC was remarkably resilient this time, however when I talk to people around me, they all think BTC is still the riskiest thing you can do with your money.

 

I'd agree we're not there yet.

 

Wall Street doesn't believe in bitcoin.

 

 

[james22]

If anything, what this last three weeks have shown the globe: you better be coming up with a new way to exchange things, in something that everybody believes in.

 

 

[SharperDingaan]

At best, over the last 2 weeks, BTC has been demonstrating a weak negative correlation to the market. Some days maybe it is; but only after a delay, and only after gold also rose strongly. Other days it fell with the market on the day; and only rose the next day.

 

Maybe there actually is something there ... but there aren't enough data points yet, and it could quite easily just be wishful thinking, and a few people simply testing it out as a cheaper alternate to gold ... hence the delays. It will be real when institutions agree (adoption), and we are still a ways from that.

 

More notable is that the price of BTC often moves in the opposite direction to the price of oil; and has done do for many months now. Again it's not always the case, and not always to the same degree; but a lot easier to back test.

 

SD

 

 

 

[james22]

1 hour ago, SharperDingaan said:

At best, over the last 2 weeks, BTC has been demonstrating a weak negative correlation to the market. Some days maybe it is; but only after a delay, and only after gold also rose strongly. Other days it fell with the market on the day; and only rose the next day.

 

Maybe there actually is something there ... but there aren't enough data points yet, and it could quite easily just be wishful thinking, and a few people simply testing it out as a cheaper alternate to gold ... hence the delays.

 

Sure.

 

That it didn't crash 50% (like 2020) is significant though. It's no longer only a risk asset.

 

1 hour ago, SharperDingaan said:

It will be real when institutions agree (adoption), and we are still a ways from that.

 

Do you believe this shock spurs adoption?

[Dave86ch]

17 hours ago, SharperDingaan said:

 

Swing trade. BTC-ETF proceeds into o/g, earning a fat monthly cash yield while we wait for BTC-ETF prices to fade. Sell the o/g and repurchase the BTC-ETF. Ideally we earn a long gain on the o/g, collect monthly dividends, and earn a short gain on the BTC-ETF for our swing trade risk.   

 

Seems fairly low risk, but obviously not for everyone.

 

SD

 

What is your take on a long-term perspective—say, 10 years?

[SharperDingaan]

4 hours ago, Dave86ch said:

What is your take on a long-term perspective—say, 10 years?

 

BTC is something that everyone needs to have. Could be as BTC itself, a BTC-ETF, or via a stock. Depending upon the investment purpose; it could also be part of the portfolio cash/money market allocation, or the equity component. Default 5% weighting, rising to a 35% weighting the younger you are ... so that you can afford to buy a house when you grow up.  It is also not enough to passively own the exposure, you need to actively manage ... sadly, beyond most people's capabilities.

 

So, 10 years out ... USD 500K/BTC; 10 yr forward discount of 17.5%+ 

 

SD

 

 

Numbers example

Assume you are US based and measure price in BTC_USD.

 

Base price of USD 100K/BTC, 3.5% average inflation over the 10 years (tariffs driven), 15% USD devaluation to whatever the reserve currency alternate is (tariffs driven). Base price just to stay 'even' , 10 years out .... 162K/BTC (100x(1.035)^10 x 1.15

 

Assume US equities continue to deliver a 10yr CAGR of 8%, and 'on average' BTC is 2x more risky that the market. At the required risk-adjusted  16% growth rate, the base price of BTC, 10 years out, needs to be .....  507K/BTC (100x(1.16)^10 x 1.15. 10 year risk-adjusted CAGR of 17.6% (100,000X(1+.176)^10 = 507,000)

 

Assume this is not a buy and hold position; it will be aggressively swing traded while the price is 'cheap', and the net gain reinvested in BTC, raising the unit count by 10%. Swing trade base price to stay 'even' is 147K (162/1.1), risk-adjusted it is 461K (162/1.1) 

 

 

 

Edited April 13, 2025 by SharperDingaan

[73 Reds]

10 minutes ago, SharperDingaan said:

 

BTC is something that everyone needs to have. Could be as BTC itself, a BTC-ETF, or via a stock. Depending upon the investment purpose; it could also be part of the portfolio cash/money market allocation, or the equity component. Default 5% weighting, rising to a 35% weighting the younger you are ... so that you can afford to buy a house when you grow up.  It is also not enough to passively own the exposure, you need to actively manage ... sadly, beyond most people's capabilities.

 

So, 10 years out ... USD 500K/BTC. 

 

SD

 

 

Numbers example

Assume you are US based and measure price in BTC_USD.

 

Base price of USD 100K/BTC, 3.5% average inflation over the 10 years (tariffs driven), 15% USD devaluation to whatever the reserve currency alternate is (tariffs driven). Base price just to stay 'even' , 10 years out .... 162K/BTC (100x(1.035)^10 x 1.15

 

Assume US equities continue to deliver a 10yr CAGR of 8%, and 'on average' BTC is 2x more risky that the market. At the required risk-adjusted  16% growth rate, the base price of BTC, 10 years out, needs to be .....  507K/BTC (100x(1.16)^10 x 1.15

 

Assume this is not a buy and hold position; it will be aggressively swing traded while the price is 'cheap', and the net gain reinvested in BTC, raising the unit count by 10%. Swing trade base price to stay 'even' is 147K (162/1.1), risk-adjusted it is 461K (162/1.1) 

 

No!  Everyone does not need BTC.  In fact, anyone who believes that loses all credibility IMO.  Nothing personal.

[SharperDingaan]

44 minutes ago, 73 Reds said:

No!  Everyone does not need BTC.  In fact, anyone who believes that loses all credibility IMO.  Nothing personal.

 

Hate to tell you this but in 2025, most every investment house from Blackrock down, recommends a minimum 5% weighting. If you are young and have the runway ahead of you the rep will suggest a higher weighting, and higher still if you are saving to buy a house. You pay good money for that recommendation ... but of course, are free not to follow it.

 

It is just a math driven forecast, if the assumptions are valid .. it is where BTC needs to be, and what mitigation might do. Change the assumptions and you will get different numbers .... just keep in mind that BTC at 500K is a fairly common forecast amongst the major investment houses. The market has long since moved on from BTC as worthless.

 

SD    

[Milu]

1 hour ago, SharperDingaan said:

 

BTC is something that everyone needs to have. Could be as BTC itself, a BTC-ETF, or via a stock. Depending upon the investment purpose; it could also be part of the portfolio cash/money market allocation, or the equity component. Default 5% weighting, rising to a 35% weighting the younger you are ... so that you can afford to buy a house when you grow up.  It is also not enough to passively own the exposure, you need to actively manage ... sadly, beyond most people's capabilities.

 

So, 10 years out ... USD 500K/BTC; 10 yr forward discount of 17.5%+ 

 

SD

 

 

Numbers example

Assume you are US based and measure price in BTC_USD.

 

Base price of USD 100K/BTC, 3.5% average inflation over the 10 years (tariffs driven), 15% USD devaluation to whatever the reserve currency alternate is (tariffs driven). Base price just to stay 'even' , 10 years out .... 162K/BTC (100x(1.035)^10 x 1.15

 

Assume US equities continue to deliver a 10yr CAGR of 8%, and 'on average' BTC is 2x more risky that the market. At the required risk-adjusted  16% growth rate, the base price of BTC, 10 years out, needs to be .....  507K/BTC (100x(1.16)^10 x 1.15. 10 year risk-adjusted CAGR of 17.6% (100,000X(1+.176)^10 = 507,000)

 

Assume this is not a buy and hold position; it will be aggressively swing traded while the price is 'cheap', and the net gain reinvested in BTC, raising the unit count by 10%. Swing trade base price to stay 'even' is 147K (162/1.1), risk-adjusted it is 461K (162/1.1) 

 

 

 

What’s the benefit of trading and trying to estimate if it’s cheap or fairly valued? Just buy bitcoin, have the conviction to hold through the various drawdowns and come out the other end in 10 years with 5-10 times your money. Seems unnecessary to trade it and pay taxes, wonder how much you expect to come out ahead of a simple buy and hold strategy?

[Santayana]

1 hour ago, SharperDingaan said:

2 hours ago, 73 Reds said:

No!  Everyone does not need BTC.  In fact, anyone who believes that loses all credibility IMO.  Nothing personal.

 

Hate to tell you this but in 2025, most every investment house from Blackrock down, recommends a minimum 5% weighting. If you are young and have the runway ahead of you the rep will suggest a higher weighting, and higher still if you are saving to buy a house. You pay good money for that recommendation ... but of course, are free not to follow it.

Recommending a portfolio weighting for the minority of people with enough in their portfolios to even think about weightings is not the same thing as "everyone needing it".