Cryptocurrencies

[SharperDingaan]

The reality is that BTC-ETF's are not 'investments'; they are trading sardines, and 3-months is a long time. Lot of folks think BTC is 85K 4-months out (+21% from today's 70K ); but obviously it's not a straight line rise. Uncertainty drives FOMO that drives volatility that drives gambling. Should BTC fade back to 65K; that 4-month gain at 85K is now +31%

 

China's BTC-ETF introduction has indeed the potential to move the market, but to move the dial it has to overcome the widely expected post-halving mining drag. There's a reason why Chinese BTC-ETF's are coming to market, after the current halving.

 

Step away for a time, break the feedback loops, and come back with fresh eyes; the bunnies will still be there later 

 

SD

 

Edited April 11 by SharperDingaan

[rkbabang]

2 hours ago, SharperDingaan said:

The reality is that BTC-ETF's are not 'investments'; they are trading sardines, and 3-months is a long time. Lot of folks think BTC is 85K 4-months out (+21% from today's 70K ); but obviously it's not a straight line rise. Uncertainty drives FOMO that drives volatility that drives gambling. Should BTC fade back to 65K; that 4-month gain at 85K is now +31%

 

China's BTC-ETF introduction has indeed the potential to move the market, but to move the dial it has to overcome the widely expected post-halving mining drag. There's a reason why Chinese BTC-ETF's are coming to market, after the current halving.

 

Step away for a time, break the feedback loops, and come back with fresh eyes; the bunnies will still be there later 

 

SD

 

 

 

Even if I was sure there was going to be a pull back to $60K-$65K, paying 15-20% federal capital gains taxes would stop me from selling with the expectation of re-buying.  I'm just going to hold and keep DCAing.   If we get a pullback I will increase my buying, but I will not sell.  Not only is timing the market as much luck as it is anything else (i.e. gambling) capital gains taxes make it not really worth it even if you guess correct.

 

[SharperDingaan]

2 minutes ago, rkbabang said:

 

 

Even if I was sure there was going to be a pull back to $60K-$65K, paying 15-20% federal capital gains taxes would stop me from selling with the expectation of re-buying.  I'm just going to hold and keep DCAing.   If we get a pullback I will increase my buying, but I will not sell.  Not only is timing the market as much luck as it is anything else (i.e. gambling) capital gains taxes make it not really worth it even if you guess correct.

 

 

Do this in a tax exempt/deferred account (TFSA/RRSP), and the math looks a little different 

 

SD

 

 

[TwoCitiesCapital]

1 hour ago, rkbabang said:

 

 

Even if I was sure there was going to be a pull back to $60K-$65K, paying 15-20% federal capital gains taxes would stop me from selling with the expectation of re-buying.  I'm just going to hold and keep DCAing.   If we get a pullback I will increase my buying, but I will not sell.  Not only is timing the market as much luck as it is anything else (i.e. gambling) capital gains taxes make it not really worth it even if you guess correct.

 

 

+1 

 

I trade a little around my IBIT held in my IRAs. I don't trade BTC directly for these reasons other than to capture losses on recent lots of we dip. 

 

I have a suspicion we'll see a dip - but I don't know how much and think odds aren't insignificant that it's small or doesn't occur at all. 

 

Instead of trimming positions, I've been selling OTM puts in my IRAs instead of buying outright exposure.

 

Basically getting paid 2-3% every 2 weeks to have limit orders 5-10% beneath the market. Will be assigned on the dips, if any, and in the meantime getting fat annualized returns if I don't get assigned. 

Edited April 11 by TwoCitiesCapital

[Paarslaars]

There is also no reason to believe there is going to be a sell-off from the miners as long as BTC does not tank...

[SharperDingaan]

Miners have incentive to borrow against their stash to pay the bills. Bankers have incentive to lend out the collateral via derivatives. As long as the miner can continue to pay the interest, everyone wins.

 

But some miners are going to get liquidated, their stashes increasing the BTC float and lowering the BTC price. However, the obvious buyers have no incentive to buy, as all they need do is simply wait on puts to get assigned; and short (via CME options/futures) on the way down .... for a few extra bucks. 

 

SD

 

Edited April 20 by SharperDingaan

[jfan]

Found this article from the IMF on Cross-Border Bitcoin Flows. Have not read it yet but looks informative.

A Primer on Cross Border Bitcoin Flows.pdf

[james22]

 

[Dave86ch]

13 hours ago, jfan said:

Found this article from the IMF on Cross-Border Bitcoin Flows. Have not read it yet but looks informative.

A Primer on Cross Border Bitcoin Flows.pdf 9.93 MB · 7 downloads

 

[Dave86ch]

SoftWar?

 

[SharperDingaan]

On 4/23/2024 at 2:57 PM, jfan said:

Found this article from the IMF on Cross-Border Bitcoin Flows. Have not read it yet but looks informative.

A Primer on Cross Border Bitcoin Flows.pdf 9.93 MB · 9 downloads

 

A worthwhile read, with results that are not unexpected.

However, there are actually 3 BTC markets, not 2. On-chain, off-chain (Lightning network, stable coin, BTC-ETF, etc), and derivatives (OTC and non-OTC); the silence around the derivatives market speaking volumes.

 

The markets are also stratified, and facilitate money laundering; (1) Borderless BTC but subject to the 'influence' of the big holders, (2) semi-borderless BTC options/futures (US exchange [CME], borderless (but known) buyers/sellers, (3) less borderless BTC-ETF that is largely confined within the host nation. 

 

Money laundering via real estate is visible at scale, but much less so via crypto; all those empty towers in the desert and new cities in Asia being prime examples. Rather than fight it (venereal disease approach), money laundering is simply co-opted to benefit everybody - as volatility to trade against (the largest money launderers in the world are nation states)

 

Less borderless as a US BTC-ETF can be pledged as collateral for a non USD loan. Authorities know who you are, but can lean on the lender at any time to seize the collateral - Russia (JP Morgan) and China (Binance) as more recent examples.

 

We live in interesting times.

 

SD

 

Edited April 25 by SharperDingaan

[james22]

 

[SharperDingaan]

Gotta love the smell of napalm first thing in the morning (Apocalypse Now, 1979);

BTC at USD 57,500 and falling.

 

By now, retail around the world has discovered that BTC/BTC-ETF's are no longer marginable, and that margin accounts with BTC are either getting sold out, or the BTC in them severely sold down. Daily capital flow into crypto is now negative, the margin restriction has diverted money-laundering elsewhere, and it has put a hold on the inclusion of BTC in corporate Investment Policy Statements. It is also no longer worth borrowing against BTC to pay the monthly mining bills, and the current crop of Chinese BTC-ETF launches ...  have strong incentive to withdraw from the market and 'relaunch' in 6 months. And this is just BTC ..... not crypto in general; have to think that BTC is going a lot lower ....

 

Lot of those who sold into the halving are looking at potential swing trade gains in the five digits; they also aren't going to be in a hurry to buy back in. Interesting times.

 

SD

Edited May 1 by SharperDingaan

[james22]

[Milu]

36 minutes ago, james22 said:

I suppose the hard thing is determining what is a 'fair' percentage for bitcoin relative to total global Assets. Nobody knows this. For example you could just pick any random asset or group of assets and plonk that square into this chart showing massive upside. 

 

I say this as somebody with 10% of my net worth in bitcoin

[james22]

2 minutes ago, Milu said:

Nobody knows this.

 

No, but I'm betting Blackrock is targeting higher than 1%.

[Milu]

1 minute ago, james22 said:

 

No, but I'm betting Blackrock is targeting higher than 1%.

Yup, agree with that. 

[rkbabang]

39 minutes ago, Milu said:

I suppose the hard thing is determining what is a 'fair' percentage for bitcoin relative to total global Assets. Nobody knows this. For example you could just pick any random asset or group of assets and plonk that square into this chart showing massive upside. 

 

I say this as somebody with 10% of my net worth in bitcoin

 

 

Yes.   No one knows what the correct percentage is nor how long it will take to get there.  My personal opinion is more than Gold, Art, and Collectables combined, but less than Equities.  So the 2024 equivalent of $40T-$80T and within the next 20 years.

[TwoCitiesCapital]

50 minutes ago, rkbabang said:

 

 

Yes.   No one knows what the correct percentage is nor how long it will take to get there.  My personal opinion is more than Gold, Art, and Collectables combined, but less than Equities.  So the 2024 equivalent of $40T-$80T and within the next 20 years.

 

This is my long term thinking as well. And my guess is that it's not so much those markets ceding to BTC (other than maybe gold), but much of it may come at the expense of real estates market share. 

 

BTC isn't really a substitute for bonds. Equities growth in profits and and assets over time may keep them from ceding much. BTC largely accomplishes the same inflation protection as R.E. with fewer intermediaries/costs/frictions so that is where I envision most of the market share will be lost - but it doesn't produce income not can you live in it so R.E will likely continue to be the largest sector by far. 

[rkbabang]

1 minute ago, TwoCitiesCapital said:

 

This is my long term thinking as well. And my guess is that it's not so much those markets ceding to BTC (other than maybe gold), but much of it may come at the expense of real estates market share. 

 

BTC isn't really a substitute for bonds. Equities growth in profits and and assets over time may keep them from ceding much. BTC largely accomplishes the same inflation protection as R.E. with fewer intermediaries/costs/frictions so that is where I envision most of the market share will be lost - but it doesn't produce income not can you live in it so R.E will likely continue to be the largest sector by far. 

 

 

My thinking is that BTC takes some market share from Gold, Real Estate, Money, Bonds, and even Equities.  In that order.  Gold & RE 1st, Money, Bonds, & Equities last.   Right now holding money as an asset is like holding water in a leaky bucket.  It loses value constantly.  When BTC gets close to its terminal value it will be far safer to hold than government money.   There is some percentage of wealth held in Bonds and Equities now simply because people don't want to lose money to inflation every single year, so holding it in riskier investments is an attempt to hold the value through time.   At the point that BTC is the underlying base layer for which most things are valued against and it is stable (growing in purchasing power at about the rate of productivity growth in the world economy), some of the wealth that would be invested in bonds and equities today will be held in Bitcoin instead. 

 

[SharperDingaan]

Keep in mind that BTC is a single security and already has a market cap in the global top 10-15 names. If one believes that a halving doubles the value of BTC every 4-yr cycle, it will not be that many years before BTC has the largest cap of all (& then some). And if BTC is programmed to double every 4 years ... the un-leveraged 4-year CAGR to beat is 18.97%.

 

The reality is that in every nation, a BTC-ETF is very likely never going to value at anything much different to the most common fiat bill in circulation (assume $20 bill in the US). If Joe Sixpack wants to spend, he would simply hold the $20 as either a bill or as US CBDC. If Joe wants to save he would simply hold the $20 as a US BTC-ETF, immune from inflation. As and when the value of BTC to the value of supported US BTC-ETF issued periodically exceeds $20, there is simply a unit split.

 

Long term we have a similar view to rkbabang, but with perhaps more against bonds. Real estate can be nationalised/seized at any time, whereas bonds can easily be denominated in BTC to facilitate creation of today's Euro-Dollar and Euro-Yuan market equivalents.

 

Also the higher that BTC goes, the safer it gets. BTC at 40T is 1.9M per BTC. Essentially the currency for government to government settlement, that displaces reserve currency. 

 

SD

 

 

Edited May 1 by SharperDingaan

[Vish_ram]

 

What prevents Joe 6Pack Jr. to save in BTC and spend it using layer 2 networks using some app? Why does he need the $20 bill? 

 

We will most likely end up with 2 parallel systems. Govt using CBDC or $ to tax/spend, Treasury to issue debt and Fed to do FOMC activities. This will be the inflating one and rest will use Crypto/Layer2. 

[SharperDingaan]

14 minutes ago, Vish_ram said:

 

What prevents Joe 6Pack Jr. to save in BTC and spend it using layer 2 networks using some app? Why does he need the $20 bill? 

 

We will most likely end up with 2 parallel systems. Govt using CBDC or $ to tax/spend, Treasury to issue debt and Fed to do FOMC activities. This will be the inflating one and rest will use Crypto/Layer2. 

 

Fees. Cash is totally anonymous, and CBDC is free to use with near instant settlement; layer 2 ... not so much.

 

SD

Edited May 1 by SharperDingaan

[Fly]

19 hours ago, SharperDingaan said:

 

Fees. Cash is totally anonymous, and CBDC is free to use with near instant settlement; layer 2 ... not so much.

 

SD

 

Do you think physical cash bills/coins will exist in 5-10yrs?

[rkbabang]

2 hours ago, Fly said:

 

Do you think physical cash bills/coins will exist in 5-10yrs?

 

They will certainly exist.  But will they be widely used?   You can make the case that they are already not widely used today and in 5-10 years they will be used much less than now.