Cryptocurrencies

[Buckeye]

Thanks for your perspective Gfp and good points on where we came from RKBA! 

[james22]

 

[Milu]

Just wondering if any of my fellow bitcoin holders have any exposure to Ethereum? I have a little bit that I bought in 2020 (as a small gamble, rather than having any particular vision). It's up about 14x on my original price so have unrealised capital gains (33% cap gains rate in Ireland) I would need to realise if I sell it all. It's still only about a 2.6% of total portfolio position so I'm between two minds as to whether to just let it ride or just sell it down for cash and take the 33% hit.

 

 

[TwoCitiesCapital]

2 hours ago, Milu said:

Just wondering if any of my fellow bitcoin holders have any exposure to Ethereum? I have a little bit that I bought in 2020 (as a small gamble, rather than having any particular vision). It's up about 14x on my original price so have unrealised capital gains (33% cap gains rate in Ireland) I would need to realise if I sell it all. It's still only about a 2.6% of total portfolio position so I'm between two minds as to whether to just let it ride or just sell it down for cash and take the 33% hit.

 

 

 

I own a hair. Just a small amount left for my forays into DeFi. 

 

Would be the wrong point to sell it IMO. Long term I have few thoughts on ETH, but historically we're approaching what would be the time when ETH starts outperforming BTC. 

Edited November 14 by TwoCitiesCapital

[wachtwoord]

1 hour ago, Milu said:

Just wondering if any of my fellow bitcoin holders have any exposure to Ethereum? I have a little bit that I bought in 2020 (as a small gamble, rather than having any particular vision). It's up about 14x on my original price so have unrealised capital gains (33% cap gains rate in Ireland) I would need to realise if I sell it all. It's still only about a 2.6% of total portfolio position so I'm between two minds as to whether to just let it ride or just sell it down for cash and take the 33% hit.

 

 

 

Jfan recently re-shared an analysis I shared here a long time ago: 

 

 

I suggest you read it but the short of it: ETH is worth orders if magnitude less than BTC. So any valuation it has ever had, including today's, is a vast relative overvaluation.

[rkbabang]

3 hours ago, Milu said:

Just wondering if any of my fellow bitcoin holders have any exposure to Ethereum? I have a little bit that I bought in 2020 (as a small gamble, rather than having any particular vision). It's up about 14x on my original price so have unrealised capital gains (33% cap gains rate in Ireland) I would need to realise if I sell it all. It's still only about a 2.6% of total portfolio position so I'm between two minds as to whether to just let it ride or just sell it down for cash and take the 33% hit.

 

 

 

 

I still hold some from back in 2015 when I was playing with it and found it interesting.   I sold about half of it in 2021 (along with some Bitcoin, to pay off 2 mortgages I had, then sold about half of what was left earlier this year to buy more Bitcoin.  What I have left is still significant, but I've come to agree with @wachtwoord about it.  It may have some value, it may be useful for something, but it isn't a store of value, it isn't money, it isn't secure, limited, decentralized, or immutable (and now even less so that it is proof of stake).   I regret not selling all of it in 2021 so that I wouldn't have to have sold any Bitcoin at all.  Also I regret not selling all what I had left earlier this year to convert it to Bitcoin.  My dumb thinking was that I didn't want to have all of those capital gains in one year, so I'll probably sell it in 2025.

 

That said, I bought my ETH at $8, sold half in 2021 for $4050.  A gain of 506X.  That's the best trade I've ever made.

 

Edited November 14 by rkbabang

[james22]

 

[Xerxes]

On 11/14/2024 at 5:56 AM, Milu said:

Just wondering if any of my fellow bitcoin holders have any exposure to Ethereum? I have a little bit that I bought in 2020 (as a small gamble, rather than having any particular vision). It's up about 14x on my original price so have unrealised capital gains (33% cap gains rate in Ireland) I would need to realise if I sell it all. It's still only about a 2.6% of total portfolio position so I'm between two minds as to whether to just let it ride or just sell it down for cash and take the 33% hit.

 

 

I had sold all of my ETH this past Monday. 
 

I am going convert those ETH digital trinkets into house appliances with utility value. 
 

My gain was 75% (close to S&P) and mostly bought in 2021. Not traded since till this past Monday. 

[SharperDingaan]

Same as every other native coin, ETH has two values; utility, and investment. For utility purposes it does many things well (token wraps), but competition has been steadily eroding its utility value. For investment purposes it was the primary diversification purchase in a crypto portfolio, but its weight in a portfolio has steadily declined as other options have progressively become available. The other choices were NFT, bitcoin farms, etc.

 

ETH did well in an X/15/85-X portfolio; so long as the 85% in BTC rose in price, and the X% declined as the alternatives lost popularity. The presence of the CME options and futures markets in ETH ensured a high minimum weighting; and if those options were sold for premium, created a crypto convertible. While investment value was  always greatly exceeding utility value, ETH just needed to continue being used within the development community.

 

Fast forward; today BTC is also a diversifying asset within the cash allocation of a portfolio, and the crypto portfolio is more of a X/50/50-X allocation. Lot less benefit from BTC, and the alternatives are a lot better than they were. All else equal; with less rocket fuel available, ETH is unlikely to comparably perform as it has in the past.

 

With a lot of implications around portfolio optimisation and mostly negative; going forward, most would argue that the existing $ in ETH is better spent as a new $ in BTC. The obvious overlay is a longer term ETH/BTC pair trade done via the derivative markets, with periodic settlements against existing holdings.

 

Just a different POV.

 

SD

 

 

 

  

 

 

 

  

Edited November 18 by SharperDingaan

[Fly]

8 minutes ago, SharperDingaan said:

Same as every other native coin, ETH has two values; utility, and investment. For utility purposes it does many things well (token wraps), but competition has been steadily eroding its utility value. For investment purposes it was the primary diversification purchase in a crypto portfolio, but its weight in a portfolio has steadily declined as other options have progressively become available. The other choices were NFT, bitcoin farms, etc.

 

ETH did well in an X/15/85-X portfolio; so long as the 85% in BTC rose in price, and the X% declined as the alternatives lost popularity. The presence of the CME options and futures markets in ETH ensured a high minimum weighting; and if those options were sold for premium, created a crypto convertible. While investment value always greatly exceeding utility value, ETH just needed to continue being used within the development community.

 

Fast forward; today BTC is also a diversifying asset within the cash allocation of a portfolio, and the crypto portfolio is more of a X/50/50-X allocation. Lot less benefit from BTC, and the alternatives are a lot better than they were. All else equal; with less rocket fuel available, ETH is unlikely to comparably perform as it has in the past.

 

With a lot of implications around portfolio optimisation and mostly negative; going forward, most would argue that the existing $ in ETH is better spent as a new $ in BTC. The obvious overlay is a longer term ETH/BTC pair trade done via the derivative markets, with periodic settlements against existing holdings.

 

Just a different POV.

 

SD

 

 

 

  

 

 

 

  

It is interesting to have seen the “store of value” challengers to BTC in previous cycles all fail to break into that segment of the crypto market, but as you stated when it comes to the smart contract competitors ETH was the first mover but suffered as competitors made further sacrifices in security and decentralization in exchange for gains in transaction speed. 
 

 

[TwoCitiesCapital]

As someone who played with ETH and DeFi on 2021, the potential seems to be there. 

 

But the fees killed it. You want to deposit your crypto at in a dApp and earn interest? You pay to permission the dApp to spend the crypto (each crypto), then you pay for the actual transaction, then you pay when you want to change the balance or claim the rewards or withdraw. Often times fees are $5-10/apiece pending how high demand is and how intensive the transactions are in computing power. 

 

The way they fixed this? Via multiple layer 2 solutions that didn't talk with one another and required another set of hefty fees (at the time) to get onto and off of along with 5-10 day type settlement periods. 

 

Pair this with rug pulls, unscrupulous actors, hacks of legitimate dApps, and legit dApps that just seized activities forcing you to transact, it was too much to navigate while prices were falling 90+%. 

 

I think things have improved slightly since then, but not enough to get me re interested. ETH ecosystem seems roughly the same as it did 3 years ago, but BTC has continued to power forward. 

Edited November 17 by TwoCitiesCapital

[Fly]

IBIT options start trading tomorrow. Will this be good/bad/ugly for BTC? Will retail turn this into a GME part 2?

[TwoCitiesCapital]

4 hours ago, Fly said:

IBIT options start trading tomorrow. Will this be good/bad/ugly for BTC? Will retail turn this into a GME part 2?

 

Will be huge IMO.

 

Allows you leverage without having to pay 3x MSTRs NAV, the negative roll yield often accompanying futures contracts, or unexpected dividends that reduce the likelihood of the strike being hit. 

 

So better than all other alternatives and will absorb that capital. 

Edited November 19 by TwoCitiesCapital

[Paarslaars]

Won't that depend on the volatility? I thought the reason traders love MSTR is because it is more volatile than BTC itself.

[TwoCitiesCapital]

6 hours ago, Paarslaars said:

Won't that depend on the volatility? I thought the reason traders love MSTR is because it is more volatile than BTC itself.

 

IBIT options are also more volatile than BTC itself. And have no basis risk. 

 

There are scenarios now where MSTR price could fall even while BTC rises or vice versa. IBIT options allow you to cleanly play the thesis or hedge without that risk 

Edited November 19 by TwoCitiesCapital

[Paarslaars]

Yes but you don't have options on top of options.

MSTR options are more interesting than IBIT options due to the volatility, I was assuming?

 

Not an expert here, I'm not an options trader, I just sometimes buy leaps when I like a bit of leverage.

I am curious to understand if the volatility that MSTR provides to the option market is an important part of its premium to NAV or not.

Guess only one way to find out...

Edited November 19 by Paarslaars

[TwoCitiesCapital]

1 hour ago, Paarslaars said:

Yes but you don't have options on top of options.

MSTR options are more interesting than IBIT options due to the volatility, I was assuming?

 

Not an expert here, I'm not an options trader, I just sometimes buy leaps when I like a bit of leverage.

I am curious to understand if the volatility that MSTR provides to the option market is an important part of its premium to NAV or not.

Guess only one way to find out...

 

I don't think volatility justifies significant premiums to NAV and am highly skeptical of the "infinite money machine" people believe Saylor has found. 

 

That being said, it's not as dumb as paying million for monkey JPGs and we've seen that in the crypto space too, so anything can happen I suppose. 

 

I prefer the straight exposure without the basis/dividend risks and I expect most directional traders will as well. 

 

If you're just capturing volatility risk premia? Then there are dozens of options outside of IBIT that may be better at any given time

[TwoCitiesCapital]

Rolled out of positions in BITU in exchange for IBIT Leaps. Near similar 2x leverage but without the decay on down days eroding overall total return over the life of the option. 

 

Have a number of bull put spreads on BITO expiring between now and December. Will rolls those to IBIT options too. 

 

Love the idea of being able to sell covered calls against my core IBIT position to generate income as well, but will wait for the market to get real forthy before giving up the upside. 

 

 

[TwoCitiesCapital]

Re: the cyclicality and predictability of crypto 

 

Tim Peterson has been posting and updating this chart for a few months now 

 

So far has been amazingly accurate at predicting current price movements, and when they occur, by analyzing the average of prior cycles. 

 

Its hard for me to imagine what kind of capital requirement are needed to flow into the industry to get to $500-600k this cycle, but maybe it plays out the same way again. 

 

Watch out for that mid-cycle shake out though. That 50%-like drawdown is gonna be a doozy

Edited November 20 by TwoCitiesCapital

[Paarslaars]

Leak Reveals Trump Crypto Bombshell As Bitcoin Suddenly Surges Toward $100,000 Price

 

Crypto Czar 

[jfan]

Just curious, where does everyone think BTC will top out this cycle?

1) $150K

2) $200K

3) $250K

4) $300K+

 

My vote $300K.

[Paarslaars]

I'm much more conservative, thinking $150k-$200k.

Will start reducing my exposure (now 60%) around $150k.

[TwoCitiesCapital]

4 hours ago, jfan said:

Just curious, where does everyone think BTC will top out this cycle?

1) $150K

2) $200K

3) $250K

4) $300K+

 

My vote $300K.

 

I have my trim targets @ $250k and $350k. I'm not certain those will hit or not. 

 

But, some of the guys that I've followed that have been WAY more accurate than me in the past have $300-500k as the eventual top so ... we'll see

[rkbabang]

I don't know what the top will be this cycle, $150K - $500K would be my guess, but that's a big range.   I don't plan to trim BTC.  I do plan to trim MSTR when I think we are at or close to the top.   Maybe sell half which will be many times my cost basis by then.   My current plan is to hold an accumulate Bitcoin through the next 3-4 cycles at least.  16 years from now I'll be in my late 60s and will hopefully not even need my bitcoin, but it will be there if I need it.

[Fly]

I think price targets are difficult, but timeframe might be easier. Looking at 4Q 2025 for a top. I’m not selling BTC but plan on cleaning out the old altcoins I still have floating around. 

Edited November 21 by Fly