Cryptocurrencies

[backtothebeach]

1 hour ago, TwoCitiesCapital said:

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/

 

I don't claim to understand everything explained in the link, but I think Bernie Madoff would have found this interesting. Doesn't sound like anyone will go to jail over the lost millions/billions.

[Spekulatius]

22 minutes ago, backtothebeach said:

I don't claim to understand everything explained in the link, but I think Bernie Madoff would have found this interesting. Doesn't sound like anyone will go to jail over the lost millions/billions.

Just a bug in the algos. Easy fix.

[Spekulatius]

On 6/8/2021 at 11:20 AM, 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.

BTC at $29.7K this AM. Looks like the line has been breached. This could be fun. Never a dull moment in crypto land.

 

 

 

[rkbabang]

19 minutes ago, Spekulatius said:

BTC at $29.7K this AM. Looks like the line has been breached. This could be fun. Never a dull moment in crypto land.

 

Weeee!

[Gregmal]

Its like one of those 0 gravity amusement park rides. Gets real fun when there's nothing supporting you! 

[TwoCitiesCapital]

Wish I had the trading acumen of you guys!  The ride from 65k to 30k (or maybe 20k) has not been as fun as the ride from 10k to 65k was. Kind of crazy the crash is happening in an environment where countries are literally adopting it as use for legal tender...something the bears NEVER thought would happen...but here we are. 

 

I still think it's possible we hit 100k this cycle, but certainly looking less and less likely. 65k top is by far the shallowest of all prior booms - even 100k would have been shallow by comparison but we'll see. 

[Gregmal]

Trading sense wise, I actually think there's a case to be made that the worse sentiment gets the more likely $100k becomes. Sentiment just fuels the next move in the opposite direction. I mean this is still positive YTD dont forget. 

 

I already laid out my original trade, so no, not buying as theres other stuff more compelling to me here, but man this has been worth the price of admission. 

[Castanza]

1 hour ago, TwoCitiesCapital said:

Wish I had the trading acumen of you guys!  The ride from 65k to 30k (or maybe 20k) has not been as fun as the ride from 10k to 65k was. Kind of crazy the crash is happening in an environment where countries are literally adopting it as use for legal tender...something the bears NEVER thought would happen...but here we are. 

 

I still think it's possible we hit 100k this cycle, but certainly looking less and less likely. 65k top is by far the shallowest of all prior booms - even 100k would have been shallow by comparison but we'll see. 

Countries that are basically failed states 

[TwoCitiesCapital]

9 minutes ago, Castanza said:

Countries that are basically failed states 

 

Where else would you expect it to start?

 

Places like the U.S. and China would PREFER to keep monopoly power over their currencies and continue to abuse the power and privilege that come with it. They'll be the late adopters and will change only when forced to. 

 

Countries that have a history of failed money? The perfect spot to implement actual sound money. 

 

I'll also add that just 4-months ago, people thought it was absurd that ANY country would accept BTC as legal tender. Now we have to dilute the argument of what it doesn't matter that El Salvador did and try to downplay the "quality" of the countries considering it. Adoption is adoption and the bulls call for increasing corporate and state adoption is turning out to be more accurate than the bears "no one would ever adopt this" argument. 

 

 

Edited June 22, 2021 by TwoCitiesCapital

[Castanza]

20 minutes ago, TwoCitiesCapital said:

 

Where else would you expect it to start?

 

Places like the U.S. and China would PREFER to keep monopoly power over their currencies and continue to abuse the power and privilege that come with it. They'll be the late adopters and will change only when forced to. 

 

Countries that have a history of failed money? The perfect spot to implement actual sound money. 

 

I'll also add that just 4-months ago, people thought it was absurd that ANY country would accept BTC as legal tender. Now we have to dilute the argument of what it doesn't matter that El Salvador did and try to downplay the "quality" of the countries considering it. Adoption is adoption and the bulls call for increasing corporate and state adoption is turning out to be more accurate than the bears "no one would ever adopt this" argument. 

 

 

You’re expecting the US and other G7 countries to adopt policy of a country that 99% of people probably couldn't even point out on a map? 

 

I think when people talk about “ANY” country and policy adoption at a high level, it’s generally assumed they mean influential countries. Again, I’m not trying to shit on El Salvador….but from a purely influential standpoint I’d call it a nothing burger. 
 

if someone “bigger” adopts it, then we can talk. But it (insert country) certainly isn’t going to be because El Salvador did.
 

I still think it’s likely the government (US) takes action before their own currency is debased by Bitcoin. 

Edited June 22, 2021 by Castanza

[Gregmal]

Doesnt really matter how influential the country is IMO, as long as incremental users are added to the ecosystem. I wouldnt expect the US or a major old money establishment type regime to cede control. Imagine what kind of stimulus pickle they'd be in if we still had the gold standard or BTC type currency? How would they send poor people their stimmies? Frozen chicken packages? Gold plated coins? food vouchers funded by future tax credits? It would be hilarious. But the existing system is setup so they can retain control and influence and I agree they'll come up with something dumb, IE crypto funds terrorism or some stupid argument to ban it before they let it take over. 

[Castanza]

3 minutes ago, Gregmal said:

Doesnt really matter how influential the country is IMO, as long as incremental users are added to the ecosystem. I wouldnt expect the US or a major old money establishment type regime to cede control. Imagine what kind of stimulus pickle they'd be in if we still had the gold standard or BTC type currency? How would they send poor people their stimmies? Frozen chicken packages? Gold plated coins? food vouchers funded by future tax credits? It would be hilarious. But the existing system is setup so they can retain control and influence and I agree they'll come up with something dumb, IE crypto funds terrorism or some stupid argument to ban it before they let it take over. 

Id be curious to know what the sentiment is of citizens in El Salvador for BTC. I mean, what reason do they have to trust their governments decision? I think you could argue BTC adoption starting in a risky country is more risky for BTC ecosystem. If this fails in El Salvador like all the other currencies then it would crush mass country adoption. Their goal imo is to hold on hoping someone bigger adopts (which is possible). I could see adoption in the US if the majority of people became invested in it. But that is more bottom up, and it still would require a binary decision by the govt. 

 

I think Sharper has the best view that govts will simply establish their own crypto. 

[rkbabang]

Giving people in failed states access to a currency that isn't going down with the state is like throwing people a lifeline.  This is where a non-state currency will be used first.   While the 1st world thinks of crypto as a speculative investment the 3rd world actually needs it.  This reminds me of people who sit in Starbucks with their $8 lattes, behind their $2000 macbooks, wearing their $200 sneakers pontificating about child labor over seas, when without those jobs people would be starving.   If your government is failing, being able to still do business with others will be a pretty important thing.

 

 

[Castanza]

7 minutes ago, rkbabang said:

Giving people in failed states access to a currency that isn't going down with the state is like throwing people a lifeline.  This is where a non-state currency will be used first.   While the 1st world thinks of crypto as a speculative investment the 3rd world actually needs it.  This reminds me of people who sit in Starbucks with their $8 lattes, behind their $2000 macbooks, wearing their $200 sneakers pontificating about child labor over seas, when without those jobs people would be starving.   If your government is failing, being able to still do business with others will be a pretty important thing.

 

 

El Salvador used USD....If everyone in El Salvador had BTC instead, they would have just lost 65% of their wealth. How can anyone argue that BTC in its current state can provide stability to a country? 

[Spekulatius]

19 minutes ago, Castanza said:

El Salvador used USD....If everyone in El Salvador had BTC instead, they would have just lost 65% of their wealth. How can anyone argue that BTC in its current state can provide stability to a country? 

Since BTC is now legal tender supposedly in El Salvador, anybody has to accept it. it will be interesting to see how street vendors in El Salvador and the many small business deal with BTC payments and the volatility.

 

I suspect there are going to be a lot of exceptions - otherwise I think we will see a lot of chaos and bankruptcies occurring from folks that find themselves on the wrong side of the volatility or that possibly get scammed.

[SharperDingaan]

There is little doubt that BTC is under co-ordinated assult, by significant CB's. El Salvador threatened the Chinese monetary regime, and the globes 'failed state' citizenry, had to be taught a lesson - don't use BTC as an inflation hedge, 'cause the volatiity could wipe you out. Sure it can ..... just like monthly currency devaluation in the teens!

 

Yet despite best efforts, it has not been possible to drive BTC < USD 29K/BTC? Worse still. it has pretty much established USD 29K/BTC as the 'real' value - which was NOT the plan! Sh1te!!

 

El Salvador was a problem for 'everyone', because BTC gave the citizenry an alternative beyond 'dollarization'. Now you just need enough USD to buy food - ONLY when you need to (bank account = BTC walllet). Less transactional demand for USD, less wealth to steal (cans of food), and harder to steal, period!. Hacking the wallet doesn't help, if you don't ALSO know the private key. Something must be done!

 

China maintains two currencies for a reason - and that requires bullet proof capital controls. Before BTC, smugglers routinely swam with the fishes as a warning to others, and 'leakage' was 'containable' to a select few. BTC screws up the gig - and is as much appreciated as a pig in a synagogue. Something must be done!

 

Yin/Yang remain alive and well - the CME thanks you for your hedging business 

And the more corrupt the environment, the better BTC works.

 

SD

 

 

 

    

Edited June 22, 2021 by SharperDingaan

[TwoCitiesCapital]

1 hour ago, Castanza said:

El Salvador used USD....If everyone in El Salvador had BTC instead, they would have just lost 65% of their wealth. How can anyone argue that BTC in its current state can provide stability to a country? 

 

They "lost" 65% of their wealth from 3 months ago and still have 300% of their wealth from a year ago.

 

The CPI index was 211.143 in January 2009. CPI index in May 2021 was 269.195. Purchasing power of the dollar is down 22% for El Salvordorans over that period. Losing 22% of accumulated wealth in dollars seems terrible over the course of 12 years...and yet I don't here you talking about the "volatility" of the dollar or the risk they're taking by having their savings/economy denominated in it.  

 

For the record, BTC went from $0.01 to $33,000 and has been better than the USD over any time frame barring outside of the last 4-months. Zoom out and you'll get the bigger picture. 

 

Bitcoin remains volatile, but gets less so every year. Eventually it will be on par with traditional "major" or "influential" currencies and will have a market cap to match them at that point. Also, volatility is less important if the vast bulk of it is upside volatility as demonstrated by BTC's 12-year history thus far. 

 

1 hour ago, Spekulatius said:

Since BTC is now legal tender supposedly in El Salvador, anybody has to accept it. it will be interesting to see how street vendors in El Salvador and the many small business deal with BTC payments and the volatility.

 

I suspect there are going to be a lot of exceptions - otherwise I think we will see a lot of chaos and bankruptcies occurring from folks that find themselves on the wrong side of the volatility or that possibly get scammed.

 

There are services that exist to immediately convert BTC/USD or USD/BTC based on their preferences. PayPal is already doing this in the U.S. as well. People who do NOT want exposure to BTC do not need to have it to accept BTC as payment. 

 

2 hours ago, Gregmal said:

Doesnt really matter how influential the country is IMO, as long as incremental users are added to the ecosystem. I wouldnt expect the US or a major old money establishment type regime to cede control. 

 

+1. Bitcoin's value is its global network. This grows that network and could be a catalyst for larger adoption overall. I don't expect the U.S. to adopt it willingly - I expect it will do so out of necessity. We won't be the reserve currency forever and at some point we'll be settling our trade in another currency outside of the USD. If half of the global is already accepting BTC? Well, the decision is kind of made for us just like prior reserve currencies were forced into accepting USD. 

 

It will happen gradually and then suddenly. I think we're seeing the gradually piece right now as USD dominance is global trade settlements and central bank reserves has likely already peaked. We saw the peak in global reserves (correlated with global trade and need for USD) back in 2000. We're currently at 25-year lows in USD reserves at global central banks. At some point, something has to give. 

Edited June 22, 2021 by TwoCitiesCapital

[Castanza]

18 minutes ago, TwoCitiesCapital said:

 

They "lost" 65% of their wealth from 3 months ago and still have 300% of their wealth from a year ago.

 

The CPI index was 211.143 in January 2009. CPI index in May 2021 was 269.195. Purchasing power of the dollar is down 22% for El Salvordorans over that period. Losing 22% of accumulated wealth in dollars seems terrible over the course of 12 years...and yet I don't here you talking about the "volatility" of the dollar or the risk they're taking by having their savings/economy denominated in it.  

 

For the record, BTC went from $0.01 to $33,000 and has been better than the USD over any time frame barring outside of the last 4-months. Zoom out and you'll get the bigger picture. 

 

Bitcoin remains volatile, but gets less so every year. Eventually it will be on par with traditional "major" or "influential" currencies and will have a market cap to match them at that point. Also, volatility is less important if the vast bulk of it is upside volatility as demonstrated by BTC's 12-year history thus far. 

 

 

There are services that exist to immediately convert BTC/USD or USD/BTC based on their preferences. PayPal is already doing this in the U.S. as well. People who do NOT want exposure to BTC do not need to have it to accept BTC as payment. 

 

 

+1. Bitcoin's value is its global network. This grows that network and could be a catalyst for larger adoption overall. I don't expect the U.S. to adopt it willingly - I expect it will do so out of necessity. We won't be the reserve currency forever and at some point we'll be settling our trade in another currency outside of the USD. If half of the global is already accepting BTC? Well, the decision is kind of made for us just like prior reserve currencies were forced into accepting USD. 

 

It will happen gradually and then suddenly. I think we're seeing the gradually piece right now as USD dominance is global trade settlements and central bank reserves has likely already peaked. We saw the peak in global reserves (correlated with global trade and need for USD) back in 2000. We're currently at 25-year lows in USD reserves at global central banks. At some point, something has to give. 

I don't think it's fair to use the BTC went from .01 to 33k argument when talking about adoption by countries. The only people who had this on their radar until 2017 were nerds in dorms and 4chan users. I mean, should govt be buying all these other sh1tcoins because they are cheap? 

 

USD is still the reserve currency backed by the US and it's military. China owns like 50% of BTC and the majority of the miners are there no? I don't see that as a positive even if it's a simplistic view. 

 

For the record, I am not against crypto and would probably buy some BTC for trading if the price came down substantially. To me it's history and present "antics" seem way to opaque and volatile to justify adoption by a large country. 

[TwoCitiesCapital]

14 minutes ago, Castanza said:

I don't think it's fair to use the BTC went from .01 to 33k argument when talking about adoption by countries. The only people who had this on their radar until 2017 were nerds in dorms and 4chan users. I mean, should govt be buying all these other sh1tcoins because they are cheap? 

 

USD is still the reserve currency backed by the US and it's military. China owns like 50% of BTC and the majority of the miners are there no? I don't see that as a positive even if it's a simplistic view. 

 

For the record, I am not against crypto and would probably buy some BTC for trading if the price came down substantially. To me it's history and present "antics" seem way to opaque and volatile to justify adoption by a large country. 

 Eh...I mean, I was aware of it 2012/2013 when it was around $100. I don't really frequent 4-chan and didn't live in a dorm at the time...but I am a nerd and did read a lot and follow its booms/busts. Despite hearing/knowing about it, I still didn't buy in and still thought it was a bubble and that Mt. Gox would be the end of it so I don't know really what value there is to ascribe to "hearing" about it that we would judge it by. 

 

But sure, I'll cede that it may not be fair to rewind 12 years to its inception. But the fact is rewinding over any period of time greater than 6-months provides outperformance to the USD and most other currencies in 99% of observations. 

 

So while it may not be fair to go a full 12-years back to BTC's inception, it's also no not fair to ignore an entire decade plus of outperformance to make a point that is only true of the most recent 6-month period. 

 

Also, China does not OWN 50% of BTC. They do represent a large percentage of the miners. I don't think that is necessarily problematic just like I don't think it's necessarily problematic China represents 80% of a lot of industries. But that IS changing and we are seeing businesses migrate to Western domiciles now that China is continuing to be hostile towards BTC while western governments have made soft commitments to regulation rather than outright bans. 

[Gregmal]

Every facet of the bear cases generally rely on things that could apply to plenty of other investments...particularly new or disruptive ones that people missed and are bitter about. Its always important to be critical...but part of being critical is being open minded. I think there's merit to crypto, but also think its value is no different than that of gold...basically, whatever someone else is willing to pay for it. No intrinsic value whatsoever. Doesnt mean it doesnt have a purpose, just means you need to be a little sharper with your transactions/trades. Theres times when its got a valued place in ones investing/trading tool belt....IE against the backdrop of inflation...but also susceptible to piece of shit mode....be careful. 

 

My favorite bear argument is the "aids criminals" one. Cuz cash doesnt LOL!

[Castanza]

https://podcasts.apple.com/us/podcast/what-bitcoin-did/id1317356120?i=1000526017403
 

interview of the man who brought Bitcoin to El Salvador. Seems the primary function is for remittance of those who work in the states to send money back to their families. At least in the near term. 

[SharperDingaan]

13 hours ago, Castanza said:

https://podcasts.apple.com/us/podcast/what-bitcoin-did/id1317356120?i=1000526017403
 

interview of the man who brought Bitcoin to El Salvador. Seems the primary function is for remittance of those who work in the states to send money back to their families. At least in the near term. 

 

Last yeat Facebook was trying to bring 'Libra' to the world - a digital token that could be used for payment between any two Facebook accounts, at near zero cost. Technically not s big reach, it was 'pressured' out of existence by central monetary autorities - 'cause it both bypassed 'jurisdictions', bypassed existing rails, and facilitated money laundering. To someone protecting themselves against raging domestic inflation (Argentina, etc), Libra would have worked just as well as BTC (or better), and Wells Fargo would have lost a good chunk of its more profitable business.

 

Remittances are huge business, and Libra would have been a prefered choice for ALL migrant labour ALL OVER the world. Migrant labour within North and South America, the Middle East, much of Europe, and some of Asia. 

 

There were very good reasons for the clamp down, but it's a temporary solution at best. The solution is the joint CB equivalent of a FANG, offering its own token for payment between any two wallets. Coming to you soon ...

 

SD 

 

Edited June 23, 2021 by SharperDingaan

[DooDiligence]

Thread...

 

https://twitter.com/JerryCap/status/1407713943192211459?s=20

[ValueArb]

On 6/22/2021 at 11:54 AM, TwoCitiesCapital said:

 

They "lost" 65% of their wealth from 3 months ago and still have 300% of their wealth from a year ago.

 

The CPI index was 211.143 in January 2009. CPI index in May 2021 was 269.195. Purchasing power of the dollar is down 22% for El Salvordorans over that period. Losing 22% of accumulated wealth in dollars seems terrible over the course of 12 years...and yet I don't here you talking about the "volatility" of the dollar or the risk they're taking by having their savings/economy denominated in it.  

 

For the record, BTC went from $0.01 to $33,000 and has been better than the USD over any time frame barring outside of the last 4-months. Zoom out and you'll get the bigger picture. 

 

Bitcoin remains volatile, but gets less so every year. Eventually it will be on par with traditional "major" or "influential" currencies and will have a market cap to match them at that point. Also, volatility is less important if the vast bulk of it is upside volatility as demonstrated by BTC's 12-year history thus far. 

 

 

There are services that exist to immediately convert BTC/USD or USD/BTC based on their preferences. PayPal is already doing this in the U.S. as well. People who do NOT want exposure to BTC do not need to have it to accept BTC as payment. 

 

 

+1. Bitcoin's value is its global network. This grows that network and could be a catalyst for larger adoption overall. I don't expect the U.S. to adopt it willingly - I expect it will do so out of necessity. We won't be the reserve currency forever and at some point we'll be settling our trade in another currency outside of the USD. If half of the global is already accepting BTC? Well, the decision is kind of made for us just like prior reserve currencies were forced into accepting USD. 

 

It will happen gradually and then suddenly. I think we're seeing the gradually piece right now as USD dominance is global trade settlements and central bank reserves has likely already peaked. We saw the peak in global reserves (correlated with global trade and need for USD) back in 2000. We're currently at 25-year lows in USD reserves at global central banks. At some point, something has to give. 

 

What's BTC's intrinsic value? Not being snarky, obviously it's not backed by the PV of a DCF, but it's utility as a medium of exchange does give it value. Question is how do we estimate a reasonable value (or range of values) for it's utility?

 

$100,000 would be close to $2 Trillion, does the world need $2 Trillion of BTC for remittances, protection of net worth in oppressive countries like Venezuela, etc?  

 

I owned a small amount of BTC when it was $400 and remember making the argument that it had utility for those uses so it wasn't going away. But I don't cry over selling it at $450 because I've never been able to figure out what even a broad range of value was for it. Obviously its a lot more than the $8 Billion it was then, but even if I had come up with what seemed at the time to be a ridiculous valuation like $100B, I'm out before $5,000. 

[TwoCitiesCapital]

6 minutes ago, ValueArb said:

 

What's BTC's intrinsic value? Not being snarky, obviously it's not backed by the PV of a DCF, but it's utility as a medium of exchange does give it value. Question is how do we estimate a reasonable value (or range of values) for it's utility?

 

$100,000 would be close to $2 Trillion, does the world need $2 Trillion of BTC for remittances, protection of net worth in oppressive countries like Venezuela, etc?  

 

I owned a small amount of BTC when it was $400 and remember making the argument that it had utility for those uses so it wasn't going away. But I don't cry over selling it at $450 because I've never been able to figure out what even a broad range of value was for it. Obviously its a lot more than the $8 Billion it was then, but even if I had come up with what seemed at the time to be a ridiculous valuation like $100B, I'm out before $5,000. 

 

Intrinsic Value: I answered this question in recent weeks and linked to an article. It's value is in its network and thus the value of Bitcoin is no different than the value of a telephone network, and internet network, or a social network and can be estimated accordingly. I linked a white paper that does precisely this. The writer of that paper had estimated BTC's network value to be ~20k/coin at the time that I posted. 

 

But, historically BTC has boomed significantly above its network value - for instance, in 2017 when it went to 19k while it's network value was ~3-4k at peak bubble activity. This is why I didn't sell at 65k - 3x network value is a shallow top in a boom AND 3-years later it didn't matter b/c network value is growing so quickly. 

 

As far as measuring it in trillions - Apple has a $2 trillion market cap. What is more valuable - a global/permissionless payment network that can also be an investment asset class and a store of wealth or a premium option in a crowded smartphone market? I view BTC's value-add as significantly above Apple's. 

 

At $2 trillion, BTC would trade at a minimum of 105k/coin assuming no coins have been lost. 

Edited June 23, 2021 by TwoCitiesCapital