Cryptocurrencies

[ICUMD]

4 hours ago, Parsad said:

 

Crypto is worse than the internet bubble in 2000.  I went to my pharmacy on Tuesday to get a prescription filled...the pharmacist asked me what I do, and then started asking about the stock market.  I told her as long as she wasn't into cryptocurrencies it was a good time to buy stocks, and if she had stocks, don't sell...ride through the storm.  She then started listing her holdings from her phone, as she didn't know them all and her brother had put her into these "stocks".  As soon as I heard them, I said those are all cryptocurrencies or related stocks.  "If I was an advisor, your volatility rating would be on the extremely aggressive side...where you could lose all of your money."  She was down 60% so far, and I told her don't put any more money into this stuff.  She said her brother told her to hold on and in few years it will be worth 10-100 times what it is today.  She was confident that she would make a fantastic return on it.  I knew I was talking to someone who had no idea what their brother got them into.

 

So unfortunately, my prescription wasn't ready and I said I would come back Saturday.  I went in right now and picked up my prescription.  The two other people working there started talking to me.  They were also invested in crypto and most of their friends.  Most of them had put in anywhere from $10K to a couple hundred thousand, and we're talking about people here who are struggling to buy their first home in Vancouver, young single or couples, most with kids.  

 

This is far more prevalent than what I remember during the internet bubble...in terms of how many small investors had bought into internet or internet-related stocks.  This is comparable to the stupidity of ARM loans during the housing crisis.  That type of nuclear bomb!  Fortunately, the financial system isn't really correlated to crypto and has little if any exposure. 

 

I can't believe how many people I heard from who wanted to know about crypto in the last 18 months to how many people are now asking about should they hold on to their crypto in the last 2 months!  I can't see how most of these people don't lose most/all of their money.  Crazy!  Cheers!

Reminds me of the BreX scandal, but on a larger scale.  

 

I wonder though if a large scale crypto collapse would cause a wide spread equity sell off through negative wealth effect, fear and irrational behavior.  

Edited July 3, 2022 by ICUMD

[Gregmal]

Totally agree. I found the investment in crypto to be one purely based on psychology and supply/demand. I slowly bought a bunch after the big crash years ago. And when I bought it had set parameters in my head that $10k was a guarantee and so was taking out the old high of $19k once the institutions piled in. Then it was up to me to see where the sky became the limit and to manage the position accordingly. It obviously did very well and typically with speculative stuff like that, I always leave something in the game as you never truly know and sometimes the 100x price target might actually happen. So I made 5-12x depending on the lots or something crazy total in a few years but liked the grander picture and said let’s keep something here. Last fall I ran into an old business partner. We had a decent gig going in our mid 20s which resulted in us pulling in like $20-30k a month with minimal effort. This dude was the type to spend $30k if he made $20k and spend $50k a month if he made $30k. He d send the IRS $5k for estimated taxes a quarter and think he was in good shape lol. Just all around a dumb dumb and irresponsible fellow. He couldn’t stop talking about how he had 17 bitcoins and had just mortgaged his house to buy more. While taking to him I thought of the Big Short scene where Carrell is at the airport and is like “there’s a bubble!”. I sold everything and don’t plan on looking back til all these dopes are doing drywall or working the registers rather than driving fancy cars and lecturing everyone on the new age of investments. 

[Parsad]

16 minutes ago, ICUMD said:

Reminds me of the BreX scandal, but on a larger scale.  

 

I wonder though if a large scale crypto collapse would cause a wide spread equity sell off through negative wealth effect, fear and irrational behavior.  

 

If government regulations had allowed it and financial institutions then allowed investors to margin their brokerage accounts and buy crypto directly, it would have been as bad as GFC.  Fortunately that didn't happen!

 

There still could be some impact on margin accounts since some brokerages like Schwab allowed investment in crypto trusts and futures.  

 

If there's money to be made, people will do the stupidest things to try and get some!  Cheers!

[Spekulatius]

24 minutes ago, Parsad said:

 

If government regulations had allowed it and financial institutions then allowed investors to margin their brokerage accounts and buy crypto directly, it would have been as bad as GFC.  Fortunately that didn't happen!

 

There still could be some impact on margin accounts since some brokerages like Schwab allowed investment in crypto trusts and futures.  

 

If there's money to be made, people will do the stupidest things to try and get some!  Cheers!

The SEC / Fed needs to make sure that our financial system and whatever crypto Defi system exists remains totally segregated.  Otherwise I think there is chance that we will get some sort of an overnight crash that takes down financial institution that seemed fine when we go to bed and are wiped out the next morning when we wake up.

 

As long as the crypto guys just blowing themselves up, I am not too concerned.

[Spekulatius]

@Parsad I don’t  think crypto is that big. All these cryptocurrencies ad up to probably less than $700B in market cap. Then we have various crypto companies like $COIN, Ripple (private) that I don’t  think add more than $100B in total, so that $800B.

 

It’s a lot of money, but it really pales relative to stock markets or real estate.

 

FWIW, I do think that at some point crypto was worth more than $2T so the difference to now is at least $1.2T of quantitative tightening in a way. Crypto coins are really money created out of thin air in way, at least as long people accept these coins as money.

 

I do think that crypto is interesting as measure of sentiment. Since there really are no fundamental to speak of (it’s not like a crypto coin can miss earnings) it’s probably a great measure how greedy people feel. I do think if we get a way larger decline than the customary 80% from The top, it might be a good idea to play BTC for a bounce. Or maybe start from the base where the latest bull market started - around 10k for BTC.

 

[SharperDingaan]

19,212, and falling. July-02-2022 @ 1:35 AM UTC.

Pretty sure we're going down to the 12,000+ level - woo hoo! 

 

Sorry, but we're with rkbabang on this one.

 

SD

[Parsad]

23 minutes ago, Spekulatius said:

@Parsad I don’t  think crypto is that big. All these cryptocurrencies ad up to probably less than $700B in market cap. Then we have various crypto companies like $COIN, Ripple (private) that I don’t  think add more than $100B in total, so that $800B.

 

It’s a lot of money, but it really pales relative to stock markets or real estate.

 

FWIW, I do think that at some point crypto was worth more than $2T so the difference to now is at least $1.2T of quantitative tightening in a way. Crypto coins are really money created out of thin air in way, at least as long people accept these coins as money.

 

I do think that crypto is interesting as measure of sentiment. Since there really are no fundamental to speak of (it’s not like a crypto coin can miss earnings) it’s probably a great measure how greedy people feel. I do think if we get a way larger decline than the customary 80% from The top, it might be a good idea to play BTC for a bounce. Or maybe start from the base where the latest bull market started - around 10k for BTC.

 

 

Spek, we were at $3T:

 

https://coinmarketcap.com/charts/

 

$3T that easily could go to zero. 

 

In comparison, total subprime exposure during the GFC was only $1.4T. 

 

Yes, MBS and the leverage involved exacerbated the situation back then, but if things had gotten further along where crypto became mainstream and adopted by more nation states, it could have been as ugly.  

 

Cheers!

[Parsad]

37 minutes ago, SharperDingaan said:

19,212, and falling. July-02-2022 @ 1:35 AM UTC.

Pretty sure we're going down to the 12,000+ level - woo hoo! 

 

Sorry, but we're with rkbabang on this one.

 

SD

 

Again, I wouldn't touch the currencies, but certainly would look at the infrastructure companies in blockchain and crypto.  Look at Overstock.com, which I own a lot of now and will keep buying if it goes down further. 

 

$1.1B market cap, profitable retail business, $450M in cash on the books, $2.5B in revenues, virtually no debt...essentially you are buying the company for $600M...a quarter of revenues...and that doesn't even include their huge blockchain investment in Medici Ventures LP...which could be worth $1B or $20B! 

 

If that Medici option ever kicks in, it could be the cheapest stock on the market right now.  In the mean time, just the retail business itself is worth 2-3x what it trades for right now.  

 

https://pelionvp.com/

 

Cheers!

[SharperDingaan]

Back in the day, before crypto, the get rich quick stock was 'Moose Pasture Inc", and the exchange of choice was the VSE. Holes in the ground, with promoters on top ... selling o/g, mining, weed, etc .... whatever a good story could be spun around. Crypto is just the latest version.

 

Of course it's a crapshoot, most people are going to be wiped out. But if you are one of the few who win, most will win a prize big enough to do something with - deposit on a house, start a business, etc. Whether by pure luck, or skill, same result. However - you must have the maturity to subsequently 'step away from the table'. Of course .... many don't have it.

 

You aren't going to raise a DP, while still a young man/women, by buying 'grandpa stocks'. You have to take risk, and do it when you can best afford to - when young, unattached, and without mortgage and kids to pay for. Coffee servers are just being rational.

 

Oh ... but the dollars involved are HUGE !!!. Bullshit .....

It's roughly the same amount that it was decades ago MULTIPLIED by the compound inflation from your choice of start date through to today. 

 

YOU were also utter sh1te when you first started investing, and probably lost your shirt at least once before you finally got your act together. Give someone else the chance !

 

SD

 

Edited July 3, 2022 by SharperDingaan

[no_free_lunch]

SD, you could apply the same rationale to the casino, lottery tickets, even a true ponzi scheme.

 

If I knew a young person looking for that multi-bagger I would tell them to put together a portfolio of a few small/micro cap stocks where they actually know the company.  Crypto is fine to put in maybe 3-5k for someone starting out, something that won't hit them but for someone to put multiple years of savings in, it can just wreck their life and what is the reasoning to believe it goes up?

[Gregmal]

Everything has to be put in context. Stocks or crypto can present unique, well adjusted casino like situation but with odds far better than 52/48 or whatever. If you can identify setups with 85% probability of having a positive outcome, you take it all day. Whether one wants to call it casino, gambling, investing, or anything else, who cares? Crypto is almost entirely a sentiment trade. 

[SharperDingaan]

Most young people aren't going to have much in savings - 50K would be a big number. Blow up and maybe you lose 50% before bailing out at 25K. Win big, maybe you make 100%, before panic selling at 100K. That 100K as a DP would allow you to buy 1/2 an apartment - today. That 25K loss you have your whole working like to recover from. If you have youth, ability to risk, and the risk appetite - it's dumb not to take the risk.

 

Today, BTC is priced at < 1/3 of what it was in November (8-months ago). Most young people would also wait until they saw BTC stabilize for a few weeks (ie: a lower price than today). If that meant a buy at another 1/3 less than todays price? they probably aren't taking much of a risk. Grandpa value investor wouldn't hesitate were this a blue chip, the kid just chooses crypto instead - more in synch with his/her times.

 

SD

 

 

[ICUMD]

37 minutes ago, SharperDingaan said:

Most young people aren't going to have much in savings - 50K would be a big number. Blow up and maybe you lose 50% before bailing out at 25K. Win big, maybe you make 100%, before panic selling at 100K. That 100K as a DP would allow you to buy 1/2 an apartment - today. That 25K loss you have your whole working like to recover from. If you have youth, ability to risk, and the risk appetite - it's dumb not to take the risk.

 

Today, BTC is priced at < 1/3 of what it was in November (8-months ago). Most young people would also wait until they saw BTC stabilize for a few weeks (ie: a lower price than today). If that meant a buy at another 1/3 less than todays price? they probably aren't taking much of a risk. Grandpa value investor wouldn't hesitate were this a blue chip, the kid just chooses crypto instead - more in synch with his/her times.

 

There is an important difference in gambling, crypto and value investing. 

 

If you believe in value investing, it is possible to evaluate profitability, valuation, quality etc and place a bet on price direction. You can be wrong, but iteratively you can learn and improve.  Great examples of this Buffet et al. 

 

Gambling is a completely different strategy, depending on the game. Learning and repeatability is probably more difficult to consistently get correct. 

 

Crypto has yet a completely different set of rules. Maybe the rules are still being written?  Few understand it yet many players in this arena.

 

Lots of good evidence to play what you know best.

 

 

Edited July 3, 2022 by ICUMD

[randomep]

23 hours ago, no_free_lunch said:

 

I think there are 2 elements to crypto.  There is the utility side, money transfer and payments if nothing else which is real.  The other side is the ability to safely store your assets without government stealing it, sort of a gold alternative.  The two tie together.  The more it's used, the easier and safer it is to justify as a store of value.  That said, who knows what the real value should be.  Should bitcoin be $100 or $100k, I really have no idea.  I think of the value of a given coin as being: the float (the amount of some crypto readily available) divided by the transfers that happen over some period.  The more transfers relative to the float size the more valuable it should be, right?  I don't know how to get from there to an actual number but I don't think that number is 0 for something like bitcoin or monero.  Crypto has a utility so is not a total scam but the valuations are difficult to justify.

 

 

no free lunch: your 2 elements sounds nobel and is the only reason why crypto is not 100% outlawed, 12 years since the creation of crypto , we are past that, we are beyond the hype stage and even the most gullible of us should wonder, when is this happening?  When are we going to utilize crypto for something other than speculation?  I have never heard of anyone doing any such thing.... have you?  I for one could use a cheap means of money transfer w/o interference from government and corporations. I send money every week from the US to europe (nothing nefarious, just chess lessons) and I could do w/o paying a 5% fee to paypal everytime, but my chess coach rejected the idea because of bitcoin's instability....... so if I can't use bitcoin for such a simple purpose, who can?  Remember we are 12 years since its creation and it marketcap is now equal to 5% of the US stockmarket..... what is hell it is for? coca cola is not that much and I can see it and use it everyday.....

[SharperDingaan]

"If you believe in value investing, it is possible to evaluate profitability, valuation, quality etc and place a bet on price direction. You can be wrong, but iteratively you can learn and improve. "

 

Hate to tell you this, but an investment in crypto is the same process.

Value investors are simply trying to put a value on the future stream of tangible cashflows that the investment is expected to generate. Crypto investors are simply trying to put a value on the intangible benefits that the investment is expected to generate.

 

If you think an asset has to generate a future cashflow - or it cannot be valued ... I sadly have news for you !

Almost everyone would agree than an attractive and unattached member of the opposite sex, in a crowded bar, on a Saturday night, clearly has value ! .... and it is entirely intangible !! 

 

SD

[no_free_lunch]

17 minutes ago, randomep said:

 

no free lunch: your 2 elements sounds nobel and is the only reason why crypto is not 100% outlawed, 12 years since the creation of crypto , we are past that, we are beyond the hype stage and even the most gullible of us should wonder, when is this happening?  When are we going to utilize crypto for something other than speculation?  I have never heard of anyone doing any such thing.... have you?  I for one could use a cheap means of money transfer w/o interference from government and corporations. I send money every week from the US to europe (nothing nefarious, just chess lessons) and I could do w/o paying a 5% fee to paypal everytime, but my chess coach rejected the idea because of bitcoin's instability....... so if I can't use bitcoin for such a simple purpose, who can?  Remember we are 12 years since its creation and it marketcap is now equal to 5% of the US stockmarket..... what is hell it is for? coca cola is not that much and I can see it and use it everyday.....

 

I remember a time in Canada, just a few months ago, where donations to a given entity were outlawed.  Donations could result in termination of your bank account and loss of access (temporarily) to your finances.  As rare or as unbelievable as that may sound it did happen.   So right there is a case where having some crypto would have been handy.  As the governments start to crack down on cash transactions the utility becomes more valuable.

 

Again, I 100% agree that it should not be valued anywhere close to where it is.  I suspect bitcoin should be a lot closer to $100 than $100k.  I am just making the point that there is some utility there, so not an actual ponzi scheme in the true sense of the word.

[Dave86ch]

My thesis didn't chnge, bitcoin is a self custodial asset with unique features and it deserves a small position in my portfolio.

Protocols and tokens will not disappear, a few of them will survive and thrive imo.

 

It's a shame talking only about prices, there are more interesting things behind greed and incentives.

Edited July 3, 2022 by Dave86ch

[Spekulatius]

1 hour ago, Dave86ch said:

My thesis didn't chnge, bitcoin is a self custodial asset with unique features and it deserves a small position in my portfolio.

Protocols and tokens will not disappear, a few of them will survive and thrive imo.

 

It's a shame talking only about prices, there are more interesting things behind greed and incentives.

I think it’s likely that some tokens have value, but I don’t see much happening that seems interesting. I think we are probably 10 years away from business using the blockchain to produce something that has a significant economic benefit.

 

The focus has been on cryptocurrencies because that’s where the quick money is. It’s also the title of this thread.

[Gregmal]

At the end of the day some people mistake value investing for something that requires putting a multiple on cash flow. But simplistically, if you can determine that a trade has a 90% probability of a favorable outcome, that’s the same thing. You’re using math and probability to stack the deck in your favor. 

[rkbabang]

6 hours ago, ICUMD said:

If you believe in value investing,

Value investing isn’t a religion, it isn’t something you believe in. It is one tool among many.

[ICUMD]

6 hours ago, SharperDingaan said:

 

If you think an asset has to generate a future cashflow - or it cannot be valued ... I sadly have news for you !

Almost everyone would agree than an attractive and unattached member of the opposite sex, in a crowded bar, on a Saturday night, clearly has value ! .... and it is entirely intangible !! 

 

SD

No doubt!  Some people will jump into marriage at first glance of an attractive partner.  Not all marriages work out.

 

Crypto certainly has a monetary value right now (19k for bitcoin).  It's the future value I have yet to see a convincing number.  For bitcoin, sure I'd buy some sub $100.  But then I'd only be dating.  Not married! 

 

As far as currency, I'd personally still rather own a few onces of gold at current bitcoin prices. 

[Gregmal]

What’s funny is I never hear people refer to the MIT blackjack team as “gamblers”. Certainly, with investing, there’s an overlap in principle and fundamental strategy. 

[crs223]

I wish crypto traders the best of luck.  Consider furnishing your mansions with Restoration Hardware and insuring your Ferraris with Geico.

 

[aws]

40 minutes ago, crs223 said:

 insuring your Ferraris with Geico.

 

Lambos surely 

[Frankie1]

On 7/2/2022 at 8:13 PM, ICUMD said:

Reminds me of the BreX scandal, but on a larger scale.  

 

I wonder though if a large scale crypto collapse would cause a wide spread equity sell off through negative wealth effect, fear and irrational behavior.  

Reminds me of the BreX scandal

did you have to on a nice Monday Morning ?