BITCOIN

GDB2222

darren232002 said:

Deleted_User said:

Hilarious. Enjoy being poor

Aww... Bless.

bugbyte_2 said:

Hi Darren, from your post above are you saying we now have to discount everything you said before 11/10/2022?

You do realise that the entity that gave the price prediction that the quote was referring to of $140k, is now predicting a price for the immediate future of $13k right? It seems both I, and JPMorgan, are capable of changing opinions.

bugbyte_2 said:

Just out of interest why do you think Bitcoin is going to recover better than say Meta Platforms Inc. which dropped (and has now slightly recovered) 75% this year? Is your thinking that because BTC price was so 'high' previously it is bound to go that high again? 

I'd answer this if I hadn't already set out extensively the exact reasons for my thesis many times over.

Frequentlyhere said:

Wow, Darren, this is basically "The dollar is the real Ponzi scheme" stuff, scraping the barrel here.

Frequentlyhere said:

Back in the real World, interest rates have risen 

To 3%. Inflation is at 8%. Deeply negative real rates.

And at that rate, the interest payment on US debt is their second largest expense; higher than the defence budget. Unsustainable.

Frequentlyhere said:

there now appears to be some softening in inflation (potentially)

Its 8%. Its gone from impossible, to an average of 2% over the decade, to a little hotter than usual (3%) to transitory. And now its gone from 8.1 to 7.9 or w/e and its great because its 'softening'? Absolute clown show of shifting goalposts every single time.

Frequentlyhere said:

There's still even debate over whether to call this a global recession, never mind it being a total disaster that brings about a new bitcoin regime. In short, the World is coping just fine without BTC, thanks. Even if it wasn't, BTC still wouldn't be the answer.

The last time I quoted you, I specifically asked for you 'stop spouting crazy ideas that I don't think will happen.'

I've stated very clearly what I think will happen in the long run; It doesn't involve fiat disappearing and it doesn't involve a disaster that brings about a new Bitcoin regime. Have you actually read my posts or are you, as I suspect, simply arguing against a trope you have invented in your own mind?

Frequentlyhere said:

Meanwhile, the crypto-sphere is imploding before our eyes, which I think is fair to say is not an exaggeration. Any support that existed for Crypto (and yes, Bitcoin is crypto) from rational people, institutions and Government has effectively been shot down in flames in this episode. 

You'e not exaggerating? Ok, so in this hypothetical 'implosion' and 'bonfire', what does it say that Bitcoin is down only 8% from where you last posted a graph a month ago? How about the fact that its still up nearly 2x on my cost basis, which I think I'm still safe in saying is better than anything else I could have bought at the time...

In any event, a centralised exchange imploding due to fraudulent and criminal acts is a great advert for why Bitcoin needs to exist. 

And again, defi seems to be working just fine throughout all of this.

Frequentlyhere said:

Despite all of that, Bitcoin is still *presently* down less than some fairly reputable growth stocks (though is an eye watering 73% down). I'd personally say given that and the ongoing binfire surrounding the space in every conceivable aspect, I've never seen a worse time to be invested in Bitcoin.

Cant wait to revisit this in 4 years time.

Can I just check one point with you, please. Your crypto investment is worth double what you paid? 

So, you could sell now, and make a very handsome profit.

Or, you could wait, and what will you do if it halves or doubles in price?  

Cus

darren232002 said:

Deleted_User said:

Hilarious. Enjoy being poor

Aww... Bless.

bugbyte_2 said:

Hi Darren, from your post above are you saying we now have to discount everything you said before 11/10/2022?

You do realise that the entity that gave the price prediction that the quote was referring to of $140k, is now predicting a price for the immediate future of $13k right? It seems both I, and JPMorgan, are capable of changing opinions.

bugbyte_2 said:

Just out of interest why do you think Bitcoin is going to recover better than say Meta Platforms Inc. which dropped (and has now slightly recovered) 75% this year? Is your thinking that because BTC price was so 'high' previously it is bound to go that high again? 

I'd answer this if I hadn't already set out extensively the exact reasons for my thesis many times over.

Frequentlyhere said:

Wow, Darren, this is basically "The dollar is the real Ponzi scheme" stuff, scraping the barrel here.

Frequentlyhere said:

Back in the real World, interest rates have risen 

To 3%. Inflation is at 8%. Deeply negative real rates.

And at that rate, the interest payment on US debt is their second largest expense; higher than the defence budget. Unsustainable.

Frequentlyhere said:

there now appears to be some softening in inflation (potentially)

Its 8%. Its gone from impossible, to an average of 2% over the decade, to a little hotter than usual (3%) to transitory. And now its gone from 8.1 to 7.9 or w/e and its great because its 'softening'? Absolute clown show of shifting goalposts every single time.

Frequentlyhere said:

There's still even debate over whether to call this a global recession, never mind it being a total disaster that brings about a new bitcoin regime. In short, the World is coping just fine without BTC, thanks. Even if it wasn't, BTC still wouldn't be the answer.

The last time I quoted you, I specifically asked for you 'stop spouting crazy ideas that I don't think will happen.'

I've stated very clearly what I think will happen in the long run; It doesn't involve fiat disappearing and it doesn't involve a disaster that brings about a new Bitcoin regime. Have you actually read my posts or are you, as I suspect, simply arguing against a trope you have invented in your own mind?

Frequentlyhere said:

Meanwhile, the crypto-sphere is imploding before our eyes, which I think is fair to say is not an exaggeration. Any support that existed for Crypto (and yes, Bitcoin is crypto) from rational people, institutions and Government has effectively been shot down in flames in this episode. 

You'e not exaggerating? Ok, so in this hypothetical 'implosion' and 'bonfire', what does it say that Bitcoin is down only 8% from where you last posted a graph a month ago? How about the fact that its still up nearly 2x on my cost basis, which I think I'm still safe in saying is better than anything else I could have bought at the time...

In any event, a centralised exchange imploding due to fraudulent and criminal acts is a great advert for why Bitcoin needs to exist. 

And again, defi seems to be working just fine throughout all of this.

Frequentlyhere said:

Despite all of that, Bitcoin is still *presently* down less than some fairly reputable growth stocks (though is an eye watering 73% down). I'd personally say given that and the ongoing binfire surrounding the space in every conceivable aspect, I've never seen a worse time to be invested in Bitcoin.

Cant wait to revisit this in 4 years time.

*Not baiting but have couple of q's for you as I like to hear reasoned intelligent opinion despite not agreeing to it..*

Has the recent events stopped you or hindered your ability to earn on your crypto positions?

Do you think this exchange fiasco is actually long term a good thing for bitcoin specifically as it cuts out the altcoin noise?

Are you slightly more worried now that maybe bitcoin etc might not get to where you expected/hoped in the future?

Thanks in advance. I have worked in investment banking for many years so I will not just put my 'its all tulips' hat on and not listen...

fourmarks

Frequentlyhere said:

Despite all of that, Bitcoin is still *presently* down less than some fairly reputable growth stocks (though is an eye watering 73% down). I'd personally say given that and the ongoing binfire surrounding the space in every conceivable aspect, I've never seen a worse time to be invested in Bitcoin.

Cant wait to revisit this in 4 years time.

By my calculations you may have to wait approximately 4 years.

User232002

Cus said:

*Not baiting but have couple of q's for you as I like to hear reasoned intelligent opinion despite not agreeing to it..*

Has the recent events stopped you or hindered your ability to earn on your crypto positions?

Yes. 

The majority of the yield on other crypto assets has largely remained, and indeed it was always going to. However, it was also obvious that once a BTC top had formed that altcoins were going to be decimated. There is no point earning 10% APR staking SOL, paid in SOL, whilst SOL goes from $200+ to its current price of $15 ish. BTC had a mini pump from around $37k to $45k ish in January / February - it was at this point that I sold every single altcoin I had (except USD stables) including projects that I think are 'good' and will survive. I was very tempted to sell the BTC & ETH too, but I don't like the idea of trying to time these markets so resolved to hold them regardless. 

The majority of the yield that was being paid on good assets (BTC / ETH) came from people wanting to borrow these assets to long / short and / or market make in a capital efficient way. As liquidity dried up and a top had clearly formed, these rates were always going to contract. At some point around May/June I removed assets like this from services like BlockFi as the yield being given no longer compensated for the counter party risk. 

Cus said:

Do you think this exchange fiasco is actually long term a good thing for bitcoin specifically as it cuts out the altcoin noise?

I'm not sure it will cut out the altcoin noise unfortunately. If it does, that would undoubtedly be a good thing.

Crypto.com's proof of reserves appears to show that 30% of the capital in it went to buying an imaginary coin named after a breed of dog with no security or roadmap. Unfortunately, people are stupid. There have been arguments on this thread (from people that would probably claim they were intelligent) stating that Dogecoin and Bitcoin are one and the same thing. Or, as its usually phrased, "there are 10000+ cryptocurrencies, so what 'scarcity' does Bitcoin offer?" Or the Myspace argument, which convinces people that don't know the history of digital currency development that there will be a better iteration than Bitcoin. Unit bias is a thing, and people want to buy 'the next Bitcoin' rather than realising that there is no next Bitcoin. Whilst Binance & Coinbase may not have been embezzling customer funds, they have both been guilty of putting utter s**t up for sale on their exchanges over the last few years.

I spent a lot of money on coins that did something towards the end of 2020. Defi tokens with revenues, projects with achievable and solid visions for utility. These tokens did well, but not nearly as well as those that had a good narrative, a solid meme or were shilled by influencers. I made money, but that was very much a learning experience about human nature. ADA does nothing and may very well be terminally broken, yet it went 30x this cycle and was the coin people in real life asked me the most about. The altcoins favoured by FTX were particularly abhorrent for 'investors.' Low float, high FDV - they were uninvestable even if you believed they were good projects.

There is definitely a need for education here. However, most people don't want to listen to monetary history, understand tokenomics or spend the time to understand why Bitcoin is different. Most people fall in to the 'all crypto is tulips,' or 'all crypto is the future,' mould, of which neither are correct. Perhaps Bitcoin needs to be quoted in satoshi's instead to encourage people's unit bias. The flip side is that most of the people in this industry that make money on such obvious rubbish end up converting their profits in to BTC / ETH anyway, so that capital does flow in to the majors in some way.

Cus said:

Are you slightly more worried now that maybe bitcoin etc might not get to where you expected/hoped in the future?

Not particularly.

If anything, it may have lengthened the time needed for it to happen. But equally, people forget far quicker than they like to admit. Russia invaded Ukraine in February and most people are bored of hearing about the war. Boris was the most hated man in the country in May and two weeks ago may very well have become prime minister again. 

I've said here before that the ultimate goal is a fairer financial system for all. QE and low interest rates have distorted asset prices and the cost of capital which has largely screwed (most of) my generation over. Bitcoins success will always be inversely proportional to central banks' failure. If central banks want to reduce their balance sheets to pre 2008 levels that would send Bitcoin to zero, but it would also nuke asset prices to more reasonable levels and mean people lengthened their time preference. I'm fine with either outcome, I just think that we've long gone past the point at which central banks can reverse course on this. Instead, the debt will be inflated away - punishing savers and those who had planned for the future in favour of those who took out mortgages at ridiculous valuations or saddled their businesses with unsustainable debt. Asset prices remain high and financial independence becomes further out of reach for the majority. Monetary policy for the last two decades has rewarded risk takers and not risk aversion.

So Bitcoin is still the more likely winner because I don't see how central banks can regain financial credibility in anything approaching a reasonable time scale. 

Frequentlyhere

We've been around this block before Darren, and I still don't see why your scenario of the Fed failing to cope with inflation leads to any success for Bitcoin.

I've already said that that are signs inflation has already peaked, but let's assume those are red herrings and high inflation is still going to persist.  The FED will have to continue to raise interest rates.  Stocks will crater again, bond yields will rise and Bitcoin & friends will fall further as well.

That would also probably mean a far more tangible worldwide recession, with high unemployment and general economic malaise, a chunk of people losing their homes too. That would then lead to demand destruction and a sharp reduction in inflation, at which point the higher interest rates will have done their job and the FED would pivot. The economy would recover, employment will rise and we begin a new cycle.  

Now maybe in that scenario Jerome Powell would get a slightly less favourable biography and some people will have a miserable few years as they did in 2008-2010 , but what I don't see is how this is of any use to the value of Bitcoin?

How does it "win" in this scenario? Or if my scenario is wrong, what does it look like?

(edited to reduce my long windedness a bit)

User232002

Frequentlyhere said:

The FED will have to continue to raise interest rates.  

Except, they can't.

This isn't the 1970's

The US national debt is $31.3T. The US government currently spends $480B dollars on interest payments on a tax revenue of $5T. We have been in a period of essentially 0% interest rates for the last decade, but this gives an average interest rate of 1.5% due to the existence of long term treasuries.

Lets assume the FED maintain their current 4% interest rate for the next two years. Just over 50% of the national debt is debt that will have to be renewed within those 2 years. So, 50% of the debt remains at an average 1.5% rate, and 50% renews at 4%, for a new average rate of 2.75%.

Well, at 2.75%, the interest payment on the debt ends up being nearly $900B. That's comfortably over 20% of federal tax revenue. On interest payments alone. For reference, medicare is $1.3T, all social security spending in the US totals $1.2T and defence spending totals $800B. So interest would be the third largest expenditure. You can't 'find' this amount of money in existing budgets - if you tried, there would be civil strife and undoubtedly you'd be unelected at the first opportunity. 

Every western government around the world finds themselves in this situation to one degree or another. So they keep interest rates low, print money and run deficits. It kicks the can down the road, but you can't avoid the reckoning. The IMF once said that a debt to GDP ratio of 90% was the inflection point of no return; well, we are way past that. Adjust the numbers if you want, but the end result is the same. When your interest payment is rising faster than your revenue, you're on borrowed time.

This is the zugzwang scenario for central banks; they can raise interest rates to fight inflation and eventually bankrupt the country because of debt to GDP levels, or keep interest rates low and watch inflation run rampant and slowly destroy peoples faith in the currency. They will choose the latter and continue printing the currency in to oblivion. 

Frequentlyhere said:

Stocks will crater again, bond yields will rise and Bitcoin & friends will fall further as well. 

Except, they can't be allowed to.

Pensions are underfunded as it is due to pension funds being forced to hold bonds which have underperformed everything for the last decade due to rampant QE. So, if asset values were to crater then suddenly a boat load of pensioners due for retirement would find out that their home values, equity portfolios and bond yields won't support them in retirement. What does a government do in this situation? Well, they will of course need to print money to fill these holes.

The only reason the current fiat system is still standing is because of the inflated values of the assets contained within it which maintain the faith of its participants - much like FTX a week ago ironically.

Frequentlyhere said:

Now maybe in that scenario Jerome Powell would get a slightly less favourable biography and some people will have a miserable few years as they did in 2008-2010 , but what I don't see is how this is of any use to the value of Bitcoin?

How does it "win" in this scenario? Or if my scenario is wrong, what does it look like?

Why do US Dollars have more value than Argentinian pesos? Because we can trust the issuing body more for it to maintain a stable value over time.

Most people don't understand money because they have no need to do so. Inflation at 2% is only noticeable over long time scales. When inflation gets to levels where you notice it within a year, people will very quickly start to realise that a currency that is losing value at such a pace is not a good money to store value in. And we will get there, because like I said in the first section - printing and debasing the currency to deal with rampant inflation is the only valid option central banks have now.

Money is an economic good that transports value in to the future. I can overproduce today, and send the difference between the value of my production and the cost of my desires in to the future in the form of money. That is why salt, gold and dollars existed as forms of money. But when it becomes apparent that something can no longer fulfill that function, people will stop storing value in it and move to something better. History is littered with examples of people and countries that lost fortunes because they didn't recognise this shift in time. People in Weimar Germany or 1950's Hungary knew not to hold their wealth in inflating currencies or became much poorer.

A globally recognised, scarce, easily transportable, fungible digital asset will accrue the monetary premium instead. Its just better at all the features of money than anything else that exists.

I'm not interested in USD or GBP that can be printed on the whim of a handful of people when they decide its right to do so. The same self-interested people who sold their portfolios at the top of the market to 'prevent conflict of interest.' I'd rather hold my wealth by trusting unchangeable code and solid design principles that incentivise participants to act in the best interests of all.

That is how Bitcoin accrues a monetary premium.

DoublePolaroid

I read the thread out of interest, whilst having little knowledge and absolutely no intention of investing in something I don’t fully understand.

I do though appreciate the appropriate use of the beautifully descriptive chess term in the post above. 

adamp87

Bit of a bloodbath at the moment.

I still think Bitcoin & maybe Eth have a future, certainly to me Bitcoin is the one that is a commodity and actually does something.

The Altcoins eventually will drop to £0 they have no real value or use & are basically pump and dumps.

The actions of exchanges over the weekend, FTX surely has knocked back confidence for a long time and further pushed back any form of adoption. 

Regulation is needed and will come eventually for a cryptocurrency to ever be accepted by a Western government and the general public.

For most people they are involved to make money. I really detest the argument and disagree that cryptocurrency is some sort of protection against Banks or that Banks somehow aren’t protective of your money.

If we are honest the past week has shown you are a million more times likely to get screwed over with cryptocurrency, and at least my fiat in a bank suddenly isn’t going to drop 10, 20 even 60% over the course of a year.

Someone out there will be making a ton of money on this weeks actions too.

As always with any investment it’s key to do your own research, and anything you invest is at risk and to act in your best interests.

Nebulous2

darren232002 said:

Frequentlyhere said:

The FED will have to continue to raise interest rates.  

Except, they can't.

This isn't the 1970's

The US national debt is $31.3T. The US government currently spends $480B dollars on interest payments on a tax revenue of $5T. We have been in a period of essentially 0% interest rates for the last decade, but this gives an average interest rate of 1.5% due to the existence of long term treasuries.

Lets assume the FED maintain their current 4% interest rate for the next two years. Just over 50% of the national debt is debt that will have to be renewed within those 2 years. So, 50% of the debt remains at an average 1.5% rate, and 50% renews at 4%, for a new average rate of 2.75%.

Well, at 2.75%, the interest payment on the debt ends up being nearly $900B. That's comfortably over 20% of federal tax revenue. On interest payments alone. For reference, medicare is $1.3T, all social security spending in the US totals $1.2T and defence spending totals $800B. So interest would be the third largest expenditure. You can't 'find' this amount of money in existing budgets - if you tried, there would be civil strife and undoubtedly you'd be unelected at the first opportunity.

I’ve very limited knowledge of, and even less interest in Bitcoin. My son managed to fund 8 months backpacking on the sale of less than 1 Bitcoin that he mined (using my electricity) so I appreciate it has worked for some people. 

However paying interest at 4% while inflation is at 8 is a win for the Fed. Their debt is literally being inflated away.... 

GDB2222

I agree that bank accounts paying negative real interest rates are not a good investment. What I do not understand is the logical leap from 'bank accounts are bad' to ‘therefore BTC is good'?