Deleted Thread

maxsteam

It moves at random, with no logic, in my view. The price depends on buyers and sellers. I suspect that the dealing costs will be relatively high but it's your money. You might win, you might lose. You seem certain that you are likely to win so I wish you luck I prefer to put money on things where the dealing costs are lower.

underground99

[Deleted User] said:

Malthusian said:

 - Dogecoin doesn't have much going on in terms of technology. Other than being a meme e.g. Elon Musk making funny tweets about Shiba Inu dogs, there isn't much to get excited about.

That's one more thing to get excited about than there is about Bitcoin. I promise I'm not bashing Bitcoin (this time). They're the same technology, they have all the same advantages and disadvantages, but Dogecoin has a funny picture of a dog which Bitcoin doesn't.

If you buy any asset long your downside is limited (to how much you invested) and your upside is unlimited. If you short an asset, your upside is limited (the maximum gain is 100%, if the asset becomes worthless) and your downside is unlimited.

And having decided that you want to take a punt on something with potentially unlimited losses, you're picking something that recently went up by 320% at the whims of memelords, where there's nothing stopping it doing so again, and again?

Haha, good points. Yes, my reasoning depends on the assumption that the chances of Dogecoin spiking up to market cap higher than Bitcoin is zero. I guess it's possible, but realistically, isn't the upside for Dogecoin at ~$50 billion quite limited at this point, where would the money to pump it up that much more even come from?

If I took a short position, it would be a small one that I could double down on a few times if the Dogecoin price rose, while accepting the risk of ruin that would occur if the price rose to near Bitcoin-levels. The major exchanges have mechanisms that auto-liquidate you, so I would be prevented from racking up unlimited losses/debt.

The problem with most stop loss or auto-liquidate functions is that unless you're paying for a 'guaranteed stop loss' to definitely get you out at your preferred exit level, the market may move through your preferred exit level without there being sufficient liquidity to close your position at that time, so you end up with a worse position than the one you hoped to get. So losses might not be 'unlimited' but can be substantially worse than you'd hoped, unless they are guaranteeing you to have a controlled risk position.

Another problem is that if you set a stop loss (for example at a market price that might equate to a market cap of ~$100bn, making your max loss from a $50bn start point the same as your potential max gain if the price went to zero), you can get the situation where the price temporarily spikes up to that level and you get closed out for a big loss before the market goes back down without you. It would be very annoying to get stopped out with the very biggest loss you could handle and realise that five minutes later you would have made less of a loss.

The main risk with 'bet a small enough amount that I could keep doubling down for a while if I get it wrong' is the old adage that "the market can stay irrational longer than you can stay solvent".  Probably once the price had gone up 5x within the last week of January, people thought they would take a punt on it going back down again. But then it went to 10x, 20x, now about 40x the price it was three months ago.

HansOndabush

Woof Woof, still rising

$0.412422

24 Hour % Change 7.70%

Market Cap $53.25B

Volume (24h) $34.90B

There's life in the old dog yet.

As an interesting aside, bitcoin has devalued 97% against dogecoin over the last month. LOL

MaxiRobriguez

[Deleted User] said:

RolandFlagg said:

I'm all for a bit of risky investments. I have Bitcoin. I have SMT. I have tech funds (QQQ, IITU, L&G Tech), but I don't put money into the market I need anytime soon. I have a very long term approach.
Shorting a crypto is pure gambling.

Yeah wise words.

I just think the price of Dogecoin makes me think this is an exceptional situation, otherwise I would not be considering shorting it. I agree this is way, way more speculative than regular investments in ETFs.

I have the vast majority of my assets in ex-US value ETFs, and have a very long time horizon for those.

You're trying to apply logic to an unregulated "currency" that's branded with a dog being bought by young lads who haven't left home yet and who care not one bit about whether something is sensible or not.

Doge could go up or down from here, no one knows. If you had a capped downside and unlimited upside then yes, taking a punt may suit, but vice versa seems to me like an incredibly poor risk/reward to consider. 

Avoid. 

Scottex99

[Deleted User] said:

MaxiRobriguez said:

lardellion said:

RolandFlagg said:

I'm all for a bit of risky investments. I have Bitcoin. I have SMT. I have tech funds (QQQ, IITU, L&G Tech), but I don't put money into the market I need anytime soon. I have a very long term approach.
Shorting a crypto is pure gambling.

Yeah wise words.

I just think the price of Dogecoin makes me think this is an exceptional situation, otherwise I would not be considering shorting it. I agree this is way, way more speculative than regular investments in ETFs.

I have the vast majority of my assets in ex-US value ETFs, and have a very long time horizon for those.

You're trying to apply logic to an unregulated "currency" that's branded with a dog being bought by young lads who haven't left home yet and who care not one bit about whether something is sensible or not.

Doge could go up or down from here, no one knows. If you had a capped downside and unlimited upside then yes, taking a punt may suit, but vice versa seems to me like an incredibly poor risk/reward to consider. 

Avoid. 

I have long since given up trying to apply logic to cryptos like Dogecoin. It reminds me of the situation with Gamestop.

I guess my question is where the money could come from to significantly increase Dogecoin prices from here. It's not like institutional investors are going to pile into Dogecoin.

The last pump before this one came from exactly that and from the WSB Reddit chat. I've had a bag from those times as a kind of joke punt. Probably done 6-7x gains from there but I'm well aware all those could disappear tomorrow, small stakes anyway.

A short isn't a terrible idea in theory as the zero fundamentals mean it shouldn't be doing this well. But then as already mentioned the unlimited downside would be way too risky. It could go to $1 or 1c. Get involved for fun if you fancy it. If I make a few K from some stupid meme coin then I can spend it on something decent, i've written the funds off already pretty much

Malthusian

[Deleted User] said:

Malthusian said:

 - Dogecoin doesn't have much going on in terms of technology. Other than being a meme e.g. Elon Musk making funny tweets about Shiba Inu dogs, there isn't much to get excited about.

That's one more thing to get excited about than there is about Bitcoin. I promise I'm not bashing Bitcoin (this time). They're the same technology, they have all the same advantages and disadvantages, but Dogecoin has a funny picture of a dog which Bitcoin doesn't.

If you buy any asset long your downside is limited (to how much you invested) and your upside is unlimited. If you short an asset, your upside is limited (the maximum gain is 100%, if the asset becomes worthless) and your downside is unlimited.

And having decided that you want to take a punt on something with potentially unlimited losses, you're picking something that recently went up by 320% at the whims of memelords, where there's nothing stopping it doing so again, and again?

Haha, good points. Yes, my reasoning depends on the assumption that the chances of Dogecoin spiking up to market cap higher than Bitcoin is zero. I guess it's possible, but realistically, isn't the upside for Dogecoin at ~$50 billion quite limited at this point, where would the money to pump it up that much more even come from?

If I took a short position, it would be a small one that I could double down on a few times if the Dogecoin price rose, while accepting the risk of ruin that would occur if the price rose to near Bitcoin-levels. The major exchanges have mechanisms that auto-liquidate you, so I would be prevented from racking up unlimited losses/debt.

There isn't any such thing as "market cap" with cryptos, although crypto bros like to talk about it as a form of cargo cult worship.

If a company has a market cap of £100m then it is perfectly possible that a private equity firm might come along and buy out all the current investors at that price. (Probably a bit more to get the current investors to sell up.) You might or might not find a private equity firm that has the money and the inclination to do that, but £100m is what the market considers a fair rate for that company's assets and profits and/or growth prospects.

There is no chance whatsoever that somebody will come along and buy up every Dogecoin at 38 cents each.

A crypto does not have market cap, it has money on the table, i.e. the total amount paid to acquire the current Dogecoins held, which is considerably lower than the "market cap" as most Dogecoins were bought for less than the current price. If everyone tries to cash out their Dogecoin at 38 cents, the price will collapse. Unless an entirely new market of people can be found willing to buy all the Dogecoins for 38 cents each, which isn't going to happen - everyone who would be interested has already bought Doge.

It takes much less money than you might think to pump the price of any crypto, even the big ones, and as a short seller you would be at the mercy of someone doing so.

underground99

[Deleted User] said:

Malthusian said:

[Deleted User] said:

Malthusian said:

 - Dogecoin doesn't have much going on in terms of technology. Other than being a meme e.g. Elon Musk making funny tweets about Shiba Inu dogs, there isn't much to get excited about.

That's one more thing to get excited about than there is about Bitcoin. I promise I'm not bashing Bitcoin (this time). They're the same technology, they have all the same advantages and disadvantages, but Dogecoin has a funny picture of a dog which Bitcoin doesn't.

If you buy any asset long your downside is limited (to how much you invested) and your upside is unlimited. If you short an asset, your upside is limited (the maximum gain is 100%, if the asset becomes worthless) and your downside is unlimited.

And having decided that you want to take a punt on something with potentially unlimited losses, you're picking something that recently went up by 320% at the whims of memelords, where there's nothing stopping it doing so again, and again?

Haha, good points. Yes, my reasoning depends on the assumption that the chances of Dogecoin spiking up to market cap higher than Bitcoin is zero. I guess it's possible, but realistically, isn't the upside for Dogecoin at ~$50 billion quite limited at this point, where would the money to pump it up that much more even come from?

If I took a short position, it would be a small one that I could double down on a few times if the Dogecoin price rose, while accepting the risk of ruin that would occur if the price rose to near Bitcoin-levels. The major exchanges have mechanisms that auto-liquidate you, so I would be prevented from racking up unlimited losses/debt.

There isn't any such thing as "market cap" with cryptos, although crypto bros like to talk about it as a form of cargo cult worship.

If a company has a market cap of £100m then it is perfectly possible that a private equity firm might come along and buy out all the current investors at that price. (Probably a bit more to get the current investors to sell up.) You might or might not find a private equity firm that has the money and the inclination to do that, but £100m is what the market considers a fair rate for that company's assets and profits and/or growth prospects.

There is no chance whatsoever that somebody will come along and buy up every Dogecoin at 38 cents each.

A crypto does not have market cap, it has money on the table, i.e. the total amount paid to acquire the current Dogecoins held, which is considerably lower than the "market cap" as most Dogecoins were bought for less than the current price. If everyone tries to cash out their Dogecoin at 38 cents, the price will collapse. Unless an entirely new market of people can be found willing to buy all the Dogecoins for 38 cents each, which isn't going to happen - everyone who would be interested has already bought Doge.

It takes much less money than you might think to pump the price of any crypto, even the big ones, and as a short seller you would be at the mercy of someone doing so.

Yeah good points. Crypto "market cap" doesn't mean anything like a normal company market cap. However the trading volumes on these coins are still enormous and the sells/volumes on the orderbooks are huge, assuming they aren't spoofed. It must still take an enormous amount of money to double the price of a coin at Dogecoin levels?

Not really. Any offer price or bid price is not a price to buy the whole market of coins. It is the price at which you would be offered a coin to buy from another person who was selling, or bid to buy by a person who was buying.  So it's simply marginal price of the next incremental  coin that you would buy or sell.   

If e.g. one person or entity is sitting on a lot of coins, and if the whole gang on Reddit have said they are going to HODL whatever happens to the price, then there are not billions of coins in play, even though the market cap is billions. If someone wants to buy a million coins and there are not a million coins being offered for sale, he would need to offer more and more money for enough sellers to come out of the woodwork and make their coins available, at more than the $0.38 currently being requested. He might need to pay a million dollars to buy a million of them which would spike the price of the transaction to $1 each.  Or he starts to buy one at $0.38 but then when he wants another one and another one and another one the price keeps going up with people assuming he is never going to stop asking for them and the later coins within his million cost $2 each before he eventually stops demanding any more and at that point everyone decides he was crazy and start rapidly dumping their holdings and it goes back to sub $0.10.

HansOndabush

I prefer roulette; at least it comes with pretty girls and free sandwiches.

kuratowski

My view is that the supply of dog memes vastly outstrips the demand.

Good luck with the bet.

Malthusian

lardellion said:

I opened a small short position at about $0.35. No leverage involved

Short selling inherently involves leverage. At some point in the future you have to return the Dogecoins you borrowed and immediately sold for $0.35. Debt + potential for losses to exceed deposits = leverage.

The risks of short selling are unsuitable for anyone who doesn't understand it, which includes most short sellers, including those who think there's "no leverage involved".

, and I am prepped to double down if the price pumps, Martingale strategy.

Ah, the Martingale strategy, the only gambling system that actually works and is absolutely 100% guaranteed to make money, providing you start with an infinite amount of money.

I will report back at some point with the resulting gain/losses.

I agree this is a risky bet though, which is why it is a pretty small slice of my portfolio.

Please do (genuinely). It'll be a much larger slice of your portfolio if the price goes up by 10x or even 3x.