Bitcoin, Cryptocurrency and Blockchain Discussion Thread

[Artful Dodger]

"Kraken Is Investigating Bitcoin Selloff, CEO Says"

Bloomberg Markets and Finance | Youtube​

Feb.23 -- "It's hard to speculate about what's driving the market action," Kraken Exchange co-founder and CEO Jesse Powell said after the Bitcoin selloff worsened and some in the crypto community looked to a possible flash-crash on the Kraken exchange. "We're still investigating," he said on “Bloomberg Surveillance Early Edition.”​

 

[EVWatcher]

"Kraken Is Investigating Bitcoin Selloff, CEO Says"

Bloomberg Markets and Finance | Youtube​

Feb.23 -- "It's hard to speculate about what's driving the market action," Kraken Exchange co-founder and CEO Jesse Powell said after the Bitcoin selloff worsened and some in the crypto community looked to a possible flash-crash on the Kraken exchange. "We're still investigating," he said on “Bloomberg Surveillance Early Edition.”​

First Time
https://twitter.com/binance/status/1363863694808125442?s=20

Second time
https://twitter.com/binance/status/1364142776091344899?s=20

I'm 100% serious here. It crashes on inflation concerns. Trading can be suspended by different organizations involved in the ecosystem. Investigations into causes of crashes can result in reversed transactions or potentially penalties. How is this any different than the fiat system other than its run by a bunch of tech people who just have engineering enthusiasm and no experience or wisdom.


edit:
to be clear, I know there are many people who have still made a ton of money on this, but thats not my point. Crypto is supposed to be this amazing new thing that brings power to the people. But it seems like its just a new class of wall street gamblers and less experienced bankers. Some people will get rich, some people will get ****ed. It seems like the biggest difference is there's less accountability

 

[Artful Dodger]

First Time
https://twitter.com/binance/status/1363863694808125442?s=20

Second time
https://twitter.com/binance/status/1364142776091344899?s=20

I'm 100% serious here. It crashes on inflation concerns. Trading can be suspended by different organizations involved in the ecosystem. Investigations into causes of crashes can result in reversed transactions or potentially penalties. How is this any different than the fiat system other than its run by a bunch of tech people who just have engineering enthusiasm and no experience or wisdom.


edit:
to be clear, I know there are many people who have still made a ton of money on this, but thats not my point. Crypto is supposed to be this amazing new thing that brings power to the people. But it seems like its just a new class of wall street gamblers and less experienced bankers. Some people will get rich, some people will get ****ed. It seems like the biggest difference is there's less accountability

First time for everything:

"Fed Looking Very Carefully at Issuing a Digital Dollar: Powell" | Bloomberg Finance

 

[amolina]

Are there any BTC or ETH option traders in the house? I would love some scheming to predict BTC Implied volatilities on Deribit. Deribit has got the longest dating options and is super convenient to use.

You could also use the BVOL indicator to understand the IV, however, you cannot trade options on Bitmex, so they are not perfectly correlated. .BVOL: Price Index Definition - BitMEX

 

[jhm]

Has anyone been thinking of diversifying their Tesla position with BTC?

Here's a little experiment of holding a 50/50 portfolio of TSLA and GBTC with weekly rebalancing. Over the last 5 years the return of BTC has been better than Tesla, so to even things up I'm only going back to May 22, 2017. If you had invested $1000 in either asset back and held to present, you'd have $10,747 in TSLA or $10,265 in BTC, but if you held a balanced portfolio of both, you'd have $17,518 today.

While both assets have performed very well by themselves over a long stretch of time, it is not clear which asset will beat the other over moderate span of time (about 12 months). The correlation of weekly returns over this time period is just 0.1676. So if you're long-term outlook is about the same for both investments, a 50/50 portfolio nearly optimal.

And in case you like log scales, here you go:

All the best HODLing!

 

[jhm]

First Time
https://twitter.com/binance/status/1363863694808125442?s=20

Second time
https://twitter.com/binance/status/1364142776091344899?s=20

I'm 100% serious here. It crashes on inflation concerns. Trading can be suspended by different organizations involved in the ecosystem. Investigations into causes of crashes can result in reversed transactions or potentially penalties. How is this any different than the fiat system other than its run by a bunch of tech people who just have engineering enthusiasm and no experience or wisdom.


edit:
to be clear, I know there are many people who have still made a ton of money on this, but thats not my point. Crypto is supposed to be this amazing new thing that brings power to the people. But it seems like its just a new class of wall street gamblers and less experienced bankers. Some people will get rich, some people will get ****ed. It seems like the biggest difference is there's less accountability

Inflation can kill off the value of bonds. If the Fed steps in to limit inflation and preserve the value of bond. These actions tighten up the money supply. This intervention is downward jolt to stock. It makes sense that if the fed is tightening up the money supply, yeah, this should deflate the value of bitcoin too.

Think of it this way, when the Fed is injecting cash into the system, there is more cash chasing goods, stocks and bitcoin. Accommodation can inflate all three. But when the Fed pulls back on the money supply, there is less cash chasing goods, stocks and bitcoin. So limiting inflation is downer for stocks and bitcoin.

 

[EVWatcher]

Inflation can kill off the value of bonds. If the Fed steps in to limit inflation and preserve the value of bond. These actions tighten up the money supply. This intervention is downward jolt to stock. It makes sense that if the fed is tightening up the money supply, yeah, this should deflate the value of bitcoin too.

Think of it this way, when the Fed is injecting cash into the system, there is more cash chasing goods, stocks and bitcoin. Accommodation can inflate all three. But when the Fed pulls back on the money supply, there is less cash chasing goods, stocks and bitcoin. So limiting inflation is downer for stocks and bitcoin.

I mean, I 100% agree. But this is counter to everything pro bitcoin people say

 

[amolina]

Has anyone been thinking of diversifying their Tesla position with BTC?

Here's a little experiment of holding a 50/50 portfolio of TSLA and GBTC with weekly rebalancing. Over the last 5 years the return of BTC has been better than Tesla, so to even things up I'm only going back to May 22, 2017. If you had invested $1000 in either asset back and held to present, you'd have $10,747 in TSLA or $10,265 in BTC, but if you held a balanced portfolio of both, you'd have $17,518 today.

View attachment 639394

While both assets have performed very well by themselves over a long stretch of time, it is not clear which asset will beat the other over moderate span of time (about 12 months). The correlation of weekly returns over this time period is just 0.1676. So if you're long-term outlook is about the same for both investments, a 50/50 portfolio nearly optimal.

And in case you like log scales, here you go:
View attachment 639414

All the best HODLing!

I dabbled a little and bought BTC at 10k levels. BTC is going to moon people. It is just starting.
Wall street Manipulations are written all over the BTC and Crypto market. It's always the signs that wall street is going to move in. They need your coins and they just steal it. A last few days, Kraken and other exchanges are seeing flash crashes to 50% or 20% on big coins of 40B and 240B market cap respectively. Quite insane. They are basically just stealing Retailers coins. We KNOW that it's a strategy from the Big guys. So what do you think they are eyeing?

Ofcourse they cannot drop BTC like the others, still, it dropped close to 20-30%. Pure mobbing in the day light.

 

[jhm]

I mean, I 100% agree. But this is counter to everything pro bitcoin people say

People who are pro bitcoin very well could be wrong about a lot of things. It remains a fascinating asset.

 

[amolina]

First Time
https://twitter.com/binance/status/1363863694808125442?s=20

Second time
https://twitter.com/binance/status/1364142776091344899?s=20

I'm 100% serious here. It crashes on inflation concerns. Trading can be suspended by different organizations involved in the ecosystem. Investigations into causes of crashes can result in reversed transactions or potentially penalties. How is this any different than the fiat system other than its run by a bunch of tech people who just have engineering enthusiasm and no experience or wisdom.


edit:
to be clear, I know there are many people who have still made a ton of money on this, but thats not my point. Crypto is supposed to be this amazing new thing that brings power to the people. But it seems like its just a new class of wall street gamblers and less experienced bankers. Some people will get rich, some people will get ****ed. It seems like the biggest difference is there's less accountability

BTC is a very long term play. Please try to understand the narrative behind BTC.

Michael saylor does a great job here explaining it in a few seconds. For some reason, I am not able to embed the time stamp. Please start 4 minutes. WAtch it till the end
Video here

 

[jhm]

Shorting Oil, Hedging Tesla

I spend most of my TMC time on the Shorting Oil thread. Here is post where I try to connect bitcoin to some oil economics issues. It think I'll try to keep bitcoin conversation here.

 

[EVWatcher]

BTC is a very long term play. Please try to understand the narrative behind BTC.

Michael saylor does a great job here explaining it in a few seconds. For some reason, I am not able to embed the time stamp. Please start 4 minutes. WAtch it till the end
Video here

Ya, this is the very thing I was to see less of because its not rational thinking. Its the tail trying to wag the dog and its terrible logic

 

[EVWatcher]

Has anyone been thinking of diversifying their Tesla position with BTC?

Here's a little experiment of holding a 50/50 portfolio of TSLA and GBTC with weekly rebalancing. Over the last 5 years the return of BTC has been better than Tesla, so to even things up I'm only going back to May 22, 2017. If you had invested $1000 in either asset back and held to present, you'd have $10,747 in TSLA or $10,265 in BTC, but if you held a balanced portfolio of both, you'd have $17,518 today.

View attachment 639394

While both assets have performed very well by themselves over a long stretch of time, it is not clear which asset will beat the other over moderate span of time (about 12 months). The correlation of weekly returns over this time period is just 0.1676. So if you're long-term outlook is about the same for both investments, a 50/50 portfolio nearly optimal.

And in case you like log scales, here you go:
View attachment 639414

All the best HODLing!

I got into Tesla in large part because of the positive effects the company has. I have done far better personally than I ever expected from my investments, giving me the opportunity to invest in other things I see both a profit and net good for the world. I see a very profitable potential for bitcoin. But I see it’s effects as dangerous. I see describe it as a libertarian dream and don’t want to be part of it.

I come to this thread because I hope that I am wrong and someone can educate me. But I see two types of advocates for bitcoin.

The Peter schiff style government is terrible and this is freedom through technology types. “Inflation hedge” blah blah. That mindset has existed with gold as long as I can remember and while I briefly flirted with it in college I consider it deeply flawed.

The other camp is the ARK style where the see the volatility and the opportunity for a land grab which they are profiting from. Good on ARK for doing what they are paid to do. But as an individual investor is doesn’t meet the bar for ethics for investing for me.

I really hope someone can change my mind on the ethical perspective.

 

[jhm]

BTC is a very long term play. Please try to understand the narrative behind BTC.

Michael saylor does a great job here explaining it in a few seconds. For some reason, I am not able to embed the time stamp. Please start 4 minutes. WAtch it till the end
Video here

Several good points in this video.

Bitcoin as a bank: If I put $1B into a bank, that does not overvalue the bank by $1B. It just means that the bank is storing more money. The bank operates at a larger scale.

Bitcoin is property not a security: Is there a problem with an executive personally owning BTC directing her company to then buy bitcoin? Is this insider trading? Security laws apply to securities. But conflict of interest still must be considered.

Scale matters: Is there a scale above which these conflict of interest issues don't matter? The larger bitcoin is, the harder it is for anyone player to move the price of BTC. We don't really ask those questions of gold ownership and gold is at a market cap of $10T.

Volatility declines with scale: Scale really matters! With scale you have a larger, more diverse community trading bitcoin. With scale, it becomes harder for individual micro shocks to move the prices. Even macro shocks within national or regional economies can wash out as that community of traders becomes more geographically diverse.

Saylor believes bitcoin will over take gold at $10T and become increasingly stable going to $100T. Volatility and growth rates decline as bitcoin marches to $100T. It becomes a stabilizing influence on the global economy.


Let me illustrate this idea that volatility declines with scale. Tesla bought $1.5B in bitcoin when prices was about $33k/BTC and the market cap was $610B. So it was about 0.25% of the market cap, and now the market cap is about $938. But if Tesla had attempted this when the market cap was just $61B, it would have had a much bigger impact on. Maybe that would have nudged the market cap to $120B in as many days later. But what about when the market cap is $6.1T? Tesla buying a mere $1.5B would hardly budge the price higher. Would that size purchase even move it to $6.2T? So then what happens with bitcoin is at $61T? Pretty much zero impact.

So now why would the growth rate decline with scale? We should probably expect some sort of logistic growth cure (S-curve) for bitcoin market cap. Saylor says the globe has about $500T in total assets and thinks that bitcoin will reach $100T or 20% of total asset. Naturally some asset classes like real estate, stock and debt can't really be displaced by bitcoin. So it reasonable to think that long run share of assets is bounded. I don't now if it should be 20% or 2%, but let's follow Saylor's line of thinking. Growth starts exponential and slows down as bitcoin as a share of total assets approaches 20%, and in the long run bitcoin grows with the size of total assets. So we could model it this way: RelChgBTCmarketCap = alpha + beta*(1 - BTCmarketCap/TotalGlobalAssets/0.20). So you hardly notice any slowing of growth rate while market cap is below $10B or 2% share, at that point the grow rate is still 90% of what it was early on, alpha + 0.9*beta. But once it hit $50T, its growing at alpha + 0.5*beta. And as it approaches $100T it slows to just alpha, the growth rate of total global assets. The insight here is simply that bitcoin is still very early on in it adoption curve. This is not much different that trying to understand the growth rate of EVs. Right now its nearly exponential while EVs have about 2.3% share of the new auto market, but the growth rate will slow down as EVs approach 100% of the auto market.

 

[EVWatcher]

Several good points in this video.

Bitcoin as a bank: If I put $1B into a bank, that does not overvalue the bank by $1B. It just means that the bank is storing more money. The bank operates at a larger scale.

Bitcoin is property not a security: Is there a problem with an executive personally owning BTC directing her company to then buy bitcoin? Is this insider trading? Security laws apply to securities. But conflict of interest still must be considered.

Scale matters: Is there a scale above which these conflict of interest issues don't matter? The larger bitcoin is, the harder it is for anyone player to move the price of BTC. We don't really ask those questions of gold ownership and gold is at a market cap of $10T.

Volatility declines with scale: Scale really matters! With scale you have a larger, more diverse community trading bitcoin. With scale, it becomes harder for individual micro shocks to move the prices. Even macro shocks within national or regional economies can wash out as that community of traders becomes more geographically diverse.

Saylor believes bitcoin will over take gold at $10T and become increasingly stable going to $100T. Volatility and growth rates decline as bitcoin marches to $100T. It becomes a stabilizing influence on the global economy.


Let me illustrate this idea that volatility declines with scale. Tesla bought $1.5B in bitcoin when prices was about $33k/BTC and the market cap was $610B. So it was about 0.25% of the market cap, and now the market cap is about $938. But if Tesla had attempted this when the market cap was just $61B, it would have had a much bigger impact on. Maybe that would have nudged the market cap to $120B in as many days later. But what about when the market cap is $6.1T? Tesla buying a mere $1.5B would hardly budge the price higher. Would that size purchase even move it to $6.2T? So then what happens with bitcoin is at $61T? Pretty much zero impact.

So now why would the growth rate decline with scale? We should probably expect some sort of logistic growth cure (S-curve) for bitcoin market cap. Saylor says the globe has about $500T in total assets and thinks that bitcoin will reach $100T or 20% of total asset. Naturally some asset classes like real estate, stock and debt can't really be displaced by bitcoin. So it reasonable to think that long run share of assets is bounded. I don't now if it should be 20% or 2%, but let's follow Saylor's line of thinking. Growth starts exponential and slows down as bitcoin as a share of total assets approaches 20%, and in the long run bitcoin grows with the size of total assets. So we could model it this way: RelChgBTCmarketCap = alpha + beta*(1 - BTCmarketCap/TotalGlobalAssets/0.20). So you hardly notice any slowing of growth rate while market cap is below $10B or 2% share, at that point the grow rate is still 90% of what it was early on, alpha + 0.9*beta. But once it hit $50T, its growing at alpha + 0.5*beta. And as it approaches $100T it slows to just alpha, the growth rate of total global assets. The insight here is simply that bitcoin is still very early on in it adoption curve. This is not much different that trying to understand the growth rate of EVs. Right now its nearly exponential while EVs have about 2.3% share of the new auto market, but the growth rate will slow down as EVs approach 100% of the auto market.

I appreciate your analysis of volatility here. Its very thoughtful and in depth. I agree with this logic.

Notably you don't mention inflation which seems to be one of the major claims bitcoin advocates harp on.

The other major missing thing is addressing statements like "it will consume gold and the equity markets". I admit that that is entirely possible. But for an unregulated asset that other than making people rich is pretty much a disaster in every respect I have a hard time seeing WHY it would grow to that point. And if there is large enough community will to buy into bitcoin, why would world governments not take notice and try to put a leash on this?

 

[MC3OZ]

Don't know much about this source, I just stumbled across it,

It does possibly explain the fork in the road meme.

 

[jhm]

I got into Tesla in large part because of the positive effects the company has. I have done far better personally than I ever expected from my investments, giving me the opportunity to invest in other things I see both a profit and net good for the world. I see a very profitable potential for bitcoin. But I see it’s effects as dangerous. I see describe it as a libertarian dream and don’t want to be part of it.

I come to this thread because I hope that I am wrong and someone can educate me. But I see two types of advocates for bitcoin.

The Peter schiff style government is terrible and this is freedom through technology types. “Inflation hedge” blah blah. That mindset has existed with gold as long as I can remember and while I briefly flirted with it in college I consider it deeply flawed.

The other camp is the ARK style where the see the volatility and the opportunity for a land grab which they are profiting from. Good on ARK for doing what they are paid to do. But as an individual investor is doesn’t meet the bar for ethics for investing for me.

I really hope someone can change my mind on the ethical perspective.

I feel that tension too. From the ethics side, I think there are serious problems with financializing any natural commodity. Consider how much human and ecological damage has been done to fill vaults with gold. Gold functions primarily as a token of value and valued too highly for much practical use. During the last oil glut, new oil storage systems had to be created just to hold the billions of barrels that investors wanted, but consumers had no use for. Moreover, cheap oil kept the global economy stuck on burning oil for extra years. So really bad things happen to people and the ecosystem when there is too much cash circulating in the economy looking for some store of value. We should not be using commodities to store excess fiat currency that can be create by central banks faster than use value of the commodities grow.

It is frustrating that bitcoin has a stupid "mining" operation, but I think it pales in comparison to commodity based schemes. Moreover, it does accomplish a few useful things. It exploits excesses of renewable energy and pushes computer technologies to become more energy efficient via learning curve effects. Additionally it motivates advances in cybersecurity. I also think there are opportunities to define future cryptocurrencies that capture the value of existing bitcoins without replicating the inefficiencies of bitcoin. For example, image a new blockchain that you could write cryptoassets to for a certain exchange into a new crypto asset. That is, suppose I could transfer my 0.001BTC to the blockchain for uBTC and get 1000 uBTC in exchange where uBTC has a lower transaction cost than BTC. This exchange transaction would take my 0.001BTC permanently out of circulation. So if the transaction cost is lower and the quality of security and other features are just as good or better, then every actively user of BTC makes the exchange to uBTC. But none of the value of the original BTC ever gets lost (except cases where users forgot password or accounts). Something like this ought to make for a compelling transition, and may be absolutely necessary if some security weakness comes into being. It trust there are much more clever crypto technologists than me who can figure this out. A key point though is with trillions of dollars worth of bitcoin and other crypto at stake, you don't just lose interest in the value that has already been tokenized, even if you invent a better token. You take care to transfer value into superseding tokens. Some really small cryptocurrencies could fall into disuse, but too much value is a stake with the larger ones. So in the long run, the most efficient and trustworthy cryptos will win and will perpetuate the value of bitcoin. Inefficient mining practices will be abandoned along the way.

It will be interesting to watch what happens to gold. The token value of bitcoin could eclipse the token value of gold. This could mean that gold prices will fall. If they fall far enough, gold mining comes to an end. Vaults full of gold bricks could begin to circulate to make more electrical components. Strip the token value from gold and the use value of gold will dictate how we make best use of it. Hoarding is perhaps the most absurd use of all.

 

[MC3OZ]

It will be interesting to watch what happens to gold. The token value of bitcoin could eclipse the token value of gold.

Gold can hitch itself to the Crypto bandwagon become digitized and traded on the blockchain.
The metal itself is useful for a number of things, perhaps storing it in vaults is simply wasting a useful metal.

 

[jhm]

Gold can hitch itself to the Crypto bandwagon become digitized and traded on the blockchain.
The metal itself is useful for a number of things, perhaps storing it in vaults is simply wasting a useful metal.

How would gold itself be digitized? Would that be like gold fund where some entity hoard the physical stuff and issues tokens of "ownership"? I hope that's not the idea.

 

[MC3OZ]

How would gold itself be digitized? Would that be like gold fund where some entity hoard the physical stuff and issues tokens of "ownership"? I hope that's not the idea.

This is how;- Trovio just raised $6.25m for its tech that turns gold into a digital asset - Stockhead

The company has a relationship with the Perth Mint and started a conversation about it using Trovio’s technology to provide a unique way of taking any physical asset and digitising it in a cryptographically secured way as a digital token – a kind of unique digital certificate.

There is a gold coin stored in a vault for each Crypto coin. but otherwise the Crypto coin shares some aspects of Bitcoin.

Energy spent physically shipping gold around the world is less.

The most interesting and controversial aspect of any Cryptocurrency is, it's initial creation.