Are we excited yet?

Ozark707 · 22-11-2022 12:35pm

https://www.boards.ie/discussion/comment/119904680#Comment_119904680

I wonder has a lot of the institutional money departed Crytpo in recent weeks. Whatever ones thoughts as to the value of BTC etc they don't seem the type of people who would risk huge sums of money. It appears that FTX was built on somewhat dubious grounds, are there more like that out there?

erlichbachman · 22-11-2022 1:19pm

https://www.boards.ie/discussion/comment/119906005#Comment_119906005

Stop making sense, there's people coming on here to gloat and you're ruining it for them

Mad_maxx · 22-11-2022 2:14pm

Looking at the chart, I see no support until $10800

waterwelly · 22-11-2022 4:36pm

https://www.boards.ie/discussion/comment/119906463#Comment_119906463

Where's he making sense? It was worth $54k before.

The trend for the past 12 months has been down, down and down again.

Are the lads saying it will double in value, break $30k etc. making sense in your view?

These threads are littered with people who have been buying the dips all the way down.

Bitcoin has increased 48% in 5 years,not unlike the DOW Jones @44%.

erlichbachman · 22-11-2022 5:03pm

https://www.boards.ie/discussion/comment/119907397#Comment_119907397

In my book its a rational suggestion to work out how much % of the market it can capture and estimate from there.

The bottom line here is, in a year or 2, or maybe 3, investors will put money into crypto, they will gauge when to jump in and do so, they will also view the graph of the previous couple of years and look at the period around October, November, December 2022 and dream of entering the market at that point - this is where we are currently at, which kinda makes the crystal ball predictions somewhat irrelevant at this point.

22-11-2022 5:06pm

It's the absolute certainty with which you speak ...

Sleepy Joseph · 22-11-2022 5:58pm

https://www.boards.ie/discussion/comment/119907518#Comment_119907518

What’s your view on dot, shiba and doge?

ScissorPaperRock · 22-11-2022 6:54pm

https://www.boards.ie/discussion/comment/119907397#Comment_119907397

It was $54k before, but largely driven by speculation. The speculation makes it a very volatile asset.

I just picked a conservative % of market capture to show how it could approach the previous all time high based on adoption, rather than speculation.

Bitcoin has had similar, and even more extensive, drawdowns than what it's now experiencing in previous bear markets. At those times people were having the same conversations about its demise.

We can compare with the DOW Jones if we cherry pick the time frame, but if we look at the range/volatlity it's not comparable. But again, that's largely a product of speculation.

The important question is whether adoption will continue to grow, and with the inherent speculation at present, price probably isn't the best metric/predictor of that.

23-11-2022 1:08am

https://www.boards.ie/discussion/comment/119906005#Comment_119906005

I'm curious about what is meant by the terms being used here. What does "capture" mean in regards to bitcoin? Because an asset's market value reaching 5% of a particular industry's worth does imply anything about capturing it. The actual money in Bitcoin is far smaller than its market cap, just like any other stock.

Do you mean 5% of that industry being replaced by crypto exchanges like Binance, or smart contracts or something? Because I don't see how that would be tied to the value of one bitcoin.

Can you be more specific?

ScissorPaperRock · 23-11-2022 8:10am

https://www.boards.ie/discussion/comment/119909609#Comment_119909609

Market cap is the price of a coin multiplied by the number of coins. In my example I used the fully diluted value, based on the theoretical max of 21,000,000 BTC. Based on the current circulating supply (19.2m BTC, and the market cap of $317bn, we have the current value of approx $16,500 per coin.

By "capture" I mean BTC being used as a vehicle for storing value and making payments.

HerrKuehn · 23-11-2022 10:55am

https://www.boards.ie/discussion/comment/119909828#Comment_119909828

If anything, bitcoin is further away from being used for payments than it was in 2017. It doesn't seem to have gained any traction. Which leaves "storing value", which makes no sense in a volatile asset, unless.... we expect it might increase in value and so really just end up with speculation being the main use case.

Grumpypants · 23-11-2022 11:23am

I'm fine with it being a store of value. Even though I've been interested and investing in this space since 2016 crypto is less than 3% of my overall portfolio.

Order of things to do:

Get something like YNAB and get your finances under control.

Max your pension contributions (especially if your company will match it)

Buy any stocks your company gives you a discount on.

Have min 6 months cash flow in case you lose a job or have a major life event.

Have a property purchased.

Then take less than 5% of what you are worth and buy bitcoin.

If it flops you still have 95% of your wealth. If it takes off you have a great opportunity. You won't be a millionaire but it might help you to get ahead of the cycle of living in debt / going from pay cheque to pay cheque.

antimatterx · 23-11-2022 11:34am

https://www.boards.ie/discussion/comment/119910285#Comment_119910285

Great advise. I’m young so Bitcoin is going to be quite a bit more than 5%.

HerrKuehn · 23-11-2022 11:34am

https://www.boards.ie/discussion/comment/119910285#Comment_119910285

I don't think it is awful advice, but 5% of worth while not enormous is still very substantial to be putting into something that is like buying a lotto ticket. I would favor putting it into an equity index tracker or something like that. In your suggestion, you have very little investment other than pension and bitcoin. I think the valuation of bitcoin is based entirely on hype. Hype is affected by external things and so cannot be predicted. There are a lot of things that could have a huge negative impact on bitcoin, like regulation etc. Given the collapse of FTX, I think this has become likely to happen soon. What about if there is an audit of tether and it is nowhere near backed (it isn't, it is backed by cash or equivalent assets apparently)?

It would be interesting to do a review of "expert" opinion on bitcoin valuation at the end of 2022 from say 2021, to get an idea of their forecasting skills.

waterwelly · 23-11-2022 12:28pm

https://www.boards.ie/discussion/comment/119910285#Comment_119910285

I'm with you until bitcoin.

I've invested that 5% in a couple of things which are far less volatile and deliver steady appreciation.

Incidentally somebody wanted to pay me for something in bitcoin many years ago and I declined. If only.........

I'd never touch it now because I can't see it making 1000% returns again.

Grumpypants · 23-11-2022 12:51pm

https://www.boards.ie/discussion/comment/119910323#Comment_119910323

I've No debt which is the best investment you can have.No car loan, no overdrafts, no credit cards. Then I've Property, pension, cash, stocks, bitcoin.

HerrKuehn · 23-11-2022 5:47pm

https://www.boards.ie/discussion/comment/119910677#Comment_119910677

I assume above you are talking about allocating 5% of your investments to Bitcoin, rather than keeping 5% of your total assets (including property)?

Agreed regarding debt. I have no idea why someone would borrow money to buy an expensive car (some might need to borrow to buy a basic car out of necessity). If you can't pay for it in cash, you can't afford it.

In Ireland, buying a property is definitely important as the rental sector is so bad. I don't personally see it as "wealth" or an investment as such, but for a lot of people it represents the largest portion of their assets. I think its important to max out the pension to get the tax benefit, this will be a better investment than most other things, since by putting money in you have already near enough doubled it. For younger people they probably feel they need to get a deposit before contributing significantly, which is unfortunate.

For a 20-something graduate, living at home, looking to save a deposit for a property, I think it is much better to be putting it into a broad equity ETF and add to it over a 10 year period or so, rather than trying to hit the home run with 5x (or 500x 😀) longshot.

ScissorPaperRock · 23-11-2022 9:06pm

Very true about store of value function being undermined by volatility. But it should be a positively reinforcing cycle. As market cap grows, volatility diminishes and the utility as a store of value increases. The speculation on the other hand is largely associated with the volatility.

HerrKuehn · 24-11-2022 8:37am

https://www.boards.ie/discussion/comment/119912922#Comment_119912922

What would a compelling reason for someone to use bitcoin to store value then? We don't normally keep non productive wealth in foreign currencies for example. I have never had say X and thought, I might store half that in japanese yen.

ScissorPaperRock · 24-11-2022 12:40pm

https://www.boards.ie/discussion/comment/119914150#Comment_119914150

A hedge against inflation. It's a narrative that hasn't played out well so far due to the price volatility, but theoretically if price were to stabilise it would be a good hedge given the supply is capped at 21m BTC. Fiat, on the other hand, keeps on printing.

As we progress towards central bank digital currencies (CBDCs), and the level of control they will confer to governments, censorship-resistant mediums like BTC might also become increasingly attractive.

HerrKuehn · 24-11-2022 12:51pm

https://www.boards.ie/discussion/comment/119915096#Comment_119915096

I really don't mean to be smart, but we have high inflation at the moment and if anything Bitcoin and other crypto has turned out to be a kind of inverse hedge if anything. People might be better off shorting it as a hedge against inflation, but most people would not take that kind of risk. If you think about it too, it actually makes sense. Crypto is seen as a highly speculative asset and in times of high inflation those types of assets will get smashed, we have the same with tech growth stocks. If you are interested in hedging inflation, there are various types of inflation proof bonds and things, you can also buy property or stocks in companies that would be unlikely to be affected during the high inflation.

I think it all comes back to speculation being the main use case and that relies on the asset being volatile. Would anyone buy Bitcoin to hold if there was not a chance of above inflation increase? Also, trading firms (prop trading and hedge funds etc) will trade anything that suits their strategies, so I wouldn't see their involvement as any particular buy in to a belief in the long term viability of the crypto world, I work in one of these companies developing trading strategies.

silliussoddius · 24-11-2022 6:38pm

https://www.boards.ie/discussion/comment/119915096#Comment_119915096

One of the main reasons people invest in it is to make crazy gains, as long as people are doing that it won’t stabilize.

waterwelly · 25-11-2022 2:17am

https://www.boards.ie/discussion/comment/119917079#Comment_119917079

Comparing the charts to the Dow there have been no crazy gains over the past 5 years though.

I just looked briefly at investments in copper, a real world necessary material, and over 5 years bitcoin looks like a very poor second.

Now I just picked copper at random but I've no doubts plenty of relatively in demand physical materials are hammering bitcoin on investment returns.

ScissorPaperRock · 25-11-2022 10:56am

https://www.boards.ie/discussion/comment/119918534#Comment_119918534

There were crazy gains... if you take a five year period up until today, there was 500% growth in the first 4 years of that period, with the majority of that occurring in year 4. Yes, year 5 has seen a lot of that growth wiped out, but you can't deny it happened. Looking at a start-point and end-point alone gives a very limited perspective.

Compared to Dow Jones, if you do want to cherry pick a 5-year start-point to end-point view, BTC still has 70% vs 40%. Copper looks to have gone from $3.1 to $3.65 in the same period... so an 18% gain...