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Mike Novogratz Is Set for Comeback With Cryptocurrency Hedge Fund

59 points by champagnepapi 9y ago

wslh 9y ago
It is also good to try to have a balanced view and separate signal from noise. Chris Burniske published a few days ago an article about cryptoasset valuations trying to start a serious framework for analyzing cryptoassets [1]. Beyond the valuation, the innovation behind Bitcoin and few others make sense taking into account scaling issues and security thresholds. Sharing here [2] a work in progress about new insights in the field (e.g. Spectre). [1] https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7 https://medium.com/@cburniske/cryptoasset-valuations-ac83479... [2] https://docs.google.com/document/d/1VfvfAA2v7EhAaxKmw95GJ0pv6SYdrcHxmGd7KwUL4Es/edit?usp=drivesdk https://docs.google.com/document/d/1VfvfAA2v7EhAaxKmw95GJ0pv...
- rothbardrand 9y ago
  Be vary wary of the "peer review" status in that spreadsheet. Academic peer review is a lot different from a code audit, and at least one of the projects you have listed engaged in a lot of, shall we say, less than secure practices in implementation, like embarrassingly insecure. There's a world of difference between academic peer review and adversarial code review.
  - wslh 9y ago
    Yes, we are very aware of that and this is one of the top specialists work with us ;-)
  - wslh 9y ago
    > Academic peer review is a lot different from a code audit, and at least one of the projects you have listed engaged in a lot of, shall we say, less than secure practices in implementation, like embarrassingly insecure. Which project are you referring to? If you are referring to IOTA it is a preprint. Also here we put a new link to the doc: https://docs.google.com/document/d/1J8hehbnZWzcIUMQcxMiGbjz86wDu3zDFF7UtkR0XjGE/ https://docs.google.com/document/d/1J8hehbnZWzcIUMQcxMiGbjz8...
omellet 9y ago
Most people think it's a bubble, and nobody thinks they're the greater fool.
m-p-3 9y ago
It could very well be a bubble, but I never put more than I am willing to lose.
jsnathan 9y ago
Specifically, he compares compares blockchains to the Internet and railroads: "It is a bubble. This is going to be the largest bubble of our lifetimes, and so .. remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble, railroads really fundamentally changed the way we live; the Internet bubble changed the way we live. And so, prices are gonna get way ahead of what they should be. You can make a whole lotta money on the way up. And we plan on it. At one point you're going to have to sell."
- AznHisoka 9y ago
  everything he says seems fairly obvious but he never seems to answer the tough question: when do you sell?
  - dmichulke 9y ago
    My answer: Take a look at the dotcom bubble, adjust nasdaq marketcap for inflation (and maybe much more because of ZIRP) and there you have your target market cap.
    - AznHisoka 9y ago
      What's your reasoning behind this? When all the dumb money is in, it's time to get out?
      - dmichulke 9y ago
        Yes, the only question is when the dumb money is in. I guess dotcom is here a historical precedent. Since we cannot really know, I will just use that number and gradually sell around it. Of course that might make me the dumb money but that's a risk I'm willing to take.
  - rothbardrand 9y ago
    When bitcoin is fully valued, you won't need to sell.
thinkMOAR 9y ago
If a tree falls.. i mean the other well known saying, "if a bubble doesn't burst while you are in it (invested and cashed out), was it really a bubble?"
- saalweachter 9y ago
  I'm really starting to respect it a lot more as a bubble now that most people have stopped trying to pretend it's a viable currency/transaction processing system. It's really, like, the platonic ideal of a bubble, perfect for separating fools from their money: slow growing, with no clear limit in site, but volatile, and decoupled from reality. It's beautiful, really.
  - rothbardrand 9y ago
    Bitcoin is many things, and the most important thing is it's a currency outside of the control of governments. Right now that's new enough that it's primary value proposition is anti-inflation (in venezuela) and "digital gold" in much of the world. Is there no legitimate value to letting chinese people move money? Also, between SegWit, Lightning Network and side chains, the scalability is going to be nearly unlimited in about two years, so the idea that it's not a "viable transaction processing system" seems a bit silly. In fact it works now, globally, without serious problems.
  - ojr 9y ago
    it still is a very viable currency and transaction processing system, I would even argue the best right now for gambling, Bitcoin Cash, a fork of the original Bitcoin, the settlements are even faster, mainstream users can still use normal debit and credit cards, but the settlements will happen behind the scenes with bank-to-bank transfers or bitcoin transfers, its already happening on a small scale
cs702 9y ago
He calls Bitcoin a bubble, and yet, he's launching a new $500 million fund to BUY Bitcoin -- including $150 million of his own money! WHY would he be doing this? Quoting from the OP, here's his answer: "This is going to be the largest bubble of our lifetimes, and so .. remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble, railroads really fundamentally changed the way we live; the Internet bubble changed the way we live. And so, prices are gonna get way ahead of what they should be. You can make a whole lotta money on the way up. And we plan on it. At one point you're going to have to sell."
- empath75 9y ago
  I’m gonna ride this Ponzi scheme all the way to the top!
  - cs702 9y ago
    Was the railroad bubble of the 1840's [1] a Ponzi scheme? Was the dot-com bubble of the late 1990's [2] a Ponzi scheme? Were the electricity, automobile, aviation, radio, and television bubbles of the "Roaring 20's" [3] Ponzi schemes? Just because something is in an asset-price bubble doesn't necessarily mean it's a Ponzi scheme. Yes, many if not most investors ultimately lost money in the electricity, automobile, aviation, radio, television, railroad, and dot-com bubbles, but those bubbles left behind an enormous amount of investment in infrastructure from which we are benefiting to this day.[4] [1] https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania [2] https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble [3] https://en.wikipedia.org/wiki/Roaring_Twenties#Economy https://en.wikipedia.org/wiki/Roaring_Twenties#Economy [4] Buffett wrote a great article touching on this in 1999, at the peak of the dot-com bubble: http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm http://archive.fortune.com/magazines/fortune/fortune_archive...
    - Luc 9y ago
      Could you have invested in any of those at the time without losing your shirt along the way? Possibly, maybe, with a lot of luck. Likewise, I don't doubt digital currencies will end up being bigger than they are today, I just don't see a way of investing in them at the moment that will survive the likely implosion of the bubble.
Blackstone4 9y ago
Maybe some people here can help answer some questions I have: 1 - Where can you spend Bitcoin? 2 - What percentage of outstanding Bitcoins are used for trade? i.e. exchanging currency for a good 3 - People have been saying it could be used for illegal activities. I understand each transaction is recorded in the global public ledger using the ID. Is it possible to trace who is behind each transaction? Can it be used for illegal activities? If so what percentage of Bitcoin does this make up?
- seppin 9y ago
  1. almost nowhere 2. < .01% 3. yes, but there's nothing stopping you buying and selling through multiple currencies. still technically traceable, but very difficult
  - mark024 9y ago
    you can spend it on steam, of travel to Japan and spend it everywhere.
- VMG 9y ago
  1) Here is a list https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/ https://99bitcoins.com/who-accepts-bitcoins-payment-companie... -- a lot of stores indirectly accept bitcoin via payment providers like bitpay.com, but I could not find a list. 2) Hard to tell because of (3). But you can approximate it using the exchange volumes: https://bitcoinaverage.com/ https://bitcoinaverage.com/ 3) Unless you are doing a targeted search, mapping an individual to one of his addresses, it is very difficult to run an analysis. This makes it hard to answer (2). It successfully used for illegal activities.
  - Blackstone4 9y ago
    Thank you VMG On 2) could one strip out speculators from the exchange volumes?
    - VMG 9y ago
VMG 9y ago
Gold is a 6000 year old bubble: https://www.coindesk.com/citi-chief-economist-bitcoin-closest-commodity-gold/ https://www.coindesk.com/citi-chief-economist-bitcoin-closes...
- bhaak 9y ago
  This one might pop if we get profitable asteroid mining.
josu 9y ago
This fool thinks he can time the market. >“I sold at $5,000 or $4,980,” he said. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.” My guess is that this is not going to end well for him or his fund. If you want to read a similar story read this twitter feed [0]: it's from a very confident trader who probably lost around 1-2M. We will probably not know the exact number because he stopped tweeting. [0] https://twitter.com/fomoer https://twitter.com/fomoer
- rothbardrand 9y ago
  Timing the market isn't as hard in a sustained bull market, because being right %50 of the time still results in returns. When Bitcoin makes all time highs, selling some is an easy strategy, and then when some random news hits and it drops, or whales start throwing weight around, then you can buy in at a discount like this guy did. The article leaves out that it has come back up to $4k right now. Since so many traders are following stock oriented trading strategies the market dynamics end up being a lot like stocks with sentiment driving direction, which is probably not super hard to trade (though I'm not good at it.) So much of the stocks value and future depends on regulatory environment and stocks are located in one jurisdiction... meanwhile bitcoin global. So as time goes on, any one jurisdiction making scary noises has less effect on bitcoin. The drop to $3k was due to china "banning bitcoin" (for like the 8th time this year) and it was quickly shrugged off... I remember china "banning bitcoin" back in January taking us from $1,200 to $800.
  - csomar 9y ago
    > Timing the market isn't as hard in a sustained bull market, because being right %50 of the time still results in returns. When Bitcoin makes all time highs, selling some is an easy strategy, and then when some random news hits and it drops, or whales start throwing weight around, then you can buy in at a discount like this guy did. This speaks like someone who hasn't traded bitcoin, at least recently. I'll tell you that the non-stop jump from 900 to 3.000 hit very bad the very best of traders. That's an event where you lose money even though we are still in a bull-market. Now think how much you'll lose when the tables turn (bull market to bear market). Trading is hard business.
timthelion 9y ago
I think that the idea is that the total volume is low enough that this person thinks they can manipulate the price. They say "it's a bubble, it's going to pop" and then they sell $30million in obfuscated coins. Everyone goes "IT'S POPPING!" and they sell, and then he buys $470million in coins.
pmorici 9y ago
Title is not accurate, what he actually says is that it will be not that it is currently. Also lots of errors here like mistaking ICO for Internet Coin Offering instead of Initial Coin Offering.
mark024 9y ago
what's the difference between bitcoin and gold? if the world goes to shit, you won't be able to eat gold, the gold industrial use is just a myth, there is the jewelry use, but still the same deal store of value, if bitcoin is a bubble then gold is a hundreds of years bubble.
nikcub 9y ago
> “I sold at $5,000 or $4,980,” he said. I doubt it. If you follow the Bitcoin price you'll know that a lot of indices reported the price hit over $5,000 but that was because the Chinese exchanges were trading at a premium (up to $5,150 on OKCoin) which dragged it up. It didn't actually hit $5,000 on Coinbase, Bitfinex and Bitstamp - and when it did trade at high $4900s it was for low volume for a very short period of time The reason why the price delta between the USD and CNY exchanges is high is because of how difficult it is to trade between the two (also because of restrictions on CNY) So he's either trading on Chinese exchanges and figured that out, or ..
- csomar 9y ago
  Or he is full of shit? Easy one. Anyone bragging about trading results must have a public ledger.
- mrb 9y ago
  It actually surpassed $5k for about 3 hours on CEX.IO https://bitcoincharts.com/charts/cexUSD#rg60zig5-minzczsg2017-09-01zeg2017-09-02ztgSzm1g10zm2g25 https://bitcoincharts.com/charts/cexUSD#rg60zig5-minzczsg201...
jondubois 9y ago
It's very high risk, but I can imagine the bull case becoming a reality some day: Approximately $10.5 trillion US dollars exists today. Some sources claim that the total value of all fiat currencies in circulation (or storage) in the world amounts to $75 trillion. The total market cap of ALL cryptocurrencies today is less than $150 billion. This means that if cryptocurrencies replace traditional currencies, then you can expect a 500x increase in the total value of all cryptocurrencies. But it's not going to all go into Bitcoin; it's going to be spread across millions (if not billions) of unique cryptocurrencies and new ones are going to rise and fall all the time (like apps on the app store, except fairer). There will be exchanges to convert between any cryptocurrency immaginable; they will all communicate with exchanges via a standard protocol. So any new currency which implements the protocol will be immediately tradeable on any exchange. Different groups of people will affiliate themselves with different cryptocurrencies and this will allow the combined net worth of different groups of people to float freely on the market based on how much the rest of society values their labor/output. To get rich, it will just be a matter of associating with the the right groups of people at the right time (by buying their currency). It will be the ultimate free market.
- rothbardrand 9y ago
  The thing is, unless you are auditing the code it's hard to know which cryptos are competent and which are just BS. On the other hand, since the code is open source, then you can audit the code. A crypto hedge fund that spends a lot of money actually auditing code might have great returns.
rothbardrand 9y ago
Ultimately what makes for a successful cryptocurrency is security and network effects. Now security not just includes the quality of the cryptography but the quality of the network, and the design of the currency to allow it to be used reliably. This factor is all about engineering. And the thing about cryptocurrencies is that they are so novel and so new that there are a really small number of good cryptocurrency engineers. I've worked with a lot of second raters (I'm maybe a third rater myself) and talked to the first rate people. This is not a skill people will be getting with a class or two at a MOOC. (Or I wouldn't be a 3rd rater) On both measures: Security and Network Effects bitcoin is the king. The second most popular is Ethereum which is starting to get a lot of holders but seems to be constantly engineering its way out of disaster (the blockchain is already bigger than bitcoins and it's growing faster and new code is being thrown in all the time.) Move fast and break things makes sense for facebook- they can fix any problems trivially. This is not the case for blockchain systems and thus the risk for ethereum is pretty high. To their credit they have been able to avoid catastrophe so far, but it's a lot less safe in this regard than bitcoin. (And theres some fundamental problems with Proof of Stake that may be exploited when Ethereum goes to that mechanism.) Right now there's money to be made trading between these alternatives to bitcoin and bitcoin, but that's mostly trading on hype, not utility. Bitcoin itself isn't even yet having its value follow utility, though it's adoption in situations like Venezuela is starting to prove some of that utility (and here again Ethereum has done good by being GPU mineable, something you can do in probably any country, unlike Bitcoin which requires expensive and mostly-single sourced ASICs) I don't see where Crypto hedge funds have any advantage. They can't engage in the kind of market manipulation or derivatives trading that typical hedge funds seem to make their money with.
csomar 9y ago
> “I sold at $5,000 or $4,980,” he said. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.” Why not make your trades public then? You can make them publicly encrypted and then publish the keys later if you want to brag. And is he talking about a small trade here? 4980 was the maxima (the tip), so little money changed hand at that price. I take any person who says that as a fraudster selling to the ignorant. If you can make, with persistence, 30% returns in a few days then why raise capital in the first place?
mrb 9y ago
He is a billionaire who puts his money where his mouth is: he revealed in April he had $100 million(!)'s worth of Bitcoin & Ethereum. http://money.cnn.com/2017/04/20/investing/mike-novogratz-bets-big-on-bitcoin-ether-blockchain/index.html http://money.cnn.com/2017/04/20/investing/mike-novogratz-bet... Went up 3-5× since then...

59 points by champagnepapi 9y ago

wslh 9y ago

It is also good to try to have a balanced view and separate signal from noise. Chris Burniske published a few days ago an article about cryptoasset valuations trying to start a serious framework for analyzing cryptoassets [1]. Beyond the valuation, the innovation behind Bitcoin and few others make sense taking into account scaling issues and security thresholds. Sharing here [2] a work in progress about new insights in the field (e.g. Spectre). [1] https://medium.com/@cburniske/cryptoasset-valuations-ac83479ffca7 https://medium.com/@cburniske/cryptoasset-valuations-ac83479... [2] https://docs.google.com/document/d/1VfvfAA2v7EhAaxKmw95GJ0pv6SYdrcHxmGd7KwUL4Es/edit?usp=drivesdk https://docs.google.com/document/d/1VfvfAA2v7EhAaxKmw95GJ0pv...

rothbardrand 9y ago
Be vary wary of the "peer review" status in that spreadsheet. Academic peer review is a lot different from a code audit, and at least one of the projects you have listed engaged in a lot of, shall we say, less than secure practices in implementation, like embarrassingly insecure. There's a world of difference between academic peer review and adversarial code review.
- wslh 9y ago
  Yes, we are very aware of that and this is one of the top specialists work with us ;-)
- wslh 9y ago
  > Academic peer review is a lot different from a code audit, and at least one of the projects you have listed engaged in a lot of, shall we say, less than secure practices in implementation, like embarrassingly insecure. Which project are you referring to? If you are referring to IOTA it is a preprint. Also here we put a new link to the doc: https://docs.google.com/document/d/1J8hehbnZWzcIUMQcxMiGbjz86wDu3zDFF7UtkR0XjGE/ https://docs.google.com/document/d/1J8hehbnZWzcIUMQcxMiGbjz8...

omellet 9y ago

Most people think it's a bubble, and nobody thinks they're the greater fool.

m-p-3 9y ago

It could very well be a bubble, but I never put more than I am willing to lose.

jsnathan 9y ago

Specifically, he compares compares blockchains to the Internet and railroads: "It is a bubble. This is going to be the largest bubble of our lifetimes, and so .. remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble, railroads really fundamentally changed the way we live; the Internet bubble changed the way we live. And so, prices are gonna get way ahead of what they should be. You can make a whole lotta money on the way up. And we plan on it. At one point you're going to have to sell."

AznHisoka 9y ago
everything he says seems fairly obvious but he never seems to answer the tough question: when do you sell?
- dmichulke 9y ago
  My answer: Take a look at the dotcom bubble, adjust nasdaq marketcap for inflation (and maybe much more because of ZIRP) and there you have your target market cap.
  - AznHisoka 9y ago
    What's your reasoning behind this? When all the dumb money is in, it's time to get out?
    - dmichulke 9y ago
      Yes, the only question is when the dumb money is in. I guess dotcom is here a historical precedent. Since we cannot really know, I will just use that number and gradually sell around it. Of course that might make me the dumb money but that's a risk I'm willing to take.
- rothbardrand 9y ago
  When bitcoin is fully valued, you won't need to sell.

thinkMOAR 9y ago

If a tree falls.. i mean the other well known saying, "if a bubble doesn't burst while you are in it (invested and cashed out), was it really a bubble?"

saalweachter 9y ago
I'm really starting to respect it a lot more as a bubble now that most people have stopped trying to pretend it's a viable currency/transaction processing system. It's really, like, the platonic ideal of a bubble, perfect for separating fools from their money: slow growing, with no clear limit in site, but volatile, and decoupled from reality. It's beautiful, really.
- rothbardrand 9y ago
  Bitcoin is many things, and the most important thing is it's a currency outside of the control of governments. Right now that's new enough that it's primary value proposition is anti-inflation (in venezuela) and "digital gold" in much of the world. Is there no legitimate value to letting chinese people move money? Also, between SegWit, Lightning Network and side chains, the scalability is going to be nearly unlimited in about two years, so the idea that it's not a "viable transaction processing system" seems a bit silly. In fact it works now, globally, without serious problems.
- ojr 9y ago
  it still is a very viable currency and transaction processing system, I would even argue the best right now for gambling, Bitcoin Cash, a fork of the original Bitcoin, the settlements are even faster, mainstream users can still use normal debit and credit cards, but the settlements will happen behind the scenes with bank-to-bank transfers or bitcoin transfers, its already happening on a small scale

cs702 9y ago

He calls Bitcoin a bubble, and yet, he's launching a new $500 million fund to BUY Bitcoin -- including $150 million of his own money! WHY would he be doing this? Quoting from the OP, here's his answer: "This is going to be the largest bubble of our lifetimes, and so .. remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble, railroads really fundamentally changed the way we live; the Internet bubble changed the way we live. And so, prices are gonna get way ahead of what they should be. You can make a whole lotta money on the way up. And we plan on it. At one point you're going to have to sell."

empath75 9y ago
I’m gonna ride this Ponzi scheme all the way to the top!
- cs702 9y ago
  Was the railroad bubble of the 1840's [1] a Ponzi scheme? Was the dot-com bubble of the late 1990's [2] a Ponzi scheme? Were the electricity, automobile, aviation, radio, and television bubbles of the "Roaring 20's" [3] Ponzi schemes? Just because something is in an asset-price bubble doesn't necessarily mean it's a Ponzi scheme. Yes, many if not most investors ultimately lost money in the electricity, automobile, aviation, radio, television, railroad, and dot-com bubbles, but those bubbles left behind an enormous amount of investment in infrastructure from which we are benefiting to this day.[4] [1] https://en.wikipedia.org/wiki/Railway_Mania https://en.wikipedia.org/wiki/Railway_Mania [2] https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble [3] https://en.wikipedia.org/wiki/Roaring_Twenties#Economy https://en.wikipedia.org/wiki/Roaring_Twenties#Economy [4] Buffett wrote a great article touching on this in 1999, at the peak of the dot-com bubble: http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm http://archive.fortune.com/magazines/fortune/fortune_archive...
  - Luc 9y ago
    Could you have invested in any of those at the time without losing your shirt along the way? Possibly, maybe, with a lot of luck. Likewise, I don't doubt digital currencies will end up being bigger than they are today, I just don't see a way of investing in them at the moment that will survive the likely implosion of the bubble.

Blackstone4 9y ago

Maybe some people here can help answer some questions I have: 1 - Where can you spend Bitcoin? 2 - What percentage of outstanding Bitcoins are used for trade? i.e. exchanging currency for a good 3 - People have been saying it could be used for illegal activities. I understand each transaction is recorded in the global public ledger using the ID. Is it possible to trace who is behind each transaction? Can it be used for illegal activities? If so what percentage of Bitcoin does this make up?

seppin 9y ago
1. almost nowhere 2. < .01% 3. yes, but there's nothing stopping you buying and selling through multiple currencies. still technically traceable, but very difficult
- mark024 9y ago
  you can spend it on steam, of travel to Japan and spend it everywhere.
VMG 9y ago
1) Here is a list https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/ https://99bitcoins.com/who-accepts-bitcoins-payment-companie... -- a lot of stores indirectly accept bitcoin via payment providers like bitpay.com, but I could not find a list. 2) Hard to tell because of (3). But you can approximate it using the exchange volumes: https://bitcoinaverage.com/ https://bitcoinaverage.com/ 3) Unless you are doing a targeted search, mapping an individual to one of his addresses, it is very difficult to run an analysis. This makes it hard to answer (2). It successfully used for illegal activities.
- Blackstone4 9y ago
  Thank you VMG On 2) could one strip out speculators from the exchange volumes?
  - VMG 9y ago

VMG 9y ago

Gold is a 6000 year old bubble: https://www.coindesk.com/citi-chief-economist-bitcoin-closest-commodity-gold/ https://www.coindesk.com/citi-chief-economist-bitcoin-closes...

bhaak 9y ago
This one might pop if we get profitable asteroid mining.

josu 9y ago

This fool thinks he can time the market. >“I sold at $5,000 or $4,980,” he said. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.” My guess is that this is not going to end well for him or his fund. If you want to read a similar story read this twitter feed [0]: it's from a very confident trader who probably lost around 1-2M. We will probably not know the exact number because he stopped tweeting. [0] https://twitter.com/fomoer https://twitter.com/fomoer

rothbardrand 9y ago
Timing the market isn't as hard in a sustained bull market, because being right %50 of the time still results in returns. When Bitcoin makes all time highs, selling some is an easy strategy, and then when some random news hits and it drops, or whales start throwing weight around, then you can buy in at a discount like this guy did. The article leaves out that it has come back up to $4k right now. Since so many traders are following stock oriented trading strategies the market dynamics end up being a lot like stocks with sentiment driving direction, which is probably not super hard to trade (though I'm not good at it.) So much of the stocks value and future depends on regulatory environment and stocks are located in one jurisdiction... meanwhile bitcoin global. So as time goes on, any one jurisdiction making scary noises has less effect on bitcoin. The drop to $3k was due to china "banning bitcoin" (for like the 8th time this year) and it was quickly shrugged off... I remember china "banning bitcoin" back in January taking us from $1,200 to $800.
- csomar 9y ago
  > Timing the market isn't as hard in a sustained bull market, because being right %50 of the time still results in returns. When Bitcoin makes all time highs, selling some is an easy strategy, and then when some random news hits and it drops, or whales start throwing weight around, then you can buy in at a discount like this guy did. This speaks like someone who hasn't traded bitcoin, at least recently. I'll tell you that the non-stop jump from 900 to 3.000 hit very bad the very best of traders. That's an event where you lose money even though we are still in a bull-market. Now think how much you'll lose when the tables turn (bull market to bear market). Trading is hard business.

timthelion 9y ago

I think that the idea is that the total volume is low enough that this person thinks they can manipulate the price. They say "it's a bubble, it's going to pop" and then they sell $30million in obfuscated coins. Everyone goes "IT'S POPPING!" and they sell, and then he buys $470million in coins.

pmorici 9y ago

Title is not accurate, what he actually says is that it will be not that it is currently. Also lots of errors here like mistaking ICO for Internet Coin Offering instead of Initial Coin Offering.

mark024 9y ago

what's the difference between bitcoin and gold? if the world goes to shit, you won't be able to eat gold, the gold industrial use is just a myth, there is the jewelry use, but still the same deal store of value, if bitcoin is a bubble then gold is a hundreds of years bubble.

nikcub 9y ago

> “I sold at $5,000 or $4,980,” he said. I doubt it. If you follow the Bitcoin price you'll know that a lot of indices reported the price hit over $5,000 but that was because the Chinese exchanges were trading at a premium (up to $5,150 on OKCoin) which dragged it up. It didn't actually hit $5,000 on Coinbase, Bitfinex and Bitstamp - and when it did trade at high $4900s it was for low volume for a very short period of time The reason why the price delta between the USD and CNY exchanges is high is because of how difficult it is to trade between the two (also because of restrictions on CNY) So he's either trading on Chinese exchanges and figured that out, or ..

csomar 9y ago
Or he is full of shit? Easy one. Anyone bragging about trading results must have a public ledger.
mrb 9y ago
It actually surpassed $5k for about 3 hours on CEX.IO https://bitcoincharts.com/charts/cexUSD#rg60zig5-minzczsg2017-09-01zeg2017-09-02ztgSzm1g10zm2g25 https://bitcoincharts.com/charts/cexUSD#rg60zig5-minzczsg201...

jondubois 9y ago

It's very high risk, but I can imagine the bull case becoming a reality some day: Approximately $10.5 trillion US dollars exists today. Some sources claim that the total value of all fiat currencies in circulation (or storage) in the world amounts to $75 trillion. The total market cap of ALL cryptocurrencies today is less than $150 billion. This means that if cryptocurrencies replace traditional currencies, then you can expect a 500x increase in the total value of all cryptocurrencies. But it's not going to all go into Bitcoin; it's going to be spread across millions (if not billions) of unique cryptocurrencies and new ones are going to rise and fall all the time (like apps on the app store, except fairer). There will be exchanges to convert between any cryptocurrency immaginable; they will all communicate with exchanges via a standard protocol. So any new currency which implements the protocol will be immediately tradeable on any exchange. Different groups of people will affiliate themselves with different cryptocurrencies and this will allow the combined net worth of different groups of people to float freely on the market based on how much the rest of society values their labor/output. To get rich, it will just be a matter of associating with the the right groups of people at the right time (by buying their currency). It will be the ultimate free market.

rothbardrand 9y ago
The thing is, unless you are auditing the code it's hard to know which cryptos are competent and which are just BS. On the other hand, since the code is open source, then you can audit the code. A crypto hedge fund that spends a lot of money actually auditing code might have great returns.

rothbardrand 9y ago

Ultimately what makes for a successful cryptocurrency is security and network effects. Now security not just includes the quality of the cryptography but the quality of the network, and the design of the currency to allow it to be used reliably. This factor is all about engineering. And the thing about cryptocurrencies is that they are so novel and so new that there are a really small number of good cryptocurrency engineers. I've worked with a lot of second raters (I'm maybe a third rater myself) and talked to the first rate people. This is not a skill people will be getting with a class or two at a MOOC. (Or I wouldn't be a 3rd rater) On both measures: Security and Network Effects bitcoin is the king. The second most popular is Ethereum which is starting to get a lot of holders but seems to be constantly engineering its way out of disaster (the blockchain is already bigger than bitcoins and it's growing faster and new code is being thrown in all the time.) Move fast and break things makes sense for facebook- they can fix any problems trivially. This is not the case for blockchain systems and thus the risk for ethereum is pretty high. To their credit they have been able to avoid catastrophe so far, but it's a lot less safe in this regard than bitcoin. (And theres some fundamental problems with Proof of Stake that may be exploited when Ethereum goes to that mechanism.) Right now there's money to be made trading between these alternatives to bitcoin and bitcoin, but that's mostly trading on hype, not utility. Bitcoin itself isn't even yet having its value follow utility, though it's adoption in situations like Venezuela is starting to prove some of that utility (and here again Ethereum has done good by being GPU mineable, something you can do in probably any country, unlike Bitcoin which requires expensive and mostly-single sourced ASICs) I don't see where Crypto hedge funds have any advantage. They can't engage in the kind of market manipulation or derivatives trading that typical hedge funds seem to make their money with.

csomar 9y ago

> “I sold at $5,000 or $4,980,” he said. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.” Why not make your trades public then? You can make them publicly encrypted and then publish the keys later if you want to brag. And is he talking about a small trade here? 4980 was the maxima (the tip), so little money changed hand at that price. I take any person who says that as a fraudster selling to the ignorant. If you can make, with persistence, 30% returns in a few days then why raise capital in the first place?

mrb 9y ago

He is a billionaire who puts his money where his mouth is: he revealed in April he had $100 million(!)'s worth of Bitcoin & Ethereum. http://money.cnn.com/2017/04/20/investing/mike-novogratz-bets-big-on-bitcoin-ether-blockchain/index.html http://money.cnn.com/2017/04/20/investing/mike-novogratz-bet... Went up 3-5× since then...