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This. Like it or not, we are in for a crash followed by a long crawl back for cryptocoin investors. The tech is cool and useful, but not $6400/BTC useful just y

by ttul 9y ago

This. Like it or not, we are in for a crash followed by a long crawl back for cryptocoin investors. The tech is cool and useful, but not $6400/BTC useful just yet.

dpandya 9y ago
If you're as confident on this as the comment suggests, you could purchase the appropriate futures with most of your net worth and make lots of money. If you don't want to do that, maybe it isn't quite as certain as you suggest.
- iamthirsty 9y ago
  I'm a huge proponent of putting your money where your mouth is, but staking most of your net worth against what still is a pretty manipulated market is just stupid and is a gamble no one needs to make.
- beepboopbeep 9y ago
  uh, or you could be a reasonable human being and weigh the risks that you're willing to endure for a given return on an investment...
- fgonzag 9y ago
  "The market can stay irrational far longer than you can stay solvent"
  - dpandya 9y ago
    This comment doesn't really apply here, because the post above suggests explicitly that the true value of Bitcoin is far lower than it is now and the market will realize this in the near-term (i.e. "the market will crash"). If the comment only suggested that the true value of Bitcoin is lower than the currently traded rate (and made no mention of what the market value would do), this particular observation would be relevant.
- jjxw 9y ago
  That's the great thing about a futures market. People who want to short Bitcoin with reasonable risk management can do so now. There are a lot of people who have lost their shirts betting against Bitcoin because all you could do were naked short - these derivative markets will provide sophisticated traders the ability to hedge their bets so they can continue to short without getting margin called if Bitcoin happens to double in value before crashing in the coming months / years.
- roenxi 9y ago
  We had an article on the Kelly criterion just the other day that handily refutes your point. Even if bitcoin is certain to crash, without a deep understanding of when (and by extension, how) a naive futures trader still runs a good chance of being eaten alive, or making poor returns. Stating bitcoin will crash is a bit like the conventional wisdom that smoking is bad for your health. One can reasonably be very confident in the truth of it without being confident in specific odds on any bad outcome.
  - rjbwork 9y ago
    "The market remain irrational longer than you can remain solvent."
    - the_rosentotter 9y ago
      Or maybe you were just wrong and not everybody else? Just a thought. (I know this is a quote from Keynes)
  - bob_theslob646 9y ago
    Care to link that? I am pretty sure the Kelly Criterion is a betting strategy. What does that have to do with bitcoin? Edit: Found it. https://rhsfinancial.com/2017/06/line-aggressive-crazy/ https://rhsfinancial.com/2017/06/line-aggressive-crazy/ I hope you really think about applying the Kelly Criterion to trading bitcoin futures and hope you realize that the person completely ignores friction(transaction costs),and does not show a sharpe ratio( who cares if you beat a benchmark with 10x the risk). "[In November 2000.] Those kinds of times… when everyone is running around like a chicken with its head cut off, that's pretty good for us… "~Jim Simons (https://en.wikipedia.org/wiki/Renaissance_Technologies https://en.wikipedia.org/wiki/Renaissance_Technologies)
    - milcron 9y ago
      The Kelly Criterion is a betting strategy that, given the probability and payoff of different outcomes, tells you what percentage of your bankroll to bet.
- bob_theslob646 9y ago
  The better question is how the CME is going to replicate the value of a Bitcoin. The funny thing about this is when the real smart ones get there hands on this contract (quants), watch out. Goodbye free lunch and hello very efficient pricing.(Low vol)
  - kgwgk 9y ago
    They don't need to replicate anything, they just need to match buyers and sellers.
    - bob_theslob646 9y ago
      Maybe replicating was too strong of word What I meant was, how they plan on "replicating", constructing the index value ,in which ,they( the CME) will base the value of bitcoin to be. It is detailed here. https://www.cmegroup.com/trading/files/bitcoin-reference-rate-methodology.pdf https://www.cmegroup.com/trading/files/bitcoin-reference-rat... CNBC stated that it is a weighted average of 4 index's in the video, but could not find anything of the sort in the article (https://www.cnbc.com/2017/10/31/cme-plans-to-launch-bitcoin-futures-by-year-end.html https://www.cnbc.com/2017/10/31/cme-plans-to-launch-bitcoin-...)
      - kgwgk 9y ago
        The press release gives some details. The exchanges are Bitstamp, GDAX, itBit and Kraken. http://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html http://www.cmegroup.com/media-room/press-releases/2017/10/31...
  - paulpauper 9y ago
    but commodities are much more volatile than stocks though
- empath75 9y ago
  I firmly believe the price is going to crash but I also think it could double or triple before it does. The bitcoin market is insane.
- mikeash 9y ago
  What level of confidence would you say is represented by that comment? I’d say 95% sounds reasonable, which implies a 5% chance of being wiped out with your strategy. Might be too high for many people.
eric_h 9y ago
I’m really not sure what the dollar value utility per BTC should be, I just know that it’s so uncertain that I have no business playing the game unless I’d already had the fortune of acquiring a large amount of bitcoin for “free.” I didn’t, and I consider the profit I’ve made to be a satisfying amount of “free money”, so I’m just going to keep watching from the sidelines. No judgement, I’m just out.
icelancer 9y ago
I've been hearing this at $500, $1000, $2000, $4000, $5000, and now $6400. I'm certainly willing to believe anyone at those times. But... everyone's been quite wrong. I make a weekly purchase of a small basket of cryptocurrency (mostly BTC) and I actually mine XMR with some leftover hardware since it's price efficient currently. No different than hedging your retirement portfolio with commodities and other non-correlated assets with your equities basket. Cryptocurrency isn't going anywhere anytime soon, that's about the only thing we can say for sure.
- paulpauper 9y ago
  Yeah ppl who keep predicting bubble need to hang it up and just admit they were wrong.
  - baddox 9y ago
    It's less about being "wrong" and more about making a falsifiable claim. You can certainly just call something a bubble literally forever: until you die, or until humanity goes extinct, until the heat death of the universe, etc. If Bitcoin stays relevant up to any of those points in time, I'll consider it a success regardless of how many people continued making the unfalsifiable claim that it's a bubble.
    - omio 9y ago
      The universe is a bubble!
- arzt 9y ago
  Any advice for newbies looking to mine XMR?
  - icelancer 9y ago
    /r/moneromining is OK. Lot of resources to check out there. SimpleMiningOS is a popular operating system that runs a ton of miners.
- 9y ago
charlesdm 9y ago
I can't predict the future, but my gut feeling is telling me you're wrong. Institutional money moves the needle and I wouldn't be surprised if this goes another 20x (into trillions of dollars) before we see a major correction. The current market cap ($180bn) is nothing. Facebook went 10x, from $50bn to $500bn, after it was added to the S&P500. A similar pattern can generally be seen for other stocks being added to the index. That's one company / stock. There is only one Bitcoin. There is only one Ethereum. You have investors globally buying mostly those two assets. Want to buy the asset class? You buy one of those two (or both) Pension funds manage around $300tn. If those allocate 1 or 2% to crypto, a sparkly new asset class, you'll have a $3-6tn market cap. Which they might, given the above average returns it's been generating. Gold is worth $8.2tn globally. Bitcoin in my view qualifies as digital gold. Why was gold originally picked as a store of value? You could've picked other metals. Or diamonds, etc. But someone decided gold was the one. Gold in itself isn't very useful. It's been given its value by people, because they believe it to be a store of value. (I'm not a gold bug and I personally don't think gold is worth holding) But think about this: how high could gold and silver go in a speculative bubble? $13tn? $16tn? Higher? There will be 20-30-40% corrections along the way, but in my view, it's going much much higher -- very much like the .com bubble (which went up to approx. $5.6tn). Wouldn't be surprised if this entire space achieves a multi trillion market cap ($2-4tn) over the next few years, with most of that ending up in Bitcoin and Ethereum. Note: this is not investment advice. Do your own research and make up your own mind.
- sillysaurus3 9y ago
  Also, if someone is confident BTC will fall, they should short it and make money on the way back down. But people tend not to do that.
  - Anderkent 9y ago
    Not necessarily. 'The market can stay irrational longer than you can stay liquid', etc. To short you not only have to believe something will eventually go down, but that it will go down soon.
    - 9y ago
monkeydreams 9y ago
I believe that looking at bitcoin as a currency suggests it is not worth its current high price. Looking at it as a service for circumventing local currency and legal controls, then current events suggests that demand for these types of services might be high enough to warrant even higher prices.

by ttul 9y ago

This. Like it or not, we are in for a crash followed by a long crawl back for cryptocoin investors. The tech is cool and useful, but not $6400/BTC useful just yet.

dpandya 9y ago

If you're as confident on this as the comment suggests, you could purchase the appropriate futures with most of your net worth and make lots of money. If you don't want to do that, maybe it isn't quite as certain as you suggest.

iamthirsty 9y ago
I'm a huge proponent of putting your money where your mouth is, but staking most of your net worth against what still is a pretty manipulated market is just stupid and is a gamble no one needs to make.
beepboopbeep 9y ago
uh, or you could be a reasonable human being and weigh the risks that you're willing to endure for a given return on an investment...
fgonzag 9y ago
"The market can stay irrational far longer than you can stay solvent"
- dpandya 9y ago
  This comment doesn't really apply here, because the post above suggests explicitly that the true value of Bitcoin is far lower than it is now and the market will realize this in the near-term (i.e. "the market will crash"). If the comment only suggested that the true value of Bitcoin is lower than the currently traded rate (and made no mention of what the market value would do), this particular observation would be relevant.
jjxw 9y ago
That's the great thing about a futures market. People who want to short Bitcoin with reasonable risk management can do so now. There are a lot of people who have lost their shirts betting against Bitcoin because all you could do were naked short - these derivative markets will provide sophisticated traders the ability to hedge their bets so they can continue to short without getting margin called if Bitcoin happens to double in value before crashing in the coming months / years.
roenxi 9y ago
We had an article on the Kelly criterion just the other day that handily refutes your point. Even if bitcoin is certain to crash, without a deep understanding of when (and by extension, how) a naive futures trader still runs a good chance of being eaten alive, or making poor returns. Stating bitcoin will crash is a bit like the conventional wisdom that smoking is bad for your health. One can reasonably be very confident in the truth of it without being confident in specific odds on any bad outcome.
- rjbwork 9y ago
  "The market remain irrational longer than you can remain solvent."
  - the_rosentotter 9y ago
    Or maybe you were just wrong and not everybody else? Just a thought. (I know this is a quote from Keynes)
- bob_theslob646 9y ago
  Care to link that? I am pretty sure the Kelly Criterion is a betting strategy. What does that have to do with bitcoin? Edit: Found it. https://rhsfinancial.com/2017/06/line-aggressive-crazy/ https://rhsfinancial.com/2017/06/line-aggressive-crazy/ I hope you really think about applying the Kelly Criterion to trading bitcoin futures and hope you realize that the person completely ignores friction(transaction costs),and does not show a sharpe ratio( who cares if you beat a benchmark with 10x the risk). "[In November 2000.] Those kinds of times… when everyone is running around like a chicken with its head cut off, that's pretty good for us… "~Jim Simons (https://en.wikipedia.org/wiki/Renaissance_Technologies https://en.wikipedia.org/wiki/Renaissance_Technologies)
  - milcron 9y ago
    The Kelly Criterion is a betting strategy that, given the probability and payoff of different outcomes, tells you what percentage of your bankroll to bet.
bob_theslob646 9y ago
The better question is how the CME is going to replicate the value of a Bitcoin. The funny thing about this is when the real smart ones get there hands on this contract (quants), watch out. Goodbye free lunch and hello very efficient pricing.(Low vol)
- kgwgk 9y ago
  They don't need to replicate anything, they just need to match buyers and sellers.
  - bob_theslob646 9y ago
    Maybe replicating was too strong of word What I meant was, how they plan on "replicating", constructing the index value ,in which ,they( the CME) will base the value of bitcoin to be. It is detailed here. https://www.cmegroup.com/trading/files/bitcoin-reference-rate-methodology.pdf https://www.cmegroup.com/trading/files/bitcoin-reference-rat... CNBC stated that it is a weighted average of 4 index's in the video, but could not find anything of the sort in the article (https://www.cnbc.com/2017/10/31/cme-plans-to-launch-bitcoin-futures-by-year-end.html https://www.cnbc.com/2017/10/31/cme-plans-to-launch-bitcoin-...)
    - kgwgk 9y ago
      The press release gives some details. The exchanges are Bitstamp, GDAX, itBit and Kraken. http://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html http://www.cmegroup.com/media-room/press-releases/2017/10/31...
- paulpauper 9y ago
  but commodities are much more volatile than stocks though
empath75 9y ago
I firmly believe the price is going to crash but I also think it could double or triple before it does. The bitcoin market is insane.
mikeash 9y ago
What level of confidence would you say is represented by that comment? I’d say 95% sounds reasonable, which implies a 5% chance of being wiped out with your strategy. Might be too high for many people.

eric_h 9y ago

I’m really not sure what the dollar value utility per BTC should be, I just know that it’s so uncertain that I have no business playing the game unless I’d already had the fortune of acquiring a large amount of bitcoin for “free.” I didn’t, and I consider the profit I’ve made to be a satisfying amount of “free money”, so I’m just going to keep watching from the sidelines. No judgement, I’m just out.

icelancer 9y ago

I've been hearing this at $500, $1000, $2000, $4000, $5000, and now $6400. I'm certainly willing to believe anyone at those times. But... everyone's been quite wrong. I make a weekly purchase of a small basket of cryptocurrency (mostly BTC) and I actually mine XMR with some leftover hardware since it's price efficient currently. No different than hedging your retirement portfolio with commodities and other non-correlated assets with your equities basket. Cryptocurrency isn't going anywhere anytime soon, that's about the only thing we can say for sure.

paulpauper 9y ago
Yeah ppl who keep predicting bubble need to hang it up and just admit they were wrong.
- baddox 9y ago
  It's less about being "wrong" and more about making a falsifiable claim. You can certainly just call something a bubble literally forever: until you die, or until humanity goes extinct, until the heat death of the universe, etc. If Bitcoin stays relevant up to any of those points in time, I'll consider it a success regardless of how many people continued making the unfalsifiable claim that it's a bubble.
  - omio 9y ago
    The universe is a bubble!
arzt 9y ago
Any advice for newbies looking to mine XMR?
- icelancer 9y ago
  /r/moneromining is OK. Lot of resources to check out there. SimpleMiningOS is a popular operating system that runs a ton of miners.
9y ago

charlesdm 9y ago

I can't predict the future, but my gut feeling is telling me you're wrong. Institutional money moves the needle and I wouldn't be surprised if this goes another 20x (into trillions of dollars) before we see a major correction. The current market cap ($180bn) is nothing. Facebook went 10x, from $50bn to $500bn, after it was added to the S&P500. A similar pattern can generally be seen for other stocks being added to the index. That's one company / stock. There is only one Bitcoin. There is only one Ethereum. You have investors globally buying mostly those two assets. Want to buy the asset class? You buy one of those two (or both) Pension funds manage around $300tn. If those allocate 1 or 2% to crypto, a sparkly new asset class, you'll have a $3-6tn market cap. Which they might, given the above average returns it's been generating. Gold is worth $8.2tn globally. Bitcoin in my view qualifies as digital gold. Why was gold originally picked as a store of value? You could've picked other metals. Or diamonds, etc. But someone decided gold was the one. Gold in itself isn't very useful. It's been given its value by people, because they believe it to be a store of value. (I'm not a gold bug and I personally don't think gold is worth holding) But think about this: how high could gold and silver go in a speculative bubble? $13tn? $16tn? Higher? There will be 20-30-40% corrections along the way, but in my view, it's going much much higher -- very much like the .com bubble (which went up to approx. $5.6tn). Wouldn't be surprised if this entire space achieves a multi trillion market cap ($2-4tn) over the next few years, with most of that ending up in Bitcoin and Ethereum. Note: this is not investment advice. Do your own research and make up your own mind.

sillysaurus3 9y ago
Also, if someone is confident BTC will fall, they should short it and make money on the way back down. But people tend not to do that.
- Anderkent 9y ago
  Not necessarily. 'The market can stay irrational longer than you can stay liquid', etc. To short you not only have to believe something will eventually go down, but that it will go down soon.
  - 9y ago

monkeydreams 9y ago

I believe that looking at bitcoin as a currency suggests it is not worth its current high price. Looking at it as a service for circumventing local currency and legal controls, then current events suggests that demand for these types of services might be high enough to warrant even higher prices.