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It's strayed so far from fundamentals that it's bound to crash. I really hope it's not that big when it does...

charlesdm 9y ago
But how far? Corrections of 30% in say Bitcoin are common. Does this matter? I would say not -- it's not something I lose sleep over. It's fine, boom and bust. If you buy in, buy in during a consolidation phase, when you see the price is stable. Ethereum had a huge run up, yet then consolidated for around 6+ months around $300. I would say that is healthy. Now it's heading higher. "Fundamentals" aside, of course.
deleted 9y ago
[deleted]
hndamien 9y ago
You love bankers that much? Boy we have come a long way since 2008. edit: Oh you said "hope it is not" - my mistake.
- exelius 9y ago
  It's not that I love banks; it's that we rolled back all the banking regulation that kept that stuff in check prior to 2008. Replacing that with a system with zero regulation does not seem like progress...
jordanpg 9y ago
It's not obvious to me that "fundamentals" apply here. This is literally unprecedented and cryptocurrency economies are uncharted territory.
- andr3w321 9y ago
  The fundamentals are at the current price of $17,000/btc bitcoin mining costs are about $14.5B annually(144 blocks of 12.5 btc/block plus ~3.8 btc/block in fees) in electricity expenses due to paying off miners which is about on par with the 8th largest company in the world Facebook. Bitcoin's revenue/year is however much money people feel like FOMOing in + however much tether money bitfinex feels like printing which right now is more than the mining costs. Once this figure changes, the price will decline. For reference, Facebook has ~$24B in revenue/year.
  - smokeyj 9y ago
    It isn't crazy to imagine crypto becoming adopted for actual transactions. Even if people are currently speculating, they're still downloading wallets they can spend from and loading it up with currency. For all these users there is now nearly zero obstacles to spending. This isn't even to say bitcoin is the transaction layer, but bitcoin still provides liquidity to any alt/2nd layer solution.
    - umanwizard 9y ago
      You don't need to physically control your own coins to speculate. I suspect many people are just keeping their stash on exchanges or online wallets.
      - exelius 9y ago
        The vast majority of novice speculators are using Coinbase. They at least attempt to maintain the appearance of compliance; but I suspect a large market run would wipe them out of USD fairly quickly. The fact that “experienced” Bitcoin speculators are getting nervous is a sign the bubble is about to pop. Tether volumes are hockey-sticking up as a result. There has been enough technical analysis to show that USDT volume drives BTC price and not the other way around. USDT volume is hockey-sticking over the last few weeks. Feels like a Ponzi scheme and the whales are cashing out.
        thinkmassive 9y ago
        I’d be interested in seeing evidence that USDT “drives” the USD-BTC exchange rate. I do think it’s a good indicator of sentiment about the exchange rate. Typically it’s within $0.02 of its supposed $1.00 value, but today it reached at least $1.08 and is still at $1.06. That means people are willing to pay a 6% premium just to be able to cash out of BTC today.
        mortehu 9y ago
        Maybe USDT is used in cross exchange arbitrage, where USD would be a lot slower and thus not worth as much.
- hn_throwaway_99 9y ago
  It's not obvious to me that "fundamentals" apply here. This is literally unprecedented and the Internet economy is uncharted territory. -- said a million articles in 2000
- cm2187 9y ago
  There is a whole (and very good) book titled “this time is different” https://www.amazon.co.uk/This-Time-Different-Centuries-Financial/dp/0691152640 https://www.amazon.co.uk/This-Time-Different-Centuries-Finan...
CPLX 9y ago
Bitcoin doesn't have fundamentals. Stocks are a claim on assets, buildings, inventories, and future profits. Real shit, like a parking lot full of trucks or something. Those are the fundamentals. Cryptocurrencies dont have anything like that. To the extent that there is an analogous concept it's their utility as a means of exchange. Which outside of drugs and hard drive ransoms is minuscule at best.
- DenisM 9y ago
  You’re forgetting currency control evasion. If a businessman from a country with tight controls wants to move money out of the country he would buy bitcoin and then sell it the other side of the border. This sort of activity is going on all the time, and it creates demand for crypto currencies.
  - analyst74 9y ago
    I don't see how bitcoin can facilitate currency control evasion. The government can simply shut down all local exchanges, and some already did.
    - DenisM 9y ago
      With amounts this large they could meet in person to trade.
      - exelius 9y ago
        Easy enough to rob someone for this amount of money too. As Eric Schmidt said (in the context of a hostile government, but it works here too): no passcode in the world is going to protect you from a man holding a gun to your head and demanding said passcode.
        DenisM 9y ago
        Split your loot into 100 pieces and convert to BC one by one. So you get robbed five time out of a hundred, no big deal. Eventually find a reliable trader and take your business to him. You don’t have to make it totally safe, just safer compared to other methods of evading control.

But how far? Corrections of 30% in say Bitcoin are common. Does this matter? I would say not -- it's not something I lose sleep over. It's fine, boom and bust. If you buy in, buy in during a consolidation phase, when you see the price is stable. Ethereum had a huge run up, yet then consolidated for around 6+ months around $300. I would say that is healthy. Now it's heading higher. "Fundamentals" aside, of course.

deleted 9y ago

[deleted]

hndamien 9y ago

You love bankers that much? Boy we have come a long way since 2008. edit: Oh you said "hope it is not" - my mistake.

exelius 9y ago
It's not that I love banks; it's that we rolled back all the banking regulation that kept that stuff in check prior to 2008. Replacing that with a system with zero regulation does not seem like progress...

jordanpg 9y ago

It's not obvious to me that "fundamentals" apply here. This is literally unprecedented and cryptocurrency economies are uncharted territory.

andr3w321 9y ago
The fundamentals are at the current price of $17,000/btc bitcoin mining costs are about $14.5B annually(144 blocks of 12.5 btc/block plus ~3.8 btc/block in fees) in electricity expenses due to paying off miners which is about on par with the 8th largest company in the world Facebook. Bitcoin's revenue/year is however much money people feel like FOMOing in + however much tether money bitfinex feels like printing which right now is more than the mining costs. Once this figure changes, the price will decline. For reference, Facebook has ~$24B in revenue/year.
- smokeyj 9y ago
  It isn't crazy to imagine crypto becoming adopted for actual transactions. Even if people are currently speculating, they're still downloading wallets they can spend from and loading it up with currency. For all these users there is now nearly zero obstacles to spending. This isn't even to say bitcoin is the transaction layer, but bitcoin still provides liquidity to any alt/2nd layer solution.
  - umanwizard 9y ago
    You don't need to physically control your own coins to speculate. I suspect many people are just keeping their stash on exchanges or online wallets.
    - exelius 9y ago
      The vast majority of novice speculators are using Coinbase. They at least attempt to maintain the appearance of compliance; but I suspect a large market run would wipe them out of USD fairly quickly. The fact that “experienced” Bitcoin speculators are getting nervous is a sign the bubble is about to pop. Tether volumes are hockey-sticking up as a result. There has been enough technical analysis to show that USDT volume drives BTC price and not the other way around. USDT volume is hockey-sticking over the last few weeks. Feels like a Ponzi scheme and the whales are cashing out.
      - thinkmassive 9y ago
        I’d be interested in seeing evidence that USDT “drives” the USD-BTC exchange rate. I do think it’s a good indicator of sentiment about the exchange rate. Typically it’s within $0.02 of its supposed $1.00 value, but today it reached at least $1.08 and is still at $1.06. That means people are willing to pay a 6% premium just to be able to cash out of BTC today.
        mortehu 9y ago
        Maybe USDT is used in cross exchange arbitrage, where USD would be a lot slower and thus not worth as much.
hn_throwaway_99 9y ago
It's not obvious to me that "fundamentals" apply here. This is literally unprecedented and the Internet economy is uncharted territory. -- said a million articles in 2000
cm2187 9y ago
There is a whole (and very good) book titled “this time is different” https://www.amazon.co.uk/This-Time-Different-Centuries-Financial/dp/0691152640 https://www.amazon.co.uk/This-Time-Different-Centuries-Finan...

CPLX 9y ago

Bitcoin doesn't have fundamentals. Stocks are a claim on assets, buildings, inventories, and future profits. Real shit, like a parking lot full of trucks or something. Those are the fundamentals. Cryptocurrencies dont have anything like that. To the extent that there is an analogous concept it's their utility as a means of exchange. Which outside of drugs and hard drive ransoms is minuscule at best.

DenisM 9y ago
You’re forgetting currency control evasion. If a businessman from a country with tight controls wants to move money out of the country he would buy bitcoin and then sell it the other side of the border. This sort of activity is going on all the time, and it creates demand for crypto currencies.
- analyst74 9y ago
  I don't see how bitcoin can facilitate currency control evasion. The government can simply shut down all local exchanges, and some already did.
  - DenisM 9y ago
    With amounts this large they could meet in person to trade.
    - exelius 9y ago
      Easy enough to rob someone for this amount of money too. As Eric Schmidt said (in the context of a hostile government, but it works here too): no passcode in the world is going to protect you from a man holding a gun to your head and demanding said passcode.
      - DenisM 9y ago
        Split your loot into 100 pieces and convert to BC one by one. So you get robbed five time out of a hundred, no big deal. Eventually find a reliable trader and take your business to him. You don’t have to make it totally safe, just safer compared to other methods of evading control.