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You just have to look at what happened after the MtGox collapse in 2014: Bitcoin goes back to sleep for 2 or 3 years, afterwards everyone forgets it ever happen

by Mahn 9y ago

You just have to look at what happened after the MtGox collapse in 2014: Bitcoin goes back to sleep for 2 or 3 years, afterwards everyone forgets it ever happened and another rally takes place where cryptocurrencies "go mainstream". Lather, rinse and repeat until the amount of people willing to speculate on it is completely exhausted.

hbosch 9y ago
I don't personally think it will be that cyclic. There is so much more invested this time around, so many more people standing to lose so much more money, such a brighter light on the cryptocurrency world now. A devastating loss (e.g. Bitfinex shuts down and freezes all transfers, Tether worthless, that type of thing) to the BTC economy would be critical to the entire future of cryptocurrency as we know it, IMO. I don't think Bitcoin has 9 lives.
- cwkoss 9y ago
  I don't know. Most finance people now have access to bitcoin exposure through trusted institutions via futures. Many of these people felt a lot of FOMO at missing the boat on Bitcoin's last big jump. I think if it drops to $5k, there will be some big players taking a long position in hopes of another order of magnitude movement. Certainly could get much uglier, but I think Tethers vanishing would not be fatal. Also, with Bitcoin becoming 'established' I bet everyone who owns more than $1M in cash is considering Bitcoin as a method of alternate banking and transferring funds internationally. Bitcoin certainly isn't the safest place to store your money, but there is a decent argument to be made that it can be safer to keep 90% cash and 10% btc instead of just 100% cash for some risk profiles. Criminality is one obvious use case, but people who want a plan for how they could flee their country in the case of disaster, financial meltdown, or social unrest would also see advantages: much easier to get a $100k private key through an airport and customs than the equivalent in physical cash.
  - aml183 9y ago
    Most, if not all, financial institutions aren't exposed to cryptocurrencies directly either through futures or the underlying currencies. Institutions are defined as endowments, sovereign wealth funds, pensions and asset management firms such as Goldman Sachs. Capital inflow into the cryptocurrency space in aggregate is still less than $10B. If the Norwegian sovereign wealth fund bought Bitcoin, their minimum purchase would probably be $50MM which represents .5% capital inflow and a nice uptick in "market cap" of the industry. Bitcoin is by no means established because these institutions aren't investing. If and when the day comes that this happens then Bitcoin will be established and increase one or two magnitudes. Many of the above institutions legally can't invest because they are restricted by their mandates. Bitcoin is a terrible use case for criminals because it's transparent. Monero would be better because it's anonymous.
    - joncrane 9y ago
      How would that be a net in flow? If Norway buys BTC, someone has to sell it to them. The number of BTC doesn't change.
    - cwkoss 9y ago
      You are correct. No major institutions have publicly disclosed an investment in Bitcoin, and many are legally restricted from doing so. However, I think that market speculators, particularly hedge funds, would strongly consider opening positions in Bitcoin below $5k in hopes of a many-fold return on investment. It is high risk, but in a diversified portfolio Bitcoin may be attractive in our current market climate where the market is so overbought.

by Mahn 9y ago

hbosch 9y ago

I don't personally think it will be that cyclic. There is so much more invested this time around, so many more people standing to lose so much more money, such a brighter light on the cryptocurrency world now. A devastating loss (e.g. Bitfinex shuts down and freezes all transfers, Tether worthless, that type of thing) to the BTC economy would be critical to the entire future of cryptocurrency as we know it, IMO. I don't think Bitcoin has 9 lives.

cwkoss 9y ago
I don't know. Most finance people now have access to bitcoin exposure through trusted institutions via futures. Many of these people felt a lot of FOMO at missing the boat on Bitcoin's last big jump. I think if it drops to $5k, there will be some big players taking a long position in hopes of another order of magnitude movement. Certainly could get much uglier, but I think Tethers vanishing would not be fatal. Also, with Bitcoin becoming 'established' I bet everyone who owns more than $1M in cash is considering Bitcoin as a method of alternate banking and transferring funds internationally. Bitcoin certainly isn't the safest place to store your money, but there is a decent argument to be made that it can be safer to keep 90% cash and 10% btc instead of just 100% cash for some risk profiles. Criminality is one obvious use case, but people who want a plan for how they could flee their country in the case of disaster, financial meltdown, or social unrest would also see advantages: much easier to get a $100k private key through an airport and customs than the equivalent in physical cash.
- aml183 9y ago
  Most, if not all, financial institutions aren't exposed to cryptocurrencies directly either through futures or the underlying currencies. Institutions are defined as endowments, sovereign wealth funds, pensions and asset management firms such as Goldman Sachs. Capital inflow into the cryptocurrency space in aggregate is still less than $10B. If the Norwegian sovereign wealth fund bought Bitcoin, their minimum purchase would probably be $50MM which represents .5% capital inflow and a nice uptick in "market cap" of the industry. Bitcoin is by no means established because these institutions aren't investing. If and when the day comes that this happens then Bitcoin will be established and increase one or two magnitudes. Many of the above institutions legally can't invest because they are restricted by their mandates. Bitcoin is a terrible use case for criminals because it's transparent. Monero would be better because it's anonymous.
  - joncrane 9y ago
    How would that be a net in flow? If Norway buys BTC, someone has to sell it to them. The number of BTC doesn't change.
  - cwkoss 9y ago
    You are correct. No major institutions have publicly disclosed an investment in Bitcoin, and many are legally restricted from doing so. However, I think that market speculators, particularly hedge funds, would strongly consider opening positions in Bitcoin below $5k in hopes of a many-fold return on investment. It is high risk, but in a diversified portfolio Bitcoin may be attractive in our current market climate where the market is so overbought.