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This is the first pop that I’ve felt is likely to be the last. A lot of people got burnt and are unwilling to jump back in.

by ummonk 8y ago

devereaux 8y ago
All of this has happened before, and all of this will happen again. EDIT: and I stand by my claim.
- koboll 8y ago
  How? Which investors are going to believe the next bubble isn't a bubble?
  - empath75 8y ago
    I am a huge crypto currency skeptic and think the market is largely driven by massive amounts of fraud. That said -- eventually the price will drop to the point where the price is entirely driven by Bitcoin's natural customer base -- tax cheats, money launderers, drug dealers, etc, and will probably in fact over correct. Just for the sake of argument, let's said that 'natural price' is $500 or $600 a bitcoin -- it bottomed out around $300 last time and we've had a 'halvening' since then. So let's imagine the price drops down to below $1000, and stays around that range for a year or more. Then a new halvening happens, the price doubles to $2000. Maybe someone figures out how to do something useful with cryptocurrency? 3-4 years from now, people will have already forgotten about the last bubble and might FOMO again. Bitcoin has a long history of boom and bust with each boom being bigger than the last. It won't take much to convince people that another boom is on the offing.
    - vkou 8y ago
      Ransomware authors, heroin dealers and money launderers don't care how much BTC is worth - they only use it to cash out into USD. For them, the spot price is largely irrelevant. All their prices are denominated in USD, all they care about is that the exchange rate is stable. As for the launderers, you can launder money with BTC just as well when it is $3/coin, as you can when it is $3 million/coin.
      - empath75 8y ago
        true, but there is some point at which the natural level of demand for bitcoins will match bitcoin supply.
    - ascendantlogic 8y ago
      > Bitcoin's natural customer base -- tax cheats, money launderers, drug dealers, etc, and will probably in fact over correct. Funny I should read your comment about Bitcoin's use for criminal enterprise after I read about Goldman Sach's alleged hand in a multi-billion dollar fraud in Malaysia, or Deutche Bank's multi-billion dollar money laundering. Or going back a few years the Panama Papers and that entire underground financial apparatus that drummed up exactly zero long term outrage or changes. I'll be more inclined to believe crypto is only for thieves when you convince me that the existing financial system isn't also completely rife with thievery and cheats.
      - TeMPOraL 8y ago
        Every system involving money will attract criminals. But a new system that's much better for criminals and much worse for regular people will obviously attract more of the former than of the latter. Still, I agree with vkou: > Ransomware authors, heroin dealers and money launderers don't care how much BTC is worth - they only use it to cash out into USD. For them, the spot price is largely irrelevant. That is, they'll still want to use Bitcoin, just not necessarily care about the spot price. The price is, I believe, driven up by gamblers.
      - koboll 8y ago
        Funny you should say that. I bought in at the beginning of the frenzy last September, and sold ten minutes after I read in early December that Wall Street was about to open up futures trading. I guessed that meant that the likes of Goldman were about to vaccuum up cash from the normal folks on my Facebook timeline with no technical background suddenly posting "I should buy Bitcoin!". Nailed that one.
  - yellowapple 8y ago
    The same ones that are jumping into stocks / real estate / etc. even after crashes within the last decade or so?
  - tracker1 8y ago
    With good timing, you can make money on a Bubble... the key is to get out before it bursts.
    - tim333 8y ago
      An interesting technical point I saw on that is that you may be better getting out a little after the peak. The reason being on the way up there is no way of knowing where the peak is. For example in the recent bitcoin run up you might have bought at 1000 and sold at 2000 missing most of it. If however you waited until it looked like it was on the way back down you likely would have sold at around 16000 - 10000 and so done better. I think the key is more to buy in early rather than near the top. Indeed if you time that ok you can sell half your stake when it goes 2x and so be kind of risk free for the rest. If history is a guide bitcoin will go nowhere for 6 months to a year, then up up slowly, then have another silly bubble a few years later. So my infallible guide is buy in a years time, sell half when the price doubles, wait till there is a bubble and when it's super hyped but starts crashing sell out, probably about 1/3 below the next peak.
- urda 8y ago
  There's an important idea when it comes to investing: "past performance is not indicative of future results" So no, it's not a sure thing to "happen again" and leading people on like that is just not right. Stop that. Edit: I don't care what "claim" you stand by.
  - devereaux 8y ago
    > leading people on like that is just not right. Stop that. You are free to disbelieve, at your own expense. About crypto, I sometimes make bold claims, that are downvoted [1], but I stand by them. And they come true [2] much more often than not. Last time was about DOGE. Went quite up as predicted, went a bit down during the last crash but still like at position #21 today. And I still expect it to go higher - at least around #15 soon, unless something similar comes. Before that, it was against ETH maximalism [3] - that ETH was not going to be #1 even while it was raising. I thought it was a good #2 but even that seems was too generous, as it is now in #3 and I can easily see it sliding down more. Likewise, I state that BTC will bubble up, again and again, until something else offers better features. I haven't seem that "something" yet, hence my claim. The only question is how low it will go before it bubbles up. I'd say 1000. There isn't blood in the streets yet, the crash is just starting :) [1] https://news.ycombinator.com/item?id=17684359 https://news.ycombinator.com/item?id=17684359 [2] https://news.ycombinator.com/item?id=17938426 https://news.ycombinator.com/item?id=17938426 [3] https://news.ycombinator.com/item?id=16364663 https://news.ycombinator.com/item?id=16364663
  - abstrct 8y ago
    Hey buddy, if you feel that investing in cryptocurrencies is too risky, and it may harm you finances and future, you should really find safer investments to consider. I would talk to a professional about it, perhaps with your local bank. Investments aside, you should really try to get your hands on some Bitcoin testnet coins and play around. Alternatively, something like Defcoin (http://defcoin-ng.org/ http://defcoin-ng.org/) is intentionally worthless and great for experimenting. It's neat stuff and helps you appreciate the technology, as well as appreciate the currency shortcomings that require smart people to try and fix. Many of us talk about how this has happened and will happened again not because we want you to invest, but because it's old news and articles like this are super boring. We have spent time working with the technology and community and see value in it. Value you may not see without wanting to go deeper, but value that is real and exciting.
ascendantlogic 8y ago
How many people got burnt in the dotcom crash? In the financial crisis of 2007-2008? Black Monday of 1987? Did all of those people swear off investing in traditional equity instruments forever?
- geezerjay 8y ago
  Why do you believe it is even remotely reasonable to compare "traditional equity instruments" with the perpetual scam that is cryptocurrencies? A comparison that's way more appropriate is tulips, but even so tulips aren't used as tokens in money laundering scams.
  - ascendantlogic 8y ago
    > used as tokens in money laundering scams. As opposed to the US dollar which is constantly used in money laundering scams perpetuated by some of the biggest names in global finance?
- the_gastropod 8y ago
  After the 2007/2008 financial crisis—the worst financial crisis in the history of the US—the S&P500 dropped 54.1% from peak to trough. BTC is currently down over 80% since its peak. Let's also make sure we understand that the S&P500 (or any stock ownership) is owning _business(es)_. Businesses make money, and they return that money to their owners. Bitcoin is purely speculative and depends on someone else buying it from you, presumably for more than you bought it for. Good luck finding another batch of suckers to fall for this after that last round.
  - ScottAS 8y ago
    Have you ever heard of gold?
    - berbec 8y ago
      Gold has a very long history, useful applications in industry, jewelry etc and is a defacto currency the world-wide. Crypto is... None of these. Whatever crypto is or will become, gold it, currently, is not.
Obi_Juan_Kenobi 8y ago
So far Bitcoin investor behavior has been remarkably consistent. https://plot.ly/~unchained/37/bitcoin-utxo-age-distribution/#/ https://plot.ly/~unchained/37/bitcoin-utxo-age-distribution/... There's a lot to dissect in this chart, so take some time with it. Some observations: * Most of the market is traded during bull runs. Each bull run sees a large segment of year+ holders take profits. Between bubbles, price-discovery is driven by short-term trading. * Bear markets see remarkably little activity from holders. 'Hold waves' form between bubble cycles that clearly demonstrate that the majority of coins are held by 'firm hands' that bought in bull runs. * Right now, a large segment of people that bought in the 2013 bull are starting to mature into the 5+ year bracket. A significant amount of coins are still being held in this way. It's remarkable to see it in real time. Neither the crash to $150 or the run to $20k motivated a large selloff. * It took about 2 years after the 2017 bull for <6month bracket to fall to ~25%. It only took one year this time. * Age distribution is becoming more bimodal: stubborn holders and large healthy active market. * The current price crash is rather anomalous. An incredible 4% of coins in existence moved out of 3+ year bands very suddenly. This is among the 3 or 4 largest shifts, the others occurring in much different contexts. Given how sudden it was, and how specific the age band, I have my guess as to whether this is a cause or effect of the drop. The main takeaway from this is that Bitcoin investors are remarkably willing to hold. "Hodl" is more than a meme, and the current crop seems about the same as previous ones in this regard, with a growing 'hold wave'. I also think the last 'pop' was a lot worse due to the looming existential scaling threat. This has been addressed in an unoptimal way, but one that is remarkably true to Bitcoin and overall encouraging.
- majewsky 8y ago
  > The main takeaway from this is that Bitcoin investors are remarkably willing to hold. How does this look like in other markets? It sure tastes like survivorship bias. As in: "Investors are willing to hold" because everyone else already quit.

This is the first pop that I’ve felt is likely to be the last. A lot of people got burnt and are unwilling to jump back in.

by ummonk 8y ago

This is the first pop that I’ve felt is likely to be the last. A lot of people got burnt and are unwilling to jump back in.

devereaux 8y ago

All of this has happened before, and all of this will happen again. EDIT: and I stand by my claim.

koboll 8y ago
How? Which investors are going to believe the next bubble isn't a bubble?
- empath75 8y ago
  I am a huge crypto currency skeptic and think the market is largely driven by massive amounts of fraud. That said -- eventually the price will drop to the point where the price is entirely driven by Bitcoin's natural customer base -- tax cheats, money launderers, drug dealers, etc, and will probably in fact over correct. Just for the sake of argument, let's said that 'natural price' is $500 or $600 a bitcoin -- it bottomed out around $300 last time and we've had a 'halvening' since then. So let's imagine the price drops down to below $1000, and stays around that range for a year or more. Then a new halvening happens, the price doubles to $2000. Maybe someone figures out how to do something useful with cryptocurrency? 3-4 years from now, people will have already forgotten about the last bubble and might FOMO again. Bitcoin has a long history of boom and bust with each boom being bigger than the last. It won't take much to convince people that another boom is on the offing.
  - vkou 8y ago
    Ransomware authors, heroin dealers and money launderers don't care how much BTC is worth - they only use it to cash out into USD. For them, the spot price is largely irrelevant. All their prices are denominated in USD, all they care about is that the exchange rate is stable. As for the launderers, you can launder money with BTC just as well when it is $3/coin, as you can when it is $3 million/coin.
    - empath75 8y ago
      true, but there is some point at which the natural level of demand for bitcoins will match bitcoin supply.
  - ascendantlogic 8y ago
    > Bitcoin's natural customer base -- tax cheats, money launderers, drug dealers, etc, and will probably in fact over correct. Funny I should read your comment about Bitcoin's use for criminal enterprise after I read about Goldman Sach's alleged hand in a multi-billion dollar fraud in Malaysia, or Deutche Bank's multi-billion dollar money laundering. Or going back a few years the Panama Papers and that entire underground financial apparatus that drummed up exactly zero long term outrage or changes. I'll be more inclined to believe crypto is only for thieves when you convince me that the existing financial system isn't also completely rife with thievery and cheats.
    - TeMPOraL 8y ago
      Every system involving money will attract criminals. But a new system that's much better for criminals and much worse for regular people will obviously attract more of the former than of the latter. Still, I agree with vkou: > Ransomware authors, heroin dealers and money launderers don't care how much BTC is worth - they only use it to cash out into USD. For them, the spot price is largely irrelevant. That is, they'll still want to use Bitcoin, just not necessarily care about the spot price. The price is, I believe, driven up by gamblers.
    - koboll 8y ago
      Funny you should say that. I bought in at the beginning of the frenzy last September, and sold ten minutes after I read in early December that Wall Street was about to open up futures trading. I guessed that meant that the likes of Goldman were about to vaccuum up cash from the normal folks on my Facebook timeline with no technical background suddenly posting "I should buy Bitcoin!". Nailed that one.
- yellowapple 8y ago
  The same ones that are jumping into stocks / real estate / etc. even after crashes within the last decade or so?
- tracker1 8y ago
  With good timing, you can make money on a Bubble... the key is to get out before it bursts.
  - tim333 8y ago
    An interesting technical point I saw on that is that you may be better getting out a little after the peak. The reason being on the way up there is no way of knowing where the peak is. For example in the recent bitcoin run up you might have bought at 1000 and sold at 2000 missing most of it. If however you waited until it looked like it was on the way back down you likely would have sold at around 16000 - 10000 and so done better. I think the key is more to buy in early rather than near the top. Indeed if you time that ok you can sell half your stake when it goes 2x and so be kind of risk free for the rest. If history is a guide bitcoin will go nowhere for 6 months to a year, then up up slowly, then have another silly bubble a few years later. So my infallible guide is buy in a years time, sell half when the price doubles, wait till there is a bubble and when it's super hyped but starts crashing sell out, probably about 1/3 below the next peak.
urda 8y ago
There's an important idea when it comes to investing: "past performance is not indicative of future results" So no, it's not a sure thing to "happen again" and leading people on like that is just not right. Stop that. Edit: I don't care what "claim" you stand by.
- devereaux 8y ago
  > leading people on like that is just not right. Stop that. You are free to disbelieve, at your own expense. About crypto, I sometimes make bold claims, that are downvoted [1], but I stand by them. And they come true [2] much more often than not. Last time was about DOGE. Went quite up as predicted, went a bit down during the last crash but still like at position #21 today. And I still expect it to go higher - at least around #15 soon, unless something similar comes. Before that, it was against ETH maximalism [3] - that ETH was not going to be #1 even while it was raising. I thought it was a good #2 but even that seems was too generous, as it is now in #3 and I can easily see it sliding down more. Likewise, I state that BTC will bubble up, again and again, until something else offers better features. I haven't seem that "something" yet, hence my claim. The only question is how low it will go before it bubbles up. I'd say 1000. There isn't blood in the streets yet, the crash is just starting :) [1] https://news.ycombinator.com/item?id=17684359 https://news.ycombinator.com/item?id=17684359 [2] https://news.ycombinator.com/item?id=17938426 https://news.ycombinator.com/item?id=17938426 [3] https://news.ycombinator.com/item?id=16364663 https://news.ycombinator.com/item?id=16364663
- abstrct 8y ago
  Hey buddy, if you feel that investing in cryptocurrencies is too risky, and it may harm you finances and future, you should really find safer investments to consider. I would talk to a professional about it, perhaps with your local bank. Investments aside, you should really try to get your hands on some Bitcoin testnet coins and play around. Alternatively, something like Defcoin (http://defcoin-ng.org/ http://defcoin-ng.org/) is intentionally worthless and great for experimenting. It's neat stuff and helps you appreciate the technology, as well as appreciate the currency shortcomings that require smart people to try and fix. Many of us talk about how this has happened and will happened again not because we want you to invest, but because it's old news and articles like this are super boring. We have spent time working with the technology and community and see value in it. Value you may not see without wanting to go deeper, but value that is real and exciting.

ascendantlogic 8y ago

How many people got burnt in the dotcom crash? In the financial crisis of 2007-2008? Black Monday of 1987? Did all of those people swear off investing in traditional equity instruments forever?

geezerjay 8y ago
Why do you believe it is even remotely reasonable to compare "traditional equity instruments" with the perpetual scam that is cryptocurrencies? A comparison that's way more appropriate is tulips, but even so tulips aren't used as tokens in money laundering scams.
- ascendantlogic 8y ago
  > used as tokens in money laundering scams. As opposed to the US dollar which is constantly used in money laundering scams perpetuated by some of the biggest names in global finance?
the_gastropod 8y ago
After the 2007/2008 financial crisis—the worst financial crisis in the history of the US—the S&P500 dropped 54.1% from peak to trough. BTC is currently down over 80% since its peak. Let's also make sure we understand that the S&P500 (or any stock ownership) is owning _business(es)_. Businesses make money, and they return that money to their owners. Bitcoin is purely speculative and depends on someone else buying it from you, presumably for more than you bought it for. Good luck finding another batch of suckers to fall for this after that last round.
- ScottAS 8y ago
  Have you ever heard of gold?
  - berbec 8y ago
    Gold has a very long history, useful applications in industry, jewelry etc and is a defacto currency the world-wide. Crypto is... None of these. Whatever crypto is or will become, gold it, currently, is not.

Obi_Juan_Kenobi 8y ago

So far Bitcoin investor behavior has been remarkably consistent. https://plot.ly/~unchained/37/bitcoin-utxo-age-distribution/#/ https://plot.ly/~unchained/37/bitcoin-utxo-age-distribution/... There's a lot to dissect in this chart, so take some time with it. Some observations: * Most of the market is traded during bull runs. Each bull run sees a large segment of year+ holders take profits. Between bubbles, price-discovery is driven by short-term trading. * Bear markets see remarkably little activity from holders. 'Hold waves' form between bubble cycles that clearly demonstrate that the majority of coins are held by 'firm hands' that bought in bull runs. * Right now, a large segment of people that bought in the 2013 bull are starting to mature into the 5+ year bracket. A significant amount of coins are still being held in this way. It's remarkable to see it in real time. Neither the crash to $150 or the run to $20k motivated a large selloff. * It took about 2 years after the 2017 bull for <6month bracket to fall to ~25%. It only took one year this time. * Age distribution is becoming more bimodal: stubborn holders and large healthy active market. * The current price crash is rather anomalous. An incredible 4% of coins in existence moved out of 3+ year bands very suddenly. This is among the 3 or 4 largest shifts, the others occurring in much different contexts. Given how sudden it was, and how specific the age band, I have my guess as to whether this is a cause or effect of the drop. The main takeaway from this is that Bitcoin investors are remarkably willing to hold. "Hodl" is more than a meme, and the current crop seems about the same as previous ones in this regard, with a growing 'hold wave'. I also think the last 'pop' was a lot worse due to the looming existential scaling threat. This has been addressed in an unoptimal way, but one that is remarkably true to Bitcoin and overall encouraging.

majewsky 8y ago
> The main takeaway from this is that Bitcoin investors are remarkably willing to hold. How does this look like in other markets? It sure tastes like survivorship bias. As in: "Investors are willing to hold" because everyone else already quit.