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If there were any decent probability of Bitcoin being 3.5x higher in a year's time, why wouldn't it already be getting priced in?

zhoujianfu 6y ago
You could argue it is priced in. Maybe there’s a 30% chance of it being 3.5x higher?
throwphoton 6y ago
I wonder how long people with large, leveraged positions are able to wait for that increase before they get nervous.
- jkhdigital 6y ago
  They already got wiped out in early March when the price dropped 50% in one day. Trust me—I was there at 2am when BitMEX suffered a DOS attack right when the price bottomed and rebounded $1000 in less than an hour.
hanniabu 6y ago
You could have said that in every bull run. You could also say that about the S&P, if it's going to be worth more later why isn't it instantly that price now? And it's because it simply isn't worth that now plus different investors have different investment periods.
- hlmencken 6y ago
  You can't invest in the s&p like that. > Between January 1, 1963 and December 31, 2014, 1,186 index components were replaced by other components. You can know an index of 500 large companies will go up but not know what companies will be on that index in the future.
  - jkhdigital 6y ago
    Exactly, this is a fundamental fallacy of index investing—you can’t “buy the market” and any ETF that claims otherwise is a cleverly crafted leaky abstraction. The problem with leaky abstractions is that you usually have no idea that they leak until everything collapses...
  - esoterica 6y ago
    But you can invest in the S&P like that (through index funds), because the S&P tracks the performance of a rolling selection of stocks, not the backdated performance of a future selection of stocks that is unknown in the present.
  - somebodythere 6y ago
    You can sell when a component leaves an index and buy when a component joins the index and–guess what–that portfolio also goes up. https://contrarianoutlook.com/wp-content/uploads/2018/02/SPY-Price-Total-Return-Chart.png https://contrarianoutlook.com/wp-content/uploads/2018/02/SPY...
- odonnellryan 6y ago
  BTC is different because it isn't backed by something like ownership in a company. Also, there are different risks than equities. Equities have the risk of the company failing or being significantly impacted by many different things happening, while there are existential risks with BTC I feel these are often ignored or accepted as not applicable to most BTC investors.
vasilipupkin 6y ago
because there is uncertainty. We explain it here https://www.covemarkets.com/blog/investing-in-bitcoin-pros-and-cons https://www.covemarkets.com/blog/investing-in-bitcoin-pros-a...
aeternum 6y ago
Theoretically, but the price increase has always lagged the halving, probably because enough people believe it won't continue. This is a pretty good visualization: https://i.redd.it/qfekfq88qwp31.png https://i.redd.it/qfekfq88qwp31.png Keep in mind that this is logarithmic and error bars are generally .1 to 10x the actual price.
jkhdigital 6y ago
Bitcoin isn’t a security, so it’s hard to say what it even means for something to be “priced in”. Everyone who buys or sells Bitcoin has a unique value thesis and the current market price is the net result of those competing theses. But at the end of the day, the value truly is whatever people think it is, unlike a security which has fundamentals i.e. cash flows that give it some firm ground to stand on.
oconnor663 6y ago
If there's also a decent probability of the price going down, they can cancel out.

zhoujianfu 6y ago

You could argue it is priced in. Maybe there’s a 30% chance of it being 3.5x higher?

throwphoton 6y ago

I wonder how long people with large, leveraged positions are able to wait for that increase before they get nervous.

jkhdigital 6y ago
They already got wiped out in early March when the price dropped 50% in one day. Trust me—I was there at 2am when BitMEX suffered a DOS attack right when the price bottomed and rebounded $1000 in less than an hour.

hanniabu 6y ago

You could have said that in every bull run. You could also say that about the S&P, if it's going to be worth more later why isn't it instantly that price now? And it's because it simply isn't worth that now plus different investors have different investment periods.

hlmencken 6y ago
You can't invest in the s&p like that. > Between January 1, 1963 and December 31, 2014, 1,186 index components were replaced by other components. You can know an index of 500 large companies will go up but not know what companies will be on that index in the future.
- jkhdigital 6y ago
  Exactly, this is a fundamental fallacy of index investing—you can’t “buy the market” and any ETF that claims otherwise is a cleverly crafted leaky abstraction. The problem with leaky abstractions is that you usually have no idea that they leak until everything collapses...
- esoterica 6y ago
  But you can invest in the S&P like that (through index funds), because the S&P tracks the performance of a rolling selection of stocks, not the backdated performance of a future selection of stocks that is unknown in the present.
- somebodythere 6y ago
  You can sell when a component leaves an index and buy when a component joins the index and–guess what–that portfolio also goes up. https://contrarianoutlook.com/wp-content/uploads/2018/02/SPY-Price-Total-Return-Chart.png https://contrarianoutlook.com/wp-content/uploads/2018/02/SPY...
odonnellryan 6y ago
BTC is different because it isn't backed by something like ownership in a company. Also, there are different risks than equities. Equities have the risk of the company failing or being significantly impacted by many different things happening, while there are existential risks with BTC I feel these are often ignored or accepted as not applicable to most BTC investors.

vasilipupkin 6y ago

because there is uncertainty. We explain it here https://www.covemarkets.com/blog/investing-in-bitcoin-pros-and-cons https://www.covemarkets.com/blog/investing-in-bitcoin-pros-a...

aeternum 6y ago

Theoretically, but the price increase has always lagged the halving, probably because enough people believe it won't continue. This is a pretty good visualization: https://i.redd.it/qfekfq88qwp31.png https://i.redd.it/qfekfq88qwp31.png Keep in mind that this is logarithmic and error bars are generally .1 to 10x the actual price.

jkhdigital 6y ago

Bitcoin isn’t a security, so it’s hard to say what it even means for something to be “priced in”. Everyone who buys or sells Bitcoin has a unique value thesis and the current market price is the net result of those competing theses. But at the end of the day, the value truly is whatever people think it is, unlike a security which has fundamentals i.e. cash flows that give it some firm ground to stand on.

oconnor663 6y ago

If there's also a decent probability of the price going down, they can cancel out.