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Any rational investor at this point should own some amount of bitcoin and / or ethereum. The asymmetric upside potential vs. going to zero makes a $1000 investm
by seibelj 6y ago
Any rational investor at this point should own some amount of bitcoin and / or ethereum. The asymmetric upside potential vs. going to zero makes a $1000 investment have very strong upside with limited downside.
- Traster 6y agoWhy not just buy call options. They have the same payoff structure - unlimited upside with limited downside?
- seibelj 6y agoSure, you can buy crypto options in a few places, but buying and holding crypto is far less risky in the ecosystem. There is not a robinhood for crypto options.
- throwaway9980 6y agoOptions are time limited.
- camjw 6y agoPresumably your trade would be time limited as well (or at least have some exit conditions) unless your plan would be to buy and hold bitcoin from now until the end of time.
- selfhoster11 6y agoPoint me to somewhere I can buy them as a private individual, and I'll happily try just that.
- camjw 6y agoYou can trade bitcoin options on deribit. I believe they are cash settled though, so maybe that won't count for you.
- gzu 6y agoMicrostrategy (MSTR) call options
- 101008 6y agoetoro?
- ZekeSulastin 6y agoDon't most stock brokers support options these days? I know Schwab does - you just have to apply first. (unless you meant crypto options >.>)
- selfhoster11 6y agoI mean specifically crypto options.
- capnorange 6y agoderibit.com
- Traster 6y agoNot BTC options. Just options. They have the exact same pay off structure that you're a fan of.
- harryh 6y agoLots of negative EV bets have asymmetric upside potential. Should any rational investor put some over their portfolio in roulette spins every year?
- ada1981 6y agoCan you explain your logic here? BT could easily crash back to $3k if people get spooked That said it seems like a more solid foundation of interest now.
- elif 6y agoNo shot. If you think it will break the previous floor on fear alone, absent the technical uncertainty and unsustainable rapid growth leading up to the 9k crash, let alone the institutional investment this round, you are speculating without any real basis.
- pawelmurias 6y agoIt has no inherent value, with enough fear it can easily drop to ~0$
- ada1981 6y agoit just seems like an even money gamble that is priced as such.
- PragmaticPulp 6y agoIt’s so strange to listen to Bitcoin advocates talk about hypothetically unlimited upside. I think a side effect of the realization that Bitcoin had no real underlying fundamentals that can explain the price, and therefore it’s difficult to think of an upper limit for the price using traditional metrics. This leads to weird rationalizations where people compare losing their $1000 investment to the “what it” scenario of Bitcoin going to $500k or $1 million, in which case $1000 suddenly feels negligible. Of course, Bitcoin going to a million dollars per coin doesn’t make any sense, but the “what if” and FOMO are strong drivers for some people.
- insert_coin 6y agoIt doesn't make any more sense than the dollar going to ~1/2000 oz of gold, but here we are. Bitcoin is decentralized fiat currency which you can perceive to be very valuable like the USD or worthless like the Venezuelan bolivar, as none have any intrinsic value or fundamentals besides trust.
- didericis 6y agoIt has currency fundamentals. Those are 1) limited supply/no one can print it 2) widely recognized 3) easily transferred and stored 4) difficult to steal or forge The strength of those properties in Bitcoin are fairly unique and unprecedented. It makes it an ideal means of storing value in the long term. I think the main downside is the amount of speculation that’s been going on and the volatility that results from that speculation. That’s likely to change as it becomes more and more mainstream and more people use it as an emergency savings account protected from fiat devaluation rather than an investment. I agree that the unlimited upside some people are touting doesn’t make any sense, but I think it does have the potential to grow further. I don’t know how much, but it’s still a niche area. Would be interested to see what the world looks like where most people have 5% of their savings in bitcoin.
- saalweachter 6y agoThe problem is, you can't get rich with sensible investing. Compound interest is often treated as magic, but like the magic of special and general relatively, it only really kicks in under conditions that don't really matter to ordinary people. Money going into an index fund will increase roughly 10x over the course of 30 years or so. This is nice; if you can stop living paycheck-to-paycheck by age 30 and save 10% of your pre-tax income (which is not a given), you can have a comfortable retirement, and the more frugally you live in your youth the more comfortable a retirement you can achieve. But you won't get rich that way. Best case scenario, if you are absurdly frugal and save nearly all of your money, prudently invested, for forty, fifty, sixty years, you can get one big bang at the end after decades of deprivation. To get rich you need to win the metaphoric lottery, by founding a unicorn startup, or going all-in on a series of absurdly risky investments, or by just winning an actual lottery.
- fierarul 6y agoWhat rational investor sees the loss of 100% a limited downside? By the same logic any rational investor should own some Tesla stock: hide potential upside in battery tech going forward and "limited" downside. Problem is at least one of these options has some fundamentals.
- insert_coin 6y agoIf $1000 is 1% of your portfolio it is only a 1% loss, which is less than nominal inflation.
- fierarul 6y agoI think you're getting somewhere but in terms of risk allocation. It may be optimal, overall, to allocate a small portion to high risk assets in case of a big payout. But... I think in many ways BitCoin has passed that point. There is never going to be another 100x growth. Time to find the next thing.
- ralfd 6y agoThere are option positions with _unlimited_ downside: https://www.investopedia.com/ask/answers/050115/what-types-options-positions-create-unlimited-liability.asp https://www.investopedia.com/ask/answers/050115/what-types-o...
- simias 6y agoFOMO is not a reasonable investment strategy.
- mikeodds 6y agoProbably worth a disclosure that you work at Poloniex, a crypto exchange, every time you make one of these permabull comments.
- seibelj 6y agoProbably worth a disclosure if anyone works at a FAANG if they speak on any subject related to data collection, privacy violations, and ad tracking? Your comment is irrelevant.
- mikeodds 6y agoMy statement was less analogous to working at FAANG vs you being a FAANG shareholder and telling everyone to buy FAANG stocks. I’ve worked in crypto in for 5 years, it’s disheartening the number of industry names that just talk up their own book/holdings. Be bullish on crypto, fine, I am to a degree. Also why not spend some time being honest about risks so Joe Bloggs investor doesn’t get wiped out through fomo.
- seibelj 6y agoIf you go through my post history over the past 3 years you will find attempts to get HN on board with crypto through every tactic you can imagine. I will continue to try, taking all of the downvotes along the way. Not sure how long you have been on HN for, but it is disheartening how anti-crypto this place is, given my passion and commitment to the industry and technology.
- pillop2 6y agoThanks for your work on this. I expect a % of the people were encouraged to look deeper into the tech and now thank you profusely for pointing them in the right direction.