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Everyone is rushing to buy bitcoin at all time highs
by justinzollars 6y ago
Everyone is rushing to buy bitcoin at all time highs
- caoilte 6y agoCan't see what could possibly go wrong.
- tempsy 6y agoan entire unique asset class that is worth one Tesla. seems low, no?
- iso8859-1 6y agoDoesn't make any sense to compare X satoshis to Y Teslas and imply some natural exchange rate between the two.
- arcticbull 6y agoYou're comparing a speculative mania in fictional crime-bucks to a speculative mania in a car company worth more than Facebook while simultaneously selling just 4% as many cars as Toyota. Tesla's price to earnings ratio is 1500 meaning it would take until the year 3521 for it to earn back its market cap. The fact you're even making this assessment tells me this isn't going to end well for anyone. Heed my warning: The bubble pops when the last bear dies.
- tehlike 6y agoAs the money printing goes, assets will inflate and inflation will catch up, and it will be somewhat balanced....
- arcticbull 6y agoI'd love a citation on that if you have one, I have seen no evidence the two are connected. The money was printed to counter deflationary pressure. This succeeded, and the rate of inflation is tracking at 2% per expectations.
- tempsy 6y agoReplace Tesla with Facebook, or a fraction of one large tech company, or less than the $900B stimulus bill that was just passed. My point was only that it’s a currently a small fraction of the overall US equity market, and if it becomes increasingly widely accepted as a reserve currency comparable to the dollar or an inflation protected asset like gold then there’s no reason why it shouldn’t be worth trillions.
- arcticbull 6y agoThere's not a single reason why it should be worth anything at all.
- tempsy 6y agothe market doesn’t conform to your personal biases
- arcticbull 6y agoWhat makes you think the amount someone is willing to pay for something at any given moment is a proxy for its intrinsic value? Enron traded sky high until it didn't. Tulip bulbs traded sky high until they didn't. That people are willing to pay for it doesn't mean it should be worth anything. Worth is not price. And a high price certainly doesn't mean something is good for the world. If I offered $1,000,000 for each silverback gorilla pelt you procure, (a) is that a proxy for its worth and (b) is that good for the world? The market tends to conform to my personal biases, my personal investing account just crossed 14X what it was on 3/20. I tend to short irrationality but in this case I have no interest in shooting dice in a rigged casino.
- cactus2093 6y agoYou could also call gold "speculative mania in shiny trinkets with little utility", but that one has lasted thousands of years so far. Describing something in colorful language doesn't make it a strong argument. Being so sure that BTC is a bubble is just as naive as being completely sure it's going up to a million dollars per coin. It's just speculation either way, and there is no fundamental law of nature (or even principle of economics) preventing either outcome.
- arcticbull 6y ago> Being so sure that BTC is a bubble is just as naive as being completely sure it's going up to a million dollars per coin. It's just speculation either way, and there is no fundamental law of nature (or even principle of economics) preventing either outcome. Which is why I'm not playing. And why I don't have any gold.
- deleted 6y ago[deleted]
- tlrobinson 6y ago> meaning it would take until the year 3521 for it to earn back its market cap There are much better ways to make this argument than extrapolating based on current earnings forever. e.x. “Tesla would have to capture X% of worldwide automobile sales AND capture Y% of worldwide taxi/ridesharing market share AND etc”
- arcticbull 6y agoI'm aware of the bull case. However in general, pie-in-the-sky dreams aren't factored into asset prices like that. For instance, Apple has a market cap of 2.2T a P/E of 40. Tesla has a market cap of 0.8T and a P/E of 1602. Apple could get into all those markets, so should we value it at, uh, let me run the numbers here... 88 trillion dollars?
- tlrobinson 6y agoI’m not trying to argue Tesla isn’t overvalued, I just think simply pointing to the P/E isn’t a good way to make that argument.
- icefrakker 6y agoLOL that thought is like the ultimate sophist version of STONKS
- ptruesdell 6y agoI guess I'll hold off selling then.
- mrits 6y agoIf you did last week you would have already doubled your investment
- frockington1 6y agoUS is also creating dollars at all time highs. As money supply increases, asset prices inflate
- arcticbull 6y agoNo. This is incorrect, and a misunderstanding of economics. CPI, price inflation, is tracking at 2% as expected. Housing is actually down. Stocks are up because some people have a bunch of extra cash and nothing to do during the day. These two are not connected.
- alphagrep12345 6y agoI'd like to know more about this. I always equated printing money to inflation. Why isn't this the case? Can you point me to some good books for the same? Thanks!
- arcticbull 6y agoThe value of the dollar in terms of a constant basket of goods is a function of both supply and of "velocity." Money is only worth something if it changes hands. Let's say the Fed prints 1 quintillion dollars, and then gives it to me. I then put it under my very big mattress. I will never spend a single one of those dollars. Has this quintillion dollar print changed the value of the dollars that are actually changing hands? It has not. Obviously that's a contrived example but it does demonstrate the principal. If economic environmental factors are causing people to spend less money, such as unemployment or a global pandemic, then the velocity of money goes down. This in turn causes merchants to lower prices to incentivize spend. This is how deflation materializes. If they cannot lower prices fast enough to actually incentivize a consistent level of spending you enter a deflationary spiral. Printing new money offsets the reduction in velocity, and staves off a deflationary spiral. It doesn't however guarantee a commensurate level of inflation. You can see this on a macro scale. Since the 1970s the M2 money supply has increased 15X however inflation has only increased 7X. Because the Fed, like most central banks, exercises a positive control mechanism, once velocity is restored, printing will slow or even go negative to ensure a consistent, predictable level of inflation. [1] https://www.investopedia.com/ask/answers/042015/how-does-money-supply-affect-inflation.asp https://www.investopedia.com/ask/answers/042015/how-does-mon...
- paxys 6y agoThe stock market has been at "all time highs" for most of its existence. Doesn't mean it is a bad time to invest.
- arcticbull 6y agoCrypto however has not. It has spent a comparatively tiny fraction of its time at ATH as one would expect for a speculative bubble. In fact, it spent the last 3 years way below its ATH.
- celticninja 6y agoBut the ATH increases often. Yes it crashes from these peaks, but never to below the starting point. Bitcoin bought anytime and held for a sufficient length of time would have always made money. If you can hold it for 5+ years you will make money.
- arcticbull 6y agoYou're immortal until you're not.
- turtlebits 6y agoHigh or low is just a relative term. Current price is "fair" value.