5 ms·

Ok, for everyone here worried about the value of their BTC, please consider this. At the end of the day, all that really matters is what percentage of BTC boug

Ok, for everyone here worried about the value of their BTC, please consider this. At the end of the day, all that really matters is what percentage of BTC bought was from HODLERS. If 80% of all BTC bought was from HODLERS, it means the market cap of BTC can NOT drop anymore than 20%, at the very maximum drop, and since the number of BTC coins in existance is constant, it means the drop in value of BTC is at MOST 20%. The last bitcoin bubble was mostly bought up by speculators who eventually sell very quickly, which what allowed the price drop to occur so much because most BTC holders were not hodlers and most were just speculators. You can sidestep all the concerns about Tether and USDT and conversion, etc. Just figure out what percentage of BTC is bought by HODLERS or get some kind of estimate, and that will tell you your downside risk. I for one, am long BTC, because I know this time around a much higher percentage of BTC was bought by HODLRs and there's a whole lot more coming in 2021.

owenversteeg 6y ago
Sorry, but this comment is wrong on every level. First: that is very much not how prices work. If everyone else stayed on the sidelines and did not sell or buy any Bitcoin, the price could be set by two people - one buyer and one seller. Second: you have no way to know who bought BTC. You can get a guess from various media, but you can never truly know. Large amounts of Bitcoin frequently change hands in entirely private transactions. Lots of volume is on shady exchanges, and of the volume on legitimate exchanges - what's to say that those are all "HODLERS"? I have no idea what the price of Bitcoin will be in the future, but your comment is definitely not correct - downside risk is certainly not limited by the type of people who bought in.
- thorwasdfasdf 6y ago
  What you're saying is only partially correct. Imagine if everyone stayed on the sidelines and did not sell any bitcoin (the HODLRS), as the number of sellers continues to diminish more and more and more, this puts upward pressure on bitcoin as the percentage of buyers outnumber the selllers more and more. It's like trying to buy a house in the bay area. there's very few people who can afford to buy a bay area house but there's even fewer houses for sale and so the prices keep going up and up and up. What matters is the ratio of buyers to sellers. and once you run out of sellers, the price starts going up again.
  - owenversteeg 6y ago
    No, what I said was entirely correct. I did not say "if everyone did not sell any Bitcoin", I said "if everyone did not sell or buy any Bitcoin". I'd also like to point out that you do not need to own Bitcoin to sell Bitcoin. If you believe the price of Bitcoin will be lower in the future, you can borrow Bitcoin and sell it now, also know as "selling short", or "shorting". You can, of course, also borrow Bitcoin and not sell it. I would also like to mention - if you truly believe that you can forecast future prices based on the psychology of recent buyers, you can make lots of money. There are a number of regulated markets where the buyers (or at least a decent portion of them) -are- known, so if you feel that you can do this, be my guest and become the next Warren Buffett. Finally, Bitcoin is entirely unlike Bay Area property. You cannot generate Bay Area property out of thin air using computers, there are no schemes being investigated for printing billions of fake dollars to buy up Bay Area property, and it is far less liquid than Bitcoin. The price of Bay Area property also does not double in a month.
dpiers 6y ago
There are issues with almost every assertion and conclusion in this post, but I will limit my critique to the idea that the downward movement of BTC is capped at the % of BTC people are willing to sell. It's simply not true. The spot price of BTC is a function of what people are currently willing to pay and what people are willing to accept. If the primary source of demand and liquidity in the BTC trading markets collapses - which this article argues is Tether - the price could rapidly collapse even on small trading volumes. If you add in the fact that these exchanges allow trading on margin, you could have a situation where people are forced to liquidate their holdings regardless of the current price. It's the perfect storm for a flash crash.
- thorwasdfasdf 6y ago
  Ok, you make a good point about the possibility of collapsing demand. but, even after tether collapses, as long as bitcoin has sufficient buying demand, then there's no problem. (assuming there's a fixed set of HODLRS). As bitcoin sells off, the number of sellers decreases, correct? Assume on a given day, 10K buyers and 10k sellers. As the number of sellers decreases, the ratio of buyers to sellers increases, correct? maybe 10K buyers, 5k sellers, then 10k buyers, 1k sellers, then 10kbuyers 500 sellers, etc. this continues to put increasing upward pressure on BTC. The above example would still be true even if bitcoin buying demand went from 10k to 2k. (collapse of tether BTC demand) All that matters is that there's a certain minimum number of people willing to buy bitcoin for a given time period and the HODLRs who won't sell there BTC. as long as those two conditions are met, the number of buyers will soon outnumber sellers. it's just math in the end. how can this be wrong?
  - owenversteeg 6y ago
    Ah, I see. Your problem is a fundamental lack of understanding of financial markets. I'd recommend Investopedia as an easy way to get into understanding things. First of all, in financial markets there is almost never a "fixed number" of buyers for anything, and especially not for something like Bitcoin. If you want to see something with (as good as you can get) to a fixed number of buyers, look at uranium. It's almost entirely used as fuel for nuclear reactors, which take years to build and to be shut down, so not only is the demand very stable, the future demand (for the next few years) can be pretty easily predicted. You'll be surprised to see that yes, sharp price drops can occur, even in such conditions. Next, of course, the market of sellers for Bitcoin, "HODLR" or not, certainly does not behave how you imagine. Some sellers are forced to exit large Bitcoin positions every day, with reasons ranging from tax liabilities not payable in Bitcoin, businesses that accept Bitcoin that do not wish to maintain a Bitcoin position, divorces, governments that seize Bitcoin, etc etc. Then of course you have people exiting Bitcoin because they're people and life happens: their partner told them Bitcoin was stupid, or their government added rules to holding Bitcoin that scare them, or they read that a shady entity was printing billions of fake dollars to buy Bitcoin, or they bought in years ago and wow, they can buy a car with the profit! or they bought in yesterday and the drop in price spooked them. None of this is to say anything about the price of Bitcoin or if you should buy Bitcoin - I'm just saying that your _reasons_ are deeply flawed.

owenversteeg 6y ago

Sorry, but this comment is wrong on every level. First: that is very much not how prices work. If everyone else stayed on the sidelines and did not sell or buy any Bitcoin, the price could be set by two people - one buyer and one seller. Second: you have no way to know who bought BTC. You can get a guess from various media, but you can never truly know. Large amounts of Bitcoin frequently change hands in entirely private transactions. Lots of volume is on shady exchanges, and of the volume on legitimate exchanges - what's to say that those are all "HODLERS"? I have no idea what the price of Bitcoin will be in the future, but your comment is definitely not correct - downside risk is certainly not limited by the type of people who bought in.

thorwasdfasdf 6y ago
What you're saying is only partially correct. Imagine if everyone stayed on the sidelines and did not sell any bitcoin (the HODLRS), as the number of sellers continues to diminish more and more and more, this puts upward pressure on bitcoin as the percentage of buyers outnumber the selllers more and more. It's like trying to buy a house in the bay area. there's very few people who can afford to buy a bay area house but there's even fewer houses for sale and so the prices keep going up and up and up. What matters is the ratio of buyers to sellers. and once you run out of sellers, the price starts going up again.
- owenversteeg 6y ago
  No, what I said was entirely correct. I did not say "if everyone did not sell any Bitcoin", I said "if everyone did not sell or buy any Bitcoin". I'd also like to point out that you do not need to own Bitcoin to sell Bitcoin. If you believe the price of Bitcoin will be lower in the future, you can borrow Bitcoin and sell it now, also know as "selling short", or "shorting". You can, of course, also borrow Bitcoin and not sell it. I would also like to mention - if you truly believe that you can forecast future prices based on the psychology of recent buyers, you can make lots of money. There are a number of regulated markets where the buyers (or at least a decent portion of them) -are- known, so if you feel that you can do this, be my guest and become the next Warren Buffett. Finally, Bitcoin is entirely unlike Bay Area property. You cannot generate Bay Area property out of thin air using computers, there are no schemes being investigated for printing billions of fake dollars to buy up Bay Area property, and it is far less liquid than Bitcoin. The price of Bay Area property also does not double in a month.

dpiers 6y ago

There are issues with almost every assertion and conclusion in this post, but I will limit my critique to the idea that the downward movement of BTC is capped at the % of BTC people are willing to sell. It's simply not true. The spot price of BTC is a function of what people are currently willing to pay and what people are willing to accept. If the primary source of demand and liquidity in the BTC trading markets collapses - which this article argues is Tether - the price could rapidly collapse even on small trading volumes. If you add in the fact that these exchanges allow trading on margin, you could have a situation where people are forced to liquidate their holdings regardless of the current price. It's the perfect storm for a flash crash.

thorwasdfasdf 6y ago
Ok, you make a good point about the possibility of collapsing demand. but, even after tether collapses, as long as bitcoin has sufficient buying demand, then there's no problem. (assuming there's a fixed set of HODLRS). As bitcoin sells off, the number of sellers decreases, correct? Assume on a given day, 10K buyers and 10k sellers. As the number of sellers decreases, the ratio of buyers to sellers increases, correct? maybe 10K buyers, 5k sellers, then 10k buyers, 1k sellers, then 10kbuyers 500 sellers, etc. this continues to put increasing upward pressure on BTC. The above example would still be true even if bitcoin buying demand went from 10k to 2k. (collapse of tether BTC demand) All that matters is that there's a certain minimum number of people willing to buy bitcoin for a given time period and the HODLRs who won't sell there BTC. as long as those two conditions are met, the number of buyers will soon outnumber sellers. it's just math in the end. how can this be wrong?
- owenversteeg 6y ago
  Ah, I see. Your problem is a fundamental lack of understanding of financial markets. I'd recommend Investopedia as an easy way to get into understanding things. First of all, in financial markets there is almost never a "fixed number" of buyers for anything, and especially not for something like Bitcoin. If you want to see something with (as good as you can get) to a fixed number of buyers, look at uranium. It's almost entirely used as fuel for nuclear reactors, which take years to build and to be shut down, so not only is the demand very stable, the future demand (for the next few years) can be pretty easily predicted. You'll be surprised to see that yes, sharp price drops can occur, even in such conditions. Next, of course, the market of sellers for Bitcoin, "HODLR" or not, certainly does not behave how you imagine. Some sellers are forced to exit large Bitcoin positions every day, with reasons ranging from tax liabilities not payable in Bitcoin, businesses that accept Bitcoin that do not wish to maintain a Bitcoin position, divorces, governments that seize Bitcoin, etc etc. Then of course you have people exiting Bitcoin because they're people and life happens: their partner told them Bitcoin was stupid, or their government added rules to holding Bitcoin that scare them, or they read that a shady entity was printing billions of fake dollars to buy Bitcoin, or they bought in years ago and wow, they can buy a car with the profit! or they bought in yesterday and the drop in price spooked them. None of this is to say anything about the price of Bitcoin or if you should buy Bitcoin - I'm just saying that your _reasons_ are deeply flawed.