9 ms·

> If $SPY dropped 40% we'd all call it a crash. This isn't that different If $SPY was 40% up since last month, would that be normal? ETH is still currently hig

> If $SPY dropped 40% we'd all call it a crash. This isn't that different If $SPY was 40% up since last month, would that be normal? ETH is still currently higher than its value from April 19th. Cryptocurrency market is extremely volatile. This isn't that far from normal.

cromka 5y ago
> Cryptocurrency market is extremely volatile. This isn't that far from normal. I think you inadvertently confirm OPs point. Cryptocurrencies with their volatility cannot replace regular currencies.
- intotheabyss 5y ago
  Cryptocurrency is a misnomer. Most cryptos aren't trying to be currencies in the traditional sense. For example, RAI is a stablecoin on Ethereum that's not pegged to any fiat currencies. You can think of RAI as a stable form of ETH.
  - echelon 5y ago
    What does that even mean?
    - intotheabyss 5y ago
      It means that ETH which is a decentralized cryptocurrency can be used as a collateral for an algorithmic stablecoin called RAI that adjusts its price based on the price of ETH from a Uniswap price feed and a PID controller and arbitrage. To mint RAI you need to deposit ETH. The goal of RAI is to create a stablecoin which dampens the price movements of ETH over long periods of time.
      - jakeva 5y ago
        The fact the community felt the need to invent a "stablecoin" isn't terribly reassuring
        diabeticApe 5y ago
        Why not? Its a new asset, what is wrong with improvement? I mean using that logic does it also disturb you that somebody invented the seat belt? Would you prefer they didnt invent seat belts? Would that have been more reassuring of the relative safety of the vehicle if they never admitted that you could die in a car crash? The point of stable coins is really only apparent if you're trading crypto just like the importance of seat belts might make more sense to somebody that drives daily.
        miracle2k 5y ago
        On the contrary, decentralized stablecoins are some of the most exciting things in the space. The MakerDAO system, which issues the DAI stablecoin, is earning 2.5 million every year, distributed to token holders. It has survived multiple market crashes. Algorithmic stablecoins attempt the same thing w/o collateral, and seem to have done well in this drawdown as well.
      - bhk 5y ago
        Are you talking about the RAI that traded at $0.0186 a few days ago and that you can now sell for $0.00022 ? That's a "stablecoin"? https://atomars.com/trading/RAIUSDT https://atomars.com/trading/RAIUSDT
        intotheabyss 5y ago
        No, that's not the RAI I'm talking about. This is https://www.coingecko.com/en/coins/rai https://www.coingecko.com/en/coins/rai
- inter_netuser 5y ago
  650B is a small market cap for a global currency. Gold is 12T. Once Bitcoin gets to 10T, volatility should drop.
- Mc_Big_G 5y ago
  This makes no sense. 1 BTC still equals 1 BTC.
  - randomsearch 5y ago
    Currencies are used to purchase things. If the purchasing power of 1 BTC changes dramatically, it matters.
    - Mc_Big_G 5y ago
      You're assuming I care how much something costs in dollars.
      - klyrs 5y ago
        This makes me wonder how you pay for basic living expenses like rent/mortgage, food, clothes, etc
      - imtringued 5y ago
        If you are a US citizen you will have to pay taxes in dollars.
        ric2b 5y ago
        Dollars are one of the easiest things to buy with Bitcoin, so how is that a problem? I also need water to live my life, but that doesn't make me feel the need to price everything in gallons of water.
        prepend 5y ago
        Fluctuating prices suck for paying taxes. Buy bitcoin at $1 on Jan 1, sell at $10 on dec 31. I now owe taxes on $9 in gains, so I’ll need USD$3 on April 15. If on Jan 2, I buy more Bitcoin at $10 and it drops to $6 on April 15 that will suck because then I’ll need to sell half my Bitcoin to pay taxes.
      - 5y ago
- scsilver 5y ago
  Thats the thing, they arent currencies, they are assets that can act like currencies when convenient.
  - not_jd_salinger 5y ago
    > hey arent currencies, they are assets The irony here of course is that the only way that Crypto currencies would meet any standard definition of an asset would be if they were functioning currencies. Going with Investopedia's straightforward definition "An asset is a resource with economic value", how is a non-currency crypto coin in any way a resource or possess economic value?
    - thecrash 5y ago
      Presumably your complaint is that cryptocurrencies don't have "economic value", but what theory of value are you using to decide that? Exchange theory of value says that a commodity has two values: a use value (what it can do for you outside of the market) and an exchange value (what others will give you for it in the market). I think it'd be correct to say that cryptocurrency has no use value, but it obviously does have economic value. And it's far from the only asset with these characteristics.
    - diabeticApe 5y ago
      Simple. Gold is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Crypto is similar in that it prodives a financial vehicle that posesses certain properties. Im not saying they should all be thought of as digital gold but that lile gold, they provide value not only in thier price tag but in some inherent property that provides value to the user (this property varies wildly from crypto to crypto and is what makes each project distinct and unique.
      - sashimi-houdini 5y ago
        Let's shift this one level up: Simple. Bitcoin is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Skepticoin is similar in that it provides a financial vehicle that possesses certain properties. I'm not saying it should be thought of as digital bitcoin but that it's like bitcoin, it provides value not only in its price tag but in some inherent property that provides value to the user.
SavantIdiot 5y ago
SPY is up 50% since 2019 (pre covid crash). As someone partially invested in index ETFs, this worries me. Index funds aren't supposed to be nitro, they are supposed to be slow and plodding, and 10% annual is supposed to be huge. I think major indices should be nice, slow, inertial gains from ~6-7% annual, tops. Why? When at any point as an engineer or a scientist have you observed large exponential growth to be sustainable in any context??? EDIT: Ooops It is ~50% (258 in Jan 2019 * 1.50 = 380)
- SilasX 5y ago
  >SPY is up 100% since 2019 (pre covid crash). Wait, what? I don't see SPY below 250 for all of 2019. A 100% gain would be 500, but it's 406 now. (Its 2020 nadir was ~228, but it's still not up 100% from that.) https://www.google.com/finance/quote/SPY:NYSEARCA?window=5Y https://www.google.com/finance/quote/SPY:NYSEARCA?window=5Y
  - SavantIdiot 5y ago
    Ah sh^t, you are right: I was looking at $258 and said 258 * 1.5 = ~400, and that is ~50%... but not 100%. Edited! Thanks!
- arcticbull 5y ago
  There are nitro versions of all the index funds but you usually have to buy them separately, and they come with their own fat stack of disclosures haha. For SPY see UPRO, for QQQ see TQQQ.
- hexedpackets 5y ago
  10% annual is not huge at all, it would actually be on the lower end of a year that had positive gains. 10% average is what you should expect for the SP500 - and that tends to be driven by lumps, years with returns >20%. 50% is high from a historical perspective but there are plausible explanations for why it's not absurd.
  - mahogany 5y ago
paulpauper 5y ago
In terms of risk-adjusted returns, Bitcoin worse than index funds. You can get smoother returns using 3x ETFs like TQQQ and TECL compared to bitcoin and about the same absolute returns. Nasdaq 100 has much better sharpe ratio compared to bitcoin. Same for FAAMG portfolio
- DennisP 5y ago
  When I google "Bitcoin Sharpe ratio," every article that comes up shows its ratio to be quite high. Here's a chart comparing various assets' Sharpe ratios over time, always for the previous four years. Bitcoin's is at top of the chart, staying over 2 and sometimes over 3: http://charts.woobull.com/bitcoin-risk-adjusted-return/ http://charts.woobull.com/bitcoin-risk-adjusted-return/ The lowest I've found is in this article, calculating over the past five years a Sharpe ratio of 1.6: https://www.forbes.com/sites/baldwin/2021/03/02/how-bitcoin-fits-in-a-retirement-portfolio/?sh=415cfd4d3a55 https://www.forbes.com/sites/baldwin/2021/03/02/how-bitcoin-... According to this, from 2007 to 2021 the Sharpe ratio of the Nasdaq 100 was 0.97: https://backtest.curvo.eu/portfolio/nasdaq-100--NoIgcghgzgJhCOACAjABlSANMUAZAqsgGwAcaAzCeQExFbIC6TQA https://backtest.curvo.eu/portfolio/nasdaq-100--NoIgcghgzgJh... And this gives a FAANG portfolio Sharpe ratio of 1.25: https://medium.datadriveninvestor.com/3-ways-to-evaluate-the-performance-of-your-investment-strategy-ac3783a38929 https://medium.datadriveninvestor.com/3-ways-to-evaluate-the... In terms of absolute returns, TQQQ has done well but not so well as Bitcoin. Since 2016 TQQQ has done 12X, compared to Bitcoin's 85X. Since April 2013 (as far back as Coingecko goes) TQQQ has gone up 37X, compared to a Bitcoin's 272X. As a bonus, Bitcoin has a long-term correlation with the S&P500 of only 0.01, according to the Forbes article linked above.
- cableshaft 5y ago
  If you're holding as long as most people do index funds (i.e. 5-10+ years), historically you would have been way better off putting that money into bitcoin. Even taking this crash into account, I'm way up on crypto compared to my 401k. Not going to stop putting money into my 401k though, for the sake of diversification.
  - paulpauper 5y ago
taylodl 5y ago
> Cryptocurrency market is extremely volatile. This isn't that far from normal. If that's true then cryptocurrency is pretty much worthless to use as currency. A desired property of currency is to not have wild fluctuations in value on a weekly or monthly bases.
- JoeAltmaier 5y ago
  Exactly. Its not so much a currency as a tulip bulb, or a ponzi scheme, or something new that has the worst features of all those.
  - broighbrobroigh 5y ago
    The tulip bulb mania story is an incredibly persistent but inaccurate myth.
    - hedora 5y ago
      The “debunking” of Tulip Mania has, itself, been thoroughly debunked: https://fee.org/articles/tulip-mania-not-a-myth/ https://fee.org/articles/tulip-mania-not-a-myth/ Plenty of financial records still exist from back then. Tulip bulb mania actually happened.
      - Morvan 5y ago
        That article doesn't debunk anything lol Goldgar's points are still just as valid.
  - MomoXenosaga 5y ago
    As a Dutch person I can attest tulips have an actual purpose. And worth- the flower business is worth billions every year.
    - perl4ever 5y ago
      >tulips have an actual purpose As a 1/4 Dutch person I can attest tulips hang around for decades doing nothing while being completely ignored.

cromka 5y ago

> Cryptocurrency market is extremely volatile. This isn't that far from normal. I think you inadvertently confirm OPs point. Cryptocurrencies with their volatility cannot replace regular currencies.

intotheabyss 5y ago
Cryptocurrency is a misnomer. Most cryptos aren't trying to be currencies in the traditional sense. For example, RAI is a stablecoin on Ethereum that's not pegged to any fiat currencies. You can think of RAI as a stable form of ETH.
- echelon 5y ago
  What does that even mean?
  - intotheabyss 5y ago
    It means that ETH which is a decentralized cryptocurrency can be used as a collateral for an algorithmic stablecoin called RAI that adjusts its price based on the price of ETH from a Uniswap price feed and a PID controller and arbitrage. To mint RAI you need to deposit ETH. The goal of RAI is to create a stablecoin which dampens the price movements of ETH over long periods of time.
    - jakeva 5y ago
      The fact the community felt the need to invent a "stablecoin" isn't terribly reassuring
      - diabeticApe 5y ago
        Why not? Its a new asset, what is wrong with improvement? I mean using that logic does it also disturb you that somebody invented the seat belt? Would you prefer they didnt invent seat belts? Would that have been more reassuring of the relative safety of the vehicle if they never admitted that you could die in a car crash? The point of stable coins is really only apparent if you're trading crypto just like the importance of seat belts might make more sense to somebody that drives daily.
      - miracle2k 5y ago
        On the contrary, decentralized stablecoins are some of the most exciting things in the space. The MakerDAO system, which issues the DAI stablecoin, is earning 2.5 million every year, distributed to token holders. It has survived multiple market crashes. Algorithmic stablecoins attempt the same thing w/o collateral, and seem to have done well in this drawdown as well.
    - bhk 5y ago
      Are you talking about the RAI that traded at $0.0186 a few days ago and that you can now sell for $0.00022 ? That's a "stablecoin"? https://atomars.com/trading/RAIUSDT https://atomars.com/trading/RAIUSDT
      - intotheabyss 5y ago
        No, that's not the RAI I'm talking about. This is https://www.coingecko.com/en/coins/rai https://www.coingecko.com/en/coins/rai
inter_netuser 5y ago
650B is a small market cap for a global currency. Gold is 12T. Once Bitcoin gets to 10T, volatility should drop.
Mc_Big_G 5y ago
This makes no sense. 1 BTC still equals 1 BTC.
- randomsearch 5y ago
  Currencies are used to purchase things. If the purchasing power of 1 BTC changes dramatically, it matters.
  - Mc_Big_G 5y ago
    You're assuming I care how much something costs in dollars.
    - klyrs 5y ago
      This makes me wonder how you pay for basic living expenses like rent/mortgage, food, clothes, etc
    - imtringued 5y ago
      If you are a US citizen you will have to pay taxes in dollars.
      - ric2b 5y ago
        Dollars are one of the easiest things to buy with Bitcoin, so how is that a problem? I also need water to live my life, but that doesn't make me feel the need to price everything in gallons of water.
        prepend 5y ago
        Fluctuating prices suck for paying taxes. Buy bitcoin at $1 on Jan 1, sell at $10 on dec 31. I now owe taxes on $9 in gains, so I’ll need USD$3 on April 15. If on Jan 2, I buy more Bitcoin at $10 and it drops to $6 on April 15 that will suck because then I’ll need to sell half my Bitcoin to pay taxes.
    - 5y ago
scsilver 5y ago
Thats the thing, they arent currencies, they are assets that can act like currencies when convenient.
- not_jd_salinger 5y ago
  > hey arent currencies, they are assets The irony here of course is that the only way that Crypto currencies would meet any standard definition of an asset would be if they were functioning currencies. Going with Investopedia's straightforward definition "An asset is a resource with economic value", how is a non-currency crypto coin in any way a resource or possess economic value?
  - thecrash 5y ago
    Presumably your complaint is that cryptocurrencies don't have "economic value", but what theory of value are you using to decide that? Exchange theory of value says that a commodity has two values: a use value (what it can do for you outside of the market) and an exchange value (what others will give you for it in the market). I think it'd be correct to say that cryptocurrency has no use value, but it obviously does have economic value. And it's far from the only asset with these characteristics.
  - diabeticApe 5y ago
    Simple. Gold is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Crypto is similar in that it prodives a financial vehicle that posesses certain properties. Im not saying they should all be thought of as digital gold but that lile gold, they provide value not only in thier price tag but in some inherent property that provides value to the user (this property varies wildly from crypto to crypto and is what makes each project distinct and unique.
    - sashimi-houdini 5y ago
      Let's shift this one level up: Simple. Bitcoin is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Skepticoin is similar in that it provides a financial vehicle that possesses certain properties. I'm not saying it should be thought of as digital bitcoin but that it's like bitcoin, it provides value not only in its price tag but in some inherent property that provides value to the user.

SavantIdiot 5y ago

SPY is up 50% since 2019 (pre covid crash). As someone partially invested in index ETFs, this worries me. Index funds aren't supposed to be nitro, they are supposed to be slow and plodding, and 10% annual is supposed to be huge. I think major indices should be nice, slow, inertial gains from ~6-7% annual, tops. Why? When at any point as an engineer or a scientist have you observed large exponential growth to be sustainable in any context??? EDIT: Ooops It is ~50% (258 in Jan 2019 * 1.50 = 380)

SilasX 5y ago
>SPY is up 100% since 2019 (pre covid crash). Wait, what? I don't see SPY below 250 for all of 2019. A 100% gain would be 500, but it's 406 now. (Its 2020 nadir was ~228, but it's still not up 100% from that.) https://www.google.com/finance/quote/SPY:NYSEARCA?window=5Y https://www.google.com/finance/quote/SPY:NYSEARCA?window=5Y
- SavantIdiot 5y ago
  Ah sh^t, you are right: I was looking at $258 and said 258 * 1.5 = ~400, and that is ~50%... but not 100%. Edited! Thanks!
arcticbull 5y ago
There are nitro versions of all the index funds but you usually have to buy them separately, and they come with their own fat stack of disclosures haha. For SPY see UPRO, for QQQ see TQQQ.
hexedpackets 5y ago
10% annual is not huge at all, it would actually be on the lower end of a year that had positive gains. 10% average is what you should expect for the SP500 - and that tends to be driven by lumps, years with returns >20%. 50% is high from a historical perspective but there are plausible explanations for why it's not absurd.
- mahogany 5y ago

paulpauper 5y ago

In terms of risk-adjusted returns, Bitcoin worse than index funds. You can get smoother returns using 3x ETFs like TQQQ and TECL compared to bitcoin and about the same absolute returns. Nasdaq 100 has much better sharpe ratio compared to bitcoin. Same for FAAMG portfolio

DennisP 5y ago
When I google "Bitcoin Sharpe ratio," every article that comes up shows its ratio to be quite high. Here's a chart comparing various assets' Sharpe ratios over time, always for the previous four years. Bitcoin's is at top of the chart, staying over 2 and sometimes over 3: http://charts.woobull.com/bitcoin-risk-adjusted-return/ http://charts.woobull.com/bitcoin-risk-adjusted-return/ The lowest I've found is in this article, calculating over the past five years a Sharpe ratio of 1.6: https://www.forbes.com/sites/baldwin/2021/03/02/how-bitcoin-fits-in-a-retirement-portfolio/?sh=415cfd4d3a55 https://www.forbes.com/sites/baldwin/2021/03/02/how-bitcoin-... According to this, from 2007 to 2021 the Sharpe ratio of the Nasdaq 100 was 0.97: https://backtest.curvo.eu/portfolio/nasdaq-100--NoIgcghgzgJhCOACAjABlSANMUAZAqsgGwAcaAzCeQExFbIC6TQA https://backtest.curvo.eu/portfolio/nasdaq-100--NoIgcghgzgJh... And this gives a FAANG portfolio Sharpe ratio of 1.25: https://medium.datadriveninvestor.com/3-ways-to-evaluate-the-performance-of-your-investment-strategy-ac3783a38929 https://medium.datadriveninvestor.com/3-ways-to-evaluate-the... In terms of absolute returns, TQQQ has done well but not so well as Bitcoin. Since 2016 TQQQ has done 12X, compared to Bitcoin's 85X. Since April 2013 (as far back as Coingecko goes) TQQQ has gone up 37X, compared to a Bitcoin's 272X. As a bonus, Bitcoin has a long-term correlation with the S&P500 of only 0.01, according to the Forbes article linked above.
cableshaft 5y ago
If you're holding as long as most people do index funds (i.e. 5-10+ years), historically you would have been way better off putting that money into bitcoin. Even taking this crash into account, I'm way up on crypto compared to my 401k. Not going to stop putting money into my 401k though, for the sake of diversification.
- paulpauper 5y ago

taylodl 5y ago

> Cryptocurrency market is extremely volatile. This isn't that far from normal. If that's true then cryptocurrency is pretty much worthless to use as currency. A desired property of currency is to not have wild fluctuations in value on a weekly or monthly bases.

JoeAltmaier 5y ago
Exactly. Its not so much a currency as a tulip bulb, or a ponzi scheme, or something new that has the worst features of all those.
- broighbrobroigh 5y ago
  The tulip bulb mania story is an incredibly persistent but inaccurate myth.
  - hedora 5y ago
    The “debunking” of Tulip Mania has, itself, been thoroughly debunked: https://fee.org/articles/tulip-mania-not-a-myth/ https://fee.org/articles/tulip-mania-not-a-myth/ Plenty of financial records still exist from back then. Tulip bulb mania actually happened.
    - Morvan 5y ago
      That article doesn't debunk anything lol Goldgar's points are still just as valid.
- MomoXenosaga 5y ago
  As a Dutch person I can attest tulips have an actual purpose. And worth- the flower business is worth billions every year.
  - perl4ever 5y ago
    >tulips have an actual purpose As a 1/4 Dutch person I can attest tulips hang around for decades doing nothing while being completely ignored.