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> How can you be “long BTC” By owning BTC, or equivalent economic exposure to owning BTC, ie, you will profit if BTC becomes relatively more valuable, and lose

by Lazare 5y ago

> How can you be “long BTC” By owning BTC, or equivalent economic exposure to owning BTC, ie, you will profit if BTC becomes relatively more valuable, and lose if it becomes relatively less valuable. > it’s a currency not a stock. You might say “I’m long USD” People take long position in currencies all the time. That is just a perfectly normal thing that people do, all the time. I have no idea why you think a currency is somehow different than any other financial asset here; it is not (except, perhaps in some cases, taxes). > but then you are really saying you believe the US economy will grow, and the value of its currency will strengthen. No. That's not how exchange rates work. The US economy is growing all the time (...well, outside of recessions), but so is everyone's else. A thousand factors go into determining relative strength. > Given Bitcoin isn’t attached to anything… what does long mean? It means you have a positive exposure to an increase in it's price, probably by owning some, or something that closely approximates that. Same as being long anything else. Why would it be different? What did you think being long meant?

onethought 5y ago
Exactly as I suggested in my examples. Being "Long" in the USD implies general stability of the currency (which as you say has a number of factors... all of which are non-existent in bitcoin). So my question still stands. What exactly are you thinking factors into the growth of the currency? Beyond say... hopes and dreams (aka gambling). The fact that people go "long" in fiat currencies is not at all relevant, as there is a government and usually a central bank that controls production of that currency (responsibly or not). 100% exchange rates work based on the economy underlying them (and the governments control on it)... they are not just random numbers fluctuating randomly... There is almost no comparison to crypto here, is there a fiat currency that shows as much volatility for as long as bitcoin has?
- Lazare 5y ago
  > Being "Long" in the USD implies general stability of the currency It does not. Many currencies aren't stable at all; people still take long and short positions on them, either as part of an explicit investment thesis, or just by, you know, having some paper currency in their wallet. People have been buying gold for centuries as a way of reducing their exposure to unstable currencies. I would assume it doesn't need to be explicitly said, but just for safety's sake, let's be clear: A long (or short) position is a bet, and you can bet on unpredictable things. Nobody uses the terminology, but technically you're "long red" if you bet on red coming up next on a roulette wheel at Vegas. Currently equity markets have been consumed with discussions of the "meme stocks". People have been going long on, eg, Gamestop, but the stock has been incredibly volatile, and there are no underlying economic factors that even begin to support the highs it's reached. Again, being long in a super volatile stock because it's funny, or because you're bored, or because you're trying to make a statement, or because you believe it is bouncing around randomly and you're trying to profit from this is still being long on the stock. Being long is not a moral judgement, it just means you've got an exposure to the asset becoming more valuable. If you own a share in Gamestock, or a USD, or few satoshis, or a house, you're long those assets. It doesn't matter why you own them. > which as you say has a number of factors... all of which are non-existent in bitcoin That is also untrue; many factors have exact equivalents, such as evaluating competing currencies for differences in projected inflation or deflation, projected interest rates, projected uptake in usage in new markets, projected change in regulations. If you think DeFi will continue to grow, or that Ethereum's migration to Proof Of Stake will finally happen and be successful, that suggests a relative strengthening of of Ethereum versus Bitcoin. If you think that a pure Bitcoin ETF will be approved by the SEC and will be good for Bitcoin prices, that suggests a strengthening of Bitcoin versus other currencies. And of course, you can evaluate the so-called "shitcoins" to decide if you think they'll ever get a fraction of the adoption Bitcoin and Ethereum have, etc. > What exactly are you thinking factors into the growth of the currency? Beyond say... hopes and dreams (aka gambling). As above. Although let's be clear: All currency speculation is gambling. Exchange rates are volatile, unpredictable, and for major pairs, impossible to manipulate. You can (and so very, very many people have) come up with some thesis about why the USD/EUR rate is going to move in a specific direction, go long (and/or short) in the appropriate currency, and get run over, because the market doesn't care about your thesis. Even if you're right about the thesis! :) > as there is a government and usually a central bank that controls production of that currency And...? > they are not just random numbers fluctuating randomly... They might as well be. Given the closing price of the USD/EUR pair today, there's no amount of information I can give you about relative economic performance of the US versus the EU that will let you predict the closing price of the USD/EUR pair tomorrow. Or next week. Or next year. > is there a fiat currency that shows as much volatility for as long as bitcoin has? There are - and have been - some very volatile currencies. Certainly bitcoin is at the far end of the volatility distribution. What of it? Again, you seem to have the model that you can only bet on sure things, and the more random something is, the less you can truly "gamble" on it. That is, if anything, the opposite of how it works.
  - onethought 5y ago
    My model is: Bitcoin investing is gambling. There are no underlying factors that could rationalise a “long” position. You used euro/usd comparison… why not Argentina peso to usd… is there a chance it could close higher than the usd tomorrow? - no. Because the underlying economies do effect currencies and they are not random despite the three paragraphs of prose you wrote. My question, perhaps poorly put, is why would you (rationally) go long on Bitcoin? It looks like pure gambling/speculation. I’m 100% wanting to know the value judgement being made. I’m quite okay if that answer is: gambling.

by Lazare 5y ago

onethought 5y ago

Exactly as I suggested in my examples. Being "Long" in the USD implies general stability of the currency (which as you say has a number of factors... all of which are non-existent in bitcoin). So my question still stands. What exactly are you thinking factors into the growth of the currency? Beyond say... hopes and dreams (aka gambling). The fact that people go "long" in fiat currencies is not at all relevant, as there is a government and usually a central bank that controls production of that currency (responsibly or not). 100% exchange rates work based on the economy underlying them (and the governments control on it)... they are not just random numbers fluctuating randomly... There is almost no comparison to crypto here, is there a fiat currency that shows as much volatility for as long as bitcoin has?

Lazare 5y ago
> Being "Long" in the USD implies general stability of the currency It does not. Many currencies aren't stable at all; people still take long and short positions on them, either as part of an explicit investment thesis, or just by, you know, having some paper currency in their wallet. People have been buying gold for centuries as a way of reducing their exposure to unstable currencies. I would assume it doesn't need to be explicitly said, but just for safety's sake, let's be clear: A long (or short) position is a bet, and you can bet on unpredictable things. Nobody uses the terminology, but technically you're "long red" if you bet on red coming up next on a roulette wheel at Vegas. Currently equity markets have been consumed with discussions of the "meme stocks". People have been going long on, eg, Gamestop, but the stock has been incredibly volatile, and there are no underlying economic factors that even begin to support the highs it's reached. Again, being long in a super volatile stock because it's funny, or because you're bored, or because you're trying to make a statement, or because you believe it is bouncing around randomly and you're trying to profit from this is still being long on the stock. Being long is not a moral judgement, it just means you've got an exposure to the asset becoming more valuable. If you own a share in Gamestock, or a USD, or few satoshis, or a house, you're long those assets. It doesn't matter why you own them. > which as you say has a number of factors... all of which are non-existent in bitcoin That is also untrue; many factors have exact equivalents, such as evaluating competing currencies for differences in projected inflation or deflation, projected interest rates, projected uptake in usage in new markets, projected change in regulations. If you think DeFi will continue to grow, or that Ethereum's migration to Proof Of Stake will finally happen and be successful, that suggests a relative strengthening of of Ethereum versus Bitcoin. If you think that a pure Bitcoin ETF will be approved by the SEC and will be good for Bitcoin prices, that suggests a strengthening of Bitcoin versus other currencies. And of course, you can evaluate the so-called "shitcoins" to decide if you think they'll ever get a fraction of the adoption Bitcoin and Ethereum have, etc. > What exactly are you thinking factors into the growth of the currency? Beyond say... hopes and dreams (aka gambling). As above. Although let's be clear: All currency speculation is gambling. Exchange rates are volatile, unpredictable, and for major pairs, impossible to manipulate. You can (and so very, very many people have) come up with some thesis about why the USD/EUR rate is going to move in a specific direction, go long (and/or short) in the appropriate currency, and get run over, because the market doesn't care about your thesis. Even if you're right about the thesis! :) > as there is a government and usually a central bank that controls production of that currency And...? > they are not just random numbers fluctuating randomly... They might as well be. Given the closing price of the USD/EUR pair today, there's no amount of information I can give you about relative economic performance of the US versus the EU that will let you predict the closing price of the USD/EUR pair tomorrow. Or next week. Or next year. > is there a fiat currency that shows as much volatility for as long as bitcoin has? There are - and have been - some very volatile currencies. Certainly bitcoin is at the far end of the volatility distribution. What of it? Again, you seem to have the model that you can only bet on sure things, and the more random something is, the less you can truly "gamble" on it. That is, if anything, the opposite of how it works.
- onethought 5y ago
  My model is: Bitcoin investing is gambling. There are no underlying factors that could rationalise a “long” position. You used euro/usd comparison… why not Argentina peso to usd… is there a chance it could close higher than the usd tomorrow? - no. Because the underlying economies do effect currencies and they are not random despite the three paragraphs of prose you wrote. My question, perhaps poorly put, is why would you (rationally) go long on Bitcoin? It looks like pure gambling/speculation. I’m 100% wanting to know the value judgement being made. I’m quite okay if that answer is: gambling.