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There seem to be a lot of similarities between crypto and growth stocks that are held by founders with > 15% ownership. Similar to early stage investors who ha
by somethoughts 5y ago
There seem to be a lot of similarities between crypto and growth stocks that are held by founders with > 15% ownership. Similar to early stage investors who have essentially zero cost basis, early BTC holders have zero cost basis when BTC was pennies each versus late stage current investors paying in at $60,000 for each BTC. For early BTC holders its easy to diamond hand.
There are a lot of similarities for sure between Tesla stock and BTC in terms of price versus traditional measures of value (based on current income and enterprise value), not to mention the volatility.
There is not as much price discovery when a handful of owners own more than 50% of stock or crypto and are easily diamond handing. The price discovery is only happening on the portion that's actively trading which can distort the market price. I bet in the early days of BTC there were a lot of tricks like the Jason Fried/DHH Basecamp unicorn example[1].
As they eventually lose interest/need to pass assets to the kids, when they start unloading, there will be price drops as there were once Bill Gates started unloading MSFT stock. Part of the challenge that Steve Ballmer faced (other than lackluster leadership) was the headwinds and downward pressure created by BillG's retirement related unloading of MSFT stock.
[1] https://signalvnoise.com/posts/1941-press-release-37signals-valuation-tops-100-billion-after-bold-vc-investment https://signalvnoise.com/posts/1941-press-release-37signals-...
- discobean 5y ago> For early BTC holders its easy to diamond hand That's not true, say your investment of a few dollars is now $1k. And the price is popping and just dropped 30% in one day? Would you sell for the profit? What if that investment got to 10k? 100k? People sell at some point. I'd argue it's incredibly hard to diamond hand for early holders, that is why there are more stories of people selling their coin for cheap rather than diamond hands.
- gomox 5y agoI think he meant its easy _now_. Once you are 10.000x on your investment your perspective drastically changes.
- gitfan86 5y agoThe big difference between BTC and MSFT/TSLA is that successful companies have cash flow. MSFT has a dividend that it pays out every year. TSLA is eliminating debt and adding cash to its balance sheet. If everyone stopped buying BTC and only held BTC and bought another crypto currency, BTC would go to zero since no one would be putting money in. Similar to a pyramid scheme, once there is no new money it collapses. On the other hand, if investors decided to never buy MSFT again and sold their stock the price could go down a lot, but it couldn't go to zero because that would make the dividend yield go to infinity. If MSFT went down to $20/share it would yield over 10% a year, and it is absurd to think that no one would want to get 10% a year return. Obviously companies can and do go bankrupt, but for this comparison I'm comparing successful crypto to successful companies.
- tata71 5y agoIf every new person being born started using cryptocurrency and refused to use USD, since there is no new money, it collapses.
- gitfan86 5y agoExactly, currencies have no cashflow. They can go up and down relative to many other things, but essentially their only value is if other people are willing to trade for other things with them.