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$1 on Bitcoin ten years ago are worth over ten million dollars now. And I think people thought Bitcoin had potential, even back then. Definitely something you w

$1 on Bitcoin ten years ago are worth over ten million dollars now. And I think people thought Bitcoin had potential, even back then. Definitely something you wouldn’t mind spending a few bucks on. But back in the day it was quite different for average folks without enough tech knowledge to mine or buy crypto.

zenlikethat 5y ago
Getting in early on BTC, ETH, or crypto of your choice from this bull run was probably a pretty non-reproducible fluke though. Once the leverage in crypto markets gets cracked down on (up to 100:1 leverage is definitely contributing to the wild moves including to the upside), the return profile won't look like that any more. And with NFTs, there's just this endless sea of them. Even within one collection, most of the supply stays dormant so there's no telling who might wake up at any moment and completely flood the market.
- inter_netuser 5y ago
  why does 100:1 leverage contributes to upside, but isn't cancelled out by 100:1 to downside?
  - TameAntelope 5y ago
    Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". ...typically, anyway.
    - vageli 5y ago
      > Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". If you're leveraged, you are borrowing money, which means you can lose more than you put in as you could lose the money you borrowed and thus would owe on the debt. Further, if you are shorting bitcoin for instance, there is no floor.
      - zenlikethat 5y ago
        You can't generally go beyond 0 though. You'll get liquidated before that due to the exchange's risk engines. If it goes beyond, that loss is passed on to the lenders.
  - zenlikethat 5y ago
    Well, for starters the funding and borrow rate(s) are often positive because people just tend to be bullish. So things have to get pumped up somehow before they come crashing down, it's a much stronger tendency among the crypto faithful to be bullish than to be bearish. I also think the other commenter's insight about how gains on the short side are capped at $0 price is relevant. So while there is downside pressure from liquidation cascades on the levered positions, the main point is that volatility in general will smooth out. The juiced up all time highs we've seen so far have been driven by leverage. Maybe BTC sells off to $12K but if there was no leverage in the system I think it would take a lot longer to bring up to $69K than it did before.
majormajor 5y ago
Where are you getting your numbers? They don't match my recollection, or some articles I'm seeing: https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp https://www.investopedia.com/articles/forex/121815/bitcoins-... "Bitcoin's price rose again on April 13, 2011, from $1 to a peak of $29.60 by June 7, 2011, a gain of 2,960% within three months. A sharp recession in cryptocurrency markets followed, and Bitcoin's price bottomed out at $2.05 by mid-November.4 The following year, its price rose from $4.85 on May 9 to $13.50 by Aug. 15." So let's use that $2.05 price as "ten years ago," I'm willing to give you 10 and a half years ;). A dollar in bitcoin then would be worth about $20,000 now. So sure, pretty good. Nowhere near tens of millions, though. And that $30->$2 change, and a few more up/down cycles between 2012 and 2017, shows that plenty of people thought it had already peaked. See also the various "oh no I lost my hard drive with the bitcoins I'd mined since I didn't think it was that important" stories. So sure, getting in for just a few bucks before 2011 and holding? Yeah, you're looking super great! But most people hadn't heard of it by then, and that's not who the article is talking about... when they did hear of it, you had a huge wave of pump-and-dump shitcoins proving the point of the article: the average person getting in at that point was largely too late for the level of return they were looking for.
- DennisP 5y ago
  You'd have to go a little further back. The first real price for BTC was in 2010, when someone paid 10,000 BTC for two pizzas, worth about 40 bucks. From that to the current price of $40K per BTC is a gain of ten million times. https://en.wikipedia.org/wiki/History_of_bitcoin#2010 https://en.wikipedia.org/wiki/History_of_bitcoin#2010 Of course, you had to be a serious deep-in-the-weeds enthusiast to get in that early. Maybe that's the sort of people who tend to make money on collectibles, too.
  - kingcharles 5y ago
    I had plenty of coins in 2010 that I'd mined, the problem was that they were just a toy at the time and so when I lost the keys that same year, I didn't give a shit. Now of course I have regrets :)
- deleted 5y ago

zenlikethat 5y ago

Getting in early on BTC, ETH, or crypto of your choice from this bull run was probably a pretty non-reproducible fluke though. Once the leverage in crypto markets gets cracked down on (up to 100:1 leverage is definitely contributing to the wild moves including to the upside), the return profile won't look like that any more. And with NFTs, there's just this endless sea of them. Even within one collection, most of the supply stays dormant so there's no telling who might wake up at any moment and completely flood the market.

inter_netuser 5y ago
why does 100:1 leverage contributes to upside, but isn't cancelled out by 100:1 to downside?
- TameAntelope 5y ago
  Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". ...typically, anyway.
  - vageli 5y ago
    > Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". If you're leveraged, you are borrowing money, which means you can lose more than you put in as you could lose the money you borrowed and thus would owe on the debt. Further, if you are shorting bitcoin for instance, there is no floor.
    - zenlikethat 5y ago
      You can't generally go beyond 0 though. You'll get liquidated before that due to the exchange's risk engines. If it goes beyond, that loss is passed on to the lenders.
- zenlikethat 5y ago
  Well, for starters the funding and borrow rate(s) are often positive because people just tend to be bullish. So things have to get pumped up somehow before they come crashing down, it's a much stronger tendency among the crypto faithful to be bullish than to be bearish. I also think the other commenter's insight about how gains on the short side are capped at $0 price is relevant. So while there is downside pressure from liquidation cascades on the levered positions, the main point is that volatility in general will smooth out. The juiced up all time highs we've seen so far have been driven by leverage. Maybe BTC sells off to $12K but if there was no leverage in the system I think it would take a lot longer to bring up to $69K than it did before.

majormajor 5y ago

Where are you getting your numbers? They don't match my recollection, or some articles I'm seeing: https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp https://www.investopedia.com/articles/forex/121815/bitcoins-... "Bitcoin's price rose again on April 13, 2011, from $1 to a peak of $29.60 by June 7, 2011, a gain of 2,960% within three months. A sharp recession in cryptocurrency markets followed, and Bitcoin's price bottomed out at $2.05 by mid-November.4 The following year, its price rose from $4.85 on May 9 to $13.50 by Aug. 15." So let's use that $2.05 price as "ten years ago," I'm willing to give you 10 and a half years ;). A dollar in bitcoin then would be worth about $20,000 now. So sure, pretty good. Nowhere near tens of millions, though. And that $30->$2 change, and a few more up/down cycles between 2012 and 2017, shows that plenty of people thought it had already peaked. See also the various "oh no I lost my hard drive with the bitcoins I'd mined since I didn't think it was that important" stories. So sure, getting in for just a few bucks before 2011 and holding? Yeah, you're looking super great! But most people hadn't heard of it by then, and that's not who the article is talking about... when they did hear of it, you had a huge wave of pump-and-dump shitcoins proving the point of the article: the average person getting in at that point was largely too late for the level of return they were looking for.

DennisP 5y ago
You'd have to go a little further back. The first real price for BTC was in 2010, when someone paid 10,000 BTC for two pizzas, worth about 40 bucks. From that to the current price of $40K per BTC is a gain of ten million times. https://en.wikipedia.org/wiki/History_of_bitcoin#2010 https://en.wikipedia.org/wiki/History_of_bitcoin#2010 Of course, you had to be a serious deep-in-the-weeds enthusiast to get in that early. Maybe that's the sort of people who tend to make money on collectibles, too.
- kingcharles 5y ago
  I had plenty of coins in 2010 that I'd mined, the problem was that they were just a toy at the time and so when I lost the keys that same year, I didn't give a shit. Now of course I have regrets :)
deleted 5y ago