6 ms·

I thought it was a good asset to own in case of recession?

by loandbehold 4y ago

ceejayoz 4y ago
It turns out that chanting "this is good for Bitcoin" doesn't actually make that true.
andreygrehov 4y ago
These are expected historical falls - https://ibb.co/TWyTDh5 https://ibb.co/TWyTDh5
- 988747 4y ago
  This graph only looks good because of logarithmic scale use. This is how it looks like to normal people: https://www.coindesk.com/embedded-chart/QMQGWJngBbWTR https://www.coindesk.com/embedded-chart/QMQGWJngBbWTR
  - MarkPNeyer 4y ago
    Why would you use anything but a logarithmic scale to understand an asset over long periods of time?
    - ceejayoz 4y ago
      Because “lost nearly 80% YOY” shows up better this way.
      - andreygrehov 4y ago
        In 2011 it crashed 94% ($35 -> $2) In 2013 it crashed 83% ($260 -> $45) In 2015 it crashed 87% ($1,140 -> $150) In 2017 it crashed 82% ($19,900 -> $3,540) In 2022 it crashed 76% ($66,938 -> $15,853) - so far.. As we can see, 80% crash for Bitcoin has not been that scary.
        Gigachad 4y ago
        Past performance is not indicative of future performance. It's very realistic that one of these crashes is the last one. If we could be sure it wasn't, it never would have crashed to begin with. It's just a long game of pass the bomb where everyone bets on which year it really does explode.
        andreygrehov 4y ago
        Agreed, but have we ever had an asset type that is accessible to pretty much every single person in the world? I get that it cannot go up all the time and I'm sure the price will get more or less stable at some point in the future. On the other hand, since the asset type is so widely accessible, it could go up proportionally to the population of the Earth. Just speculating.
        Gigachad 4y ago
        There is no reason to be sure BTC will stabilize on anything even close to it's current value. The volatility represents this. It says the vast majority of speculators do not trust the current value to remain. Even if you fully believe crypto is the future, it's very hard to convincingly explain why BTC is the future and not one of the other coins which implement more features. Someone 20 years ago could have been right about the internet being the future but picked the wrong companies that would win.
        mr_toad 4y ago
        > I'm sure the price will get more or less stable at some point in the future. I’m not. Most of the demand for crypto is only because it is going up. If it stops going up then speculators will look at alternatives, and it crash again. Once it’s low enough that small gains represent a higher rate of return then investors will return and the cycle begins again. This sawtooth pattern is probably inevitable, and will probably continue indefinitely.
        thunky 4y ago
        > have we ever had an asset type that is accessible to pretty much every single person in the world? We still don't. Assets have value.
    - deleted 4y ago
      [deleted]
agumonkey 4y ago
Are we in a recession ?
- piva00 4y ago
  We are, a recession is usually called in retrospect after some quarters, we are definitely in the beginning of a recession.
  - ceejayoz 4y ago
    GDP was up last quarter. Probably this upcoming one, too. If there’s a recession coming, we aren’t in it yet.
    - brendank310 4y ago
      Until the numbers get revised in 4 months.
      - ceejayoz 4y ago
        Maybe. Q2’s got revised up, not down. https://www.usnews.com/news/economy/articles/2022-08-25/2q-gdp-revised-upward-but-still-negative https://www.usnews.com/news/economy/articles/2022-08-25/2q-g...
    - piva00 4y ago
      Back in 2007-2008 (for the ones too young or just not remembering) [1]: > WASHINGTON (Reuters) - The U.S. economy shrank during the closing months of 2007 for the first time in six years, the Commerce Department confirmed on Thursday, hurt by the steepest slump in housing since 1981. > But it bounced back to record modest growth in 2008, avoiding back-to-back quarters of decline that would have met a popular definition of recession. > The department sharply revised its estimate for fourth-quarter performance to show gross domestic product, or GDP, contracted 0.2 percent -- rather than growing 0.6 percent as it previously reported. And later that year of 2008: > Growth resumed in the first quarter of 2008, however, with GDP rising at a 0.9 percent rate that accelerated to 1.9 percent in the second quarter as government stimulus payments began to flow. The wheels of recession were in motion since 2006, its head cropped up during the later quarters of 2007 and completely exploded in late-2008. Look at all the macroeconomic indicators right now, inflation, energy costs, customer spending, etc., do you really believe we are not way into the wheels of a recession? [1] https://www.reuters.com/article/us-usa-economy-gdp-revisions-idUSN3140880220080731 https://www.reuters.com/article/us-usa-economy-gdp-revisions...
yrgulation 4y ago
A store of value i was told. Because see, unlike money, bitcoin has value i was told.
- danans 4y ago
  You were told fortune favors the bold, but you should have instead invested in gold.
  - yrgulation 4y ago
    Invested in real estate and made enough to be debt free instead, pulled out just in time. Not rich, but not bad. May even be a good time to buy crypto but each time i say "now is the time" it goes down. So there's clearly a batch of signals i am reading wrong.
bloodyplonker22 4y ago
This is the sales pitch for Bitcoin, and it does have some merits if you consider the "digital gold" argument. However, as it turns out, too many people got on the boat and started thinking that bitcoin would make them "rich". They flooded the market and Bitcoin transformed into a completely speculative asset instead.
jancsika 4y ago
Then what better time to buy a recession-proof asset? (Did I gambler's fallacy correctly?)
eftychis 4y ago
Only necessity commodities are a good asset to own in a recession. And in practice due to retail patterns volatility in bad times nothing is a "good" thing to own. (If you know a vertically integrated food producer that produces their own water and fertilizer, do let me know though.) Also note we have a global currency war, where U.S. is forcing policy/pick your side to countries and also "exports" inflation. This is done in part by the rate of increase of interests rate -- a derivative other countries can not simply follow up. In big part in the way energy gets exported. So as DXY goes up everything else free-falls, and causes extra strain -- as the fixed costs to pay debt increase rapidly due to the rates too -- things break. And when things break, people sell everything they can to save the boat. So you are looking at a table full of fireworks randomly popping trying to guess what is going to stay there. I wouldn't say there is a good asset thus. Note this is simply unsustainable. My perspective.
- neural_thing 4y ago
  Counterpoint: Stanley Druckenmiller, who many, including myself, think is the most successful investor/trader alive (something like 30% a year average for 30 years with not a single down year) is on the record saying that during recessions he makes money by buying bonds.
  - eftychis 4y ago
    Would you pick a random bond? The question is if there is a good type of asset. One anyone would just keep. To your words Druckenmiller "makes money by buying bonds." That involves a) picking them b) selling them and doing both right. I don't think the average person does 30%. If Druckenmiller can send us his tips on the ultimate bond that is inefficient, I am all ears. But I wouldn't know how to pick a mispriced bond myself. Edit: But yes, you can make money during a recession. If there is a lot of inflation that might not count as much. I don't think I implied you can't with my statement. But even where you place your money is a game then -- think Lehman Brothers taking hedge fund liquidity down with it.
subsubzero 4y ago
A really bad asset to own in a recession. Its totally speculative and backed by nothing, it has no real use/value per se. Even gold's value is derived by the work taken to extract and mine it - it has uses in computing, jewelry etc. Bitcoin is just bits of data floating through the air. And don't even get me started on NFTs! During a recession people will withdraw their crypto and sell leading it to drop in value(more out in the wild) as they need money. I wonder if all of the tech layoffs this/last week triggered a huge sell volume(tech employees trying to cash out risky assets). The timing does seem suspicious.
xiphias2 4y ago
It's quite the opposite: in recession the dollar is getting stronger (buys more shares of stocks / houses). Bitcoin is a hedge against inflation of currency supply (QE infinity).
NelsonMinar 4y ago
You'd be better off with magic beans. At least you can eat beans.
scotty79 4y ago
It's good asset to own and buy in a recession. Just bad asset to sell. Just as any other. Gold is going down since march too.

I thought it was a good asset to own in case of recession?

ceejayoz 4y ago

It turns out that chanting "this is good for Bitcoin" doesn't actually make that true.

andreygrehov 4y ago

These are expected historical falls - https://ibb.co/TWyTDh5 https://ibb.co/TWyTDh5

988747 4y ago
This graph only looks good because of logarithmic scale use. This is how it looks like to normal people: https://www.coindesk.com/embedded-chart/QMQGWJngBbWTR https://www.coindesk.com/embedded-chart/QMQGWJngBbWTR
- MarkPNeyer 4y ago
  Why would you use anything but a logarithmic scale to understand an asset over long periods of time?
  - ceejayoz 4y ago
    Because “lost nearly 80% YOY” shows up better this way.
    - andreygrehov 4y ago
      In 2011 it crashed 94% ($35 -> $2) In 2013 it crashed 83% ($260 -> $45) In 2015 it crashed 87% ($1,140 -> $150) In 2017 it crashed 82% ($19,900 -> $3,540) In 2022 it crashed 76% ($66,938 -> $15,853) - so far.. As we can see, 80% crash for Bitcoin has not been that scary.
      - Gigachad 4y ago
        Past performance is not indicative of future performance. It's very realistic that one of these crashes is the last one. If we could be sure it wasn't, it never would have crashed to begin with. It's just a long game of pass the bomb where everyone bets on which year it really does explode.
        andreygrehov 4y ago
        Agreed, but have we ever had an asset type that is accessible to pretty much every single person in the world? I get that it cannot go up all the time and I'm sure the price will get more or less stable at some point in the future. On the other hand, since the asset type is so widely accessible, it could go up proportionally to the population of the Earth. Just speculating.
        Gigachad 4y ago
        There is no reason to be sure BTC will stabilize on anything even close to it's current value. The volatility represents this. It says the vast majority of speculators do not trust the current value to remain. Even if you fully believe crypto is the future, it's very hard to convincingly explain why BTC is the future and not one of the other coins which implement more features. Someone 20 years ago could have been right about the internet being the future but picked the wrong companies that would win.
        mr_toad 4y ago
        > I'm sure the price will get more or less stable at some point in the future. I’m not. Most of the demand for crypto is only because it is going up. If it stops going up then speculators will look at alternatives, and it crash again. Once it’s low enough that small gains represent a higher rate of return then investors will return and the cycle begins again. This sawtooth pattern is probably inevitable, and will probably continue indefinitely.
        thunky 4y ago
        > have we ever had an asset type that is accessible to pretty much every single person in the world? We still don't. Assets have value.
  - deleted 4y ago
    [deleted]

agumonkey 4y ago

Are we in a recession ?

piva00 4y ago
We are, a recession is usually called in retrospect after some quarters, we are definitely in the beginning of a recession.
- ceejayoz 4y ago
  GDP was up last quarter. Probably this upcoming one, too. If there’s a recession coming, we aren’t in it yet.
  - brendank310 4y ago
    Until the numbers get revised in 4 months.
    - ceejayoz 4y ago
      Maybe. Q2’s got revised up, not down. https://www.usnews.com/news/economy/articles/2022-08-25/2q-gdp-revised-upward-but-still-negative https://www.usnews.com/news/economy/articles/2022-08-25/2q-g...
  - piva00 4y ago
    Back in 2007-2008 (for the ones too young or just not remembering) [1]: > WASHINGTON (Reuters) - The U.S. economy shrank during the closing months of 2007 for the first time in six years, the Commerce Department confirmed on Thursday, hurt by the steepest slump in housing since 1981. > But it bounced back to record modest growth in 2008, avoiding back-to-back quarters of decline that would have met a popular definition of recession. > The department sharply revised its estimate for fourth-quarter performance to show gross domestic product, or GDP, contracted 0.2 percent -- rather than growing 0.6 percent as it previously reported. And later that year of 2008: > Growth resumed in the first quarter of 2008, however, with GDP rising at a 0.9 percent rate that accelerated to 1.9 percent in the second quarter as government stimulus payments began to flow. The wheels of recession were in motion since 2006, its head cropped up during the later quarters of 2007 and completely exploded in late-2008. Look at all the macroeconomic indicators right now, inflation, energy costs, customer spending, etc., do you really believe we are not way into the wheels of a recession? [1] https://www.reuters.com/article/us-usa-economy-gdp-revisions-idUSN3140880220080731 https://www.reuters.com/article/us-usa-economy-gdp-revisions...

yrgulation 4y ago

A store of value i was told. Because see, unlike money, bitcoin has value i was told.

danans 4y ago
You were told fortune favors the bold, but you should have instead invested in gold.
- yrgulation 4y ago
  Invested in real estate and made enough to be debt free instead, pulled out just in time. Not rich, but not bad. May even be a good time to buy crypto but each time i say "now is the time" it goes down. So there's clearly a batch of signals i am reading wrong.

bloodyplonker22 4y ago

This is the sales pitch for Bitcoin, and it does have some merits if you consider the "digital gold" argument. However, as it turns out, too many people got on the boat and started thinking that bitcoin would make them "rich". They flooded the market and Bitcoin transformed into a completely speculative asset instead.

jancsika 4y ago

Then what better time to buy a recession-proof asset? (Did I gambler's fallacy correctly?)

eftychis 4y ago

Only necessity commodities are a good asset to own in a recession. And in practice due to retail patterns volatility in bad times nothing is a "good" thing to own. (If you know a vertically integrated food producer that produces their own water and fertilizer, do let me know though.) Also note we have a global currency war, where U.S. is forcing policy/pick your side to countries and also "exports" inflation. This is done in part by the rate of increase of interests rate -- a derivative other countries can not simply follow up. In big part in the way energy gets exported. So as DXY goes up everything else free-falls, and causes extra strain -- as the fixed costs to pay debt increase rapidly due to the rates too -- things break. And when things break, people sell everything they can to save the boat. So you are looking at a table full of fireworks randomly popping trying to guess what is going to stay there. I wouldn't say there is a good asset thus. Note this is simply unsustainable. My perspective.

neural_thing 4y ago
Counterpoint: Stanley Druckenmiller, who many, including myself, think is the most successful investor/trader alive (something like 30% a year average for 30 years with not a single down year) is on the record saying that during recessions he makes money by buying bonds.
- eftychis 4y ago
  Would you pick a random bond? The question is if there is a good type of asset. One anyone would just keep. To your words Druckenmiller "makes money by buying bonds." That involves a) picking them b) selling them and doing both right. I don't think the average person does 30%. If Druckenmiller can send us his tips on the ultimate bond that is inefficient, I am all ears. But I wouldn't know how to pick a mispriced bond myself. Edit: But yes, you can make money during a recession. If there is a lot of inflation that might not count as much. I don't think I implied you can't with my statement. But even where you place your money is a game then -- think Lehman Brothers taking hedge fund liquidity down with it.

subsubzero 4y ago

A really bad asset to own in a recession. Its totally speculative and backed by nothing, it has no real use/value per se. Even gold's value is derived by the work taken to extract and mine it - it has uses in computing, jewelry etc. Bitcoin is just bits of data floating through the air. And don't even get me started on NFTs! During a recession people will withdraw their crypto and sell leading it to drop in value(more out in the wild) as they need money. I wonder if all of the tech layoffs this/last week triggered a huge sell volume(tech employees trying to cash out risky assets). The timing does seem suspicious.

xiphias2 4y ago

It's quite the opposite: in recession the dollar is getting stronger (buys more shares of stocks / houses). Bitcoin is a hedge against inflation of currency supply (QE infinity).

NelsonMinar 4y ago

You'd be better off with magic beans. At least you can eat beans.

scotty79 4y ago

It's good asset to own and buy in a recession. Just bad asset to sell. Just as any other. Gold is going down since march too.