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I agree with your premise but the s&p isn’t going up by 7% right now and the author is just taking a calculated risk. That’s his business. If he thinks Tether i
by aardvarkr 4y ago
I agree with your premise but the s&p isn’t going up by 7% right now and the author is just taking a calculated risk. That’s his business. If he thinks Tether is going to collapse then he’ll make a massive return on his investment.
He’s essentially gambling $46/yr to get a $450 payout if Tether collapses.
- scotty79 4y ago> massive return Just around 100%. That's not massive for crypto gambling. You could just buy BTC and have 600% in less than 3 years if only BTC won't break out of its 12 year trend. And that's a very conservative gamble.
- eli 4y agoNot if you believe BTC is wildly overvalued. I personally don’t think it sets a new record high, ever, and is mostly down from here
- swyx 4y agolook i'm as skeptical as the next HN'er but the evidence of past history is against you and "ever" is a very long time... BTC doesn't have to win mass adoption for it to set new highs, it just has to be the "store of value" (i know, i know) for enough people and for the next QE cycle to start in 3 years to get going again
- shadowgovt 4y agoBTC hasn't been around long enough for it to have a past history to be evidence against the belief it will downtrend. Not relative to other currencies or commodities. That's like putting a match to gunpowder and claiming based on the trend of the first few microseconds, the flame will engulf the world.
- scotty79 4y agoBitcoin doesn't raise exponentially. It slows down over time. Each swing cycle is shallower than previous one. It's more like putting a match to a gunpowder and theorizing that at some point some equilibrium will be reached at greater volume than currently observed.
- eli 4y agoInstead of price history look at utility history: It’s never been anything other than a speculative asset or a temporary medium of exchange for criminals. There’s no future here. Future returns on BTC cannot be compared to the S&P!
- broast 4y agoIs there currently new and previously not knowable information regarding its utility compared to when the price was going up?
- eli 4y agoNo, it’s never been particularly useful. Do you believe a popular pyramid scheme has demonstrated utility? If a pyramid scheme made people a lot of money in the past does that suggest it has long term value?
- broast 4y agoPeople similarly argue that stocks are a pyramid scheme but that doesn't stop them from existing.
- andirk 4y agoYou got a nice lil dvote from our HN friends because you spoke negatively about stonks (they like stonks a lot!) and neutral about bitcoin (they HATE bitcoin! Mostly out of jealousy). I don't think either is a pyramid scheme but both often trade at inflated valuations.
- andirk 4y agoReplace "pyramid scheme" with "stock" and the argument still stands and is actually relevant to bitcoin. Can you please explain how bitcoin is a pyramid scheme? You can say Ponzi scheme or scam or just hate it because you haven't gained anything from it personally and wish you did when you first heard about it at $5, but pyramid scheme it is not. Thanks.
- 4y ago
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- marvin 4y agoYour tulip futures from 1637 would still be out of the money, even though global tulip consumption is much, much higher and the Netherlands is the world's leading supplier.
- andirk 4y agoFinally! It took this many comments for someone to show, via the age-old tulip example, they know nothing about crypto except that there is hype around it. And thank you for adding the date to show you read the top of a Wikipedia article.
- marvin 4y agoI think you misread me. I think crypto will be very, very big in terms of utilization and value, much bigger than it is today. But I also believe this does not imply that there will be much expected gain from purely speculating in the price of current cryptocurrencies. That's where the tulip analogy comes in. Not an implication that crypto is useless, just like tulips, but that a speculative mania can leave a novel and in-demand product (asset class, in this instance) with prices that are much higher than they will be at the steady-state in the future where both adoption and production is much higher. I will probably buy Coinbase stock if Tether finally blows up, but before that the speculation is too much for me to commit to anything.
- NicoJuicy 4y agoEvidence of history? It took COVID to get Bitcoin back up. That's it Not history, just a rare event. No one cares about Bitcoin anymore.
- BlueTemplar 4y agoYou seem to have forgotten the other... IIRC 3 (?) times it has gotten back up ? (But feel free to short bitcoin of course - not the kind of risk I would take.)
- NicoJuicy 4y agoOther 3 times? Error. 1 long streak before COVID and a large decline then too. And 2 times jumping around during COVID-19 = over a very short period.
- BlueTemplar 4y agoThe previous times the bubble popped : around $30, $300, and $3000 per BTC. The ~$300 one immortalized in this parody music video : "Blame it on MT.GOX" : https://youtu.be/K2ku1A5Ox8U https://youtu.be/K2ku1A5Ox8U (Note that this one was NOT about MT.GOX going bankrupt...)
- NicoJuicy 4y agoAnd one of the biggest jumps in Crypto ( the one outside of Covid) was when banks jumped on it ( end of 2017 i think). Now you are seeing the opposite: Eg. https://www.barrons.com/articles/banks-fleeing-crypto-bitcoin-worried-51673278376 https://www.barrons.com/articles/banks-fleeing-crypto-bitcoi... I'm not replying here again fyi. I don't care about crypto anymore ( went out at 2018 before the crash), I do care about others losing money :). If you think it will rise again, fine. Go for it.
- mancerayder 4y agoAlmost every speculative asset was up then, capital was desperate to go anywhere as borrowing was cheap and savings rates were high.
- Tepix 4y agoIf you assume that Tether is going down, BTC will crash, too.
- jmathai 4y agoHumans are terrible at gauging risk. I think the parent comment was highlighting the risk component of this. VTSAX-and-chill is gambling also. But the risks are so wildly different that Tether is closer to buying lottery tickets than index funds. Everyone does what they want with their money but there seems to have been an explosion of “massive returns” content that I think is generally harmful. (I’m neither saying that this post is or isn’t harmful.)
- wjnc 4y agoI’ll just go out and enjoy “neither A or B” instead of “not A or B” or “A nor B”. I had to parse “neither is or isn’t harmful”.
- dghlsakjg 4y agoI don't have a deeply researched position behind this, but my feeling has always been that (long term, I say again, LONG TERM) VTSAX and chill is the same bet as holding cash. If your VTSAX ends up being worth nothing long-term, there is almost certainly no chance that your currency survived the same event.
- jmathai 4y agoCurious about this. The geometric mean of return for the S&P500 is about 7% over several decades. The longer the time horizon the more likely you’ll hit 7%. Why do you think it’s similar to holding cash?
- dghlsakjg 4y agoNot that its the same return as holding cash (clearly that isn't true), just that if VTSAX doesn't pay off as a bet long term, it will be because the dollar has ceased to be valuable. Basically, a bet on VTSAX is underpinned by faith in the dollar. If either one crashes the other is worthless.
- OscarCunningham 4y ago> s&p isn’t going up by 7% right now It always sounds weird to me when someone uses the present continuous tense to refer to the rate of change of stock prices. Like, how are you taking the one-sided derivative of a fractal?
- tedunangst 4y agoPick a shorter timeframe like one month, calculate annualized rate.
- OscarCunningham 4y agoThen you'd say 'the S&P hasn't been going up at 7% recently'.
- tedunangst 4y agoThe pedantry hasn't been making you a more effective communicator recently.
- TheRealPomax 4y agoWelcome to finance: if you're not being pedantic, you're probably trying to sell a lie. Verb tense absolutely matters.
- tedunangst 4y agoDoes anybody here believe aardvarkr was trying to sell a lie with their casual verb tense?
- mgaunard 4y agoThat's a bad idea, since equities have a lot of calendar events and a given month is never representative of a year's performance.
- bagacrap 4y ago
- arisAlexis 4y agoIf Tether collapses Aave will collapse too, the plan is hilariously defective
- seviu 4y agoAave as a token might collapse but Aave is a protocol, and it will continue working as designed. When Ethereum collapsed to sub 900$ we could all see how robust these decentralized protocols are. The price of the token has nothing to do with how Aave works.
- arisAlexis 4y agoI am talking about the protocol. They are untested protocols with potential design flaws or potential hacks. We have seen these happening for tens of billions of losses for years now. Waiting for something to collapse in something that can collapse is total irrationality.
- edmundsauto 4y agoThe most important line in finance is "Past performance is no guarantee of future results". This is generally treated as a warning label: Don't assume an investment will continue to do well in the future simply because it's done well in the past. However, what it really means is that nobody can predict future performance, even with historical data. I think it's negativity bias that this phrase is used to apply to downside; it should also be used when considering upside. (The reason, I think, is many people prefer to miss out on upside rather than experience downside, ie we are risk-averse.) Over some future time frame, the S&P will go up again. It doesn't feel like that will be soon, but as I always admit to myself: I am really bad at predicting the future.
- bagacrap 4y agoSince October 12 it has been going up at an annualized ~30% rate. Where it goes next is anybody's guess.