Bitcoin et al.

[Edward64]

Bitcoin dropped below 20k. Several more exchanges joining Celsius in stopping/slowing down withdrawals.

Been poking around r/bitcoin and r/cryptocurrency. The former is taking it better than the latter (no surprise). I predict a good market for used lambos.

[thesloppy]

Looks like crypto is in the midst of a cliff fall today. Bitcoin and Ethereum down ~15% in just the last 12 hours.

[Atocep]

Originally Posted by Edward64

Bitcoin dropped below 20k. Several more exchanges joining Celsius in stopping/slowing down withdrawals.

Been poking around r/bitcoin and r/cryptocurrency. The former is taking it better than the latter (no surprise). I predict a good market for used lambos.

and used video cards.

BTW, don't buy a used video card unless you know it wasn't used for crypto mining.

[Brian Swartz]

Originally Posted by Hammer

I would suggest Bitcoin should be viewed as a store of value. Perhaps in a similar vein to a precious metal. As the world as moved online it seems that physically storing a precious metal is cumbersome and outdated. No doubt there is a generational divide, people hate change. It seems to me people like to fall back on their experience and knowledge of the world as it was, rather than what it is now. You won't find too many young people buying gold. I think the market cap of gold is around 12 trillion, to Bitcoin's half a trillion. As time goes buy I suspect that gap closes.

I know this post is a little old, but I wanted to think about it before I respond.

How is a store of value different than a currency? That's exactly what precious metals are often used for. I'll consider changing my mind of crypto the moment I see people en masse buying physical products or goods and services with Bitcoin etc. Precious metals have value for various reasons, but one of those is that they are physical resources that you can make goods out of. There is a tangible product.

This is not a case of 'it's new, I don't like it'. It's a case of there's a fundamental difference between buying a stock in a company that makes knick-nacks or high technology or provides a vital service; buying a physical product like a house or a car; consultants providing knowledge/expertise; and investing it something which has no inherent value in and of itself.

I'm very futurist-minded, but I think there's good futurism and unfounded futurism. The world changed when we invented agriculture because we had a stable food supply to support a larger population and following on from that various social, political, technological etc. advances emerged. The world changed with the invention of the internet and other associated technologies, and still is in the information age, as interconnectedness increased, greater access to information and knowledge, new ways of cooperation, etc. came about. And there are many other such moments. I don't see any such promise with crypto. I think blockchain is a groundbreaking and important advance in it's own right, but that's as far as it goes.

Originally Posted by Hammer

One huge problem with any store of value has been increasing supply. We are seeing it now with fiat currency in particular, and to a lesser extent with metals. They can be mined, and increase the supply, which decreases the value. There will only ever be 21 million Bitcoin (around 19 million are currently mined). Less actually, as some are lost and will be gone forever.

Isn't this as much an asset as it is a problem? Being unable to get more of something vital is not always good. Deflation in any economy can be catastrophic.

Originally Posted by Hammer

Things will start to flatline over time. It will become more of a store of value than an investment. Who knows if it will pass the test of time, but for now it is working as intended.

The last part is the problem IMO. The way I see it, it's a lot more likely it is not working as intended. That is, a lot of people have invested in it, but it's not actually doing anything meaningful. Say I happened to inherit a crapload of Bitcoin or I had been an early adopter and had a ton of it. What could I do with it beyond find someone willing to buy it from me? Can I use it directly to make a down payment? I haven't seen Bitcoin alongside PayPal or MasterCard in any online vendor. I don't think there's an option for me to use it any physical store. There's just nothing tangible there. If I buy something really dumb like the beanie baby that was mentioned or a pet rock or something nostalgic like a stamp or card collection, it might be a bad investment or it might not. But there's a physical something that I have which I didn't before.

And meanwhile of course, the mining process itself is very harmful to our environment, so it's not just a purely speculative exercise

[Hammer]

I think at this point the jury is still out, and I wouldn't try to convince you that you are wrong in the majority of what you say Brian. Realistically I think there is still room for Bitcoin and/or crypto (I look at the 2 separately), to become genuinely world changing or essentially fail. I would say the same about all of my main holdings actually. They all have risk of blowing up or dominating the world. I think Bitcoin is only 11% of my portfolio right now, I don't own any other crypto as I believe its the wrong time to do so.

I also think looking far in to the future is pretty futile. We have a really bad history of predicting the future. For me this is a 2022-2025 investment. Then at that point I will go from there. I played the past cycle as a separate entity. I think 2022 will suck as will 2026. I thought 2021 would have a peak and I think 2025 will too. I can't say I am positive, but I like the risk reward of it playing out.

A few points I would like to expand on and reply to...

I agree mining has been harmful to the environment, and continues to be to some degree. Although its over played in the media, the narrative tends to be pushed around without the majority checking the facts as they are right now. Mining for Gold has always been worse for the environment. Bitcoin mining is going through the process of becoming much cleaner. Actually I bought a small holding in a Bitcoin mining company called Cleanspark Friday, I do think clean energy mining is the future and there seems a really strong swing towards this direction.

I don't think Bitcoin's future lies as a currency. It is too slow and clunky compared to other certain cryptos. Doge or numerous other cryptos could be used for that purpose or perhaps a CBDC. Although I think the latter would be a huge step in the wrong direction for the small people due to the centralised control it would be give to governments.

I guess a key point is you don't believe it has value, but I do. It's value will always be driven by the market. I am sure there are a whole bunch of other things we would disagree on the value of to, but the wider market decides the real underlying value. There is a factual value to Bitcoin, as there is gold or a stock. The numbers are factual information.

I will point to the scarcity all day. I don't know how many tonnes of gold get mined every year, a lot. I heard 40% of all the dollars in existence were printed last year. No idea if that is true, but it was a lot. Both of those increases to gold and the dollar eat at the underlying value of the asset.

Bitcoin is easily divisible. It is durable. It is portable. It is resistant to counterfeiting. As a store of value it just wins, it just solves problems that exist with previous stores of value. An upgrade. It has no other assets that it is directly in competition with, its decentralised, unlike all the cryptos out there. All just my opinion, of course.

As I say, I can't say it will last forever. Something better may come along. Looked at in isolation as a 2022-2025 investment I really like it. When the historically right time comes in the cycle I will convert maybe 20% of my Bitcoin in to alts most likely. Fundamentally I think all of the top alts suck ass compared to Bitcoin for various reasons. I don't want to hold them for long. But I suspect they will be faster horses than Bitcoin over a certain time period, but with the higher risk you would expect.

[Kodos]

I'm in the camp that thinks avoiding cryptocurrency is the safe play. This podcast had some interesting points about crypto. The guy being interviewed is definitely in the pro-crypto camp.

[albionmoonlight]

Look how much Trevor Lawrence lost on crypto ��

(via @CoinJournal, h/t @DavidFurones_) pic.twitter.com/e8oYHTsMEe

— BetOnline.ag (@betonline_ag) June 21, 2022

[Kodos]

I want to know how much Matt Damon has lost!

[NobodyHere]

Lawrence put his entire salary in crypto?

Someone needs to question his decision making process!

[Atocep]

Originally Posted by NobodyHere

Lawrence put his entire salary in crypto?

Someone needs to question his decision making process!

He took his entire signing bonus in crypto.

[NobodyHere]

Yeah, if you have that much money then putting it all in a extremely volatile asset makes no sense.

[albionmoonlight]

It is so easy to forget that these athletes are so young.

I graduated in the late 90s, and if someone had given me millions of dollars then, would I have invested way too much of it in high-tech startup IPOs? Probably! They were cool, and they were on a crypto-like streak of 100% returns. I'd have laughed at the financial advisors who told me to invest in mutual funds like a geezer.

And I'd have lost a lot of money. So I get where Lawrence is coming from.

[Lathum]

He can easily live off his salary and in 5-7 years when a Bitcoin is worth 100k he’s gonna be a genius.

[Hammer]

Originally Posted by Lathum

He can easily live off his salary and in 5-7 years when a Bitcoin is worth 100k he’s gonna be a genius.

Unless something crazy happens my bet is on 3.

[Hammer]

Have to say to take a huge crypto salary payment is 2021, the year the cycle peaks is a dumb move. Those guys couldn't understand what they were doing.

Probably the on.1 problem with people losing money. They buy in to the hype and get wasted. So many people bought in 2021, not knowing the implications of what they were doing. No research, then call it a scam.

The irony is nobody wants to buy now, most will wait till the bull market and lose more money.

[NobodyHere]

Originally Posted by Hammer

Unless something crazy happens my bet is on 3.

What's the rationale behind this optimism?

[Kodos]

I think it's based on the belief that crypto runs on a 4-year cycle.

[Edward64]

Harmony hacked for $100M.

I don't pretend to understand the "science" here but I'd think exchanges want to plan for the inevitable/future hacks and try do something about it to prevent it (offer the option if > e.g. $1M is withdrawn, then a manual verification needs to be done) or prevent the use of hacked keys.

Dunno what though.

[JPhillips]

I would love to know how many of these hacks are law enforcement taking drug profits. I'm sure not all of them are, but I'm also sure some of them are.

[Hammer]

Originally Posted by NobodyHere

What's the rationale behind this optimism?

To this point the 4 year cycle has played out pretty damn perfectly. I play the cycles as separate entities. I completely sold out in 2021, and have been buying pretty hard the last 6 weeks or so.

I have a pretty good sized position now for this new cycle and I am around break even. I won't buy any more unless the lows are broken, if they are I buy more. I will hold in cold storage for the next couple of years. 100% Bitcoin right now, but I will switch some of that when I believe the accumulation phase is ending. But only 20-25%.

I will start to DCA out slowly once Bitcoin breaks 60k. Once retail starts buying hard like they do, when everyone starts to buy the crappy meme coins, I will start selling out harder. Retail tends to buy at just the wrong time, when everything is going great.

We saw around a x3.5 for this past cycle from peak to peak. We have seen diminishing returns as the asset class has grown and I expect that to continue. I would guess we see around a x2, which would be around $135k. Although anything between $80k and $180k wouldn't shock me.

I am not aiming to sell the peak or buy the low. Not realistic for an average Joe who doesn't study on chain data or delve deep in to TA. Just aiming to take a chunk out the middle.

[Edward64]

Another domino about to fall/fail?

https://www.cnbc.com/2022/06/29/coin...-thursday.html

Mark Lamb, the CEO of embattled cryptocurrency exchange CoinFlex, said that withdrawals will probably not restart on Thursday as the company initially hoped.

I don't get who would buy their token to help keep them afloat? Seems like the crypto version of Milken's junk bonds.

To fix the $47 million hole in CoinFlex’s balance sheet, the company is issuing a token called Recovery Value USD, or rvUSD, and enticing investors with a 20% interest rate.

[Edward64]

And this one.

The liquidation order comes after a high-profile notice of default: On Monday, crypto broker Voyager Digital announced that Three Arrows Capital had not made the required payments on a loan worth more than $665 million, paid partly in bitcoin.

[Kodos]

This is an interview by a couple of Canadian podcasters who talk about financial stuff. Around 25:30 their guest says: "Eight of the last Nobel Prize winners in economics have described the crypto phenomenon as a bubble..."

[Edward64]

Originally Posted by Edward64

And this one.

And another one

July 1 (Reuters) - Crypto lender Voyager Digital said on Friday it has suspended withdrawals, trading and deposits to its platform, days after the company issued a default notice to embattled hedge fund Three Arrows Capital (3AC) for the fund’s failure to make required payments on a loan.

I like this "cleansing". Unfortunately a bunch of regular folks are going to get hurt but think this will result in an overall better/stronger crypto environment in the near future.

[Hammer]

Originally Posted by Kodos

This is an interview by a couple of Canadian podcasters who talk about financial stuff. Around 25:30 their guest says: "Eight of the last Nobel Prize winners in economics have described the crypto phenomenon as a bubble..."

I think that's part of the attraction for the short to medium term. It does form bubbles, but to this point they have been predictable. Becoming over fair value and under fair value at times within the 4 year cycle.

These traditional financial guys did come out of the woodwork again in 2021, warning investors of the bubble. Of course most don't listen and buy the peaks. Just like they did in 2017. I expect they will in 2025 too.

The economists I have listened to believe that will not last forever though as the bitcoin halving will have less and less impact on supply as time goes by. This will lead to price becoming closer to fair value.

[Hammer]

Originally Posted by Edward64

And another one

I like this "cleansing". Unfortunately a bunch of regular folks are going to get hurt but think this will result in an overall better/stronger crypto environment in the near future.

I think regulations are coming now. The risk management of some of these platforms has been pretty poor. I suspect they will have their hands tied soon in the U.S.

I also think it's pretty unpredictable how this will come down on alt coins in general. Gensler has indicated Bitcoin will be treated as a different animal to the alts. Not sure how this will shake out. I don't see the point in owning alts right now. With macro clouds overhead, coupled with possible regulations the risk/reward doesn't seem there.

I suspect it will be a couple of years before the market has any real movement, based on price cycle history. Hopefully that will give plenty of time for the SEC to give some clarity.

[Edward64]

Originally Posted by Hammer

I think regulations are coming now. The risk management of some of these platforms has been pretty poor. I suspect they will have their hands tied soon in the U.S.

I also think it's pretty unpredictable how this will come down on alt coins in general. Gensler has indicated Bitcoin will be treated as a different animal to the alts. Not sure how this will shake out. I don't see the point in owning alts right now. With macro clouds overhead, coupled with possible regulations the risk/reward doesn't seem there.

I suspect it will be a couple of years before the market has any real movement, based on price cycle history. Hopefully that will give plenty of time for the SEC to give some clarity.

Care to share your gut feeling where bitcoin will bottom out over the next 2 years?

[Lathum]

A buddy who follows close said he thinks it will bottom at 12k.

[Hammer]

Originally Posted by Edward64

Care to share your gut feeling where bitcoin will bottom out over the next 2 years?

I don't think anyone can really answer that question. It seems to be tracking traditional markets pretty close right now. I suspect when the FED pivots we will go risk on and we will be out of the woods. Maybe 6 months to get through?

It could be that we have seen the bottom already. Equally a black swan event could put us under $10k. Just over 2 year ago we were under $4k when covid hit. Nuclear war could put us under $1k. But then who cares about Bitcoin.

I am prepared to lose everything I have invested. I won't sell no matter what.

My feeling is whether you buy at $14k or $20k it ultimately won't make a lot of difference when it hits $80-180k in 3 years. DCA in during 2022 and DCA out in 2025 is my plan. If in 2024 we broke $60k I would likely take my initial investment.

Like any company you invest in, no guarantees. The history indicates risk-reward that works for me, but each to their own.

[Edward64]

Thanks for your perspective.

[Hammer]

Originally Posted by Edward64

Thanks for your perspective.

No problem. Do you think you will buy some, or have you got some already?

[Edward64]

Originally Posted by Hammer

No problem. Do you think you will buy some, or have you got some already?

Don't have any yet but am thinking about slowly accumulating. Going to get a Ledger as a first step.

[Hammer]

I suspect we have time. I don't see any major runs coming any time soon. I guess if a huge entity entered the fray, either an Apple or a government, it could trigger major fomo. But probably unlikely in these uncertain times.

In real terms I am guessing there are only 14 million btc out there to be had. One day in the future, maybe 10 years, who knows, I think there is a good chance there is a battle for Bitcoin between major players. To have just a little skin in the game, even 0.5% of your portfolio makes sense to me. Even for a non believer.

You maybe lose the 0.5%. But equally that 0.5% could turn in to 10% or even 20% of your portfolio in 10 or 15 years. Has to be worth a punt.

[NobodyHere]

Originally Posted by albionmoonlight

Sorry about the size. This is a guy telling everyone to calm down about Celsius freezing withdrawals because it is probably just a liquidity crisis.

When a liquidity crisis is the good interpretation of what's happening, then you are several steps past fucked.

And Celsius has filed for bankruptcy

https://www.cnbc.com/2022/07/13/emba...rce-says-.html

[SirFozzie]

Personally, I think that the crash is going to be extended. Just the ripple effects across the industry as one provider after another gets hit by the after effects.

If I had to guess where Bitcoin bottoms out? 5-6K. I think the true believers can keep it at that price, but we've seen what happens when FOMO becomes fear of being stuck in.

[Edward64]

I wonder how much of the angst in the crypto world is adversely impacting the regular stock markets now.

[Hammer]

Originally Posted by Edward64

I wonder how much of the angst in the crypto world is adversely impacting the regular stock markets now.

I think it's the other way round. I don't think Crypto is big enough to wobble traditional markets, but traditional markets can wobble crypto.

I am sure there is angst amongst people who bought at $50k or those with money on Celsius or Voyager, but really the old hands have seen all this before. 80% drops are standard in every single cycle to date. It's just how the boom and bust 4 year cycle rolls.

I very much doubt we see single digit Bitcoin unless there is a world wide black swan event. A really bad Covid variant that forces world wide long term lockdowns might do it. To see $5k, 3 out of 4 would have to sell with no new buyers coming in.

But now we have seen how strong it can bounce back surely people will front run such a low price as its easy money. After the Covid dump crushed Bitcoin to $4k, and shortly after pumped back to $64k, I think people are too wise to sell at such low prices. You sell when it's high, not when it's low.

[Solecismic]

Isn't that the exact definition of market price? The price at which people are buying and selling a commodity?

People get in and out at different prices for different reasons. The extraordinary volatility of crypto reminds me of the sure-thing of doubling your bet at every loss, secure in your knowledge that eventually you have to win a bet. The flaw in that argument is that at some point after a rare losing streak, you can't cover your bets any more. And one flaw with crypto is that you don't really know the floor and the game could end at any time (or your "broker" could go belly up).

As for timing the cycles, it's so new that any cycle has such a low sample size that trying to define the cycle is meaningless. Might as well say that because the Chargers reached their only Super Bowl in Super Bowl XXIX that they'll get back after the 2023 season.

If you're diversified enough to want high-risk investments and you're younger and understand crypto is risk++, then by all means, put a percentage of your savings in crypto. But it's not quite money yet (and probably won't be for a long time, if ever) and there's additional risk in that there will be more regulation soon enough and that can be expensive and drive some players out of the market. It still feels very Ponzi to me.

[thesloppy]

Trying to tether crypto to any kind of reality is wishful thinking as far as I can tell.

[Hammer]

Originally Posted by Solecismic

Isn't that the exact definition of market price? The price at which people are buying and selling a commodity?

People get in and out at different prices for different reasons. The extraordinary volatility of crypto reminds me of the sure-thing of doubling your bet at every loss, secure in your knowledge that eventually you have to win a bet. The flaw in that argument is that at some point after a rare losing streak, you can't cover your bets any more. And one flaw with crypto is that you don't really know the floor and the game could end at any time (or your "broker" could go belly up).

As for timing the cycles, it's so new that any cycle has such a low sample size that trying to define the cycle is meaningless. Might as well say that because the Chargers reached their only Super Bowl in Super Bowl XXIX that they'll get back after the 2023 season.

If you're diversified enough to want high-risk investments and you're younger and understand crypto is risk++, then by all means, put a percentage of your savings in crypto. But it's not quite money yet (and probably won't be for a long time, if ever) and there's additional risk in that there will be more regulation soon enough and that can be expensive and drive some players out of the market. It still feels very Ponzi to me.

For me there is a clear divide between "crypto" and Bitcoin. Security versus commodity. If you are talking about "crypto", sure, most of the projects are garbage ponzi schemes that need regulation. 5% or so of alt coins have real potential use case and a fighting chance of going somewhere, but no doubt the vast majority are garbage. Bitcoin is not heading for regulation, "crypto" is - alt coins. The distinction between the 2 has been made clear by the SEC.

Compare Bitcoin to any blue chip tech company you can think of, I think it matches up well. I invest in Tesla, Google, Amazon, Nvidia. But I would take Bitcoin over any of them over a 3 year time frame. Because of its 4 year boom and bust cycle. I fully intend to sell the lot by Q4 2025, most likely a decent proportion before that, and then start over. The people that are getting burned are the ones that are not respecting the cycle. The cycle happens for a reason - the Bitcoin halving. A peak happened in 2017 and it happened in 2021 just like those in the field expected. Then it crashed in 2022 right on schedule, same as it did in 2018. That's a whole lot of coincidence right there.

People will tell you it's all a scam because they lost money. But the truth is they jumped in without doing enough research. Wrong projects, wrong time to invest.

More than anything it's important to make the distinction between projects. Just labelling everything "crypto" is like trying to make sweeping statements about all Nasdaq companies.

[Solecismic]

What is it about Bitcoin that lends itself to a four-year cycle? Are there changes in the release schedule? Something tying it to the World Cup or Olympics? How is it that this isn't public knowledge and the market itself doesn't immediately compensate with those in the know breaking the cycle by identifying its nadir and competing to invest at that time?

Why is Bitcoin any better than any other attempt at a controlled-release currency? How would one put together an exchange, necessary for validity in that most merchants would not accept payment in Bitcoin without some guarantee that it's not going to lose value? So far, some large companies have accepted Bitcoin, but seemingly as a marketing point. And large companies can accept some risk and get out if they need to get out.

For Bitcoin to be tied properly to the exchange of goods, a lot needs to happen. I can sell my products throughout the world using Steam. I can set different prices in Peruvian Sols, Polish Zlotys, Kazakhstani Tenge and even Russian Rubles. Or I can accept Steam's equivalents. But Bitcoin is not an option.

I appreciate your earnestness in this, and it sounds like you have a plan and can handle the risk. If one is to do this, you seem like you've got a handle on it. But I don't see it. I may appreciate the idea of buying in when people are getting out, but I don't see why it's not possible that the floor might well be the same $0 that existed when anyone could mine for it.

[Hammer]

Originally Posted by Solecismic

What is it about Bitcoin that lends itself to a four-year cycle? Are there changes in the release schedule? Something tying it to the World Cup or Olympics? How is it that this isn't public knowledge and the market itself doesn't immediately compensate with those in the know breaking the cycle by identifying its nadir and competing to invest at that time?

Why is Bitcoin any better than any other attempt at a controlled-release currency? How would one put together an exchange, necessary for validity in that most merchants would not accept payment in Bitcoin without some guarantee that it's not going to lose value? So far, some large companies have accepted Bitcoin, but seemingly as a marketing point. And large companies can accept some risk and get out if they need to get out.

For Bitcoin to be tied properly to the exchange of goods, a lot needs to happen. I can sell my products throughout the world using Steam. I can set different prices in Peruvian Sols, Polish Zlotys, Kazakhstani Tenge and even Russian Rubles. Or I can accept Steam's equivalents. But Bitcoin is not an option.

What lends Bitcoin to a 4 year cycle is the Bitcoin halving.

Essentially supply and demand. Unlike Gold and Fiat currency there will only ever be 21 million Bitcoin. Currently around 19 million are available with a further 2 million available to be "mined". More and more so using clean energy, I am sure you have heard the knock on the energy consumption. Every 4 years the amount of Bitcoin which the minors can obtain is halved, hence the term Bitcoin halving. Less Bitcoin hitting the market means a supply crunch of sorts which so far has dramatically influenced price after the halving.

So yes, there are changes in the release schedule.

I am not sure to what extent this is public knowledge? It seems to me there are a lot of people who have an opinion about Bitcoin without digging in to how it works. Even just spending 5 minutes reading wiki. Honestly it took 100 hours of youtube mainly, before I felt I had a grip. Equally people jump in and lose money. End up bitter and call it a scam. That opinion is then parroted across the internet.

What makes Bitcoin different? Largely because there is no CEO. Secondly because to this point it has been bullet proof. Every other project has someone able to influence it. Bitcoin has ran for over a decade without hacks or outside influence. Nobody knows who even created this beast. It is decentralised. All the other projects have outside influence from someone who can make choices and determine its direction.

Another key point is its scarcity. There will only ever be 21 million Bitcoin. Take projects like Avalanche and Near, they are increasing their token supply hitting the market by around 30% each year. This puts downward pressure on the price. Those tokens have to be bought before break even. Every project is different. Ethereum is getting very close to zero inflation and eventually is hoping to burn tokens creating a supply crunch. It's the second biggest project out there. But it has issues of its own and a CEO. It has promise but is in no way a competitor to Bitcoin. It is for a very different purpose.

The final point I would make is Bitcoin's future is likely not as a currency. It is more akin to digital gold - a store of value. Whilst the halvings are large and influential it would be more of an "investment" if played correctly, but it the long term the price volatility should decrease. There are numerous other projects that are faster and cheaper to use as a currency. Projects that could and should blow your paypals out the water. Instant transactions speed for less than a cent. But again, they have ends that need tying up.

Skipped over a lot of details, but hopefully it gives you an idea of the landscape.

[Solecismic]

As far as the cycle goes, if halving is something tied to the value of a single bitcoin, then investors have already priced that. As the percentage of bitcoin that's new and the number of miners decreases, then the power of that cycle in how it affects pricing will also decrease.

But the bottom line is that with the increased ability for people who can't mine or know nothing about mining to invest, then if it becomes a commodity in that sense, then the power investors will or already have eliminated the cycle-ness.

So, it's a commodity, in that merchants typically would not accept a fraction of an ounce of gold as payment for goods even though the accepted price of gold is far more stable than Bitcoin.

And its elegance in design and the security of blockchain make it theoretically something that could have value. We don't see stamp collections, which meet a lot of the same requirements for design, suddenly becoming investments. However, collectables often gain value for the same reason gold does.

Not really getting the green argument. If miners can use the inefficiencies of government subsidies for electricity excess caused by the extraordinary need for reliable backup for renewables (for which the materials costs, in non-renewable energy, are somehow ignored), then it's really the taxpayers who are paying these miners to use this energy rather than setting up shop elsewhere. And the nature of the halving means the energy cost of each new bitcoin doubles every four years. At least China finally kicked them out.

But the bottom line is that since it can't be a currency and it can't be used for most transactions and it's facing regulation and it isn't pretty like artwork or gold, then the entire argument for it is in the elegance of its design as the ultimate stamp collection. And all of us who had Betamax recorders instead of VHS know that elegance and quality often lose to marketing.

It has value as long as people agree it has value. You've made a good case that it is far less Ponzi-like than some of the efforts that have CEOs and rules that might change. But I will maintain that it is incredibly risky, even though the dollar is taking a self-inflicted hit because our government is printing far too much of it.

[SirFozzie]

The reason I think it's going to take a major hit to that level is going to be the continuing knock on effects.

Major Providers file for bankruptcy (which means that the value of existing bitcoins there do not belong to their former holders, but to the corporate debtholders. It's said with Celsius that the bitcoin holders are way behind in the priority to be made whole, corporate debtholders get paid first).

Celsius Bankruptcy Filing Shows $1.2 Billion Hole in Its Balance Sheet - Decrypt

This will cause a run on other places to get their bitcoins out before it could happen elsewhere, which will give the feds a reason to step in to highly regulate the industry, which will give people a reason to look elsewhere, which will just continue the cycle

edit: I hope to be wrong, mind you. we don't need a bubble burst to go along with this inflationary cycle.

[flere-imsaho]

I guess I'm confused - why would a coin "bank" filing for bankruptcy be a problem for currency holders? I thought the whole point of crypto coins was that a blockchain would establish ownership?

[GrantDawg]

Originally Posted by flere-imsaho

I guess I'm confused - why would a coin "bank" filing for bankruptcy be a problem for currency holders? I thought the whole point of crypto coins was that a blockchain would establish ownership?

I don't get it either. ELI5

[Solecismic]

Originally Posted by SirFozzie

The reason I think it's going to take a major hit to that level is going to be the continuing knock on effects.

Major Providers file for bankruptcy (which means that the value of existing bitcoins there do not belong to their former holders, but to the corporate debtholders. It's said with Celsius that the bitcoin holders are way behind in the priority to be made whole, corporate debtholders get paid first).

Celsius Bankruptcy Filing Shows $1.2 Billion Hole in Its Balance Sheet - Decrypt

This will cause a run on other places to get their bitcoins out before it could happen elsewhere, which will give the feds a reason to step in to highly regulate the industry, which will give people a reason to look elsewhere, which will just continue the cycle

edit: I hope to be wrong, mind you. we don't need a bubble burst to go along with this inflationary cycle.

This is all quite confusing, but more related to people doing stupid things with their money (like trying to make money based on its perceived value). People signed their cash/assets/crypto over the Celsius like they would deposit money in a bank. Celsius promised a high interest rate and then could use the deposited funds as a bank would use your money to make loans, investments, whatever.

The risk here was that since crypto banks are not regulated in any way. People were using Celsius as a form of crypto-investing, but they no longer owned whatever asset they were using to fund an account with Celsius.

Then, some of the cryptocurrencies went under - even one that was supposed to be "stable" based on the dollar. Unregulated, Celsius had no way of maintaining its business based on whatever remaining portfolio it had. And there's no FDIC protection for customers. So they had to tell customers that the bank couldn't let them withdraw their assets - interest or no interest.

With no relief in sight, Celsius finally sought bankruptcy protection, and bankruptcy courts will essentially regulate how that remaining portfolio is used by putting creditors in some sort of order. Customers who deposited assets probably are rather low in this order and can't expect more than a small percentage of what they initially invested.

Naturally, this is causing a run on other cryptobanks, which is deflating the value of the remaining cryptocurrencies as people rush to get out of the market.

I don't think this is a huge issue for anyone who isn't among the surprisingly large number of people who thought putting their money in cryptobanks was risk-free (as probably advertised). It brought in a large number of casual "investors".

In the long run, this might be good news for people like Hammer who have spent the time learning to navigate this world. But it all boils down to the fact that for an asset to have value, people must agree that it has value. How long can Bitcoin survive while there are all these copycats, some rather blatantly vulnerable to bad behavior of those running the show? What about the billions piled into the NFT trend, where you essentially get ugly digital pictures anyone can copy but only you can "own" and even use in new games? Just seems like another layer of potential abuse.

For Hammer, I think, having a specific plan that involves getting-out points with defined goals, yes, there will be people who can navigate this world for now and make a lot of money. But it's not investing as we traditionally think of as investing.

[SirFozzie]

Originally Posted by GrantDawg

I don't get it either. ELI5

Celsius Owes $4.7 Billion to Users But Lacks the Money to Pay

the "hole" (ie, what they have in debts minus their assets) is already $1.2 BILLION, and most of their assets are illiquid, meaning they can't convert it into money to make it whole. One Billion of their assets is tied up in their bitcoin manufacturing)

The terms of use that form the basis of the contract between Celsius and its users explicitly state that in exchange for the opportunity to earn rewards on assets, users transfer “all right and title” of their crypto assets to Celsius including “ownership rights” and the right to “pledge, re-pledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use” any amount of such crypto, whether “separately or together with other property”, “for any period of time,” and “without retaining in Celsius’ possession and/or control a like amount of [crypto] or any other monies or assets, and to use or invest such [crypto] in Celsius’ full discretion.” A version of this statement has been in every version of Celsius’ “Terms of Use” since 2018. And since 2019, the Company has been clear that it might “experience cyber-attacks, extreme market conditions, or other operational or technical difficulties which could result in immediate halt of transactions either temporarily or permanently.”

Unlike a bank, which is FDIC insured (because there's no way that these companies would want all the rules and regulations that FDIC insurance require, regarding liquidity, funds on hand, etcetera), in this case, the people who gave Celsius their crypto are unsecured, and thus way behind others in the line to be made whole as a result of the bankruptcy.

And most of its holdings is in it's own coin, which it can't really harvest to make folks whole, because the second they start to convert that, the price crashes.

My musings above is a worst case scenario (that the Celsius bankruptcy causes a run on other crypto as people look to secure their money in a different format, which just causes a continuing spiral). Is it a certainty? No. Is it likely? I dunno. That's why we pay financial analysts the big bucks (to screw up in a lot of cases), but I think it's a lot more likely then "Black Swan Event" likely.

[Hammer]

No doubt some more of these smaller exchanges could go belly up due to poor risk management. It really isn't a big deal. Only for those who had money on the exchanges. The big players hold money in cold storage. Retail only own a small percentage of Bitcoin, the smart money dominates as per normal.

Most likely worst case scenario is a wobble of some sort comes, which causes mining to become unprofitable for those miners with old school rigs, which means high overheads. They sell their Bitcoin, which could send price down in a hurry. But again, nothing we haven't seen before. As long as you don't lose your nerve and sell low it has always bounced back. I would just see it as opportunity like the Covid crash.

Have a read about Mount Gox. That was pretty much the only exchange back in 2014ish I believe. A few small exchanges going down isn't in the same league now the space has developed so much.

The only real killer for Bitcoin would be if the blockchain was hacked. That could kill it. The best in the world have tried and couldn't scratch the surface. But anything is possible.

Regulation can't really touch Bitcoin. You can walk down to the HQ of some alt coin in Chicago. You could stop the on ramps and off ramps in your own country. But you can't regulate Bitcoin. Anyone who wants to own Bitcoin with basic tech knowledge can still buy it whether the government makes it illegal or not. It hasn't stopped the Chinese.

As long as the Blockchain remains functioning as intended and intact I would suggest normal rules don't apply. Bitcoin lives by its own rules in its own world. Any superpower government can hate on it all they want, it isn't something they can control. That's the whole point of it. It an alternative to the system.

I wouldn't deny putting money in it is fairly risky, even if you understand the market cycles. But no more than most of the tech companies out there. Elon could fall out with China tomorrow and his most profitable factory would go up in smoke. Google could fall foul of regulation. How many big tech companies crashed and burned over the the past 10 or 20 years? I am sure we could pick apart most peoples favourite holding.

It's only 11% of my portfolio right now and I would happily go to 15%. But I would draw the line there. It is money I can afford to lose. For me, the risk of not holding at least some Bitcoin is too high.

[Edward64]

I understand miners have a breakeven point where its not feasible/desirable to continue mining so below news doesn't surprise me (nor the GPUs being affordable now and flood of used GPUs).

I do have a fantasy about setting up my desktop with my old 750ti in the basement to do some mining. I understand it's not cost effective with my crap setup/power used vs electricity cost, but would still be neat to do.

Anyone have a rig setup?

https://www.cnbc.com/2022/07/18/cryp...n-one-day.html

New data from blockchain analytics firm CryptoQuant shows that miners are rapidly exiting their bitcoin positions.

14,000 bitcoin, worth more than $300 million at its current price, was transferred out of wallets belonging to miners in a single 24-hour period at the end of last week — and in the last few weeks, miners have offloaded the largest amount of bitcoin since Jan. 2021. The phenomenon is called “miner capitulation,” and it typically indicates that miners are preparing to sell their previously mined coins in order to cover ongoing mining expenses.

Bitcoin is currently trading around $21,600, up about 3% in the last 24 hours. Still, the wider crypto market has been in a slump for months, with bitcoin down nearly 70% from its all-time high of around $69,000 in Nov. 2021.

Meanwhile, inflation is on a tear, and the cost of energy is hitting record highs as the war between Russia and Ukraine rages on.