I don’t think we can say that it’s been through a crisis like the 2008 one. I’m talking about such global crises, where investors try to limit their losses and get out of the riskiest assets. My understanding of the current hype is that it’s still mostly speculation and nobody uses BTC as a store of value (unlike gold or maybe the Swiss frank) as its volatility prevents that. So I’d expect the money to flee it during the next global crisis, more so than e.g. stocks.
Most of us are probably there indirectly already because of indexes including companies such as MSTR (I think it’s in VT).
I would argue COVID crash was similar to 2008. Plenty of people panic sold equities during COVID “to limit their losses”. Many others who were leveraged (in equities) where their brokers margin called their positions. BTC acted like a risk asset, and GOLD did as well (even if people sometimes think of them as a hedge to stock crashes).
I do agree with you that it’s still mostly speculation, which is why I don’t mind putting a small sized bet on it and seeing what happens.
That is exactly what already happened in the past 2 major drawdowns:
S&P COVID drawdown = -36%
BTC COVID drawdown = -66%
S&P 2022 drawdown = -27%
BTC 2022 drawdown = -77%
Again, to me this means they are correlated. It’s all about liquidity.
True - It’s 0.03% of the fund ($300 for every $1M in VT), negligible (and not your keys)
Definitely every risk asset crashed during Covid . And so did BTC. However the only difference between Covid crash and older crashes was that the pain was not prolonged. If the Covid crash was not mitigated by govt, everything would have collapsed for a very long time and we would have had bad time across asset classes except bonds maybe.
I think BTC holders have shown great resiliency over the years going through all the crashes.
I think there are two types of BTC holders
those who actually are in long term. period. This group believes in BTC and have real faith. One can agree with them or not but it doesn’t matter.
those who are just trying to trade it and most likely love the volatile nature because it brings opportunities to trade
Most likely people who will get burned in any severe crash wouldn’t be long term holders. Just like any other risk asset, most traders would lose money but some who would make money will make the headlines.
I posted the blackrock paper earlier, but the thread becomes monster…
60d correlation is not that high. Thats why there is significant diversification benefit in a multi asset portfolio
No. Because they will need to spend it. Thats why fiat gets more concentrated over time, while bitcoin gets more evenly distributed over time.
Today the super rich dont have cash, actually they are mainly very in debt.
People with little savings who cannot invest in equities or real assets suffer, because they must have a cash buffer which continues to depreciate.
Just look empirically at countries with high inflation vs countries with very low inflation. Argentina basically destroyed itself from being the richest country in the world by too much government spent and loose monetary policy.
Well that’s assuming there’s no “final winter” that’d be a final period of stagnation at a low value. If the price of an asset keeps going through new ATH periodically, selling high and buying low is indeed a strategy for which you mostly pay the opportunity cost. But there’s no guarantee that this will last forever, in particular if countries end up with more regulation when it comes to cryptocurrencies, like China did, seemingly successfully. I don’t expect that to happen with the current hype, but I do think that’s a distinct possibility with the next crisis on the scale of the FTX one or bigger.
On average, the real loser is the average BTC investor, given that it has negative expected value (you get out what others put in, minus fees, since there’s no cashflow).
I don’t think there’s any evidence of that, actually I don’t think we can prove or disprove this. Maybe if all centralized exchanges had most of the BTC and would agree on publishing stats about this we could get an idea, but we’re far from there.
I don’t think we can say average BTC investor is losing money.
Their average cost basis is 25K and price is 93K. So average person needs to be in profit if they are long term holders .
Of course some have 10,000X returns and some have 2% returns.
I feel a bit like “Old man yelling at cloud” but anyway …
To my knowledge to this day the “Blockchain Oracle Problem” is still unsolved. I’d argue it’s impossible to solve but I’m happy to be proven wrong. Thus, somebody or something in the real world, that is corruptible, is going to judge whether you are a real person that gets a vote, or not.
This is almost meaningless. The only reason it’s not completely meaningless is “relatively” high fees incurred by sending around Bitcoins. But anyway, one address can hold BTC of multiple people (exchanges) and on the inverse people can have multiple addresses.
I wonder if this balance is something worth aiming for in and of itself. Do you not risk suppressing innovation with a progressive wealth tax and making everybody poorer? In the end you can’t eat money, it’s more like a mechanism to direct energy & attention towards what people find valuable and this kind of intervention might disturb those signals, leading to a misallocation of resources. You might improve the situation on paper while at the same time people are worse off in aggregate.
I don’t have the answer for that. I was merely saying that I don’t see Bitcoin as being able to fix wealth inequality / the “system” (if that’s what @stojano was referring to about his trip to France). If anything I could see it act similarly to the current system. For example, bitcoin backed loans from early adopters to buy up housing and other hard assets for example to keep the prices out of reach from the “average” person. Again that’s more of a political take so we don’t need to continue further in is thread.
Thanks! Although it’s all unrealized-gains as I don’t plan on scaling out of any.
Pretty sure that (freezing fiat) happened in Canada already during the COVID “Freedom Convoy”. I don’t think the protest was violent (although disruptive to the average city person), with likely a few bad apples causing some violence.
You’re talking about unrealized (paper) profits, I’m talking about realized profits. If all BTC owners sold now, they wouldn’t sell at 90k+ because the price would crash. But their sole profit is really through selling BTC (there’s no dividend), so their positive unrealized profits would turn into realized losses (on average).
The point is that there’s no (positive) cashflow, it’s not a productive asset, it’s a greater fool asset: all the money that one gets out of selling BTC comes from somebody else putting the money in, minus the fees. At any given point, people have overall put more money into BTC than they got out, and that started at the first BTC sold. Basically TOTAL_MONEY_OUTFLOW = TOTAL_MONEY_INFLOW - FEES.
The one argument I can see against this line of thought could be that, if we can always find a greater fool (the price keeps going up), the realized profits could always be positive, so it’s not that bad. A bit like a Ponzi scheme that would never collapse and would keep getting new members, and thanks to population growth, that would never be such a problem per se (I guess you could also consider certain pension systems for this analogy). But just like this Ponzi scheme would then have its growth constrained by population growth, in the long run, the flow of money into Bitcoin is constrained by the growth of the productive economy (which it can extract money from and which it’s not a part of). If you then add the negative part, the fees, you end up with an asset that will eventually have to grow more slowly than the productive economy, at which point it’s not clear for how long people would refrain from dumping it. So the losses would have to be realized eventually on average.
Please question the intentions and authors background of the opinion articles quoted in media.
For example this author is consulting the BIS.
He cannot be pro btc. It would literally make the institution obsolete.
Same is true for the famous 2 ECB employees which are quoted by FAZ all the time and are sooo wrong in their predictions it just gets ridiculous.
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