I suppose the NASDAQ only lost 75% from Feb 2000 to Sept 2002. Granted, it got back to its 2000 peak 15 years later. My point is that even normal companies traded publicly, held by institutional investors, with government oversight, see large drops after an asset bubble. I see no reason why bitcoin ETFs establish a floor price.
The days of 80% "over night" drops may be over, but a bear market to wipe 80% off the market cap is not out of the question.
We aren't dealing with cs hobbyists, retail investors, and small nest eggs anymore, billionaire adoption is a game changer as Michael Saylor constantly points out...
Welcome to BTC cantillonaires with access to ~unlimited leverage courtesy of central banks.
All the billionaires in the world are worth 11 trillion dollars. How much are they realistically going to allocate to Bitcoin, to support a >1 trillion market cap?
Bitcoin is like gold in that it just "sits there", it doesn't do any work. If gold can drop 30% over a few months, despite all the pandemic fears, then Bitcoin can drop 80% for just not being that interesting anymore, compared to other assets.
The hardest, most inflation protected and liquid asset wins. Bitcoin.
>How much are they realistically going to allocate to Bitcoin, to support a >1 trillion market cap?
Bitcoins adoption example = make BTC just 1% of your portfolio, wait, that 1% is now worth more than the other 50% of your portfolio...you can guess what happens next if trend continuation is expected. Two words, "Ape In".
>Bitcoin is like gold in that it just "sits there", it doesn't do any work.
Lossless store of value is "work"...if your billion dollar nest egg in fiat is losing 10-20% per year due to currency debasement, assets that result in not losing that $200M aren't doing valuable work?
Bitcoin has a Number Go Up monetary policy and other properties that are unrivaled. Losing interest really isn't in the cards since this network is scheduled to start demolishing larger and larger central banks around the world and hoovering up value...
Bitcoin realistically isn't any more liquid than an ETF, you need to go through similar on/off ramps, and the tax considerations are also comparable.
> Two words, "Ape In".
"Ape in" can lead to "chimp out".
> Lossless store of value is "work"...if your billion dollar nest egg in fiat is losing 10-20% per year due to currency debasement, assets that result in not losing that $200M aren't doing valuable work?
What I mean by "not doing work" is that one Bitcoin stays one Bitcoin over time. A company can grow and pay dividend. Real estate has people working to pay for its rent. Currency debasement affects all asset classes, including stock and real estate.
Then the question becomes: Why would you put money in an asset that doesn't do any work? The answer is that you want to be decorrelated from certain risk. This is a fair argument for Bitcoin (or gold) in terms of portfolio diversification, but it's not a good argument for a large allocation.
The on and off ramps are heavily limited in ETFs. Bitcoin can be purchased/sold P2P without counterparty or exchange custody risk. Many ETFs regularly miss the inflation hurdle, all ETFs are not permissionless, and can go bankrupt. Also, have you ever tried selling an ETF at 2am on a Saturday?
>A company can grow and pay dividend. Real estate has people working to pay for its rent. Currency debasement affects all asset classes, including stock and real estate.
Real estate/company resale market isn't as liquid as bitcoin's and they are not immune from catastrophic failure, degradation over time, or agency related downside risks. Also, ever tried selling a $200M home/company on a Saturday at 2am?
For comparison, anyone can liquidate $200M of Bitcoin in 10-20 minutes and top exchange order books are thick enough to absorb that volume with little price slippage.
You are trying to separate the unique combination of properties bitcoin has and individually address them with an alternate asset. The real work you have to do is find an asset with all of the valuable properties mentioned, working in unison, that also wins the hardest money contest. Unfortunately, you can't and that's why bitcoin wins as a store of value, especially over a long time horizon.
TLDR Every asset is a shitcoin compared to "Energy Money" aka Bitcoin. Price action and growing depth of market proves that.
By definition, you can't exchange Bitcoin for dollars without counterparty risk. Technically you can exchange it over-the-counter or with some guy in a shady alley, but few are willing to do this.
> Real estate/company resale market isn't as liquid as bitcoin's and they are not immune from catastrophic failure, degradation over time, or agency related downside risks. Also, ever tried selling a $200M home/company on a Saturday at 2am?
True, real estate isn't as liquid, but compared to stock, you can live in it and may have some tax advantages. You can have stocks and real estate, you don't really need Bitcoin in the picture.
> You are trying to separate the unique combination of properties bitcoin has and individually address them with an alternate asset. The real work you have to do is find an asset with all of the valuable properties mentioned, working in unison, that also wins the hardest money contest. Unfortunately, you can't and that's why bitcoin wins as a store of value, especially over a long time horizon.
I'm looking at it from an investment perspective, because you are arguing that all the billionaires are going to "ape in". Bitcoin may have all these properties and still be not interesting as a large allocation. The "hardest money contest" doesn't matter, because holding money is not the point of investment.
> Price action and growing depth of market proves that.
Price action doesn't prove anything. Bitcoin can still drop 10+% in a single day.
If you can't see that crypto only raised because of covid and things related to that, you should really check the timelines.
We've been through this story already in 2017, when stores tried to adopt crypto payments and it was unsuccessfull ( square, steam, woocommerce, ... ). It went from 20 k to ~4 k.
Nothing fundamentally changed, payments with crypto are practically zero offline and online.
Some people just have some percentage in it, because they think of it as value store.
And if digital currency would be adopted by countries, they are not going to take any of the excisting ones, but their own variant.
Change my mind with logic reasoning :), not emotionally because you want to protect your assets.
2. With billions of institutional money and billions more waiting until ETFs in the US are approved, Bitcoin has something it didn’t have back in the day: a floor.
The days of 80% drops are over.