If $SPY was 40% up since last month, would that be normal? ETH is still currently higher than its value from April 19th.
Cryptocurrency market is extremely volatile. This isn't that far from normal.
EDIT: Ooops It is ~50% (258 in Jan 2019 * 1.50 = 380)
what on _earth_ do you think 6-7% a year is? that's exponential growth.
> SPY is up 50% since 2019 (pre covid crash). [...] Index funds aren't supposed to be nitro, they are supposed to be slow and plodding, and 10% annual is supposed to be huge. I think major indices should be nice, slow, inertial gains from ~6-7% annual, tops.
you've confused long-term averages with short term behavior.
the market gets its 6-10% annual by going up a lot when it does, to make up for the years where it goes down, or just moves sideways.
I think we can keep going for quite some time.
https://templatetraining.princeton.edu/sites/training/files/...
Really great short story
> what on _earth_ do you think 6-7% a year is? that's exponential growth.
It's not "large" exponential growth, it's inline with the revenue growth of many large companies, so it's sustainable for quite some time.
Wait, what? I don't see SPY below 250 for all of 2019. A 100% gain would be 500, but it's 406 now. (Its 2020 nadir was ~228, but it's still not up 100% from that.)
50% is high from a historical perspective but there are plausible explanations for why it's not absurd.
For SPY see UPRO, for QQQ see TQQQ.
If that's true then cryptocurrency is pretty much worthless to use as currency. A desired property of currency is to not have wild fluctuations in value on a weekly or monthly bases.
The confusion of treating an asset such as bitcoin as currency is it's fluidity - which is just a measure of how easy it is to convert currency into an asset and an asset into currency. Stocks, for example, have an extremely high fluidity, which also contributes somewhat to their variability. Real estate on the other hand has a very low fluidity (historically speaking anyway, today's market notwithstanding). No one thinks of purchasing goods and services with stocks, nor should you think of purchasing goods and services with bitcoin.
Viewed in that light bitcoin is actually something that's quite familiar: gold. It's digital gold. Now is it good to invest in such an asset? That's another question we can tackle on another day!
As a 1/4 Dutch person I can attest tulips hang around for decades doing nothing while being completely ignored.
https://fee.org/articles/tulip-mania-not-a-myth/
Plenty of financial records still exist from back then. Tulip bulb mania actually happened.
I agree. I used to think that this would decrease its value, but that hasn’t happened.
There are crypto pegged to specific currencies, like USD, but the transaction fees are so high that it’s still not useful to use as currency unless I have lots of really high transaction values.
I don’t have crypto holdings but, for example, since Tether is traded on ethereum there’s a $21[0] fee for any transaction.
This may be worse than the fluctuation problem since a $21 fee on any purchases wouldn’t work for me. Comparing the fees on using a check or cash, this sucks.
I suppose this gets competitive with visa/MC, if I assume a 3% fee, around $700.
[0] https://ycharts.com/indicators/ethereum_average_transaction_...
It's an investment. Detractors cite electricity usage, but overall it uses much less electricity than the traditional banking system. Also, the value of the second type of currency is only the value that people believe it has in their transactions, which is no different than the US Dollar. Since we went off the gold standard, the US dollar only has the value we believe it has. Part of that belief is that the US Dollar is rightly a bit more stable because it is artificially manipulated by the FED to control inflation.
The traditional banking handles thousands of transfer per seconds, and many many many more assets and assets types than bitcoin. All things that bitcoin is not able - nor designed to - handle.
It's like saying that F1 engine are consuming less gas than trucks. It's only valid if you only look at it from a very specific angle. Sure, in total trucks are consuming more than F1, but both in consumption per km and in versatility, trucks win. F1 engines are not ready - nor designed to - be a suitable replacement for trucks engines.
Bitcoin and cryptos consume order of magnitude more electricity than the traditional banking system if you put them in equal terms. It's only logical since one is supposed to work in zero-trust environments while the other doesn't.
No? A currency is a medium of exchange for goods and services.
The secondary meaning that you're attempting to allocate to "currency" is already amply described by the word "asset".
The two are not the same, and assets are not meaningfully regarded as proto-currencies in the way you suggest.
What? A painting is currency? A house is currency? No.
Paintings aren’t used as currency, they are used as assets or stores of value.
Similarly, diamonds are pretty rarely used to actually transact and are rather just asset stores. It goes cash->diamond->cash; not cash->diamond->something else.
Anything can be traded or bartered that doesn’t make it currency. Some cultures used beads and shells and stuff but don’t any more. That doesn’t make beads currency.
I think you inadvertently confirm OPs point. Cryptocurrencies with their volatility cannot replace regular currencies.
The irony here of course is that the only way that Crypto currencies would meet any standard definition of an asset would be if they were functioning currencies.
Going with Investopedia's straightforward definition "An asset is a resource with economic value", how is a non-currency crypto coin in any way a resource or possess economic value?
Exchange theory of value says that a commodity has two values: a use value (what it can do for you outside of the market) and an exchange value (what others will give you for it in the market).
I think it'd be correct to say that cryptocurrency has no use value, but it obviously does have economic value. And it's far from the only asset with these characteristics.
Simple. Bitcoin is an asset that is not used as currency but provides the holder with certain desired benefits and the asset can be liquidated if needed. Skepticoin is similar in that it provides a financial vehicle that possesses certain properties. I'm not saying it should be thought of as digital bitcoin but that it's like bitcoin, it provides value not only in its price tag but in some inherent property that provides value to the user.
Gold is 12T. Once Bitcoin gets to 10T, volatility should drop.
I'm long on crypto myself, but come on. This crash still affects the prices of goods and services, unless all you're buying is other crypto and nothing else. We are nowhere near the point where shops don't assume they have to check the bitcoin/usd cost every few minutes to adjust their pricing.
I also need water to live my life, but that doesn't make me feel the need to price everything in gallons of water.
Buy bitcoin at $1 on Jan 1, sell at $10 on dec 31. I now owe taxes on $9 in gains, so I’ll need USD$3 on April 15. If on Jan 2, I buy more Bitcoin at $10 and it drops to $6 on April 15 that will suck because then I’ll need to sell half my Bitcoin to pay taxes.
Here's a chart comparing various assets' Sharpe ratios over time, always for the previous four years. Bitcoin's is at top of the chart, staying over 2 and sometimes over 3: http://charts.woobull.com/bitcoin-risk-adjusted-return/
The lowest I've found is in this article, calculating over the past five years a Sharpe ratio of 1.6: https://www.forbes.com/sites/baldwin/2021/03/02/how-bitcoin-...
According to this, from 2007 to 2021 the Sharpe ratio of the Nasdaq 100 was 0.97: https://backtest.curvo.eu/portfolio/nasdaq-100--NoIgcghgzgJh...
And this gives a FAANG portfolio Sharpe ratio of 1.25: https://medium.datadriveninvestor.com/3-ways-to-evaluate-the...
In terms of absolute returns, TQQQ has done well but not so well as Bitcoin. Since 2016 TQQQ has done 12X, compared to Bitcoin's 85X. Since April 2013 (as far back as Coingecko goes) TQQQ has gone up 37X, compared to a Bitcoin's 272X.
As a bonus, Bitcoin has a long-term correlation with the S&P500 of only 0.01, according to the Forbes article linked above.
Not 20x, that’s a little more than 3x.
you keep using that word...
There are certain segments eg. travel where bitcoin/crypto has worked well for years.
When I talk with friends about BTC, it is about price because that is the interesting part. The fact that I used it to pay for something is just not interesting.
That's the business Coinbase is in.
Now, if you are using cryptocurrency for payments you don't need Coinbase.
PayPal, since you mention it, knows that cryptocurrency is going to make it's business model obsolete as soon as it is widely deployed. That is why they pretend to allow you to keep and use Bitcoin on their platform.
Dropping "currency of the future" does come with the challenge of coming up with a new supposed benefit, which is where "store of value" comes in. Problem is: there is no inherent value in bitcoin.
not really
Binance already has a credit card service that lets people use their cryptocurrency holdings to buy anything.
People dont have to talk about them as currencies because they just work
No different than cellular reception in an underground subway, you dont have to think about it anymore
Even these cryptos aren't being used as currencies per se. They're popular, sure, but they're popular because A) they allow traders to move funds between crypto 'investments' without converting to fiat (i.e. without triggering cap gains), and B) They allow investors to "avoid market volatility" (but in a manner far riskier than fiat, given that even DAI or USDT could go to zero tomorrow).
...but they're still not currencies. Nobody is buying a hamburger with DAI.
But they generally rely on individuals to report accurately. Obviously wage-earners arent used to that as their employers withhold money for taxes and report to the IRS so this crowd may find this new found freedom to be foreign and a chance to “get away with” something, but everyone else has lived in a world where they report their taxes voluntarily and accurately
Then again, I'm operating under the impression most people cheat on their taxes w.r.t cryptos
See "Q16. Will I recognize a gain or loss if I exchange my virtual currency for other property?" [1]:
A16. Yes. If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. For more information on capital gains and capital losses, see Publication 544, Sales and Other Dispositions of Assets.
Trickier in the sense that it requires more attention than simply recording the execution price and fees of a BTC/USD trade.
Only more annoying when you have to use an AMM’s info site and the chart isnt very granular or go back far enough. Pancakeswap’s info site doesnt even work.
So yes best to keep track at that exact time of trade
You dont have a way of quantify if people are tax cheats (as what you described does not prevent capital gains liability), stores of value, or buying hamburgers
Well that's not really true, it was headline news when Tesla started accepting crypto payments (and then headline news when they stopped).
Stores accepting crypto still makes the news, it's not common and not something that "just works." But what you can do is at least semi-reliably convert between crypto & things that stores do accept using the various conversions you listed. But you still do have to convert from crypto to a traditional currency to use it as a currency.
Your fictional higher standard of currency would say that the euro is not a currency because my transferwise debit card converts it to dollars when I spend in the US
The peer to peer payment mechanism works and all crypto assets inherit that
I was paying on NewEgg using their BitPay method, which supports payment with only the following cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Dogecoin, and 5 stablecoins (GUSD, USDC, PAX, DAI, and BUSD).
I have Bitcoin and could have paid directly with that, but I wanted to keep holding it and pay with Litecoin. So I converted that to USDC (for free, but I will have to pay taxes on the gains next year since every conversion or purchase is a taxable event in crypto in the US), and then sent that to Bitpay.
So yes, I still maintain I used USDC for its intended purpose.
I did, however, do what you said and liquidated some Ethereum to fiat several years ago (right at the previous bull run's top, by happenstance, got super lucky then) to pay for the downpayment on my home. I would have paid with it directly if I could but there was just no mechanism for it, at least not back then.
Hmm, yes it is different. Cryptocurrencies are very-very volatile. In the last weeks, it wasn't uncommon to have 25% change in either direction within 24 hours for most top currencies. Stocks are less volatile.
With that said, the current nose-dive isn't over yet, so I'm not saying there won't be a crash, I'm just saying that comparing stocks and cryptos sounds to me like comparing apples to oranges.
SPY is highly diversified though. The crypto market is known to move in tandem w/ BTC swings.
A 40% swing may seem large compared to SPY's usual 1-2% swings, but consider that other crypto coins frequently swing by 10-50%. For example, MATIC was up some 47% just yesterday. The reality is that crypto is highly volatile; it doesn't make sense to compare its volatility to ETFs or REITs or other conservative vehicles.
Some analysts were even expecting a correction, saying that a BTC drop to 30k would still be within expectations...
This results in outsized volatility, as it is still a developing market. 1T for a global currency is very small.
We'll see how it behaves at 10T.
By the diamond-est of hands: those who lost their keys.
Problem is: there's no way to tell the dead from the merely sleeping. The bigger the share of dark addresses, the bigger the impact of some "old god" dark address lighting up again. And the longer a "darkening deflation" goes on, the higher the impact of some old darknes wake-up would be.
PPS: obviously I have no idea about governance of the code, but I do acknowledge that very few changes have ever been accepted (as evidenced by the high number of long running forks). I wouldn't expect any of this to happen before the known alive amount of tokens has become a tiny fraction of the dark parts.
You could even conjure up an argument based on block chain "balance of hashrate" security, which I presume is the best type of argument with that audience: "what if, after mining rewards have run out, everybody is just doing value store? No transaction fees for those selfless miners! (will they still be called miners?) One by one they will close their datacenters, difficulty goes down and suddenly the gates are wide open for 51%. Quick! Introduce mandatory keepalive ping transactions or we are doomed!"
Not that I expect this to happen, but I find these musings far more entertaining than the ups and downs of the market.
Of course these are more hypothetical end game states than immediate threats (I think, I have no idea what fraction could currently be considered dark), but we can't just ignore theoreticals like that.
"Bans" are not going to do it. It was designed toward censorship resistance. That moves it to an underground, at best.
The top holders are not going to dump it - they've committed book value assets; mining companies, exchanges - they aren't going to exit.
For their continued existence to make sense they want more things to be traded in crypto, so they invent stuff like "NFT" and "DeFi". Half of it is crap, but I have been around long enough to remember when Wall Street was bullish on "3D Television". Investors always want angles to make their current holdings more valuable, and as of this moment there are far too many crypto projects to be aware of them all. The re-investment rate is huge. Far different from when a penny pumper puts out the "good news" that they have put their logo on a race car and have t-shirts available.
So as I see it, it's either not a Ponzi or everything is.
Nonetheless, what you posted was considerably worse. Please don't take threads in degenerate directions.
https://news.ycombinator.com/newsguidelines.html
Edit: we've had to warn you about this repeatedly in the past. It seems like you (mostly) improved for a while—that's good. Please do that instead.
For the record I:
(1) Bought during the 2017 run-up, and sold around $17,000 in early 2018, and parlayed that into various other investments that have done quite well. I've posted to that effect here in the past.
(2) Shorted CME futures at $56,000, and a bunch of Coinbase and a bunch of Tesla. That's roughly $100,000 USD per contract in profit - deposited directly into my SIPC insured FINRA regulated account with zero counter-party risk, 60% long term capital gains. Not bad for two weeks work.
You worry about your account, leave mine to me :) I'm talking about crypto on its merits, not its price. The merits of course inform my investment decisions.
There are tons of ways to make money on this planet, HODLing crypto is just one among them. I was addressing the question directly: why do I hate bitcoin? Asked, and answered.
But to supplement: the thing I hate most about crypto are the touts and the community.
Options, futures and commodities are zero-sum, because gains for one party are distributed directly from the other party's losses.
Stocks are positive sum because companies have earnings, revenues and profits. They use this income to grow the business, pay dividends or re-purpose shares. It's absolutely the case that you can get more than $1 out for each $1 put into share ownership.
Hope that clarifies the difference.
I was referring to the above. You are incorrect. I'm thoroughly enjoying myself, and this particular advocacy is making the world a better place.
Those silly Zimbabweans, Venezuelans and Turks, why are they losing their life savings?
Can't they just do smart things like you, and login to an SIPC insured account to short Bitcoin right at the top without any counter-party risk, while their financial advisors manage the rest of their portfolios? Duh.
It finally makes sense, you are from the "let them eat cake" camp.
I'm from the "don't tell them it's cake when it's a sawdust to pump your bags" camp.
[1] https://www.bloomberg.com/news/articles/2021-01-13/venezuela...
Stocks are extremely overvalued According to the buffet ratio
And bonds/cash will soon be completely worthless by the time the gov and feds of the world are done with them
Real estate is extremely difficult to buy and sell. Execution is hard.
There’s a desperate need for a store of value, now more than ever (gov of the world are abandoning their obligation of providing a stable fiat)
Do you see any better solution than crypto?
Pretty much any low volatility/world ETF or streak based ETFs (paying out an increasing dividend). If you trust nobody except yourself then get gold.
>And bonds/cash will soon be completely worthless by the time the gov and feds of the world are done with them
Actually, the worst thing that could happen to the US economy is that the USD goes up in value.
>There’s a desperate need for a store of value, now more than ever (gov of the world are abandoning their obligation of providing a stable fiat)
Why would anyone want to buy a "store of value" that is extremely volatile? You put in $1000 and you aren't unlikely to get $1000 back out, either you make a big loss or big gain. People love shouting that assets going up is inflation but when they go down nobody thinks "hyperdeflation".
>Do you see any better solution than crypto?
Even gold is better at the "store of value" meme than Bitcoin. People buy Bitcoin because it goes up, that's all there is to it.
I have a risk appetite so I keep my IRA in this [1]. Then, for taxed investments, I have a core portfolio of the stock from companies I've worked at, against which I sell covered calls. I sell futures options for passive income (not all the time, I'm sitting this move out, for instance). I carved out a chunk for my financial advisor to manage more conservatively.
NFA, of course.
Everyone is wiping their tears with dollar bills right now, very bittersweet.
Gold has some funny business with its paper holdings because of the way governments lend it out.
Also, maybe BTC is not like SPY but more like TSLA.
Would you consider being reduced to last month's price a crash?
If $SPY dropped 40% we'd all call it a crash. This isn't that different.
Also unlike the stock market, crypto is under the delusion of being a viable currency. If USD or Euro dropped even 20% we'd start questioning if it's a recession, much less 40%.