Either way, you personally benefit from belief in Bitcoin and crypto being generally positive, which has implications for your objectivity even if well meaning.
Just wondering as I'd have thought a "peak" is only evident in retrospect?
Then, one or twice a year, you an reallocate assets as they drift away from the ratio. Doing it too often is detrimental, so my guess is once a year is "enough", and may be keep an eye on any fluctuations and if it grows bigger than some threshold, you do a second rebalance.
Let's say in 2021, crypto had a huge bull run, and went from just being 10% of your allocation to something close to 20%. It makes a lot of sense then, to sell the 10%, and rebalance back into the other assets you hold.
Progressive selling on the way up is emotionally very hard to do, as it feels like you're losing money whilst actually being in profit. It's tempting to fully ride the top. Don't.
Next, when the inevitable crash comes, you're uniquely positioned to buy in heavily as you have the dry powder to do so. This too is emotionally hard as everybody is fearful, "blood in the streets". Here too you can progressively buy in rather than try and predict the bottom.
This strategy only works for things that bounce back, which is not true for almost every altcoin or shitcoin.
You can also take permanent profits. Once I made my first significant profit, I took out my initial investment so that effectively I'm in crypto only with profits. I could lose it all and whilst that wouldn't make me happy, it wouldn't truly affect me either.
At the end the only experience I got is that I’m still a bad trader, and I won’t do it :)
> Just an example last year I had a target of $150k when it was at $50k, and also (like most people) I got a BTC based loan (it made sense for tax purposes as well).
That doesn't sound like a good idea in the middle of a bull run and everyone being in profit on Bitcoin when it was at $50K last year or even $69K. I have a different strategy - taking profits and taking advantage of the hype.
It's better to get in when the market crashes so that you can buy it significantly lower, (Like say <$10K) and sell some of it during the height of the euphoria, than it is to enter when everything is going up and end up bag-holding and waiting months, or years in an unrealised loss for it to go back up again.
Hence being against anyone jumping in at >$60K last year [0] and warning another person about DOGE going all the way up and bag-holding it at $0.6; thinking that it will go to $1 by August. [0]
Anyways, Good luck with your strategy.
The people who bought in at around >$40K and higher just did that and are now bag-holding in drawdown.
> PP got a loan at 50 which is a bearish trade, halfway to shorting.
Well no wonder they received multiple margin calls when the smart traders were taking profits or shorting from >$60K with him ending up on the wrong side of the trade or entering at higher prices and holding into unrealised losses.
Financial instrument trading is always gambling. Imvesting is what it's not.
I also sold most my investments in January because I wanted to buy a house. Moral of the story: be a lucky bastard like me
I believe crypto doesn't need to "go to the moon" to succeed. If bitcoin hit a stable price of 1k it still works. If I were to make another play in the crypto space I'd probably do something stupid like buy 32 eth & stake it in eth 2.0
Or 4.75% running it yourself, & figuring out how to run a validator seems more fun than handing coinbase your funds. I strongly disagree with people having their crypto held by third parties
Was just mentioning it in case you (or someone else on HN) weren't aware it was an option, but clearly you are.
The meltdown in cryptocurrencies is raising alarm about the future of digital assets — or is it?
Fears over soaring prices and slowing economic growth have sent investors fleeing from risk assets, notably cryptocurrencies. In the latest Exchanges at Goldman Sachs, Mathew McDermott, global head of digital assets at Goldman Sachs, explains the drivers, evolution and the outlook for crypto assets and the broader digital assets ecosystem.
Recent volatility underscores that crypto assets are still an emerging asset class with a large number of retail participants, McDermott explains to Exchanges host Allison Nathan of Goldman Sachs Research. “The move so far has been correlated to the broader macro market moves,” notes McDermott, who points out that nearly every asset class with discounted cash flows has been hard hit by inflationary pressures.
Blockchain, crypto and digital currencies are gaining broader acceptance among investors, companies and institutions. “Maturity across both the market participants and the infrastructure has given not only confidence to many different institutional sectors, but also has enabled many more traditional traders to really look forward in how they trade this marketplace because of this maturity in the product suite,” McDermott says.
Venture capital investments in digital assets are surging. While valuations are pretty high, there continues to be “high levels of interest because people continue to see exponential growth opportunities and are keen to deploy that capital,” says McDermott. “I think valuations have got a little out of kilter, so perhaps we'll see some more sensible valuations in terms of investment opportunities, too.”
If you follow that reason then it's rational that there are crashes after peaks (cashing out), and it's still rational that it will keep rising to a point that it reaches its true value (whatever that is).
The peaks and troughs will flatten out as that happens.
Could well all be wrong. But so far that seems to be the pattern.
Don't ignore the possibility that its "true value" is (or becomes) zero.
I guess it will crash to zero when governments start rolling out their own and declaring illegal all the other cryptocurrencies.
Bitcoin solves one single problem of "digital cash" with the most robust and boring mechanism (known to mankind so far).
While the "cryptos" aim at satisfying demand for all sorts of p2p apps and moneymaking schemes that can be funded with the digital cash to avoid getting regulated out of existence.
There are new algorithms in late research phase though for much larger payments (like $5000) that are expected to go into production this year. I’m waiting for that before switching to using lightning network.
For people in the US though they can just go into a Walmart or McDonald’s and use it right now.
Am I right to assume that "use" here is in the same sense[1] that you can "use" "dollars" to pay your Big Mac in Paris with your US credit card? I.e. French McDonald's does not set the price in dollars but euros and does not need to touch dollars with a ten foot pole during the whole process and receives euros in their account?
[1] Which hardly makes any sense to me, to be honest.
Regarding hotels and flights, I book it on internet, and I don’t even know which country the travel agencies are located, and I don’t care.
> It does not make sense (to me) to say that you use dollars to buy a big mac in Paris. You use euros, which your credit card company conveniently bills from you as dollars.
I see your point. To be more precise I use the MasterCard payment network that uses a combination of Mexican Peso, USD, and EUR in the background to settle with the merchant’s bank periodically in the background (and as I use Revolut based Mastercard, it’s even more complex).
Last month the biggest POS company integrated the lightning network, an international payment network protocol, that uses Bitcoin as its settlement currency and Bitcoin network using Strike, and as the POS company does the settlement with the credit card company, the merchant in practice doesn’t see the difference between accepting credit card payment or lightning payment, as it doesn’t handle any of the two (the POS provider handles them).
What's the significance of that $100 dollar amount with the lightning network?
oh yeah, & this: https://www.youtube.com/watch?v=0BZoKH-hX_o
but yeah, bitcoin has no utility. you'd just have to wait until The Merge inevitably occurs, or use any of the few PoS cryptocurrencies that are generally better & more capable than bitcoin in every capacity, like Avalanche, Cardano, Fantom, Solana, etc.
Its volatility and UX, as well as how negatively it is perceived currently (by some people) look like bigger blockers to me.
Lightning will definitely not solve it.
edit: tps -> transactions/day
Lightning is a way of using bitcoin. A way of cooperatively creating bitcoin transactions with multiple parties, in such a way that you can minimize the number of on-chain transactions required. It is bitcoin. It has the same security model as bitcoin. It uses the same technology. It is not in any way centralized (it's a p2p network of payment channel connections, with each operator running their own server).
Even worse, if you saw my transaction, then sent me 1BTC worth of goods, then your node becomes offline and I forcefully close the channel with the original balance, I still have my 1BTC and there is no proof anywhere except your node that the transaction ever happened. So no security, unless both nodes are online.
Finally, unless you open direct channels with everyone you want to transact with, you will rely on a 3rd party node that does have such a channel. In practice, this likely means you will use one of a few major nodes that you trust to stay online and not refuse transactions, so the payments are in effect highly centralized.
A system that validates new entries into a database can either be "very cheap and very fast" or "very fault tolerant and very decentralized". The speed of light in networking and the speed of modern CPUs make this unavoidable.
Which that is not Bitcoin and neither is it on-chain.
The parent comment is correct on Bitcoin's failure as a peer-to-peer electronic cash system and all it is instead, is a store of value. This is how you know it has failed in its intended purpose.
That competes pretty well with many bank transfer methods, especially international, which still take many days and cost sometimes $20+.
Not to mention that Bitcoin is so volatile that the transaction's value in real-world currency may be 10% higher or lower within that 24-hour window, and of course you still need to pay someone to convert it into money if you're not planning on being a crypto holder.
I haven't paid anything for international transfers within the SEPA area for years. Depending on the source/destination bank, the transfer can be completed within an hour or so.
Sometimes the solution is simply better banking infrastructure. The banking/payments system in the US is a mess but it doesn't have to be so.
Bank transfers do not cost me and happen instantaneous, not 24 hours.
I can also transfer to the US, and they receive it in 24 hours. It still doesn't cost me.
Right, e-banking is crypto.
The field of Speculative Blockchain solutions is a tiny part of crypto. But your examples sound like they either are or anchor to speculative Blockchains so Bitcoin is the leading implementation of infrastructure for your examples.
This is not true of normal investments. For example the dollars you get from selling McDonald’s stock 30 years after purchasing it come from people buying hamburgers.
The fact that there’s no such mechanism with Bitcoin demonstrates that it’s not actually an investment at all.
So when you get your profits out who will have given them to you, and what’s their story?
People invest and trade in gold. Which effectively means "gold paper", you don't physically own the gold. In fact, there's 4 times more paper gold than actual gold mined. This type of gold isn't productive. It's not going to be used to make jewelry, it doesn't even exist. It's just a number on screen and a shared belief that it has value.
To a degree you can extend that idea to stock. Sure, you can consider Apple stock to be "productive", as they make desirable products. Explain to me then how stocks are so volatile? It's because the value of the stock is largely believe-driven.
It's all just a bunch of numbers on screen. And they're all investments, regardless of personal opinions on actual value.
Apple stock on the other hand takes raw materials like people and chemicals and produces computing devices that are extraordinarily useful. That transformation is the definition of production. The stock value is a NPV calculation of the future earnings of that productive enterprise, which is the interaction of expectations of the enterprise as well as a guess what the cost of capital will be, iterated over many years into infinity.
Just because of the math involved and the iterative nature of the calculation tiny changes in expectations can cause large present value changes, but that isn't really material to the general concept of the enterprise as an ongoing means of producing new, novel, value in the world.
So from money someone else put into this whole hamburger thing and won't get it back?
> For example the dollars you get from selling McDonald’s stock 30 years after purchasing it come from people buying hamburgers.
Some dollars not all, and most likely bot even the most.
So the Bitcoin doesn't have this merchandise based mechanism for sucking the money out of the rest of the economy, so what? Only a part of the cash of the investors comes from it anyways. The rest comes from other investors who gambled wrong. Same as with Bitcoin.
Your argument is just a version of intrinsic value argument tgat crypto bros dismiss with a wide smile.
They got a hamburger and ate it. People need food.
I’ve been holding Bitcoin since 2013, and this 50-60% retracement from the all time high was nothing compared to what I (and other people) were living through. I advise people to look at past volatility of Bitcoin before making an investment decision.