I like to consider my Bitcoins a sort of a hedge, and I was just wondering if anybody here can think of any others. I literally freaked out when the market crashed today, fortunately it came back. Next time I might not be so lucky.
You want to use something as hyper-risky as Bitcoin as a safety hedge? |
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The first sell of was in 2011 and teh big one was two weeks ago so obviously we're at return to normal.
This shit is going to fall hard within the next few days. Bitcoin hangs from the thread that is mt. gox. If anything at all bad happens to them, the whole market is fucked.
All the local people contacting me to buy bitcoins seem to think differently. And this is rural West Virginia, where 98% of people are still stuck 30 years in the past. MtGox isn't that important. That's even scarier and more consistent with a bubble. |
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we're going to fly right past 'normal' and overcorrect back into misery again. we've probably already departed from sustainable prices, at this rate.
Exactly. Press releases, hoarding, and, Mt Gox (who IMO does everything they can to 'cool down' any natural sell-off then blames it on dark forces because Bitcoin apparently never goes down unless there is a nefarious scheme), will produce bubble after bubble until people finally lose interest. There is no normal. If any of you really love Bitcoin, you don't want it to go up like this day after day...... |
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I was talking with my manager today about Bitcoin. This is a man that trades commodity futures at 75-100x leverage. And he thinks I'm insane.
Only the most extremely high risk pools will be investing here yet, IMO.
Yes. |
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Basically, they are playing roulette.
Or the lottery. Any spot on the Roulette table has vastly better odds than Bitcoin, IMO. Ok. But if you believe that everything below 1000 $/BTC is a bargain then it is more important to enter than to enter at the perfect time.
I do not believe this. |
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I agree for normal markets but bitcoin has such a great potential upside that I do not dare not to be a part of it.
It's more difficult in any market that is manipulated (by Gox or other forces). IMO Gox does everything to keep it up (cools off the sell-off) and there is no easy way to short, so this certainly makes TA difficult. I believe it still works. The same patterns present themselves over and over....for a reason. I do not think Bitcoin is magically immune from regular market forces and crowd psychology. And with the extreme lack of solid fundamentals other than overblown press releases, I contend that TA is often the only thing we have. |
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The fact that this is even being debated says a lot more about the credibility of you all than it could ever say about the veracity of technical analysis.
I'm not a professional trader but am involved in the capital markets. Many use a blend of fundamental and TA (e.g., fundamentals to choose the asset and technicals to enter the trade). Some choose one or the other.
Algorithmic trading is a $trillion industry. Fully systematic programs account for $billions upon $billions. Discretionary fundamental programs account for $billion upon $billions as well. In some asset classes (e.g., managed futures), fully systematic programs are preferred by institutional investors because it prevents style drift.
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A list of believers in technical analysis.....and the fortunes amassed due to their use of technical analysis.
James Simons aka the “Quant King” – $11.7 Billion
Ray Dalio – $12.5 Billion
Steven Cohen – $9.3 Billion
Paul Tudor Jones II – $3.6 Billion
I could continue...
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You're right, USD-BTC-USD is not ideal. But as a merchant, you only have to worry about BTC-USD, and bitpay can handle that for you at 1%. Much cheaper than credit cards with no fraud risk.
True, I cannot disagree. It's much easier finding merchants to accept Bitcoin (through BitPay, which means they accept USD and not Bitcoin) than it is to get the general population to transact with Bitcoin. There is a large foreign exchange risk in holding BTC simply for the sake of transactions. Right now, only investors hold bitcoins and they sometimes use them for transactions. There is a massive segment of the population that will never invest in BTC. That segment does not have an incentive to buy BTC simply to make intra-border transactions, so for most people it would be a USD-BTC-USD transaction. It's a lot to ask to someone to become an investor in Bitcoin and subject them to enormous foreign exchange risk simply because they want to make transactions in a way that might save them 1% if they are lucky..... The spread is still relevant because at some point every investor had to purchase BTC, whether at $2 or $266. And imagine if the USD was so volatile relative to consumer prices that one had to essentially become a forex trader to make everyday purchases because that was the only way to maximize purchasing power. |
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1. cross border transactions- faster/cheaper than cash or digital fiat
2. internet transactions- faster/cheaper than digital fiat
3. person to person transfers- faster/cheaper than digital fiat
4. in person transactions- equivalent to cash, cheaper than digital fiat
Care to give me one example of bitcoin not being portable? In physical locations where it is accepted, bitcoin is just as easy to use as cash.
Agree with #1. Agree with #3 & #4 if sender already holds Bitcoins but not to purchase BTC simply to make transfers within the US. I hate Paypal, but one can send money transfers (not purchase related) free of fees for both sender & receiver. If one already holds BTC as an investment, it makes sense to make intra-border (US) purchases and transfers. Disagree with #2. Because of Bitcoin volatility, 99.9% of merchants can only accept it through BitPay. This will likely never change due to foreign exchange risk. BitPay charges 1%. The spread to purchase BTC is usually 0.5% to 1% and much higher (5%) during period of high volatility. The merchant price through BitPay must account for spread. So all things being equal and assuming instantaneous transactions, the USD-BTC-USD transaction would cost 1.5% to 2% at the minimum. And this doesn't include the substantial foreign exchange risk assumed by the purchaser, which could certainly dwarf a CC fee in a matter of seconds. One case for USD-BTC-USD is for very niche, privacy related reasons that likely involve international sites (gambling, etc). |
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Hey bulls I now have cheap tulips, gold, beanie babies, 1/4 acre lots on the moon, credit default swaps, Enron stock, and some great tech stocks trading at pennies. You better get this stuff while it is cheap or you will be very sorry soon my friends.
Oh crap I forget bulls only like to buy up a lot when the price is super high, on second thought I'm charging an extra 1000% markup on all.
Trade? Peanut the Royal Blue Elephant (Beanie Baby) for my weekend home in Ordos, my entire MF Global stock holdings, an ounce of Rhodium, and I'll throw in two bitcoins to sweeten the deal. PM me if interested.... |
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Yep. That's what I keep telling people, but nobody gets it: Bitcoin is a risk asset. It's not a deflation hedge and an inflation hedge at the same time. It cannot be both. I heard the same arguments about gold but it's finally really starting to crack with the emerging deflationary pressures. It "sounds logical" that Bitcoin would be a disaster hedge, but actual historical trading activity clearly identifies it as a risk asset. That's why it broke out in a parabolic move as stocks made record highs, not while stocks were falling - i.e. people buy bitcoins when they're euphoric, not when they're fearful
I never imagined Bitcoin was a safe haven asset because it is too unstable, speculative, & risky as well as primarily a non-institutional, non-HNWI asset. I didn't think it would be negatively correlated, but I did think it would be somewhat non-correlated in a similar vein to managed futures (vaguely, but hyper-beta vs alpha). What you are saying makes perfect sense, though. I need to dig into this....have you looked at corr of different periods? Thank you, btw. |
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on log scale I get 0.8302335879 as the correlation coefficient, which is pretty decent
That's an extremely high correlation......ridiculously high. Wow. |
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I'm still holding short on the sp500, so far that position has worked out very well. Btw I finally ran a real multi-year correlation study on sp500 and bitcoin in bloomberg software and it came out positive... No surprise here as that's exactly what I've noticed since the earliest days of bitcoin (yet for some reason people argued angrily against the notion that stocks and bitcoin could possibly be correlated! I'll give you a hint though: they are because they're both risk assets and are driven by the same social cycles of greed and fear. It's all psychology...)
I need to rerun it though on detrended data
Enjoy,
BA
Very interesting. I assumed it was non-correlated but I can see that there are reasons that it would be correlated. Can I ask you what level of positive correlation you found? I have been meaning to do this but haven't found time to manually account for monthly BTC time series. |
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I found that they really interested in bubble growth. They do their best to not allow panic sells.
Exactly. |
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And one reason I mention HNWIs as an important would-be driving force is because Tradehill & Coinlab are currently limited to accredited investors and businesses. http://www.investopedia.com/terms/a/accreditedinvestor.aspI do not know many (if any) accredited investors that would consider Bitcoin a serious option without some level of regulation, accountability or, at least, low volatility. |
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You need only look at what bitcoin does better than anything else: 1) send money at almost no cost anywhere in the world, 2) resistant to attacks (whether by government, inflation, hackers, etc).
So yes, there absolutely *is* a reason to pay for something in BTC that is available in USD. It is 2% cheaper, at least in theory. Merchants accepting BTC do not have to pass on 3% credit card fees to their customers. They may anyway, since currently almost no one offers discounts for cash.
Cheaper in theory, but not in practice.....and much more time consuming. Merchants pass on the 1% fee that Bitpay charges and the customer is also liable for the foreign exchange risk in USD/Bitcoin. I see a reason for investors in Bitcoin who already hold coins to make purchases with their coins. But I do not see a broad need for making intra-border (US) transactions to convert USD to BTC to purchase something that will be converted immediately back into USD because the merchants cannot handle the exchange risk. EDIT: This doesn't even include the spread, which is routinely 0.5% to 1% or much more (5%+) during periods of high volatility. Merchant prices for BitPay must account for current spread. So, if the entire transaction (USD to BTC to USD) was instantaneous.....1% fee from BitPay plus current spread of 0.5% or 1% is already 1.5% to 2%, minimum. This doesn't even include foreign exchange risk, which can be quite substantial, and the value of the additional time it takes to make these conversions. EDIT 2: 99.9% of merchants cannot accept Bitcoin without BitPay because BTC is a volatile investment vehicle and merchants would not be willing to take on the foreign exchange risk. |
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I think something that will have to happen for any sustained growth will be thousands of people beginning to take a large enough percentage of their salary in bitcoin such that they will be spending some of it each month.
Perhaps. If that is the case, then IMO the likelihood of success is even lower. |
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Who cares? Bitcoin is not going to be used by people living in mud huts in Africa. For now, bitcoin is for tech-savvy people. It will get easier to use but there's a limit to how far it can penetrate, for the foreseeable future. It doesn't have to take over the world all at once.
But its strength is transnational transactions. There is no reason for a tech savvy person to go USD to BTC to USD to pay for something in the US that is available in USD.....unless, of course, that tech savvy person already holds bitcoins as an investment. So, its transactional use within the US is subordinate to its use as an investment vehicle, although the press releases that highlight its transactional use serve to push the price higher as an investment. It doesn't have to take over the world.....but it sure is pricing in a lot of premature success. |
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