It is the sideeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeways I fear the most... that is the worst of the worst.
+1 Sideways sucks the most
Dunno, for traders maybe yes. For hodlers, down is most painful...
“Sideways” means low volatility; the extreme of sideways-ness is
price stability.
The theoretically ideal form of money is price-stable. Volatility only benefits traders, at the expense of everyone else.
There are several kinds of traders. some influence, some panic, some play big swings, etc, etc
All of those require price movements. Not price stability.
Profitable trading definitionally requires “buy low, sell high” (same for shorts in the reverse order). I think that mathematically, the only way to profit from “buying low, selling high” when the price sits still is to exploit some kind of a spread—either intra-market (market maker), or inter-market (arbitrage). Those types of traders attempt to minimize the relevance of price volatility to themselves—in the extreme case, executing (or
attempting to execute) risk-free trades with no exposure to price movements. Others need
volatility, for even a unidirectional price movement cannot bring them profit: If the price only goes forever up to infinity, or forever down until it hits zero, then the only way to profit without leaving money on the table is “buy and hold” (or short and never cover), not actively to trade.
If BTC could become price-stable,* then I would prefer that. The world cannot run on volatile money alone, nor on deflationary money alone. (Note to Jay: I am perfectly well aware that price-stable BTC will never happen.)
I doubt that it is good to be using the word "never" to the extent that it matters anyhow. We already should be able to anticipate that the larger the BTC market cap gets, the more likelihood for it to be less voilatile because the BIGGER the market cap, it takes more value to move it.
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That’s a rather simplistic monetary theory. I am under no illusions about a hardcapped currency with a static supply ever becoming price-stable.
* I mean price-stable according to an index of goods and services. That means rising against the dollar, as the dollar depreciates from inflation. The dollar is not price-stable; to the contrary, the dollar is a volatile currency. Have you seen dollar prices lately!? Not only the obvious increase in prices, but the fluctuations as markets adapt to price shocks.
You are a fucking goofball, sometimes. The dollar has had a pretty long stead of having quite a bit of stability (aka mostly lacking in terms of experiencing a lot volatility) .. of course, the dollar has been depreciating in at a very slow rate .. but it is not volatile.. and for sure, one of the concerns in recent times, is that its decline has started to increase in ways that are really difficult to hide and bordering on points of unsustainability - it's been a good run.. while it lasted.. but at the same time, the dollar is not dead yet... it is the strongest of the fiats, currently. There are possibilities to continue to milk the system another 5-30 years.. I am not sure if it can last that long, but the dollar is not dead yet... and we are lucky to have this life raft called bitcoin (I did not come up with such life raft term.. but many bitcoiners have been using such analogy)
I monitor street prices in dollars of some various real-world goods and services. The kinds that ordinary people would need to buy on a regular basis. Mass-market stuff, nothing obscure or having a niche market.
In the past six months, I have seen up-and-down swings of 10%, 30%, in the extreme case even 50% in apples-to-apples comparisons of the exact same SKU, etc., with the general price trend being
up.
“Price stability” means that ordinary people with ordinary needs can draw budgets of weekly, monthly, etc. expenditures based on more or less accurate predictions of how much things will cost.
If swings of 30–50% swings constitute “stability” in your book, who is the goofball?
Zooming out, the dollar has been depreciating
rapidly since the Nixon Shock. Look at a chart. Only by the standards of what some people deride as a “third-world country” could the U.S. dollar be considered to have had
slow depreciation. Only with very short-term thinking could it be considered to have had “a good run”.
Newsflash: INFLATION IS HIGH.* Surprise! Reaction: SELL THE DEFLATIONARY CURRENCY, TO BUY THE INFLATIONARY CURRENCY!
Makes sense. To the average “Bitcoin investor” nowadays.
This is the least problem with letting people think of Bitcoin as sort of like a stock.
* Assuredly much higher than the heavily manipulated CPI numbers show. What kind of an idiot believes the CPI numbers? The kind who reacts to high dollar inflation by spending more money (BTC) to buy dollars.
Hm? Your note goes to show that perhaps you do understand Gresham's law?
I understand Gresham’s Law perfectly well. Indeed, I even understand that it applies to currencies—not to stocks or to anything that can be treated like a stock.
I began before to write a long reply to your earlier long reply re the stock issue. No time for that now; I think that anyway, I have clearly explained why treating Bitcoin as “like a stock” is a horrible idea. If you disagree, please don’t argue with me: Take it up with the SEC. They’ve been cracking down on stock-like things that people try to call “ICOs”, “DAO governance tokens”, or “NFTs”; I’m sure they’d love to bite into a stock-like thing called “Bitcoin”, if they see people treating it as “like a stock”. Needless to say, I think that is ridiculous: Bitcoin is nothing whatsoever like a stock.
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