rpietila Wall Observer - the Quality TA Thread ;)

[Wary]

The main reason that people renounce United States citizenship is that the United States is one of only two countries in the world that levies income taxes on the basis of citizenship. They also coerce financial institutions around the world in order to enforce this tax collection on their customers. One of the results of this is that being a United States citizen makes a person persona non grata when seeking financial services in many parts of the world. Both of these reasons provide a powerful incentive for ex pat United States citizens to renounce their US citizenship.

How ironic that the main driver for 'the colonies' wanting independence was freedom from taxation.

lol I love the irony. Unfortunately there are no new continents left to flee to to be free of taxation.

There is still the Ocean.

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[NotLambchop]

... There is still the Ocean.

Gentlemen!  Time for thinking outside the box.  Consider Galt's Gulch The Principality of Equestria!



Stable, sovereign, and prosperous.  With nice friendship and magic--not rotten taxation.

*Investment opportunity--lots going fast!!1!  Send money NOW!

[AnonyMint]

IANAL, but I think what you did is referred to legally as relinguishing your citizenship, as opposed to the more formal procedure of renouncing it.

The US does not charge people who relinquish either, but renouncement is a formal procedure with a lot of paperwork and bureaucracy involved, so there is a fee associated with it.

It's not clear to me why some people choose to renounce - it is pretty much irrevocable, as well as more work, and much more expensive - but there must be some legal reason why some people go that route.

http://www.nestmann.com/relinquish-or-renounce

The officials apparently made no effort to determine if the targeted individuals had renounced—or merely relinquished—their U.S. citizenship. In addition, the State Department  lumps any U.S. citizen who expatriates into a single category, which it calls “renunciants.”

These facts make the distinction I’ve made between renunciation and relinquishment largely irrelevant. As the procedure for renunciation is simpler, and removes any question of intent, I no longer see any reason to avoid this option.

Meh. It is still slowly dropping.
This is what I think. End of January 2012. With the difference that blockchain reward halving is 2 years ahead not one year ahead.



So what? I have been wrong in the past.

And still ain't selling any.

So 6 - 12 months to go before seeing significantly higher prices, while downside remains. Thus risk vs. reward says to move some to cash now if you may need to cash out before 12 months.

Interesting, EuroTrash! Do you think that the fact of the reward-halving still taking some time plays a big role or not so much? It's an interesting approach nevertheless, though. We may very well be in for quite some sideways movement now... Which is still better than tanking to $100 in my books!

Thanks! I think the fact that reward halving is so far away in the future will slow recovery down. But not much.
IMO no way we are tanking to $100, because of this:



400s or even 300s are possible 'tho.

Similar pattern existing in 2012. Price didn't move up.


I could be entirely wrong, but I see a lot of downside risk as the BTC chart looks like silver's peak in 2011. I don't see any possible earth shattering great news on the near-term horizon for BTC. So the upside is very limited near-term yet the downside risk is palatable. Ecuador, New York, China, and many other jurisdictions are in the process of making Bitcoin essentially illegal. Bitcoin mining, development, and foundation is entirely centralized. I warned about this several months ago at $600 when I warned it would bottom at $350 (and then it did) and be stuck in a much slower log-logistic adoption rate, not the much faster logistic.

[oyvinds]

I could be entirely wrong, but I see a lot of downside risk as the BTC chart looks like silver's peak in 2011. I don't see any possible earth shattering great news on the near-term horizon for BTC. So the upside is very limited near-term yet the downside risk is palatable. Ecuador, New York, China, and many other jurisdictions are in the process of making Bitcoin essentially illegal. Bitcoin mining, development, and foundation is entirely centralized. I warned about this several months ago at $600 when I warned it would bottom at $350 (and then it did) and be stuck in a much slower log-logistic adoption rate, not the much faster logistic.

http://btccharts.everdot.org/commodities/silver_8y.gif

This "market", and any market, needs BULLS to get in there and buy and keep buying for the market to move up. This is specially true in regards to BTC. I do not see anyone in their right mind looking at the daily thinking "I'll invest millions in this thing because the risk/reward looks so attractive right now".

The same is not true for the market to move down, any market will grind downwards as long as there is no buying pressure. This is specially true here due to the constant drips from miners and merchants.

The only really bullish factor BTC and LTC has going for it right now is the sher amount of shorts. Right now we are talking 8,356.52 BTC and 142,122.51 LTC at Bitfinex alone, see http://www.bfxdata.com/combined/btc.php for details. Now, you may assume that this means we will get a short-cover rally to the moon. Check out the 6 month graph if you believe this is true and notice that when shorts peaked at around 10000 BTC short the "market" actually went from $530 to $400.

The similarity between silver and the daily chart for BTC, LTC and DOGE is staggering.

[SlipperySlope]

Here is the most recent 7-day moving average chart of adjusted number of bitcoin transactions from Blockchain.info. Note that the dip in late August has reversed back towards upward growth. I am closely watching to see if the number can exceed the previous peak near 75,000 per day. Currently the smoothed value is 67,330 per day.

[rpietila]

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

- What is the value per unit if A) it fulfills its promise?
- What is the value if B) it does not?

- What is the probability of A)?
- How long does it take?
- What is the current price?

A: value $1,000,000
B: value <$100,000
A: probability 20%
A: duration at least 3 years, up to 10 years
current: $500.

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

[vuduchyld]

I've made much more conservative assumptions, but even VERY conservative assumptions make a strong case for buying.  I use M2 calculations because I believe that M2 is a very good measuring stick for what BTC represents because it speaks to money as a medium of exchange and also as a store of value.

Best guess I can come up with for GLOBAL M2 is around $55 trillion. I'd suspect it may inflate over the next 5-7 years to, let's say, $65 trillion.  I can't remember what the BTC emission schedule looks like, but let's say there might be 17 million BTC by then.  Total money supply in BTC, theoretically, would be 3095238, or roundly 3,100,000 BTC.  I'd say 1% is pretty aggressive, given that most of the world's population may not be capable of storing or transmitting currency in that way.  But 0.5%?  Maybe a little less?  That STILL gets you to a valuation of $15,500. 

The other thing to consider is velocity.  I've read that people believe BTC's velocity to be similar to that of USD.  In my view, they are including mining transactions, which don't belong in the velocity discussion any more than it's a measure of velocity to have fiat coming off a printing press.  My guess is that BTC velocity will grow into a USD-like velocity, possibly slightly slower, which would grow velocity by an estimated 5x.  That gets us to a valuation of $3100.

I have not batted an eye at buying more and more as the price has dipped under $500.  A lot of things can happen.  The adoption trendline could accelerate or decelerate.  My pulled-from-ass guess about velocity could change.  But I think a 2020 fair value for BTC might be around $3100. 

I don't expect to retire on 20-30 BTC.  But if that investment grows from $10K-$15K to $60-90K, it is still a lot better than many other investments I've made.

[Biodom]

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

- What is the value per unit if A) it fulfills its promise?
- What is the value if B) it does not?

- What is the probability of A)?
- How long does it take?
- What is the current price?

A: value $1,000,000
B: value <$100,000
A: probability 20%
A: duration at least 3 years, up to 10 years
current: $500.

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

Very interesting...I invested a significant sum in crypto+miners, so my percentage of active capital (not counting real estate equity) in crypto is ~20% .
I don't think that I will "actively" up it up to 50% (if it goes there by appreciation-fine)
Monero-invested (exchanged) 2% of my BTC into XMR.

[oyvinds]

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

My suggestion: Short the rallies, avoid buying back on dips.

[coinits]

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

My suggestion: Short the rallies, avoid buying back on dips.

I'll play  - $482.09 / 4 = $120.52

[sidhujag]

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

My suggestion: Short the rallies, avoid buying back on dips.

Thats gotta be the weirdest math ive ever seen

[AnonyMint]

What?? Bears infesting my thread?  

Please note I qualified my post saying it was targeted to those who need cash within 6 - 12 months. I wasn't asserting anything about the long-term risk vs. reward analysis.

Near-term risk is limited to the upside, and greater to the downside. Last time we had this discussion @ $600, Bitcoin came down to $350 just as I expected. I could end up wrong this time, but I am having difficulty finding  a catalyst to the upside near-term and the downside risk is potentially revisiting $350 or breaking through to lower lows as silver did.

As Armstrong says, don't fight the market. Let it speak to you. Fundamentals apply long-term, but not short-term. Just the same as for silver, all the perma-bulls have to be wiped out before a bottom is achieved. Don't ever get married to an investment.

So my post should not have made you angry if you read it carefully.

A: value $1,000,000
...
A: probability 20%
A: duration at least 3 years, up to 10 years
current: $500.

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

So my risk vs. reward calculation for the long-term differs significantly from yours, but it is not bearish and I wouldn't advise long-term hodlers to sell except to diversify into any suitable faster growing alternatives in market cap weighted proportions.

The dollar and the US stocks look more attractive between now and 2015.75 and will maybe be pulling capital out of Bitcoin.

[sidhujag]

Yea the dollar bullish scenario has been a long time coming but seems to be at bay because of the amount of printing that keeps going on.. so I think it may rise a bit but only before the next crash when rates rise 3x from here.. last time rates went low and rose they rose up about 3 to 4x the lows before the next bubble burst... This time its already so low that rates going to a few percent may be too much.. and thats when the confidence in the system breaks and we enter a new era.. hopefully a crypto currency backed financial system.

I generally  agree with the viewpoint that usually all the permabulls are wiped out before it really rises.. which is why gold/silver are headed down since retailers are still long.. however bitcoin seems a little different because we are in the early adoption phase and if we look back we would be laughing at the fact that we were able to buy bitcoins in double digits.. and it didnt stop the rise from $50 to $1200 when there were plenty of people along for that ride and not just smart money.

[vuduchyld]

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

My suggestion: Short the rallies, avoid buying back on dips.

OK...in other news:

* Your Ford Pinto is worth $900
* A Ferrari goes about 3x as fast
* Thus, the value of the Ferrari is 3x the value of a Pinto
* The fair value of a Ferrari is $900 * 3 = $2700

[Biodom]

What?? Bears infesting my thread?  

Please note I qualified my post saying it was targeted to those who need cash within 6 - 12 months. I wasn't asserting anything about the long-term risk vs. reward analysis.

Near-term risk is limited to the upside, and greater to the downside. Last time we had this discussion @ $600, Bitcoin came down to $350 just as I expected. I could end up wrong this time, but I am having difficulty finding  a catalyst to the upside near-term and the downside risk is potentially revisiting $350 or breaking through to lower lows as silver did.

As Armstrong says, don't fight the market. Let it speak to you. Fundamentals apply long-term, but not short-term. Just the same as for silver, all the perma-bulls have to be wiped out before a bottom is achieved. Don't ever get married to an investment.

So my post should not have made you angry if you read it carefully.

A: value $1,000,000
...
A: probability 20%
A: duration at least 3 years, up to 10 years
current: $500.

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

So my risk vs. reward calculation for the long-term differs significantly from yours, but it is not bearish and I wouldn't advise long-term hodlers to sell except to diversify into any suitable faster growing alternatives in market cap weighted proportions.

The dollar and the US stocks look more attractive between now and 2015.75 and will maybe be pulling capital out of Bitcoin.

this is one strange prediction: no growth in price (or negative growth ) until Oct 2015, then 20-fold appreciation (with 80% probability ?) in the following <24mo.
In any case, this would allow me to convert more of my ongoing $$ earnings to btc/xmr stash.

[Biodom]

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

My suggestion: Short the rallies, avoid buying back on dips.

OK...in other news:

* Your Ford Pinto is worth $900
* A Ferrari goes about 3x as fast
* Thus, the value of the Ferrari is 3x the value of a Pinto
* The fair value of a Ferrari is $900 * 3 = $2700

I cannot see why ltc would have any long term value.

[vuduchyld]

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

My suggestion: Short the rallies, avoid buying back on dips.

OK...in other news:

* Your Ford Pinto is worth $900
* A Ferrari goes about 3x as fast
* Thus, the value of the Ferrari is 3x the value of a Pinto
* The fair value of a Ferrari is $900 * 3 = $2700

I cannot see why ltc would have any long term value.

At the very least, it is beyond ridiculous to:
1) peg the value of BTC to the market price of the lesser LTC
2) assign that value by virtue of nothing other than quantity

[rpietila]

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

My suggestion: Short the rallies, avoid buying back on dips.

Have you bought this account recently? 

[AnonyMint]

What?? Bears infesting my thread?  

Please note I qualified my post saying it was targeted to those who need cash within 6 - 12 months. I wasn't asserting anything about the long-term risk vs. reward analysis.

Near-term risk is limited to the upside, and greater to the downside. Last time we had this discussion @ $600, Bitcoin came down to $350 just as I expected. I could end up wrong this time, but I am having difficulty finding  a catalyst to the upside near-term and the downside risk is potentially revisiting $350 or breaking through to lower lows as silver did.

As Armstrong says, don't fight the market. Let it speak to you. Fundamentals apply long-term, but not short-term. Just the same as for silver, all the perma-bulls have to be wiped out before a bottom is achieved. Don't ever get married to an investment.

So my post should not have made you angry if you read it carefully.

A: value $1,000,000
...
A: probability 20%
A: duration at least 3 years, up to 10 years
current: $500.

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

So my risk vs. reward calculation for the long-term differs significantly from yours, but it is not bearish and I wouldn't advise long-term hodlers to sell except to diversify into any suitable faster growing alternatives in market cap weighted proportions.

The dollar and the US stocks look more attractive between now and 2015.75 and will maybe be pulling capital out of Bitcoin.

this is one strange prediction: no growth in price (or negative growth ) until Oct 2015, then 20-fold appreciation (with 80% probability ?) in the following <24mo.
In any case, this would allow me to convert more of my ongoing $$ earnings to btc/xmr stash.

Good point. Note I did say "3 years or more", so the $10,000 is when ever Bitcoin reaches its peak price not necessarily within 3 years (because my somewhat technologically informed expectation is for Bitcoin to not be the final winner in the crypto-currency arena). First some opinion, which is basically worthless. I am thinking more along the lines of sideways to down for some months (say pull the number 3 or 6 out of my arse) then a slower averaged rise (with potentially sharp rises and drops) until the blastoff when the ensuing stampede (retail investor isn't even in the USA stock market yet since they left in 2008/2009) into the dollar and dollar assets has reached its peak around 2015.75. And also to give time for my (non-verified) assumption of the slowing rate of increase (i.e. deceleration) of adoption of Bitcoin (in my log-logistic theory) to catch up with the huge rise in the market cap in 2013. Remember Peter R showed that market cap correlates with the square of some proxy for adoption (as expected by Metcalf's law).

So let's say roughly my expectation is Bitcoin is back over $1000 in (late) 2015, and then up to a 10 bagger over next several years. And I expect the smoothed (taking into account the 2013 rise) rate of appreciation to continue to slow down in my log-logistic adoption theory. So the $10,000 would be reached sort of asymptotically rather than as a stampede peak. I think we are past the early adopter phase of Bitcoin, as it is almost 6 years old.

There could be another big jump in the price upon the next halving of the nominal rate of increase in the coin supply in 2017, although less pronounced than 2013 because the market cap is larger and debasement rate is continuously declining.

I do believe this period is an opportunity for long-term hodlers who don't have their market cap weighted fill to dollar cost average to accumulate more. I was mainly writing that message to those (at least one I know who is not rpietila) who are top-heavy on Bitcoin and who have cash needs within the next 6 months. Essentially I was arguing for diversifying some (20 - 25%?) into altcoins, dollars, and USA stock market, although do note in my opinion (as far as I know since I don't have time to study deeply every altcoin) mostall of those are just investor pump short-term speculative timing rides. The altcoins appear to mostly follow a familiar pattern of pop on some misinformed stampede (greater fool theory of speculation) then they do a death spiral, e.g. Litecoin, Aurora, and Doggiecoin.

I cannot see why ltc would have any long term value.

The Scrypt ASICs have apparently killed the main reason it was needed as an alternative to Bitcoin for the GPU miners. The value of a coin is proportional to the hashrate applied to mining. Anyone who is making an altcoin and ignores the importance of mining is not going to beat Bitcoin.

We discussed this last month in rpietila's Altcoin thread, and I made the point that when PoW difficulty is not directly influenced by investor driven price, then miners have some say in the price. GPUs were made unprofitable by ASICs, so this is not a Litecoin investor driven change. Also investors now have to value Litecoin under the new regime where there is no strong feature that Bitcoin doesn't have. There is still the arbitrage reason to need Litecoin, but there are also other altcoins although liquidity may be much lower. I do expect Litcoin to bounce back some relative to BTC as the math argues it is oversold and an arbitrage opportunity. Also note that when BTC sells off, LTC sells off more. When BTC rises (except for recent decline due apparently to arrival of ASICs), LTC rises more. So LTC looks to be a good speculation (for diversification from BTC) as we approach a firm bottom in BTC, contrary to popular sentiment.

Yea the dollar bullish scenario has been a long time coming but seems to be at bay because of the amount of printing that keeps going on.. so I think it may rise a bit but only before the next crash when rates rise 3x from here.. last time rates went low and rose they rose up about 3 to 4x the lows before the next bubble burst... This time its already so low that rates going to a few percent may be too much.. and thats when the confidence in the system breaks and we enter a new era.. hopefully a crypto currency backed financial system.

My former post contained a link to my recent summary of Armstrong's thesis, which says that printing is ending in all the western countries other than Europe and Japan. This was a secret central bank agreement to prop up those dying economies by driving bond investors to Europe and Japan (declining interest rates cause the value of pre-existing bonds to appreciate, whereas rising interest rates in the other western countries drive speculative bond investors out and the long-term bond investors such as pensions are dying).

Armstrong's ECM model had turning point this Sept 3 or 4 2014 which means the stampede into the dollar could accelerate and volatility could be very high in all markets this week! The Euro recently turned down. And now Draghi says Germany is wrong and the ECB must print trillions of Euros.

[oyvinds]

I believe we have before us the opportunity to forge - for fun and for profit - an epic short squeeze.

http://btccharts.everdot.org/.bitcontalk/470_1600.png

* 1600 BTC sold short at $469/$470
* Flash pool at BFX as good as empty (shorts can currently add 2-300 BTC before there will be no more shorting)
* Total amount of shorts is at a record 9,249.08 BTC

It must be remembered that you can easily squeeze shorts but you can not squeeze SELLERS. Still, I do believe we have an opportunity here.

All we need is the right major crisis and the nations will accept the GNU World Order.

Have you bought this account recently?  

We short term traders are not very consistent, now are we? That being said, I honestly do believe this is a long-term bear-market. Look at the daily. Are we above ATH? No, we are not. Do we have higher highs and higher lows? No, we do not. Bear-markets do tend to have counter-rallies before falling down again and there is nothing wrong with riding those waves.