Bitcoin as an investment?

[Tervuren]

Originally Posted by cstreit

Warren Buffet told a similar story... He said when he got a stock tip from a shoeshine guy, he new it was time to divest for a while...

The thing is, when there is a lot of hype, people are willing to overpay. Eventually, the hype runs out, and things go back closer to what they really are worth.

So once everyone starts jumping in on something such that it is selling beyond its underlying value, sell, let it bump, buy back.

It doesn't mean what is getting hyped may not be a good investment or have a sound model, it just means that people that don't understand it are valuing it higher than it perhaps should be. Eventually it runs out of people buying on hype and goes bump.

[trader220]

Originally Posted by Tervuren

So once everyone starts jumping in on something such that it is selling beyond its underlying value, sell, let it bump, buy back.

"The market can stay irrational longer then you can stay liquid"

I don't recall who said that one but its an extremely important lesson. When people start jumping in, maybe its just time to walk away.

[Alan A]

Originally Posted by trader220

Its nothing personal, but that statement right there is the foundation on which many a Ponzi scheme has been built. Belief in something you heard, something someone was selling, belief in an opinion not supported by anything other than words.

It was keynote at a conference. Bunch of bankers. The lot of them are right next to used car salesmen in the trustworthy stakes imo, but their geeks knew the tech up down and sideways.

Personally I consider it to have exactly as much value as people believe it to have at that instant, and belief is fickle. Which is why I'm not relying on it for anything more than entertainment. If it makes me a few $ on the way all to the good. If it all goes to zero I'm on house money at this point so no biggie.

[trader220]

Alan,

If "bankers" are untrustworthy why were you at a key note conference? How did you get invited?Additionally you earlier said you've heard a number of people describe it as "gold for millennials". So the number people was the bankers? Technical Geeks are fine for technical stuff but what do they know valuations and/or markets, macro economics?

You said you "casually watch" these cryptocurrencies.... Yet you flip between them based on relative value? How do you calculate their relative values? How do you execute trades based on your calculations of relative values given the time it takes to make transactions?

With the introduction of futures recently it appears as if there are arbitrage opportunities between the futures and the cash. The issue becomes executing the cash trade, it essentially kills any arb opportunity.

Having been a derivatives trader for a couple decades, I always find new markets and products interesting, especially ones as grossly inefficient as the current markets in these cryptocurrencies. For more than a decade I traded currency derivatives. Some may say I do have a reasonable amount of experience.

In all fairness I realize this is really a forum about Porsche. If you don't want to get into it thats fine.

[Alan A]

I was there as a +1. I'm a tech wonk in a different industry - the keynote and panel were all VC or fund guys. And they were all bloody sharp. Would want to count my fingers after shaking hands with any of them, but there were no dummies in the room (except perhaps me).

That was the first time I heard the value store analogy. I've heard it since used by others, not in that field. Valid or not it stuck.

Up to that point I hadn't looked at cryptocurrencies at all. Thought the whole thing was a bit iffy. Still do frankly, but seeing people pile in has been instructive.

And by casually watch I mean watch the relative difference of ETH : BTC on GDAX. It's been trading in a fairly predictable range. Swapping between one and the other is a free and moderately entertaining exercise that's relatively hands off. I could almost certainly have made more $ sticking to one and selling/buying the swings, or by just getting out and staying out when it hit 19k, but this takes almost no time and the $ in there is all profit.

[sc_rufctr]

$14,450.09 x 1,700 = $24,565,153 USD today!

[biosurfer1]

Hope the XRP fans held on...hit a high of 2.84 today.

[Cajundaddy]

I wonder who is currently driving up demand (and price) for bitcoin and is it possible for a few key players to manipulate the market to their advantage, driving up the price and then selling off at their designated peak?

It is interesting to watch this bitcoin speculative bubble and there will surely be winners and losers just as in Las Vegas. More losers I expect. It reminds me of my college poker nights. If you look around the table and don't know who the sucker is, it's you.

Tulip mania part deux:
https://en.wikipedia.org/wiki/Tulip_mania

[biosurfer1]

Originally Posted by Cajundaddy

is it possible for a few key players to manipulate the market to their advantage, driving up the price and then selling off at their designated peak?

For Bitcoin? I doubt it, at least at these prices and market cap. The only person would could "possibly" do it is Satoshi with his rumored 1 million bitcoins, but even that's a rumor and isn't confirmed.

I doubt even the Winklevoss twins could swing the market that much with their 1%

[Cajundaddy]

Might want to do a little more homework on that if you wish to stay in the game. Manipulation of currency markets is as old as time and all it takes is a few key players working together.

Forex scandal: How to rig the market - BBC News

[trader220]

Originally Posted by Cajundaddy

Might want to do a little more homework on that if you wish to stay in the game. Manipulation of currency markets is as old as time and all it takes is a few key players working together.

Forex scandal: How to rig the market - BBC News

Unfortunately that article is about rigging the London price fix which only means anything if you mark your PnL statement to the fixing everyday.

Since bitcoin is a cryptocurrency and not an actual currency the article is even less relevant.

[Cajundaddy]

Originally Posted by trader220

Unfortunately that article is about rigging the London price fix which only means anything if you mark your PnL statement to the fixing everyday.

Since bitcoin is a cryptocurrency and not an actual currency the article is even less relevant.

Everyone is entitled to an opinion. I will simply suggest that digital currency is far easier to manipulate by a few key players working together than the foreign exchange. The methods are different but the result is the same. Forest > trees.

Players in the game can still make money knowing that the digital currency market is rigged, but there is certainly an element of risk.

[trader220]

I wasn't saying it cant be done, I was just saying that the article posted has no relevance to the cryptocurrency markets. The traders who conspired to move the London fixing did so because it allows them to market their balance sheets for the day. There is no open or close for the currency market so in order to mark your positions you have to choose a uniform time during the day. What they did was try and move that mark up or down a tiny fraction. In reality its nothing more than fooling yourself and your own books.

I am not sure how anyone could say the cryptocurrency market is harder or easier to manipulate than any other market.

[Pazuzu]

My Ethereum wallet is much happier today that it was yesterday...or last week...or last month...

What's Bitcoin?

[Alan A]

Originally Posted by biosurfer1

Hope the XRP fans held on...hit a high of 2.84 today.

Nope. Screwed that one up royally.
Sold when it went from 22c to 60c and nearly dislocated my shoulder patting myself on the back.
Now I have a broken ankle from kicking myself in the ass so hard.

Selling Ethereum at 850 a couple of days ago wasn’t my smartest move either. Especially since I bought LTC with the proceeds.

[biosurfer1]

.22 to .60 is still a great return but yes, tough to watch it go to 3.81 (currently).

[aigel]

What I love is the images of coins you see in the news. Like below. WTF is up with that?

Nobody is buying these to use as currency, only to sell at a higher price later. Two things that keep me out are a) there are only strange ways to buying the currencies, can't get them at your broker and b) while there are only 21 million bitcoin, there is a new currency coming out every 20 minutes, anyone seems to be able to start one, no question it will get all diluted down to nothing. I wish I was a CS guy. I'd sure start my own!

[cstreit]

Originally Posted by aigel

What I love is the images of coins you see in the news. Like below. WTF is up with that?

Nobody is buying these to use as currency, only to sell at a higher price later. Two things that keep me out are a) there are only strange ways to buying the currencies, can't get them at your broker and b) while there are only 21 million bitcoin, there is a new currency coming out every 20 minutes, anyone seems to be able to start one, no question it will get all diluted down to nothing. I wish I was a CS guy. I'd sure start my own!

Anyone with the technology can "create" a coin. That said - anyone with a printer can create a "dollar". However certain fundamentals must be in place for anyone to agree it has value.

Currently there are about 10x alt-coins to every fiat currency out there. However 90% are bunk. ...and likely very few will be what we have in 2 years. Probably none in 10 years. I agree it is a speculative instrument at this point. When it costs upwards of $40-$50 confirm a transaction out of a "wallet" it doesn't have any use in daily commerce. It can't at that rate.

[aigel]

I know paper currencies have a bad rep, and rightfully so, but not "anyone can print a dollar", at least not a US dollar. I can print my own paper money and call it PPOT dollars, but nobody will buy them from me for $15k, I am afraid, even if I limit them to 21 million!

The whole "limited supply" is out the window with every new crypto currency jumping on board. And the speculators will move to the next shiny new object.

G

[cstreit]

Originally Posted by aigel

I know paper currencies have a bad rep, and rightfully so, but not "anyone can print a dollar", at least not a US dollar. I can print my own paper money and call it PPOT dollars, but nobody will buy them from me for $15k, I am afraid, even if I limit them to 21 million!

The whole "limited supply" is out the window with every new crypto currency jumping on board. And the speculators will move to the next shiny new object.

G

I shouldn't have said "dollar", but rather "paper currency." My point was simply this:

I can "create" a crypto currency just as much as I can create a paper bill. It only has value if we agree it does. (Since the gold standard is gone) One is no different than the other IMO other than the way it is regulated.