Merged Bitcoin - Part 3

[Chanakya]

I do have some familiarity with conventional investing. Not so with crypto, though. So, pinch of salt.

With that qualification clearly made upfront :

Bitcoin's market cap alone is just a bit over $1 trillion not including any other cryptocurrencies. In comparison, the entire DOW JONES market cap is just a bit over $8 trillion (...) It may seem laughable to some, but it is just as laughable to realize that in July 2010, bitcoin began trading at a value of US $0.0008

Which, to me, spells 'bubble'.

Although: First, IMV the USD is a bubble too, globally that is. What's held that up so far is, and what may well continue to hold it up, are, first, smoke and mirrors; and usage, convention, the that's-how-it-is factor; and, in some measure, luck. With BTC there's only the luck factor, just that. From the individual investor's perspective, I mean. But of course, given how long the bubble's lasted, in a few years you might well have the that's-how-it-is factor going for it too. Not so much the smoke and mirrors thing, though, not unless those are set up from scratch.

And, second: "Bubble" isnt' necessarily a bad word. If you have an understanding of how the bubble works, or think you do, and if you have luck on your side, then "bubble" might well spell 'opportunity'. Or it may spell money-down-the-drain, if the former but, it turns out, not the latter.

You're covered on your BTC cash out. (...) The BTC market cap alone could eventually surpass the DOW.

That last may well happen, but as far as the highlighted, how do you figure that? A high market cap does not translate into either liquidity or solvency (not unless whole hordes share your optimism about future market cap, which I don't think is the case, yet). The obverse, if anything: that is, it takes uncommonly high solvency and/or liquidity to meet the obligations of a high market cap, should there be sellout pressure.

Like I said, I'm no expert on cryptos. I'm trying to understand your reasoning. Although a crypto-skeptic, the recent and prolonged success of bitcoin has led me to seriously start considering a (small) outlay myself --- I'll consider it a zero-future-NW write-off, that just might inject my portfolio with steroid, kind of like a lottery ticket, except the odds, though IMV slim, are far better than the lottery. What I'm trying to say is, while I'm disagreeing, sure, but I'm asking more than disagreeing per se, if you know what I mean.

Could you explain why you think BTC's covered, should one want to cash out at current levels, and why you think a high market cap actually facilitates that?

So all the bitcoin holders can all cash out today if they want?
Put actual dollars in to a bank account?

Like Dr. Sid said, billions, doubtful, IMV; millions, probably, as long as not too many tried cashing out. But that's just the commonsense and non-crypto-expert answer; let's hear from the experts, their reasoning as well as their answer.

 

[psionl0]

Yes, but the answer is also yes.

So stock brokers don't need to find buyers for your shares. They already have the millions to cash them out. Interesting ............

 

[ChrisBFRPKY]

So all the bitcoin holders can all cash out today if they want?
Put actual dollars in to a bank account?

The same as all stock holders can cash out today.

 

[Belz...]

So stock brokers don't need to find buyers for your shares. They already have the millions to cash them out. Interesting ............

You have a strange habit of inventing what the other person is saying and responding to that.

How about you address what I actually posted?

 

[Chanakya]

The same as all stock holders can cash out today.

Only if there's adequate liquidity. Else it's all paper.

That's kind of the whole point. Isn't it? What kind of liquidity do we have with BTC, given strong sell pressure, and for large transactions, is the question here. Do we know?

(Those of you who track BTC closely might have good factual info on this, and opinions that build on that information, that you might want to share.)

 

[Dr.Sid]

Only if there's adequate liquidity. Else it's all paper.

That's kind of the whole point. Isn't it? What kind of liquidity do we have with BTC, given strong sell pressure, and for large transactions, is the question here. Do we know?

(Those of you who track BTC closely might have good factual info on this, and opinions that build on that information, that you might want to share.)

Well one common issue is service availability. Coinbase is famous in going offline when there is 'strong sell pressure'. To the point people accuse them of doing it on purpose. But it's issue with any web service. There are limits on how many people they can serve.

 

[psionl0]

You have a strange habit of inventing what the other person is saying and responding to that.

How about you address what I actually posted?

All you answered was "yes". Do you have the faintest idea what the question was?

 

[ChrisBFRPKY]

I do have some familiarity with conventional investing. Not so with crypto, though. So, pinch of salt.

With that qualification clearly made upfront :





Which, to me, spells 'bubble'.

Although: First, IMV the USD is a bubble too, globally that is. What's held that up so far is, and what may well continue to hold it up, are, first, smoke and mirrors; and usage, convention, the that's-how-it-is factor; and, in some measure, luck. With BTC there's only the luck factor, just that. From the individual investor's perspective, I mean. But of course, given how long the bubble's lasted, in a few years you might well have the that's-how-it-is factor going for it too. Not so much the smoke and mirrors thing, though, not unless those are set up from scratch.

And, second: "Bubble" isnt' necessarily a bad word. If you have an understanding of how the bubble works, or think you do, and if you have luck on your side, then "bubble" might well spell 'opportunity'. Or it may spell money-down-the-drain, if the former but, it turns out, not the latter.





That last may well happen, but as far as the highlighted, how do you figure that? A high market cap does not translate into either liquidity or solvency (not unless whole hordes share your optimism about future market cap, which I don't think is the case, yet). The obverse, if anything: that is, it takes uncommonly high solvency and/or liquidity to meet the obligations of a high market cap, should there be sellout pressure.

Like I said, I'm no expert on cryptos. I'm trying to understand your reasoning. Although a crypto-skeptic, the recent and prolonged success of bitcoin has led me to seriously start considering a (small) outlay myself --- I'll consider it a zero-future-NW write-off, that just might inject my portfolio with steroid, kind of like a lottery ticket, except the odds, though IMV slim, are far better than the lottery. What I'm trying to say is, while I'm disagreeing, sure, but I'm asking more than disagreeing per se, if you know what I mean.

Could you explain why you think BTC's covered, should one want to cash out at current levels, and why you think a high market cap actually facilitates that?





Like Dr. Sid said, billions, doubtful, IMV; millions, probably, as long as not too many tried cashing out. But that's just the commonsense and non-crypto-expert answer; let's hear from the experts, their reasoning as well as their answer.

I'm no expert and I'm not even very good at investing. Heck, I sold my Cardano (ADA) at 0.12 cents last year.

I do like most bubbles though, always did even as a kid. I like some bubbles more now than I did then, though admittedly a different type. Inflationary bubbles I like not so much though. I find it objectionable that somewhere between 20% and 35% (or more by now) of all US dollars in existence have been printed in the last 12 months. This makes my US dollars a lesser value than they were a year ago. My remaining BTC seems to be doing well though, even if it's current value is halved in the near future, I'm still up. But the value of my dollar is still in decline.

The whole "Bitcoin is in a bubble!" thing is an oversold media hype to frighten investors away from BTC and back to precious metals and stocks. Janet Yellen also feels the need to crow about the risks of BTC when her hedge fund buddies want to buy in at a discount it seems. IMO anytime something gains in value at an exponential, it's a bubble. Yep, so what. If the same thing decreases in value "The bubble has popped!" Yep, so what. This is a fact of investing in anything and yet some in the media act as if they're the first to discover this thing about bubbles and for some reason they can only relate them to Bitcoin. Seems like predetermined talking points to me.

I've never had any issue buying or selling Cryptocurrency. I've yet to be denied a cash out at any exchange I use. I don't know from experience if I would have any issue cashing out billions I hope I can let you know at some point in the future. Elon didn't seem to have any issues.

I suppose if we're trying to determine a pie in the sky scenario in which a BTC owner is left holding the bag and cannot cash out we could do that. Yet any scenario that would facilitate that outcome for the BTC holder would also facilitate the same outcome for traditional investors and bank depositors as well, I guess there's that to consider if we dive into a critical comparison honestly.

I don't know where the Crypto market is going. I've already made my money from it and if it doubles in the next few minutes, great I'll profit, if it crashes in the next few minutes...great I'll profit. I do think that anyone that invests now should do so with long term goals in mind and expect a roller coaster ride prior to any rocket ship. Of course there's also day trading for short term gains and Alt coins etc for those that don't like the waiting game. I prefer both strategies.

 

[ChrisBFRPKY]

Only if there's adequate liquidity. Else it's all paper.

That's kind of the whole point. Isn't it? What kind of liquidity do we have with BTC, given strong sell pressure, and for large transactions, is the question here. Do we know?

(Those of you who track BTC closely might have good factual info on this, and opinions that build on that information, that you might want to share.)

Apply any scenario you will against BTC to the same against the stock market and you circle around to the same result. If BTC holders all sell at the same time the market crashes, if stock holders all sell at the same time the market crashes. Circular argument that determines one is no better than the other in those extreme examples.

 

[Belz...]

All you answered was "yes". Do you have the faintest idea what the question was?

I see you not only decided NOT to address what I said as I requested, but also decided to pretend as if your misrepresentation of my post is somehow my fault, which isn't a bait-and-switch per se but is certainly bait-and-switch-adjacent.

First of all, you're incorrect. What I answered was yes AND yes; first to your question and then to Swoop's question. His question was whether it was possible to cash out large sums of money from BTC, and instead of actually answering it or, as of course is impossible for you, ignoring it, you instead snapped a question in return. Having had that question answered by both myself and Swoop, however, you continue to avoid returning to the original question and answering it.

Which seems to suggest that you, in fact, know that the answer is "no".

 

[Chanakya]

Well one common issue is service availability. Coinbase is famous in going offline when there is 'strong sell pressure'. To the point people accuse them of doing it on purpose. But it's issue with any web service. There are limits on how many people they can serve.

You mean, a systemic technical issue? As opposed to a liquidity issue?

If that's all it is, then there can be workarounds that can (and probably will) be incorporated as (if) volumes continue to grow. That is, that kind of an issue, of a purely technical nature, shouldn't deter the (long-term) investor. If you want to cash out, cash out you will, if with some inconvenience.

But if it's a liquidity issue, then that's more ...fundamental.

 

[Chanakya]

ChrisBFRPKY, thanks for your posts. They're somewhat long, and I'm on my phone, so I'm not quoting them.

I take your point, that you personally have never had difficulty selling. That's a good input to have.

Whether a billion lot would face issues is probably irrelevant. In fact, ditto millions as well, although that was Captain Swoop's question -- irrelevant for most of us, that is. If thousands, and tens of thousands, never create problems -- a few hundreds of thousands, for bigger players -- then that's fine, for all practical purposes.

---

Except for one concern: If a whale does download, would that upset the (liquidity) apple cart?

---

As for my second post, sure, as you say the stock analogy holds, broadly, but the point is, some stocks are more liquid than others. That's one of the considerations that drives investments, at the individual level.

Your personal (and consistent) experience is probably representative, no reason why it shouldn't be. And I appreciate that input.

Would you have any broader measures of liquidity that you factor in when investing in BTC? Perfectly fine if not. I'm just looking for such information and general guidance as one can find by discussing with people better versed with BTC than I am, not really trying to argue any one particular position.

 

[psionl0]

What I answered was yes AND yes; first to your question and then to Swoop's question.

If you say so.

 

[Dr.Sid]

You mean, a systemic technical issue? As opposed to a liquidity issue?

If that's all it is, then there can be workarounds that can (and probably will) be incorporated as (if) volumes continue to grow. That is, that kind of an issue, of a purely technical nature, shouldn't deter the (long-term) investor. If you want to cash out, cash out you will, if with some inconvenience.

But if it's a liquidity issue, then that's more ...fundamental.

I mean technical issue. Any web site has limited capacity. And when everyone wants to simply use the website at the same time, they can't.
I remember buying small radio on 9/11, as all news websites just collapsed. And it wouldn't be that much different today. You don't need that capacity for the most of the time, so why pay for it.
On the other hand, AFAIK Coinbase has separate member site, which I guess will have better support.

 

[arthwollipot]

So all the bitcoin holders can all cash out today if they want?
Put actual dollars in to a bank account?

Yes. It's extremely easy. Almost trivial, I would say.

There are a number of sites that you can use to buy and sell cryptocurrency. I used BTCMarkets.com.au. It requires two-factor authentication, and it withdraws from and deposits into my PayPal. And not just bitcoin. I can also buy and sell other currencies.

Speaking of which, I hear that it might be a good time to pick up some Dogecoin...

 

[Belz...]

If you say so.

I really don't understand you. Are you saying that you don't believe that the same question should be asked of the stock market, or that you can't cash out of large number of stocks easily, or what?

It doesn't actually ever seem like you're making any point or argument.

 

[lomiller]

The same as all stock holders can cash out today.

The difference is that companies that trade on the stock market have earnings. Stock prices can only drop so far before buying pressure picks them back up.

Who in their right mind wouldn't be willing to spend $1million to buy a company that has a profit of $1million per year? Even if you don't have $1 million in your pocket that's an easy loan to get. Prices wouldn't even need to drop that far before buying pressure kicks is. Even at a guaranteed 30% or even 20% yearly return (net present value of future profits) would mean every available dollar would be pumped back into the stock market. This would even include the money the first sellers received for their stock, assuming that were deposited in a bank or used to by short/long term securities.

 

[JoeMorgue]

Also in general companies have to like... do stuff.

Cryptocurrency is the financial equivalent of Famous for being Famous.

 

[Chanakya]

Also in general companies have to like... do stuff.

Cryptocurrency is the financial equivalent of Famous for being Famous.

Except the famous-for-being-famous do start out with sex tapes. I don't think you can do that with crypto.

 

[lomiller]

Only if there's adequate liquidity. Else it's all paper.

That's kind of the whole point. Isn't it? What kind of liquidity do we have with BTC, given strong sell pressure, and for large transactions, is the question here. Do we know?

(Those of you who track BTC closely might have good factual info on this, and opinions that build on that information, that you might want to share.)

The liquidity for purchasing Stock in profitable companies is near infinite. Because there is guaranteed income (profits) once price drops well below what’s required to cover any potential debt servicing costs there is no almost limit to how much an investor can borrow in order to buy up any available stock.

This only works for assets with reliable earnings though. If the earnings (EG mortgage backed securities in 2008) are called into question it becomes a lot more difficult. When an asset has no earnings at all and no industrial use to create demand prices can fall to near zero.