Cryptocurrency - Bitcoin Continues to Soar!

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Prahasaurus
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

SlowMovingInvestor wrote: Tue May 11, 2021 12:34 am
Prahasaurus wrote: Tue May 11, 2021 12:18 am
I can borrow from Aave now, no KYC, the process takes about 5 minutes. Why do we have a credit card industry when it's just so easy to borrow at 1-2%? Are you serious?

I have no doubt Bogleheads have access to cheap capital if they are willing to spend months filling out the forms. And hedge funds have access to even cheaper capital. It's just the 99% of Americans that don't seem to have those options. And 99.99% of the rest of the world.
Are you seriously asking that question ?

The reason people borrow at higher rates from credit card companies is that they don't have shares and margin accounts to get loans (*). Or they don't have homes they can get HELOCs against. Months filling forms ? Changing my account into a margin account at Ibroker was approved in maybe 2 hrs. I've never actually got margin from them, but I think it's instant from this point on.

The 99 % (actual I'd guess it's significantly less than that) of Americans or 99.9% of the rest of the world who don't have those options also DON'T have crypto to put up as collateral. Margin loans (which ARE collateralized and can be instantly liquidated) can charge much lower rates because they have collateral that can be priced and liquidated instantly. And Ibroker's margin rates are indeed 1-1.25%.

(*) It's possible that some share owners don't realize they can get margin loans against them or don't want to take the risk of liquidation. But the problem then is lack of financial literacy or risk taking appetite -- which would prevent them from using crypto collateral.
Overcollateralized loans are just the beginning. I'm sure other entities will partner with Aave (read: integrate to Aave) and offer loans themselves, using Aave as the bank. 3rd parties (centralized at first, but later decentralized) that can do credit checks, etc. DeFi is just over 1 year old, and you expect it to have all the services as our existing financial system? LOL! In one year Aave has gone from 0 to 18 billion USD locked in its protocol, a truly amazing achievement. And shows the market need.

What has been built over the past year (granted, the development typically started around 2017/18) is just unbelievable, and I can't wait to see how it all evolves in the coming decade. So glad I'm an early investor in the future of finance!
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by LadyGeek »

I removed a number posts conjecturing on internet / government regulation of bitcoin. The discussion was derailed (political policy, conspiracy theory). As a reminder, see: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
  • US or world economic, political, tax, health care and climate policies
  • conspiracy theories of any type
  • discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.
Please stay on-topic, which is bitcoin increasing in value.
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SlowMovingInvestor
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by SlowMovingInvestor »

Prahasaurus wrote: Tue May 11, 2021 1:07 am DeFi is just over 1 year old, and you expect it to have all the services as our existing financial system? LOL! In one year Aave has gone from 0 to 18 billion USD locked in its protocol, a truly amazing achievement. And shows the market need.

What has been built over the past year (granted, the development typically started around 2017/18) is just unbelievable, and I can't wait to see how it all evolves in the coming decade. So glad I'm an early investor in the future of finance!
I didn't say that I expected it to have the same services. I'm simply pointing out that you should do an apples to oranges comparison. If low HYSA rates are a 'slave mentality', then very high borrow rates are probably far 'more slavish' (*). And the best comparison to AAVE/Celsius is not credit loans, but margin loans, which are 1-1.25% at Interactive Broker for USD. I believe even lower rates for Euros. Not at all a good comparison for AAVE @ 12.6%. And it doesn't take several months, as you implied, to get margin loans (or even HELOCs).

I welcome innovation, whether it's tech or fintech. Heck, I did some work on digital cash well before BTC. But again, there's no magic to get you 8.6% on deposits when mortgages are around 2-2.75%, car loans around 2.5-3% (and that collateral is not so easily liquidated either).
Last edited by SlowMovingInvestor on Tue May 11, 2021 9:36 am, edited 1 time in total.
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TheCleverest
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by TheCleverest »

decapod10 wrote: Tue May 11, 2021 12:17 am
TheCleverest wrote: Mon May 10, 2021 11:58 pm I'm genuinely curious...for those who believe some coins will go down in value...why don't you attempt to profit from this downward movement (ie buy puts, futures, etc)? Not trying to be confrontational...genuinely curious. And I also have thought about trying to profit from a downward movement. TY
Crypto is already too risky for Bogleheads, they are definitely not going to be shorting crypto, lol.

There is a lot of shorting in crypto, but it is usually done by people who invest in crypto as well. They usually take bets on very short term action (like hours or days). It's already extremely dangerous for people who study crypto to be shorting crypto, let alone people who are not well educated in crypto.

I've pasted the top 25 cryptocurrencies by market cap and pasted them below, along with the %gain/loss over the past 3 months.

"BTC
Bitcoin" 24.18%
"ETH
Ethereum" 126.11%
"BNB
Binance Coin" 546.37%
"DOGE
Dogecoin" 535.36%
"USDT
Tether" -0.08%
"ADA
Cardano" 125.71%
"XRP
XRP" 203.64%
"DOT
Polkadot" 62.18%
"BCH
Bitcoin Cash" 176.33%
"LTC
Litecoin" 108.24%
"LINK
ChainLink" 76.15%
"UNI
Uniswap" 85.07%
"XLM
Stellar" 61.94%
"USDC
USD Coin" 0.01%
"SHIB
SHIBA INU" 0.00%
"ETC
Ethereum Classic" 1027.11%
"VET
VeChain Thor" 520.57%
"SOL
Solana" 413.41%
"FIL
Filecoin" 312.96%
"OKB
OKB" 353.91%
"WBTC
Wrapped Bitcoin" 24.78%
"THETA
Theta Token" 279.84%
"EOS
EOS" 141.00%
"TRX
TRON" 191.83%
"BUSD
Binance USD" -0.79%

Look at those gains and imagine if you had tried to short those coins anytime in the last 3 months, it is likely you would have been in a world of hurt. Ignoring the stable coins, BTC is the worst performer at +24%. Shiba shows at 0% for some reason, but it's actually some ridiculously high number like 70000% or something.
I get that whoever shorted crypto would have lost money. With options though the floor is limited on the loss.

And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?

Not trying to be antagonistic just looking to better understand

Cheers
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Gadget
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Gadget »

TheCleverest wrote: Tue May 11, 2021 8:53 am

And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?

Not trying to be antagonistic just looking to better understand

Cheers
I'm a crypto proponent, but it's pretty easy to defend anti crypto people here on why they aren't buying put options or shorts on crypto. It's the same reason they don't in the normal stock market. You have to be right not only on the direction of the coin/stock, but the timing. Greek letters will eat into your returns the longer out you place your bets. And on highly volatile stocks like AMC, GME, or what I assume the crypto options market is, you pay quite a premium to buy options in the first place. Increased volatility usually means increased options prices on both puts and calls.

I think Siba Inu coin is a scam. But I'd likely go bankrupt trying to short it unless I got really lucky on my timing.
txhill
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

Gadget wrote: Tue May 11, 2021 9:27 am
TheCleverest wrote: Tue May 11, 2021 8:53 am

And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?

Not trying to be antagonistic just looking to better understand

Cheers
I'm a crypto proponent, but it's pretty easy to defend anti crypto people here on why they aren't buying put options or shorts on crypto. It's the same reason they don't in the normal stock market. You have to be right not only on the direction of the coin/stock, but the timing. Greek letters will eat into your returns the longer out you place your bets. And on highly volatile stocks like AMC, GME, or what I assume the crypto options market is, you pay quite a premium to buy options in the first place. Increased volatility usually means increased options prices on both puts and calls.

I think Siba Inu coin is a scam. But I'd likely go bankrupt trying to short it unless I got really lucky on my timing.
Just to add to this, it is totally fair to think that something is intrinsically worthless but also to recognize that others simply may not see it your way over any predictable period of time. The price of something is not always reflective of its value, and the variance between the two can be pretty extreme for a long period of time. And it's also a lot easier to yell at the clouds than it is to actually get the clouds to go away.
Hustlinghustling
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

Marseille07 wrote: Tue May 11, 2021 12:36 am
TheCleverest wrote: Tue May 11, 2021 12:33 am
Marseille07 wrote: Tue May 11, 2021 12:09 am
TheCleverest wrote: Mon May 10, 2021 11:58 pm I'm genuinely curious...for those who believe some coins will go down in value...why don't you attempt to profit from this downward movement (ie buy puts, futures, etc)? Not trying to be confrontational...genuinely curious. And I also have thought about trying to profit from a downward movement. TY
How do you buy puts on the coins? I'd be interested to explore if such a thing is possible.
Great question. Option trading exists. I'm not sure if you are a US or non-US investor. See LedgerX for US and the following others for non-US Deribit, FTX,

I just found out there are Bitcoin micro futures recently. For those interested in learning more the symbol is MBT.
I'm just absolutely stunned by the pricing of futures here. Like, what are these people selling? They really want to sell MBT at 57270 for August???

Like ETH, I just don't see how I can sell short at the price I want (like, 100K for BTC for August for example). This is really crazy stuff.
I'm not clear what you're getting at, but the futures price is basically just a direct relationship of the spot price and the interest rate on BTC or ETH. It is not "predicting" anything, if that's what you mean.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Marseille07 »

Hustlinghustling wrote: Tue May 11, 2021 9:40 am
Marseille07 wrote: Tue May 11, 2021 12:36 am
TheCleverest wrote: Tue May 11, 2021 12:33 am
Marseille07 wrote: Tue May 11, 2021 12:09 am
TheCleverest wrote: Mon May 10, 2021 11:58 pm I'm genuinely curious...for those who believe some coins will go down in value...why don't you attempt to profit from this downward movement (ie buy puts, futures, etc)? Not trying to be confrontational...genuinely curious. And I also have thought about trying to profit from a downward movement. TY
How do you buy puts on the coins? I'd be interested to explore if such a thing is possible.
Great question. Option trading exists. I'm not sure if you are a US or non-US investor. See LedgerX for US and the following others for non-US Deribit, FTX,

I just found out there are Bitcoin micro futures recently. For those interested in learning more the symbol is MBT.
I'm just absolutely stunned by the pricing of futures here. Like, what are these people selling? They really want to sell MBT at 57270 for August???

Like ETH, I just don't see how I can sell short at the price I want (like, 100K for BTC for August for example). This is really crazy stuff.
I'm not clear what you're getting at, but the futures price is basically just a direct relationship of the spot price and the interest rate on BTC or ETH. It is not "predicting" anything, if that's what you mean.
What I was getting at is I can't sell futures at the price point I want, because the market price isn't at all where I want it (i.e. I can't find a buyer at my price point).

In my view, selling August for 57K is like asking the buyers to take your money.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

Marseille07 wrote: Tue May 11, 2021 9:45 am

What I was getting at is I can't sell futures at the price point I want, because the market price isn't at all where I want it (i.e. I can't find a buyer at my price point).
Do you mean there isn't a strike price available that matches your target?

If so, I'm curious what strike prices you're looking at for ETH.

Or that the price of the futures is too expensive?
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Marseille07 »

watchnerd wrote: Tue May 11, 2021 9:54 am
Marseille07 wrote: Tue May 11, 2021 9:45 am

What I was getting at is I can't sell futures at the price point I want, because the market price isn't at all where I want it (i.e. I can't find a buyer at my price point).
Do you mean there isn't a strike price available that matches your target?

If so, I'm curious what strike prices you're looking at for ETH.

Or that the price of the futures is too expensive?
I mentioned upthread but if I were to trade JUL on ETH, I'm looking at $7000. This thing was $1600 three months ago and now $4000. Selling JUL at $3969 is unthinkable.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

Marseille07 wrote: Tue May 11, 2021 9:59 am
watchnerd wrote: Tue May 11, 2021 9:54 am
Marseille07 wrote: Tue May 11, 2021 9:45 am

What I was getting at is I can't sell futures at the price point I want, because the market price isn't at all where I want it (i.e. I can't find a buyer at my price point).
Do you mean there isn't a strike price available that matches your target?

If so, I'm curious what strike prices you're looking at for ETH.

Or that the price of the futures is too expensive?
I mentioned upthread but if I were to trade JUL on ETH, I'm looking at $7000. This thing was $1600 three months ago and now $4000. Selling JUL at $3969 is unthinkable.
Then buy the future, if it's that cheap to you

But you're thinking of what futures do wrongly in that they're not trying to predict what the price would be by July. It's merely looking at the price now and applying the relevant interest rate on it (simplifying, but ya.. )
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Marseille07 »

Hustlinghustling wrote: Tue May 11, 2021 10:07 am
Marseille07 wrote: Tue May 11, 2021 9:59 am
watchnerd wrote: Tue May 11, 2021 9:54 am
Marseille07 wrote: Tue May 11, 2021 9:45 am

What I was getting at is I can't sell futures at the price point I want, because the market price isn't at all where I want it (i.e. I can't find a buyer at my price point).
Do you mean there isn't a strike price available that matches your target?

If so, I'm curious what strike prices you're looking at for ETH.

Or that the price of the futures is too expensive?
I mentioned upthread but if I were to trade JUL on ETH, I'm looking at $7000. This thing was $1600 three months ago and now $4000. Selling JUL at $3969 is unthinkable.
Then buy the future, if it's that cheap to you

But you're thinking of what futures do wrongly in that they're not trying to predict what the price would be by July. It's merely looking at the price now and applying the relevant interest rate on it (simplifying, but ya.. )
When someone mentioned futures, it was in the context of betting on the drop of crypto prices. Buying futures doesn't accomplish that.

And I never said futures traders are trying to predict the price for July.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

Marseille07 wrote: Tue May 11, 2021 10:11 am
Hustlinghustling wrote: Tue May 11, 2021 10:07 am
Marseille07 wrote: Tue May 11, 2021 9:59 am
watchnerd wrote: Tue May 11, 2021 9:54 am
Marseille07 wrote: Tue May 11, 2021 9:45 am

What I was getting at is I can't sell futures at the price point I want, because the market price isn't at all where I want it (i.e. I can't find a buyer at my price point).
Do you mean there isn't a strike price available that matches your target?

If so, I'm curious what strike prices you're looking at for ETH.

Or that the price of the futures is too expensive?
I mentioned upthread but if I were to trade JUL on ETH, I'm looking at $7000. This thing was $1600 three months ago and now $4000. Selling JUL at $3969 is unthinkable.
Then buy the future, if it's that cheap to you

But you're thinking of what futures do wrongly in that they're not trying to predict what the price would be by July. It's merely looking at the price now and applying the relevant interest rate on it (simplifying, but ya.. )
When someone mentioned futures, it was in the context of betting on the drop of crypto prices. Buying futures doesn't accomplish that.

And I never said futures traders are trying to predict the price for July.
If you think the price is going up, obviously, you just buy instead of sell.

But if you want to go short you don't necessarily need the futures market. You just need to be able to borrow the crypto to get short exposure. And this demand source for borrow is what gets people confused on all the overcollateralization who only see it through normal consumer debt lens.

ie. Borrow 1 BTC at 10%/year
sell immediately for 55k USD
wait one year (for easy illustration purposes) to return the 1BTC * 10% to lender = 1.1BTC
after one year, say price of BTC falls to 10k, then you buy back 1.1 BTC for 11k USD to return to lender and you've pocketed 40k USD+

Whether you go short through the futures/options market or the spot market, someone will be borrowing crypto to produce the short exposure (either you or the futures/options contract writer). you can't sell something you don't otherwise own.
Last edited by Hustlinghustling on Tue May 11, 2021 10:22 am, edited 3 times in total.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

Marseille07 wrote: Tue May 11, 2021 9:59 am I mentioned upthread but if I were to trade JUL on ETH, I'm looking at $7000. This thing was $1600 three months ago and now $4000. Selling JUL at $3969 is unthinkable.
Some big institutional investor (I don't remember which) put an $8K strike price for JUL on ETH.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Marseille07 »

Hustlinghustling wrote: Tue May 11, 2021 10:15 am If you think the price is going up, obviously, you just buy instead of sell.

But if you want to go short you don't necessarily need the futures market. You just need to be able to borrow the crypto to get short exposure. And this demand source for borrow is what gets people confused on all the overcollateralization who only see it through normal consumer debt lens.

ie. Borrow 1 BTC at 10%/year
sell immediately for 55k USD
wait one year (for easy illustration purposes) to return the 1BTC * 10% to lender = 1.1BTC
after one year, say price of BTC falls to 10k, then you buy back 1.1 BTC for 11k USD to return to lender and you've pocketed 40k USD+

Whether you go short through the futures/options market or the spot market, someone will be borrowing crypto to produce the short exposure (either you or the futures/options contract writer). you can't sell something you don't otherwise own.
My understanding is that BTC futures market is cash settled, so no one has to borrow crypto. You can sell something you don't own in that sense. You're just exchanging contractual obligations on the price & settlement without delivering the underlying.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Marseille07 »

watchnerd wrote: Tue May 11, 2021 10:16 am
Marseille07 wrote: Tue May 11, 2021 9:59 am I mentioned upthread but if I were to trade JUL on ETH, I'm looking at $7000. This thing was $1600 three months ago and now $4000. Selling JUL at $3969 is unthinkable.
Some big institutional investor (I don't remember which) put an $8K strike price for JUL on ETH.
Yeah, that seems more reasonable to me. As I said upthread, JUL at $3969 is...absolutely crazy. An extremely high chance they're just offering the buyers to take their money.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

Marseille07 wrote: Tue May 11, 2021 10:31 am
Hustlinghustling wrote: Tue May 11, 2021 10:15 am If you think the price is going up, obviously, you just buy instead of sell.

But if you want to go short you don't necessarily need the futures market. You just need to be able to borrow the crypto to get short exposure. And this demand source for borrow is what gets people confused on all the overcollateralization who only see it through normal consumer debt lens.

ie. Borrow 1 BTC at 10%/year
sell immediately for 55k USD
wait one year (for easy illustration purposes) to return the 1BTC * 10% to lender = 1.1BTC
after one year, say price of BTC falls to 10k, then you buy back 1.1 BTC for 11k USD to return to lender and you've pocketed 40k USD+

Whether you go short through the futures/options market or the spot market, someone will be borrowing crypto to produce the short exposure (either you or the futures/options contract writer). you can't sell something you don't otherwise own.
My understanding is that BTC futures market is cash settled, so no one has to borrow crypto. You can sell something you don't own in that sense. You're just exchanging contractual obligations on the price & settlement without delivering the underlying.
if you go short through futures market, YOU don't have to do the borrowing.
The futures market maker will be borrowing BTC to hedge the short exposure they've now provided you. They're just pocketing the spread of the futures market, not betting on the direction of BTC, so they don't take any BTC delta position. You just don't see it. But the price for borrowing BTC is priced into the future you get from them.

What's lost for many who see crypto lending in consumer debt way and not in a securities trading way, is that they don't understand borrowing is an essential and necessary step in providing short exposure to anything. Futures market makers are borrowing BTC and ETH in spot market behind every futures contract they "buy" from you to hedge themselves (i.e. you're going short)
Last edited by Hustlinghustling on Tue May 11, 2021 10:35 am, edited 1 time in total.
Marseille07
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Marseille07 »

Hustlinghustling wrote: Tue May 11, 2021 10:33 am
Marseille07 wrote: Tue May 11, 2021 10:31 am
Hustlinghustling wrote: Tue May 11, 2021 10:15 am If you think the price is going up, obviously, you just buy instead of sell.

But if you want to go short you don't necessarily need the futures market. You just need to be able to borrow the crypto to get short exposure. And this demand source for borrow is what gets people confused on all the overcollateralization who only see it through normal consumer debt lens.

ie. Borrow 1 BTC at 10%/year
sell immediately for 55k USD
wait one year (for easy illustration purposes) to return the 1BTC * 10% to lender = 1.1BTC
after one year, say price of BTC falls to 10k, then you buy back 1.1 BTC for 11k USD to return to lender and you've pocketed 40k USD+

Whether you go short through the futures/options market or the spot market, someone will be borrowing crypto to produce the short exposure (either you or the futures/options contract writer). you can't sell something you don't otherwise own.
My understanding is that BTC futures market is cash settled, so no one has to borrow crypto. You can sell something you don't own in that sense. You're just exchanging contractual obligations on the price & settlement without delivering the underlying.
if you go short through futures market, YOU don't have to do the borrowing.
The futures market maker will be borrowing BTC to hedge the short exposure they've now provided you. They're just pocketing the spread of the futures market, not betting on the direction of BTC, so they don't take any BTC delta position. You just don't see it. But the price for borrowing BTC is priced into the future you get from them.
Sure, if you include the hedging activities into the equation, yes I'm sure someone's hedging with the underlying somewhere. I agree.
Hustlinghustling
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

Marseille07 wrote: Tue May 11, 2021 10:35 am [
Hustlinghustling wrote: Tue May 11, 2021 10:33 am
Marseille07 wrote: Tue May 11, 2021 10:31 am
Hustlinghustling wrote: Tue May 11, 2021 10:15 am If you think the price is going up, obviously, you just buy instead of sell.

But if you want to go short you don't necessarily need the futures market. You just need to be able to borrow the crypto to get short exposure. And this demand source for borrow is what gets people confused on all the overcollateralization who only see it through normal consumer debt lens.

ie. Borrow 1 BTC at 10%/year
sell immediately for 55k USD
wait one year (for easy illustration purposes) to return the 1BTC * 10% to lender = 1.1BTC
after one year, say price of BTC falls to 10k, then you buy back 1.1 BTC for 11k USD to return to lender and you've pocketed 40k USD+

Whether you go short through the futures/options market or the spot market, someone will be borrowing crypto to produce the short exposure (either you or the futures/options contract writer). you can't sell something you don't otherwise own.
My understanding is that BTC futures market is cash settled, so no one has to borrow crypto. You can sell something you don't own in that sense. You're just exchanging contractual obligations on the price & settlement without delivering the underlying.
if you go short through futures market, YOU don't have to do the borrowing.
The futures market maker will be borrowing BTC to hedge the short exposure they've now provided you. They're just pocketing the spread of the futures market, not betting on the direction of BTC, so they don't take any BTC delta position. You just don't see it. But the price for borrowing BTC is priced into the future you get from them.
Sure, if you include the hedging activities into the equation, yes I'm sure someone's hedging with the underlying somewhere. I agree.
FYI this is exactly what happens when you buy a put option or sell a future on a single stock to get short exposure on it. The option writer or futures market maker after trading with you is now long delta and they need to borrow the stock (for a fee) to sell to hedge that position. That stock borrowing is - guess what - also overcollateralized with other stocks/bonds or cash.

They're just pocketing the spread for buying and selling contracts, not betting on the direction of the stock price. Higher short interest creates higher demand for borrowing the security

On flip side, when you buy a call or go long with the future, the option writer or future market maker now is short delta themselves by providing you that exposure and will need to buy the underlying to offset the exposure
TheCleverest
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by TheCleverest »

Gadget wrote: Tue May 11, 2021 9:27 am
TheCleverest wrote: Tue May 11, 2021 8:53 am

And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?

Not trying to be antagonistic just looking to better understand

Cheers
I'm a crypto proponent, but it's pretty easy to defend anti crypto people here on why they aren't buying put options or shorts on crypto. It's the same reason they don't in the normal stock market. You have to be right not only on the direction of the coin/stock, but the timing. Greek letters will eat into your returns the longer out you place your bets. And on highly volatile stocks like AMC, GME, or what I assume the crypto options market is, you pay quite a premium to buy options in the first place. Increased volatility usually means increased options prices on both puts and calls.

I think Siba Inu coin is a scam. But I'd likely go bankrupt trying to short it unless I got really lucky on my timing.
Ah, I see. So the premium is too high. Good to know. Thanks!
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

TheCleverest wrote: Tue May 11, 2021 11:24 pm
Gadget wrote: Tue May 11, 2021 9:27 am
TheCleverest wrote: Tue May 11, 2021 8:53 am

And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?

Not trying to be antagonistic just looking to better understand

Cheers
I'm a crypto proponent, but it's pretty easy to defend anti crypto people here on why they aren't buying put options or shorts on crypto. It's the same reason they don't in the normal stock market. You have to be right not only on the direction of the coin/stock, but the timing. Greek letters will eat into your returns the longer out you place your bets. And on highly volatile stocks like AMC, GME, or what I assume the crypto options market is, you pay quite a premium to buy options in the first place. Increased volatility usually means increased options prices on both puts and calls.

I think Siba Inu coin is a scam. But I'd likely go bankrupt trying to short it unless I got really lucky on my timing.
Ah, I see. So the premium is too high. Good to know. Thanks!
The volatility premium only applies to buying put options. there is no premium for going short by selling a future or by borrowing to sell in spot market, other than if you see the interest rate charged for borrowing the cryptocurrency as a “premium”. but if you think the cryptocurrency will fall 50% in 3 months, then an annualized rate of borrowing at 10% is well worth it

I’ve belaboured the point but hope this drills home how crypto lending is a necessary step for short crypto exposure and drives the otherwise peculiar lending arrangement if viewed only in narrow consumer debt purposes
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by vanbogle59 »

TheCleverest wrote: Tue May 11, 2021 8:53 am And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?
Wouldn't just completely ignoring the whole crypto space be precisely what you would expect a BH to do?
IMHO, that is the very definition of putting their money where their mouth is.

BHs claim nobody knows nothing. Long or short. And that's for equities and bonds. (Don't even think about alt "investments").
They also claim the bond and equity markets are, practically speaking, "efficient" - on average, the current price reflects the risk/reward.
So, they only reasonable path for the average investor is "time in market" at low cost, because business adds value (makes money over time).

So, a BH ignores individual, potential income-sources of all sorts. They don't hedge dollars/rubles. They don't short lithium and buy platinum. And they don't play the slots in Vegas.

The purest BH opinion on the entire crypto space is: "It's irrelevant."

Full disclosure: I own precisely 1 BTC. Bought it back around $600 USD when Coinbase opened up. I think of it as part lotto ticket, part theater ticket. Not part of my investment plan for my family's future. Maybe somebody knows something about crypto. I sure don't.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

vanbogle59 wrote: Wed May 12, 2021 6:03 am
TheCleverest wrote: Tue May 11, 2021 8:53 am And to re-phrease my original question in a blunt manner...what are the BH reasons why someone who doesn't believe in crypto put their money where their mouth is?
Wouldn't just completely ignoring the whole crypto space be precisely what you would expect a BH to do?
IMHO, that is the very definition of putting their money where their mouth is.

BHs claim nobody knows nothing. Long or short. And that's for equities and bonds. (Don't even think about alt "investments").
They also claim the bond and equity markets are, practically speaking, "efficient" - on average, the current price reflects the risk/reward.
So, they only reasonable path for the average investor is "time in market" at low cost, because business adds value (makes money over time).

So, a BH ignores individual, potential income-sources of all sorts. They don't hedge dollars/rubles. They don't short lithium and buy platinum. And they don't play the slots in Vegas.

The purest BH opinion on the entire crypto space is: "It's irrelevant."

Full disclosure: I own precisely 1 BTC. Bought it back around $600 USD when Coinbase opened up. I think of it as part lotto ticket, part theater ticket. Not part of my investment plan for my family's future. Maybe somebody knows something about crypto. I sure don't.
I've been on the site since 2007.

I could argue that my global stock / global bond allocation is one of the purest Boglehead approaches one can take.

(after all, it's almost the same as Vanguard LIfeStrategy Moderate Growth).

So I guess holding crypto at market weight -- because I know nothing -- means I have to resign my Boglehead card.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by zzzquil »

What's a good resource for finding out what the current crypto market cap is?
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

zzzquil wrote: Wed May 12, 2021 7:23 am What's a good resource for finding out what the current crypto market cap is?
https://coinmarketcap.com/
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

zzzquil wrote: Wed May 12, 2021 7:23 am What's a good resource for finding out what the current crypto market cap is?
https://www.coingecko.com/en
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

I wish we could rename this thread. Ethereum is the real future of crypto!
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

txhill wrote: Wed May 12, 2021 9:12 am I wish we could rename this thread. Ethereum is the real future of crypto!
Just start a new thread with that name.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by vanbogle59 »

watchnerd wrote: Wed May 12, 2021 7:09 am I've been on the site since 2007.

I could argue that my global stock / global bond allocation is one of the purest Boglehead approaches one can take.

(after all, it's almost the same as Vanguard LIfeStrategy Moderate Growth).

So I guess holding crypto at market weight -- because I know nothing -- means I have to resign my Boglehead card.
Well played, and respect! :beer

Just to continue the game to its logical conclusion....

Do you also hold gold at its market weight? Real estate? Art? NFTs? :D
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

vanbogle59 wrote: Wed May 12, 2021 9:28 am

Just to continue the game to its logical conclusion....

Do you also hold gold at its market weight? Real estate? Art? NFTs? :D
To quote William Sharpe:
In a simple world, the market portfolio would include every publicly traded security, with each
held in proportion to the total amount outstanding. An investor could hold his or her version of
the market portfolio by purchasing x% of the outstanding shares of every traded stock and x%
of the outstanding number of bonds for every traded bond, where x is the ratio of his or her
invested wealth to the total value of the amounts invested by everyone.
So to your questions:

1. To be included, it needs to be securitized and tradeable
2. Yes, I hold securitized gold ETFs at their market weight ($200B).
3. I don't know of any securitized art
4. Securitized Real Estate already exists in the TSM in the form of REITS
5. There is a minimum market cap that is worth the bother. You can debate about how small that is, but there are diminishing returns.
6. I'm not opposed to NFTs. I don't think their market cap is big enough yet, although I haven't dug into it.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

txhill wrote: Wed May 12, 2021 9:12 am I wish we could rename this thread. Ethereum is the real future of crypto!
Aave's founder leaking some alpha just now on Twitter:

https://twitter.com/StaniKulechov/statu ... 7413271563
It's a private pool for institutions that are still practicing before aping into DeFi
Aave is running private pools for institutions that want to practice before going live on Ethereum mainnet. This was never disclosed before. :shock: Perhaps soon you will have the chance to earn interest on dollar deposits at Aave through your boring bank or even Vanguard! Quite curious to see which institutions come on board first.

Edit: I will once again remind you all that Aave is only worth 1/30 Wells Fargo. Which is a joke.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by atdharris »

Threw about $500 into BTC and Ethereum a bit ago and obviously that investment has done well. I'm just not well versed enough to put a large amount of money into crypto until I learn more about it. It also is worrisome that people seem to think a new currency could come along and just wipe out BTC or ETH
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

atdharris wrote: Wed May 12, 2021 10:06 am Threw about $500 into BTC and Ethereum a bit ago and obviously that investment has done well. I'm just not well versed enough to put a large amount of money into crypto until I learn more about it. It also is worrisome that people seem to think a new currency could come along and just wipe out BTC or ETH
I wouldn't invest more than you are prepared to lose.

Even if things don't get completely wiped out, the prices are crazy volatile.

Ethereum lost something like 90% of its value in the last big crypto bear market.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by decapod10 »

Yeah, this is all still risky business, even BTC and ETH. ETH reached an all time high of around $1350 in 2017, then crashed all the way to < $100. It did not reach $1350 again until January 2021. A 50% fall in ETH prices at some point would not be particularly surprising, even to relatively bullish ETH holders. Even 80/90%+ falls are possible.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

decapod10 wrote: Wed May 12, 2021 10:25 am Yeah, this is all still risky business, even BTC and ETH. ETH reached an all time high of around $1350 in 2017, then crashed all the way to < $100. It did not reach $1350 again until January 2021. A 50% fall in ETH prices at some point would not be particularly surprising, even to relatively bullish ETH holders. Even 80/90%+ falls are possible.
If Eth reaches market cap parity with Bitcoin, I think all sorts of interesting things could happen at that stage.

That would be about 2.5x from current price.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by atdharris »

watchnerd wrote: Wed May 12, 2021 10:08 am
atdharris wrote: Wed May 12, 2021 10:06 am Threw about $500 into BTC and Ethereum a bit ago and obviously that investment has done well. I'm just not well versed enough to put a large amount of money into crypto until I learn more about it. It also is worrisome that people seem to think a new currency could come along and just wipe out BTC or ETH
I wouldn't invest more than you are prepared to lose.

Even if things don't get completely wiped out, the prices are crazy volatile.

Ethereum lost something like 90% of its value in the last big crypto bear market.
Right, I remember when BTC popped a few years ago. I bought some $19k and then more at $32k and stopped there. I don't think I'd want 1-2% of my entire net worth in it, but maybe I am being too skiddish
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

Prahasaurus wrote: Wed May 12, 2021 9:48 am
txhill wrote: Wed May 12, 2021 9:12 am I wish we could rename this thread. Ethereum is the real future of crypto!
Aave's founder leaking some alpha just now on Twitter:

https://twitter.com/StaniKulechov/statu ... 7413271563
It's a private pool for institutions that are still practicing before aping into DeFi
Aave is running private pools for institutions that want to practice before going live on Ethereum mainnet. This was never disclosed before. :shock: Perhaps soon you will have the chance to earn interest on dollar deposits at Aave through your boring bank or even Vanguard! Quite curious to see which institutions come on board first.

Edit: I will once again remind you all that Aave is only worth 1/30 Wells Fargo. Which is a joke.
Very bullish news for Aave, and ETH indirectly. Seems like the shift of at least a sizeable portion of the CeFi market to DeFi is inevitable.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by JonnyDVM »

txhill wrote: Wed May 12, 2021 10:42 am
Prahasaurus wrote: Wed May 12, 2021 9:48 am
txhill wrote: Wed May 12, 2021 9:12 am I wish we could rename this thread. Ethereum is the real future of crypto!
Aave's founder leaking some alpha just now on Twitter:

https://twitter.com/StaniKulechov/statu ... 7413271563
It's a private pool for institutions that are still practicing before aping into DeFi
Aave is running private pools for institutions that want to practice before going live on Ethereum mainnet. This was never disclosed before. :shock: Perhaps soon you will have the chance to earn interest on dollar deposits at Aave through your boring bank or even Vanguard! Quite curious to see which institutions come on board first.

Edit: I will once again remind you all that Aave is only worth 1/30 Wells Fargo. Which is a joke.
Very bullish news for Aave, and ETH indirectly. Seems like the shift of at least a sizeable portion of the CeFi market to DeFi is inevitable.
AAVE up 30%! Homina Homina. Bing-bong!
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

atdharris wrote: Wed May 12, 2021 10:39 am
Right, I remember when BTC popped a few years ago. I bought some $19k and then more at $32k and stopped there. I don't think I'd want 1-2% of my entire net worth in it, but maybe I am being too skiddish
Well, we have 2% of our Risk Portfolio in crypto, not our net worth.

As a portion of our total portfolio of liquid assets, its about 1%.

As a portion of our total net worth, <1%.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

JonnyDVM wrote: Wed May 12, 2021 11:05 am

AAVE up 30%! Homina Homina. Bing-bong!
LOL such a wild west scenario.

Imagine the CEO of a publicly traded company leaking on Twitter like that.

The regulators would bust his chops so fast. ;)
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

watchnerd wrote: Wed May 12, 2021 11:12 am
JonnyDVM wrote: Wed May 12, 2021 11:05 am

AAVE up 30%! Homina Homina. Bing-bong!
LOL such a wild west scenario.

Imagine the CEO of a publicly traded company leaking on Twitter like that.

The regulators would bust his chops so fast. ;)
Does Twitter make markets more or less efficient? :)
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

watchnerd wrote: Wed May 12, 2021 9:13 am
txhill wrote: Wed May 12, 2021 9:12 am I wish we could rename this thread. Ethereum is the real future of crypto!
Just start a new thread with that name.
It's tempting but even I have to admit there are more than enough crypto threads on the forum already :)
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by JonnyDVM »

watchnerd wrote: Wed May 12, 2021 11:12 am
JonnyDVM wrote: Wed May 12, 2021 11:05 am

AAVE up 30%! Homina Homina. Bing-bong!
LOL such a wild west scenario.

Imagine the CEO of a publicly traded company leaking on Twitter like that.

The regulators would bust his chops so fast. ;)
As I said friend, this is the Wild West, except there’s no Marshall Dillon. Bought the AAVE dip yesterday morning was it? Hard to keep track. Anyway I’m wishing I bought significantly more. There’s free money lying around everywhere in this universe. I don’t want to leave.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

JonnyDVM wrote: Wed May 12, 2021 11:20 am

As I said friend, this is the Wild West, except there’s no Marshall Dillon. Bought the AAVE dip yesterday morning was it? Hard to keep track. Anyway I’m wishing I bought significantly more. There’s free money lying around everywhere in this universe. I don’t want to leave.
I'm getting the impression that this is what pre-1929 stocks, before regulations that came after the crash, must have felt like.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Aaand...it'sgone »

txhill wrote: Wed May 12, 2021 11:15 am
watchnerd wrote: Wed May 12, 2021 11:12 am
JonnyDVM wrote: Wed May 12, 2021 11:05 am

AAVE up 30%! Homina Homina. Bing-bong!
LOL such a wild west scenario.

Imagine the CEO of a publicly traded company leaking on Twitter like that.

The regulators would bust his chops so fast. ;)
Does Twitter make markets more or less efficient? :)
I dunno, but it certainly makes alt season really fun. I have friends who have basically only invested in alts last couple of years. I feel like they'll be telling me they are retiring next week. :shock:
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

watchnerd wrote: Wed May 12, 2021 11:27 am
JonnyDVM wrote: Wed May 12, 2021 11:20 am

As I said friend, this is the Wild West, except there’s no Marshall Dillon. Bought the AAVE dip yesterday morning was it? Hard to keep track. Anyway I’m wishing I bought significantly more. There’s free money lying around everywhere in this universe. I don’t want to leave.
I'm getting the impression that this is what pre-1929 stocks, before regulations that came after the crash, must have felt like.
Definitely. The crypto world is basically reinventing finance from scratch--which means it is going through all the tumult experienced by the stock market from before the passage of securities laws in 1933/1934. Hopefully the SEC will act quickly to bring some stability to the space.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

txhill wrote: Wed May 12, 2021 11:34 am

Definitely. The crypto world is basically reinventing finance from scratch--which means it is going through all the tumult experienced by the stock market from before the passage of securities laws in 1933/1934. Hopefully the SEC will act quickly to bring some stability to the space.
I don't think the SEC can do it alone.

DeFi puts too many actors out of the SEC's reach.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by txhill »

watchnerd wrote: Wed May 12, 2021 11:37 am
txhill wrote: Wed May 12, 2021 11:34 am

Definitely. The crypto world is basically reinventing finance from scratch--which means it is going through all the tumult experienced by the stock market from before the passage of securities laws in 1933/1934. Hopefully the SEC will act quickly to bring some stability to the space.
I don't think the SEC can do it alone.

DeFi puts too many actors out of the SEC's reach.
That's true... wild times.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by vanbogle59 »

watchnerd wrote: Wed May 12, 2021 9:40 am
vanbogle59 wrote: Wed May 12, 2021 9:28 am

Just to continue the game to its logical conclusion....

Do you also hold gold at its market weight? Real estate? Art? NFTs? :D
To quote William Sharpe:
In a simple world, the market portfolio would include every publicly traded security, with each
held in proportion to the total amount outstanding. An investor could hold his or her version of
the market portfolio by purchasing x% of the outstanding shares of every traded stock and x%
of the outstanding number of bonds for every traded bond, where x is the ratio of his or her
invested wealth to the total value of the amounts invested by everyone.
So to your questions:

1. To be included, it needs to be securitized and tradeable
2. Yes, I hold securitized gold ETFs at their market weight ($200B).
3. I don't know of any securitized art
4. Securitized Real Estate already exists in the TSM in the form of REITS
5. There is a minimum market cap that is worth the bother. You can debate about how small that is, but there are diminishing returns.
6. I'm not opposed to NFTs. I don't think their market cap is big enough yet, although I haven't dug into it.
This makes perfect sense to me.
Except that I don't think any of the crypto stuff rises to the level of publicly traded security.
IMHO, they still look more like Powerball tickets than shares in Megacorp.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

vanbogle59 wrote: Wed May 12, 2021 12:09 pm

This makes perfect sense to me.
Except that I don't think any of the crypto stuff rises to the level of publicly traded security.
IMHO, they still look more like Powerball tickets than shares in Megacorp.
This is where things get interesting...

They're definitely publicly traded.

Are they a security?

Gensler has said he thinks that crypto tokens are a type of security, whereas the crypto currencies are commodities.
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