Cryptocurrency - Bitcoin Continues to Soar!

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Socal77
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Socal77 »

Gadget wrote: Mon May 17, 2021 9:13 am The answer is because it can't do any of the things today that ETH can.
What can Ethereum do?
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HomerJ
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by HomerJ »

Prahasaurus wrote: Mon May 17, 2021 10:12 pm
nisiprius wrote: Mon May 17, 2021 6:02 pm
Prahasaurus wrote: Mon May 17, 2021 3:07 am
Forester wrote: Mon May 17, 2021 2:00 am Interesting new dynamic is the divorce of Elon Musk and the crypto community, it's like the tech scene splitting in two, beforehand QQQ/ARKK/Tesla/Bitcoin were all on the same page and all moving to the top right on the chart. As the tech growth story disintegrates there will be in-fighting and recrimination.
LOL.

Yeah, tech growth is going to disintegrate. Let's all bet against technology! /s
Were you paying attention to the stock market circa the year 2000?

Global Crossing. WorldCom. Webvan. Globalstar. Lycos. 3Com. Lucent. There was just no way you can avoid winning. Just invest in technology. In the "New Economy." The future is undervalued.

Yes, technology rolls on but there are bubbles and busts within it, and simply buying technology stocks isn't the master key to wealth without work.
It's all about fundamentals. If crypto is a scam, if it's about convincing a "greater fool" to buy something with no value, then longer term the crypto market will go to zero. If, on the other hand, crypto will become a foundation of many industries, including finance, then its 2 trillion USD total market cap is peanuts.

Shorter term, there are always ups and downs. I'm a long term believer.
You didn't understand what he wrote. Blockchain can be very successful in the future, but bitcoin and Ethereum could still fail.

It doesn't have to be a scam for you to lose.

3Com and Lucent weren't scams, but people who invested in them basically lost everything.

Just like you could be right about blockchain, but wrong about Bitcoin and Ethereum (not to mention all the other alt-coins)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
Prahasaurus
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

HomerJ wrote: Mon May 17, 2021 11:21 pm
Prahasaurus wrote: Mon May 17, 2021 10:12 pm
nisiprius wrote: Mon May 17, 2021 6:02 pm
Prahasaurus wrote: Mon May 17, 2021 3:07 am
Forester wrote: Mon May 17, 2021 2:00 am Interesting new dynamic is the divorce of Elon Musk and the crypto community, it's like the tech scene splitting in two, beforehand QQQ/ARKK/Tesla/Bitcoin were all on the same page and all moving to the top right on the chart. As the tech growth story disintegrates there will be in-fighting and recrimination.
LOL.

Yeah, tech growth is going to disintegrate. Let's all bet against technology! /s
Were you paying attention to the stock market circa the year 2000?

Global Crossing. WorldCom. Webvan. Globalstar. Lycos. 3Com. Lucent. There was just no way you can avoid winning. Just invest in technology. In the "New Economy." The future is undervalued.

Yes, technology rolls on but there are bubbles and busts within it, and simply buying technology stocks isn't the master key to wealth without work.
It's all about fundamentals. If crypto is a scam, if it's about convincing a "greater fool" to buy something with no value, then longer term the crypto market will go to zero. If, on the other hand, crypto will become a foundation of many industries, including finance, then its 2 trillion USD total market cap is peanuts.

Shorter term, there are always ups and downs. I'm a long term believer.
You didn't understand what he wrote. Blockchain can be very successful in the future, but bitcoin and Ethereum could still fail.

It doesn't have to be a scam for you to lose.

3Com and Lucent weren't scams, but people who invested in them basically lost everything.

Just like you could be right about blockchain, but wrong about Bitcoin and Ethereum (not to mention all the other alt-coins)
You didn't understand what I wrote. I didn't say anything in that particular post about Bitcoin or Ethereum, did I? Go back and look. I'll wait...
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HomerJ
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by HomerJ »

Prahasaurus wrote: Mon May 17, 2021 11:27 pm
HomerJ wrote: Mon May 17, 2021 11:21 pm
Prahasaurus wrote: Mon May 17, 2021 10:12 pm
nisiprius wrote: Mon May 17, 2021 6:02 pm
Prahasaurus wrote: Mon May 17, 2021 3:07 am

LOL.

Yeah, tech growth is going to disintegrate. Let's all bet against technology! /s
Were you paying attention to the stock market circa the year 2000?

Global Crossing. WorldCom. Webvan. Globalstar. Lycos. 3Com. Lucent. There was just no way you can avoid winning. Just invest in technology. In the "New Economy." The future is undervalued.

Yes, technology rolls on but there are bubbles and busts within it, and simply buying technology stocks isn't the master key to wealth without work.
It's all about fundamentals. If crypto is a scam, if it's about convincing a "greater fool" to buy something with no value, then longer term the crypto market will go to zero. If, on the other hand, crypto will become a foundation of many industries, including finance, then its 2 trillion USD total market cap is peanuts.

Shorter term, there are always ups and downs. I'm a long term believer.
You didn't understand what he wrote. Blockchain can be very successful in the future, but bitcoin and Ethereum could still fail.

It doesn't have to be a scam for you to lose.

3Com and Lucent weren't scams, but people who invested in them basically lost everything.

Just like you could be right about blockchain, but wrong about Bitcoin and Ethereum (not to mention all the other alt-coins)
You didn't understand what I wrote. I didn't say anything in that particular post about Bitcoin or Ethereum, did I? Go back and look. I'll wait...
You are just playing games now. Annoying.

You mentioned the 2 trillion market cap of crypto. 70% of that is bitcoin and ethereum. You have posted many times that you are heavily invested in both of them.

But fine, let's leave their names out... The point is still valid.

Whatever you are invested in now (AAVE, etc.) might not be the winner.

It doesn't have to be a scam for you to lose. You can be right that blockchain may become a huge part of the financial world, just like people were sure the Internet would be a huge part of the world, but you still might invest in the wrong crypto or blockchain protocols. Just like many people were right about the Internet, but still lost money by investing in the wrong companies.

Just being a strong believer in the future of crypto isn't enough.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
Prahasaurus
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

HomerJ wrote: Mon May 17, 2021 11:35 pm You are just playing games now. Annoying.

You mentioned the 2 trillion market cap of crypto. 70% of that is bitcoin and ethereum. You have posted many times that you are heavily invested in both of them.

But fine, let's leave their names out... The point is still valid.

Whatever you are invested in now (AAVE, etc.) might not be the winner.

It doesn't have to be a scam for you to lose. You can be right that blockchain may become a huge part of the financial world, just like people were sure the Internet would be a huge part of the world, but you still might invest in the wrong crypto or blockchain protocols. Just like many people were right about the Internet, but still lost money by investing in the wrong companies.

Just being a strong believer in the future of crypto isn't enough.
Thanks, I had never even considered the possibility my specific crypto investments could fail! :oops:

No, seriously. I think we are all adults here and we know what we are doing. I may be making a huge mistake, but I believe the risk/reward ratio is very favorable. I don't think I could live with myself if I didn't go for this once in a lifetime opportunity.

The beauty is that we are all free to do as we like (provided the government doesn't censor crypto). You can choose to sit on the sidelines and warn others, I can choose to invest heavily in ETH and AAVE, putting my money where my mouth is, so to speak. That is what's great about capitalism and options. You are free to succeed and fail! And hopefully learn from your mistakes/success.
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watchnerd
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

Prahasaurus wrote: Mon May 17, 2021 11:44 pm I can choose to invest heavily in ETH and AAVE, putting my money where my mouth is, so to speak.
Given how cyclical the market has been in the past, do you have sell orders pre-planned for ETH and AAVE at particular price points?

Or just HODL?
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Prahasaurus
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

watchnerd wrote: Mon May 17, 2021 11:47 pm
Prahasaurus wrote: Mon May 17, 2021 11:44 pm I can choose to invest heavily in ETH and AAVE, putting my money where my mouth is, so to speak.
Given how cyclical the market has been in the past, do you have sell orders planned for ETH and AAVE?

Or just HODL?
The cyclicality was due to Bitcoin's dominance within the entire sector. Bitcoin is a commodity like asset with little utility, no surprise it behaves more like gold than Amazon. However, I realize BTC still dominates total crypto market cap, and it will likely take another 4-5 years before we can throw off the shackles of Bitcoin dominance. Although it could also happen much sooner than most people think...

My personal belief is we'll see Ethereum rise substantially from current levels throughout 2021. We likely will see a large pullback later in 2021 or 2022 (more likely), but not as substantial as many believe. So I'm looking for ETH at 25k USD, perhaps falling to 10k USD. And it won't take another 4 years for ETH to get back to 25k... I think the fall will be brief.

Bitcoin, on the other hand, I have no clue. Bitcoin will need to come to terms with the rise of ETH, and it's going to be interesting to watch. Psychologically, it could be quite devastating for BTC to lose its position as the "top" crypto.

I'm amazed most people still don't get ETH. Most don't even understand the differences between ETH and BTC. And most have crazy assumptions about how the so called "ETH killers" will compete against ETH. I think we'll have more clarity in 2021 on that issue, which will be extremely bullish for Ethereum in general.

My plan is to sell some crypto later in the year to reduce my dependence on this sector. I have already been selling some more riskier tokens. I've sold about 75% of my UNI position, for example, even though I'm still a massive bull on UNI moving forward. I have not sold any AAVE, though. As a customer of both, I can't see any world in which AAVE's market cap is lower than Wells Fargo. Since that implies a 30x from here, I'll just wait. And the beauty of Aave is their brand is so strong, they can potentially port their solution onto other blockchains if required (although not trivial in some cases, but still, they have a great team and a fantastic brand). We've already seen that with Aave on Matic.
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typical.investor
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by typical.investor »

decapod10 wrote: Mon May 17, 2021 10:18 am
typical.investor wrote: Mon May 17, 2021 9:37 am
Gadget wrote: Mon May 17, 2021 9:13 am
HomerJ wrote: Mon May 17, 2021 12:18 am
decapod10 wrote: Mon May 17, 2021 12:07 amCardano supposedly has a lot of benefits over Ethereum on paper, however until it can actually run dApps, it is all theoretical. Cardano can claim they have lower gas fees the Ethereum, but it cannot be proven until they handle the same amount of traffic that Ethereum does. Cardano will have low gas fees now because there are so few transactions on it.

That being said, it is always possible that everything could work out, you never know. Ethereum still has to transition to 2.0, there is always a chance that it falters. Or Cardano could just turn out to be really awesome and overtake Ethereum. Or they could co-exist also. The question does that chance make Cardano worth 1/6 to 1/7 of Ethereum? Up to each person to decide.
Until Ethereum transitions to 2.0 and PoS, it's technically still in the theoretical column as well.
I think the part you're missing are the current transaction statistics. The ETH 2.0 merge is future. Just like ADA smart contracts are off in the future. Let's talk about today.

Today, the 7 day average of actual fees paid DAILY on ETH is $69 million. I think you'd agree, even with high transaction costs currently, that this means there is just so much network traffic that people are willing to pay actual crypto that they could have cashed in for dollars on something. You may not agree with the use case for that something, but obviously a large number of people do.

If you scroll way down the list at https://cryptofees.info/ you'll find Cardano. Its 7 day average of fees paid DAILY is $26,000. Even if you make the claim that their transactions are cheaper (they are significantly), why isn't everyone using Cardano? Shouldn't its lower transaction fees encourage more network usage? The answer is because it can't do any of the things today that ETH can.

Just to put those numbers into different context... Cardano network fees are currently 0.0376% of ETH's fees. Yet the market cap for Cardano is 17% of Ethereum.
I think you have twisted this inside out.

As ETH gets more valuable, transaction fees get more and more expensive when measured in USD. This is simply a fact.

That's it. So no, the lower market cap of Cardano is not necessarily because people are so willing to pay transaction fees on ETH because the smart contracts are so useful. The transaction fees are simply high because the ETH price is. Same with bitcoin.

Whether or not ETH does something with its contracts that adds value is another questions Some argue those contracts will raise the network congestion and raise the transaction fees. Some day people will examine whether the costs are worth it.

As it is, POW (proof of work by miners) seems extremely inefficient.

I'm curious what that $69 million in fees actually bought that Visa couldn't have done cheaper. But yeah, illegal transactions are always expensive.
Transaction fees are not generally dependent on the price of the underlying coin, they are dependent on supply and demand for blockspace.
That's the theory right. As a non-kool aid drinker, I have a hard time swallowing that as it's not what the data seem to show. Bitcoin is supposed to be the same story. Let's look:

Daily Confirmed Transactions (Bitcoin)

Jan 2017 around 260,000 to 313,000
May 2021 around 250,000 to 312,000

Transaction fees (0.00000001 BTC)
Jan 2017 75 to 118 satoshis/byte
May 2021 51 to 71 satoshis/byte

Transaction costs (USD)
Jan 2017 0.21 to 0.34 USD/tx
May 2021 5.29 to 10.24 USD/tx

BTC Price (USD)
Jan 2017 $1000
May 2021 $45,000 to 58,000

My eyes see the same number of transactions being executed at a far higher cost which correlates to price of bitcoin. I know that's bitcoin and ETH is a little different but both are still POW (proof of work).

When you submit a transaction, it is essentially an auction process. You submit a gas fee along with your transaction, and the miners will choose the transactions which have submitted the highest transaction fee. If there is no demand for the network, people can submit low gas fees and miners just have to accept because there is no other business. It doesn't matter what the spot price of Ether is at the time.

There is an association between gas fees and Ether prices, but you have the cause and effect slightly out of order.

High demand for the network is the root cause of both high network fees and Ether prices (though Ether prices also have speculation boosting them as well).

Edit to add: I will say though that total network fees both is and isn't a good way of measuring what a network is worth I think, but there are a lot of way to look at it.
As someone else has written:
Assuming the network has the same level of congestion, a transaction when ETH price is $1200 will use the same amount of Ether as the same transaction when ETH price is $1500.

In terms of the dollar amount spent the value will de different.
Actually, speculation that Dogecoin and Shibu Inu will rise dramatically is also pushing up ETH transaction fees tremendously because they run on the same network. I don't think these coins are doing anything meaningful other than increasing in price due to speculation. So yeah, an increasing price is pushing up transaction costs.
decapod10
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by decapod10 »

typical.investor wrote: Tue May 18, 2021 4:45 am
That's the theory right. As a non-kool aid drinker, I have a hard time swallowing that as it's not what the data seem to show. Bitcoin is supposed to be the same story. Let's look:

Daily Confirmed Transactions (Bitcoin)

Jan 2017 around 260,000 to 313,000
May 2021 around 250,000 to 312,000

Transaction fees (0.00000001 BTC)
Jan 2017 75 to 118 satoshis/byte
May 2021 51 to 71 satoshis/byte

Transaction costs (USD)
Jan 2017 0.21 to 0.34 USD/tx
May 2021 5.29 to 10.24 USD/tx

BTC Price (USD)
Jan 2017 $1000
May 2021 $45,000 to 58,000

My eyes see the same number of transactions being executed at a far higher cost which correlates to price of bitcoin. I know that's bitcoin and ETH is a little different but both are still POW (proof of work).

Actually, speculation that Dogecoin and Shibu Inu will rise dramatically is also pushing up ETH transaction fees tremendously because they run on the same network. I don't think these coins are doing anything meaningful other than increasing in price due to speculation. So yeah, an increasing price is pushing up transaction costs.
Being a Kool-Aid drinker doesn't mean that my theory is incorrect, and I'm even agnostic about how important "total fees" on a network really is. I agree that "total fees" isn't necessarily a perfect way of measuring how "good" a network is.

But regardless, in my model, the gas prices of ETH and the value of ETH are also correlated, so showing correlation between the two doesn't necessarily prove or disprove my thesis. However, I think you're right that the price of ETH being higher causes gas prices to go higher because the value of the transactions occuring also go higher, and therefore people are willing to pay more for the transactions. So maybe I'm just playing sematntics to an extent, and I will concede that yes higher ETH prices does ultimately correlate with high gas prices and probably is some driver of high gas prices as well (when valued in USD).

However, it is definitely true that demand for the Ethereum network also drive gas prices as well. Whether it's POS or POW at this point doesn't really matter because Ethereum network has been running at > 98% capacity since October 2020, so the miner's costs are pretty much irrelevant and it's the users bids that are determining the gas prices.

Dogecoin does not use Ethereum (DOGE is it's own blockchain, a fork of Litecoin), however Shiba Inu is an ERC-20 token and uses Ethereum for transactions yes. Also true that spiking Shiba Inu prices did drive up Ethereum gas prices, yes. But that would seem to contradict your thesis that high Ethereum gas prices are caused by high ETH prices. The increased price of Shiba Inu caused increased demand for Ethereum network so people could trade Shiba Inu, which caused gas prices to spike.

Date Gas price (gwei) ETH (USD)
5-May-21 59.39 3522
6-May-21 65.94 3490
7-May-21 68.35 3479
8-May-21 139.81 3905
9-May-21 130.67 3922
10-May-21 238.39 3947
11-May-21 298.77 4167
12-May-21 281.83 3811
13-May-21 170.57 3719
14-May-21 128.8 4075
15-May-21 93.12 3641

May 10/May11 was the peak of Shiba Inu transactions, and it was the desire to trade SHIB and the other dog coins that was driving up gas prices.

Reference:
https://www.coindesk.com/ethereum-gas-f ... -imitators

Notice that in gwei the gas prices almost 5x from May 5 to May 11. Yes, it's also true that ETH value increased during this time, but only by around 20%. By far the biggest driver of increased gas prices was demand for blockspace (caused by love of dog coins) rather than ETH prices.

May 12th, Vitalik famously donated SHIB to the Covid relief fund, (I think it was the same day as the Elon tweet as well but I may be wrong on that). But in any case, the network demand from the dog coins dropped off after that, and gas prices dropped down along with the decreased demand.

So, I think it may be fair to say that ETH prices has some effect on gas prices when looking at USD values, but my opinion is that it's not the only factor or even the predominant one.

(FWIW, anecdotally I look at Ethereum gas prices several times per day and see which sources are creating the demand for block space, and I can also confirm that the Shiba contract was in the top 4 or so gas guzzlers at the peak, which is unusual. Today for example it is #18. But just my own observation)
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watchnerd
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

decapod10 wrote: Tue May 18, 2021 10:36 am Notice that in gwei the gas prices almost 5x from May 5 to May 11. Yes, it's also true that ETH value increased during this time, but only by around 20%. By far the biggest driver of increased gas prices was demand for blockspace (caused by love of dog coins) rather than ETH prices.

May 12th, Vitalik famously donated SHIB to the Covid relief fund, (I think it was the same day as the Elon tweet as well but I may be wrong on that). But in any case, the network demand from the dog coins dropped off after that, and gas prices dropped down along with the decreased demand.

So, I think it may be fair to say that ETH prices has some effect on gas prices when looking at USD values, but my opinion is that it's not the only factor or even the predominant one.

(FWIW, anecdotally I look at Ethereum gas prices several times per day and see which sources are creating the demand for block space, and I can also confirm that the Shiba contract was in the top 4 or so gas guzzlers at the peak, which is unusual. Today for example it is #18. But just my own observation)
The economics are reminding me of when I owned oil and gas pipeline MLPs.

Strictly speaking, the payout was related to the volume going through the pipe, but the volume went up in periods of high demand, as did the price of oil/gas.

So there was a strong correlation between pipeline volume and commodity price.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by decapod10 »

watchnerd wrote: Tue May 18, 2021 11:19 am
decapod10 wrote: Tue May 18, 2021 10:36 am Notice that in gwei the gas prices almost 5x from May 5 to May 11. Yes, it's also true that ETH value increased during this time, but only by around 20%. By far the biggest driver of increased gas prices was demand for blockspace (caused by love of dog coins) rather than ETH prices.

May 12th, Vitalik famously donated SHIB to the Covid relief fund, (I think it was the same day as the Elon tweet as well but I may be wrong on that). But in any case, the network demand from the dog coins dropped off after that, and gas prices dropped down along with the decreased demand.

So, I think it may be fair to say that ETH prices has some effect on gas prices when looking at USD values, but my opinion is that it's not the only factor or even the predominant one.

(FWIW, anecdotally I look at Ethereum gas prices several times per day and see which sources are creating the demand for block space, and I can also confirm that the Shiba contract was in the top 4 or so gas guzzlers at the peak, which is unusual. Today for example it is #18. But just my own observation)
The economics are reminding me of when I owned oil and gas pipeline MLPs.

Strictly speaking, the payout was related to the volume going through the pipe, but the volume went up in periods of high demand, as did the price of oil/gas.

So there was a strong correlation between pipeline volume and commodity price.
Yeah, it's tough because sometimes it's sort of a chicken and the egg problem.

Conceptually, I think about the scenario where people are just hoarding ETH and not moving it, like Bezos just decides to buy and hold 50% of the Ether supply or something. but people aren't really transacting much and network capacity is say 60%. This constricts the supply of ETH and causes prices to go up. However I don't think gas prices would be particularly high in this case, they would probably ride somewhere just above miner's costs I'm guessing. Because there is plenty of free block space in this scenario, so you don't need to worry about outbidding other users to fight for space. You just need to bid enough that the miners will be interested in taking your transaction, and miners' costs are based on fiat, not ETH prices.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

Purely anecdotal observations on portfolio behavior from holding a small (~2%) allocation to crypto in what is otherwise approximate a global stock/bond portfolio close to 60/40:

1. As a high volatility, high beta asset, even a 2% allocation has noticeable impact on daily portfolio fluctuations -- far more than I expected.

2. Risk parity analysis puts the 2 blue chip cryptos (BTC, ETH) at about a 1:6-7 risk parity ratio versus global equities. So even 2% in crypto "feels like" you increased your equity exposure by 12-14%.

3. More correlated with equities than expected, less correlated with gold than expected, despite discussion about BTC being "digital gold".

=====

As a footnote on trying to hold crypto at market cap...

There is a Total Market Cap token in existence that I wasn't aware of, in *beta* (danger zone):

https://cryptex.finance/

However, I'm not holding it (yet), haven't used it, and it isn't available on any of the major exchanges.

I may add 1 share to my wallet just to see how it goes.
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vanbogle59
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by vanbogle59 »

watchnerd wrote: Tue May 18, 2021 12:09 pm So even 2% in crypto "feels like" you increased your equity exposure by 12-14%.
Or like someone keeps taking my portfolio to the dog track!
(Which is why my crypto gets its own spreadsheet. That way I can continue lying to myself: "I'm not REALLY invested in it".)
watchnerd wrote: Tue May 18, 2021 12:09 pm There is a Total Market Cap token in existence that I wasn't aware of, in *beta* (danger zone):
OOOOO! I want some of that.
Really. Thanks. I will check that out today.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Texanbybirth »

watchnerd wrote: Tue May 18, 2021 12:09 pm
2. Risk parity analysis puts the 2 blue chip cryptos (BTC, ETH) at about a 1:6-7 risk parity ratio versus global equities. So even 2% in crypto "feels like" you increased your equity exposure by 12-14%.
Can you help me understand this better? I saw your reply to my UPRO/TMF post yesterday, but I didn't really understand what you were saying.

(FWIW, my original crypto investment at 50/50 BTC/ETH was 35bps of our portfolio. More like a trip to a casino [a place I loathe] than an actual investment allocation.)
“The strong cannot be brave. Only the weak can be brave; and yet again, in practice, only those who can be brave can be trusted, in time of doubt, to be strong.“ - GK Chesterton
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Prahasaurus »

watchnerd wrote: Tue May 18, 2021 12:09 pm Purely anecdotal observations on portfolio behavior from holding a small (~2%) allocation to crypto in what is otherwise approximate a global stock/bond portfolio close to 60/40:

1. As a high volatility, high beta asset, even a 2% allocation has noticeable impact on daily portfolio fluctuations -- far more than I expected.

2. Risk parity analysis puts the 2 blue chip cryptos (BTC, ETH) at about a 1:6-7 risk parity ratio versus global equities. So even 2% in crypto "feels like" you increased your equity exposure by 12-14%.

3. More correlated with equities than expected, less correlated with gold than expected, despite discussion about BTC being "digital gold".

=====

As a footnote on trying to hold crypto at market cap...

There is a Total Market Cap token in existence that I wasn't aware of, in *beta* (danger zone):

https://cryptex.finance/

However, I'm not holding it (yet), haven't used it, and it isn't available on any of the major exchanges.

I may add 1 share to my wallet just to see how it goes.
Never heard of cryptex, a 5 minute review of their Whitepaper shows a synthetic asset using Chainlink oracles to mirror total market cap. I don't see anything too interesting or useful here, to be honest. I would not want to put a lot of money on a synth, especially with a new protocol with likely limited liquidity. A massive draw down could be disastrous. I much prefer to own the underlying assets. No matter what happens, I still have control of my ETH, BTC, etc. With derivatives, you add another layer or risk.

I think you are overcomplicating things. Just buy BTC and ETH, perhaps a decent DeFi index like DEFI5 from Indexed Finance or DPI, and you are done.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by watchnerd »

Texanbybirth wrote: Tue May 18, 2021 12:18 pm

Can you help me understand this better? I saw your reply to my UPRO/TMF post yesterday, but I didn't really understand what you were saying.

(FWIW, my original crypto investment at 50/50 BTC/ETH was 35bps of our portfolio. More like a trip to a casino [a place I loathe] than an actual investment allocation.)
Risk parity is a measurement of relative risk contribution of one asset vs another.

So in the example above, I need to hold *approximately* $60-70k in VT to equal the risk of $10k in blended GBTC/ETHE.

At that ratio, a portfolio composed of only those will have similar risk exposure to stocks and crypto.

Note: risk metrics change over time and crypto hasn't been around that long so data subject to change.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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Prahasaurus wrote: Tue May 18, 2021 12:28 pm

I think you are overcomplicating things. Just buy BTC and ETH, perhaps a decent DeFi index like DEFI5 from Indexed Finance or DPI, and you are done.
Thanks, but I'm having fun following a different path.

I know you're all in on DeFi, but DEFI5 isn't total market cap, so not the same thing.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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Prahasaurus wrote: Tue May 18, 2021 12:28 pm
watchnerd wrote: Tue May 18, 2021 12:09 pm Purely anecdotal observations on portfolio behavior from holding a small (~2%) allocation to crypto in what is otherwise approximate a global stock/bond portfolio close to 60/40:

1. As a high volatility, high beta asset, even a 2% allocation has noticeable impact on daily portfolio fluctuations -- far more than I expected.

2. Risk parity analysis puts the 2 blue chip cryptos (BTC, ETH) at about a 1:6-7 risk parity ratio versus global equities. So even 2% in crypto "feels like" you increased your equity exposure by 12-14%.

3. More correlated with equities than expected, less correlated with gold than expected, despite discussion about BTC being "digital gold".

=====

As a footnote on trying to hold crypto at market cap...

There is a Total Market Cap token in existence that I wasn't aware of, in *beta* (danger zone):

https://cryptex.finance/

However, I'm not holding it (yet), haven't used it, and it isn't available on any of the major exchanges.

I may add 1 share to my wallet just to see how it goes.
Never heard of cryptex, a 5 minute review of their Whitepaper shows a synthetic asset using Chainlink oracles to mirror total market cap. I don't see anything too interesting or useful here, to be honest. I would not want to put a lot of money on a synth, especially with a new protocol with likely limited liquidity. A massive draw down could be disastrous. I much prefer to own the underlying assets. No matter what happens, I still have control of my ETH, BTC, etc. With derivatives, you add another layer or risk.

I think you are overcomplicating things. Just buy BTC and ETH, perhaps a decent DeFi index like DEFI5 from Indexed Finance or DPI, and you are done.
I have to echo the risks here. Just at a glance it looks like TCAP is trading on Sushiswap at like $316 USD but from the whitepaper it sounds like it should trade at $208 (1/10,000,000,000 of $2.08 billion market cap). That is way off peg already for something that's just been out for a few days. I'd definitely wait to jump into TCAP until the dust settles a bit (unless I'm misunderstanding how it works / should be priced).

EDIT: Maybe there's an arbitrage opportunity here, haha. I guess you can mint TCAP tokens directly rather than buy on the secondary market. I guess secondary market demand is quite high leading to a huge premium.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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txhill wrote: Tue May 18, 2021 12:42 pm
I have to echo the risks here. Just at a glance it looks like TCAP is trading on Sushiswap at like $316 USD but from the whitepaper it sounds like it should trade at $208 (1/10,000,000,000 of $2.08 billion market cap). That is way off peg already for something that's just been out for a few days. I'd definitely wait to jump into TCAP until the dust settles a bit (unless I'm misunderstanding how it works / should be priced).

EDIT: Maybe there's an arbitrage opportunity here, haha. I guess you can mint TCAP tokens directly rather than buy on the secondary market. I guess secondary market demand is quite high leading to a huge premium.
Oh, I'm not planning on putting any major money in it.

Like they warn, it's beta.

But buying one token for $300 and change isn't going to do me any harm if it explodes.

And it will be fun to watch evolve.
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watchnerd wrote: Tue May 18, 2021 12:55 pm
txhill wrote: Tue May 18, 2021 12:42 pm
I have to echo the risks here. Just at a glance it looks like TCAP is trading on Sushiswap at like $316 USD but from the whitepaper it sounds like it should trade at $208 (1/10,000,000,000 of $2.08 billion market cap). That is way off peg already for something that's just been out for a few days. I'd definitely wait to jump into TCAP until the dust settles a bit (unless I'm misunderstanding how it works / should be priced).

EDIT: Maybe there's an arbitrage opportunity here, haha. I guess you can mint TCAP tokens directly rather than buy on the secondary market. I guess secondary market demand is quite high leading to a huge premium.
Oh, I'm not planning on putting any major money in it.

Like they warn, it's beta.

But buying one token for $300 and change isn't going to do me any harm if it explodes.

And it will be fun to watch evolve.
You could try minting a TCAP token yourself, as it would be at the actual peg of $208 and it might be a fun project. I don't know exactly how one does it but their website supposedly walks through the process. Of course it might not be worth minting just one token if gas fees are high, I guess.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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txhill wrote: Tue May 18, 2021 12:57 pm

You could try minting a TCAP token yourself, as it would be at the actual peg of $208 and it might be a fun project. I don't know exactly how one does it but their website supposedly walks through the process. Of course it might not be worth minting just one token if gas fees are high, I guess.
I was thinking of doing that.

I'll need to read through the docs on the weekend.

It's stakeable, too.
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watchnerd wrote: Tue May 18, 2021 12:59 pm
txhill wrote: Tue May 18, 2021 12:57 pm

You could try minting a TCAP token yourself, as it would be at the actual peg of $208 and it might be a fun project. I don't know exactly how one does it but their website supposedly walks through the process. Of course it might not be worth minting just one token if gas fees are high, I guess.
I was thinking of doing that.

I'll need to read through the docs on the weekend.

It's stakeable, too.
This looks very interesting, but it feels so not legit. I just can't bring myself to trust the website yet and connect my crypto wallet to try their mint your own token feature. It also says to make sure to always have a ratio above the minimum ratio to avoid being liquidated. What does that even mean if I'm minting my own token?
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Gadget wrote: Tue May 18, 2021 8:19 pm
watchnerd wrote: Tue May 18, 2021 12:59 pm
txhill wrote: Tue May 18, 2021 12:57 pm

You could try minting a TCAP token yourself, as it would be at the actual peg of $208 and it might be a fun project. I don't know exactly how one does it but their website supposedly walks through the process. Of course it might not be worth minting just one token if gas fees are high, I guess.
I was thinking of doing that.

I'll need to read through the docs on the weekend.

It's stakeable, too.
This looks very interesting, but it feels so not legit. I just can't bring myself to trust the website yet and connect my crypto wallet to try their mint your own token feature. It also says to make sure to always have a ratio above the minimum ratio to avoid being liquidated. What does that even mean if I'm minting my own token?
I didn’t read it carefully and I’d be super cautious. But I think the way it works is you have to collateralize the token you mint with either ETH or DAI (a stable coin), I think with 200% the value of the TCAP token minted. And in order to get your ETH/DAI back you would have to burn a TCAP token. I can see how in theory this sort of works but it isn’t very tested and any time you lock crypto into a protocol you’re at the mercy of glitches and even malicious back doors by developers, so proceed with caution. I guess that alone explains some of the premium associated with just buying the token instead of risking 200% of the token’s value in ETH.
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Well, it would be nice to have that Crypto in Free Fall thread unlocked right now cause it's bye bye biirrrrrrrrddddieee all over.
Someone even kicked my Doge... despicable! :annoyed
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OohLaLa wrote: Tue May 18, 2021 10:16 pm Well, it would be nice to have that Crypto in Free Fall thread unlocked right now cause it's bye bye biirrrrrrrrddddieee all over.
Someone even kicked my Doge... despicable! :annoyed
Almost a total crushing.

Some of the little alt smart chains or swaps are still green.

I think LINK and SUSHI are still green.
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Gadget wrote: Tue May 18, 2021 8:19 pm This looks very interesting, but it feels so not legit. I just can't bring myself to trust the website yet and connect my crypto wallet to try their mint your own token feature. It also says to make sure to always have a ratio above the minimum ratio to avoid being liquidated. What does that even mean if I'm minting my own token?
I have no idea.

I'd expect to potentially lose any money, not necessarily through outright scam, but perhaps just through bugs, even.
Last edited by watchnerd on Tue May 18, 2021 10:35 pm, edited 1 time in total.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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Crypto is falling, but since that thread is locked...

My dog scowled when I mentioned doggycoin. So clearly he does not approve.
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Kookaburra wrote: Tue May 18, 2021 10:35 pm Crypto is falling, but since that thread is locked...

My dog scowled when I mentioned doggycoin. So clearly he does not approve.
I'm not a trader and I don't put a lot of faith in charting, but the traders do.

And they say if BTC drops below the '$35k support level', it's a steep drop off after that.

I guess that's bad if you're trying to make money in the near term?

Or is it a buying opportunity and time to lever up?

*shrug*

I don't know how traders live that life without going crazy.
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watchnerd wrote: Tue May 18, 2021 10:43 pm
Kookaburra wrote: Tue May 18, 2021 10:35 pm Crypto is falling, but since that thread is locked...

My dog scowled when I mentioned doggycoin. So clearly he does not approve.
I'm not a trader and I don't put a lot of faith in charting, but the traders do.

And they say if BTC drops below the '$35k support level', it's a steep drop off after that.

I guess that's bad if you're trying to make money in the near term?

Or is it a buying opportunity and time to lever up?

*shrug*

I don't know how traders live that life without going crazy.
Smashing idea! UDOGE (DOGE 3x Daily Leveraged Fund) :mrgreen:
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I must have drank the kool aid because this just seems like an ETH buying opportunity for the long term. Seems like there’s a lot of signals that prices go much lower though.
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I was able to do some tax loss harvesting, maybe I will do it again if ETH drops another 15% or so.
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txhill wrote: Tue May 18, 2021 11:13 pm I must have drank the kool aid because this just seems like an ETH buying opportunity for the long term. Seems like there’s a lot of signals that prices go much lower though.
Yeah, I don't think the blood-letting is stopping right now. I will keep going with my DCA, for ETH.
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OohLaLa wrote: Tue May 18, 2021 10:48 pm
Smashing idea! UDOGE (DOGE 3x Daily Leveraged Fund) :mrgreen:
Levered coins actually do exist, although I'm not sure about 3x DOGE.

I ran across some on Coinbase, although they were in the 'Not Traded' category, i.e. can't buy them on Coinbase.
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OohLaLa wrote: Tue May 18, 2021 11:33 pm
Yeah, I don't think the blood-letting is stopping right now. I will keep going with my DCA, for ETH.
BTC below $40k, now at $39.6k

The "stock to flow" pricing predictions seem pretty far off base right now.

ETH below $3K.
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watchnerd wrote: Tue May 18, 2021 11:40 pm
OohLaLa wrote: Tue May 18, 2021 11:33 pm
Yeah, I don't think the blood-letting is stopping right now. I will keep going with my DCA, for ETH.
BTC below $40k, now at $39.6k

The "stock to flow" pricing predictions seem pretty far off base right now.

ETH below $3K.
Is it OK to talk about falling in this thread? I realize it's hard not to, given a massive crash that's happening right now.
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Marseille07 wrote: Tue May 18, 2021 11:45 pm

Is it OK to talk about falling in this thread? I realize it's hard not to, given a massive crash that's happening right now.
Well, the Falling thread is locked, so....where else?
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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Statements like this, from yesterday, make me laugh at technical analysis:
Bitcoin (BTC) buyers continued to defend support around $42,000 on Monday. The sell-off that began last week appears to be weakening as the cryptocurrency registers oversold signals. However, upside appears limited towards $50,000-$53,000 resistance.

The cryptocurrency was trading around $45,000 at the time of writing.

The relative strength index (RSI) on the four-hour chart is now oversold similar to the last week in April, which preceded a price bounce.

The RSI is also oversold on the daily chart and is neutral on the weekly chart, which could signal a brief price recovery as sellers capitulate.

Initial resistance is around $50,000 and then at the 100-period moving average on the four-hour chart at $53,000.

Bitcoin continues to consolidate and is now at the bottom of a three-month range.

The broader uptrend remains intact, albeit vulnerable to sharp swings and frequent drawdowns.
https://www.coindesk.com/bitcoin-stabil ... ce-50k-53k

Seriously, I can't believe anyone believes chartists...
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watchnerd wrote: Tue May 18, 2021 11:51 pm Statements like this, from yesterday, make me laugh at technical analysis:
Bitcoin (BTC) buyers continued to defend support around $42,000 on Monday. The sell-off that began last week appears to be weakening as the cryptocurrency registers oversold signals. However, upside appears limited towards $50,000-$53,000 resistance.

The cryptocurrency was trading around $45,000 at the time of writing.

The relative strength index (RSI) on the four-hour chart is now oversold similar to the last week in April, which preceded a price bounce.

The RSI is also oversold on the daily chart and is neutral on the weekly chart, which could signal a brief price recovery as sellers capitulate.

Initial resistance is around $50,000 and then at the 100-period moving average on the four-hour chart at $53,000.

Bitcoin continues to consolidate and is now at the bottom of a three-month range.

The broader uptrend remains intact, albeit vulnerable to sharp swings and frequent drawdowns.
https://www.coindesk.com/bitcoin-stabil ... ce-50k-53k

Seriously, I can't believe anyone believes chartists...
Yeah charts are nonsense but some signals are more telling than others. Like yesterday a huge amount of inflow into exchanges, which can only mean that whales are getting ready to sell. When outflows from exchanges pick up then that will be a good signal for a bottom. But with a long term view this is just fun to watch. Isn’t a loss if you never sell :)
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Re: Cryptocurrency - Bitcoin Continues to Soar!

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txhill wrote: Tue May 18, 2021 11:59 pm

Yeah charts are nonsense but some signals are more telling than others. Like yesterday a huge amount of inflow into exchanges, which can only mean that whales are getting ready to sell. When outflows from exchanges pick up then that will be a good signal for a bottom. But with a long term view this is just fun to watch. Isn’t a loss if you never sell :)
Flow data definitely makes sense to look at.

But a double head and shoulders death cross pattern transitioning to a cup and handle whatever......

I'd have more respect if they just skipped the schtick and whipped out some Tarot cards.
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watchnerd wrote: Tue May 18, 2021 11:51 pm Statements like this, from yesterday, make me laugh at technical analysis:
[...]

https://www.coindesk.com/bitcoin-stabil ... ce-50k-53k

Seriously, I can't believe anyone believes chartists...
I don't recall ever speaking with such certainty about the unknown, or things I have no clue about, so it's hard for me to sympathize... but I wonder how it must feel to be the author right now. haha

I liked this gem:
"
Bitcoin continues to consolidate and is now at the bottom of a three-month range. The broader uptrend remains intact, albeit vulnerable to sharp swings and frequent drawdowns.
"
Ok the storm is over... and we're taking flight... but not really.
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Re: Cryptocurrency - Bitcoin Continues to Soar!

Post by Hustlinghustling »

historical volatility like this downwards is why many have no issue to pay 10-20%/year to borrow a cryptocurrency. you make that interest back in no time
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Post by Williams57 »

Not sure if this even qualifies as a correction. -80% and we are talking crash. This is crypto.
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