When Bitcoin blows-up

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
itstoomuch
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Location: midValley OR

Re: When Bitcoin blows-up

Post by itstoomuch » Thu Dec 07, 2017 5:11 pm

No bite off of my little bit of coin.
I know nothing about bitcoin other than one chipmaker missed the boat.
Moved to cash last week with deep buys on particular stocks.
I think I am essentially done trading for 2017.
Ymmv
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

Jonathan
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Joined: Tue Apr 30, 2013 5:36 pm

Re: When Bitcoin blows-up

Post by Jonathan » Thu Dec 07, 2017 5:17 pm

Don't forget that the bitcoin "bubble" has already popped multiple times before. Yet here we are.

If historic bitcoin drop cycles will be repeated (no idea if they will), we can expect a 50%-80% drop, followed by another rise above the current all time high.

A good place to track all of the times that bitcoin has "died": http://bitcoinobituaries.com

texasdiver
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Location: Vancouver WA

Re: When Bitcoin blows-up

Post by texasdiver » Thu Dec 07, 2017 9:02 pm

Anyone have any idea what percentage of bitcoin holdings are in the US? Is there any way to even know?

This is a world forum, not just a US forum obviously. But if the bulk of bitcoin owners are Chinese or Indian tech millionaires, or say Colombian drug lords I'm not sure I really care what happens to bitcoin. When US pensions start investing in bitcoin then I start to get more concerned.

technovelist
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Re: When Bitcoin blows-up

Post by technovelist » Thu Dec 07, 2017 9:15 pm

Valuethinker wrote:
Thu Dec 07, 2017 5:07 pm
German Expat wrote:
Thu Dec 07, 2017 1:51 pm
I would not be so sure if there won't be any meaningful impact at least in some countries. And with the world economy being quite connected there could be some (probably not huge) spill over effects. e.g. read here about South Korea:

https://www.bloomberg.com/news/articles ... 16-premium
Whereas the Canadian or Australian housing bubbles (which I deem to be bubbles, anyways) are each probably over $1 trillion of real estate, it's hard to take this too too seriously.

The transmission mechanism has to be via financial institutions. If a major financial institution gets into trouble due to bitcoin, say a Clearing House were to go down, then we potentially have another Lehman on our hands.

It's the transmission via financial intermediaries of a bubble collapse to other financial markets and the economy as a whole that is the lynchpin of these things.

But at the moment that looks fairly far-fetched.
The first Bitcoin futures contracts are going to start trading next week (https://www.bloomberg.com/news/articles ... -on-dec-10).

The exchange guarantees performance of these contracts. That means if there are major fails to deliver due to inability to pay by the losing side of a trade, the exchange is on the hook.

That could bring down the exchange, just as the failure of the Swiss franc/Euro peg in January 2015 (https://www.cnbc.com/2015/01/15/swiss-f ... apped.html) took down several forex brokers (http://www.thisismoney.co.uk/money/news ... o-peg.html).

That could have knock-on effects elsewhere.
In theory, theory and practice are identical. In practice, they often differ.

Valuethinker
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Re: When Bitcoin blows-up

Post by Valuethinker » Fri Dec 08, 2017 5:49 am

texasdiver wrote:
Thu Dec 07, 2017 9:02 pm
Anyone have any idea what percentage of bitcoin holdings are in the US? Is there any way to even know?

This is a world forum, not just a US forum obviously. But if the bulk of bitcoin owners are Chinese or Indian tech millionaires, or say Colombian drug lords I'm not sure I really care what happens to bitcoin. When US pensions start investing in bitcoin then I start to get more concerned.
It will be difficult for US Pension Funds (ERISA money) to get significant direct exposure to bitcoin. ERISA (1974 act) operates under the "prudent man rule" which says that trustees can legally diversify the assets but must employ experts to do so-- hence third party fund managers for the bond, equity & alternative portfolios (hedge funds, private equity, infrastructure etc.)

Only in the "alternative assets" and specifically hedge funds is there a way in for those funds.

I doubt the trustees would allocate much money to a HF investing in cryptocurrencies. Say 20-30% in alternatives (up there with Yale and the top endowments), say 1-2 HFs out of portfolio of say 20 HF managers and 20 Private Equity managers, then 1-2%?

So unless there are indirect effects via margin/ leverage given by financial institutions, it's hard to see much exposure.

Jeff Albertson
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Location: Springfield

Re: When Bitcoin blows-up

Post by Jeff Albertson » Fri Dec 08, 2017 8:47 am

texasdiver wrote:
Thu Dec 07, 2017 9:02 pm
Anyone have any idea what percentage of bitcoin holdings are in the US? Is there any way to even know?
You can see the trading volume, by currency, here -
https://www.cryptocompare.com/coins/btc/analysis/USD
Holdings, rather than trading volume, is harder, maybe impossible, to know.

The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market
https://www.bloomberg.com/news/articles ... the-market
About 40 percent of bitcoin is held by perhaps 1,000 users ...

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