Bitcoin Drops Back Below $6,000 as 2018 Loss Approaches 60%(bloomberg.com)
bloomberg.com
Bitcoin Drops Back Below $6,000 as 2018 Loss Approaches 60%
https://www.bloomberg.com/news/articles/2018-06-27/bitcoin-drops-back-below-6-000-as-2018-loss-approaches-60
75 comments
Does the cash flow in the trading/exchanges not count?
Cash flow in the sense that real estate gives you rent, bonds interest and stocks dividends.
It's been said many times before, but as digital gold. Gold is worth about $8tn. That puts it at about an 80x multiple from where it is today. But let's be "conservative" and put a 20 to 40x estimate on it, from where it is.
It's obviously an assumption, not a sure thing. But the only thing that needs to happen is people sharing the belief that it is and/or can become digital gold, which is quite peculiar.
If large stable investors buy in (pension funds, endowments, etc) that will help massively to support price levels, after a period of value growth.
It's obviously an assumption, not a sure thing. But the only thing that needs to happen is people sharing the belief that it is and/or can become digital gold, which is quite peculiar.
If large stable investors buy in (pension funds, endowments, etc) that will help massively to support price levels, after a period of value growth.
Fundamentals supporting gold:
1. It has industrial uses - this doesn't justify current prices, but it does provide support at low price points because there is a demand that will increase at lower price levels.
2. People are attracted to shiny objects, and people like status symbols, thus they are willing to pay a lot of money for shiny objects that their friends can't afford.
Fundamentals supporting cryptocurrencies: 1. Criminals need a way to do business online. Of course it works for normal people too, but with the transaction fees and inconveniences inherent in current systems, cryptocurrencies are most attractive for people who can't do business through traditional channels. 2. But Blockchain is the future...
You can see a lot of parallels here, but note the differences: 1. Industry may use more gold plating as prices fall, but falling bitcoin prices won't make criminals switch from cash to crypto, so the price cushion is weaker. 2. People have been attracted to shiny objects for all of human history, so this is likely a part of human nature. (Regular) people have been attracted to blockchain for like 10 months, so this is probably a fad. Additionally, while bitcoin may be scarce within its own ecosystem, cryptocurrencies are not scarce in a global sense...a new crapcoin is minted everday. Unless BTC is the one true coin (and it can't support the transaction load), there is no real scarcity here.
By the way, if the fundamentals I listed for gold sound a little shaky, it's because they are. A responsible financial adviser might tell you to put 80% of your money in stocks, but he'd never tell you to hold 80% in gold.
Fundamentals supporting cryptocurrencies: 1. Criminals need a way to do business online. Of course it works for normal people too, but with the transaction fees and inconveniences inherent in current systems, cryptocurrencies are most attractive for people who can't do business through traditional channels. 2. But Blockchain is the future...
You can see a lot of parallels here, but note the differences: 1. Industry may use more gold plating as prices fall, but falling bitcoin prices won't make criminals switch from cash to crypto, so the price cushion is weaker. 2. People have been attracted to shiny objects for all of human history, so this is likely a part of human nature. (Regular) people have been attracted to blockchain for like 10 months, so this is probably a fad. Additionally, while bitcoin may be scarce within its own ecosystem, cryptocurrencies are not scarce in a global sense...a new crapcoin is minted everday. Unless BTC is the one true coin (and it can't support the transaction load), there is no real scarcity here.
By the way, if the fundamentals I listed for gold sound a little shaky, it's because they are. A responsible financial adviser might tell you to put 80% of your money in stocks, but he'd never tell you to hold 80% in gold.
The same arguments I used above can also be applied to gold. Gold is intrinsically hard to value. So pricing BTC off gold feels tenuous to me.
Gold also has non-monetary use (i.e. jewellery) which I imagine is a substantial portion of demand.
5+ years ago, I used to be really into gold when I used to read Zerohedge. I feel like I'm hearing similar arguments for crypto currencies vs. fiat as back then when I read up on gold vs. fiat. People were fanatical about gold (me included) and weren't objective.
I owned shares in gold miners. I got burnt and lost a whole bunch of money. So personally I'm sticking to investments which produce cash flow.
As they say, "History doesn't repeat itself, but it does rhyme." I had better learn from my mistakes.
Gold also has non-monetary use (i.e. jewellery) which I imagine is a substantial portion of demand.
5+ years ago, I used to be really into gold when I used to read Zerohedge. I feel like I'm hearing similar arguments for crypto currencies vs. fiat as back then when I read up on gold vs. fiat. People were fanatical about gold (me included) and weren't objective.
I owned shares in gold miners. I got burnt and lost a whole bunch of money. So personally I'm sticking to investments which produce cash flow.
As they say, "History doesn't repeat itself, but it does rhyme." I had better learn from my mistakes.
If you owned shares in gold mines and got burned, it had nothing to do with the value of the gold itself. The price of gold has seen a steady upward trend over the past ~17 years at least (that's how long I've been looking at it, anyway).
Adjust for inflation and look at the trend starting from the 17 years before that.
"adjust for inflation" on a 300% increase? Are you looking at a different graph than I am? Perhaps I don't understand what I'm looking at. Could you walk me through your reasoning?
Sure. Google "inflation adjusted price of gold since 1980". Or view https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22....
The giant saddle does seem to support the idea that gold is hard to value.
Then the next search phrase to look up is "inflation adjusted price of gold since 2011". It's not a pretty chart. I would not use the words "steady upward trend" to describe it. "Steady downward trend", maybe.
The giant saddle does seem to support the idea that gold is hard to value.
Then the next search phrase to look up is "inflation adjusted price of gold since 2011". It's not a pretty chart. I would not use the words "steady upward trend" to describe it. "Steady downward trend", maybe.
Large, stable investors don't buy gold, so why would they buy BTC? Especially now that the blockchain hype is derided rather than celebrated on Wall Street.
Assuming that BTC replaces gold is insane.
One BTC is exactly as useful as one "MyBTC" as a store of value. You can fork infinitely. Can't do that with gold.
One BTC is exactly as useful as one "MyBTC" as a store of value. You can fork infinitely. Can't do that with gold.
We'll see. I was sceptical at first, but I think as the market cap has grown, it's starting to make a lot more sense.
The main question is: are people ready for a digital store of wealth? If yes, it'll likely be Bitcoin. If not, it'll falter. I don't know the correct answer.
The main question is: are people ready for a digital store of wealth? If yes, it'll likely be Bitcoin. If not, it'll falter. I don't know the correct answer.
I bought BTC when it was 15$. I bought again at 17k and bought at 6k and really don't care what the price of btc is today tomorrow or next week. I understand how easy it can be to call someone an idiot in restrospect when everything is down, but you have to know too that some people don't really care where it is _now_ and is just interested in where it go few years from now.
It is like calling people idiot because they bought btc @ 1000$ and then it dropped @ 360$. I really don't think those who bought at 1k are idiots but that's just my opinion and it's OK if other people have different opinion than mine.
Warm vibes.
It is like calling people idiot because they bought btc @ 1000$ and then it dropped @ 360$. I really don't think those who bought at 1k are idiots but that's just my opinion and it's OK if other people have different opinion than mine.
Warm vibes.
How do you value BTC? What is a fair price? $1m? $2m? $5bn? $10tn?
Do you have a valuation methodology?
My biggest issue with BTC is that it's subject to how the market feels about it. There's no cash flow. When I buy USD, I can by 2yr treasuries yielding ~2.5%.
Do you have a valuation methodology?
My biggest issue with BTC is that it's subject to how the market feels about it. There's no cash flow. When I buy USD, I can by 2yr treasuries yielding ~2.5%.
The value comes from the same place of gold, and to a slightly lesser extent fiat currency. When something is used as a medium of exchange the item itself gains value from this utility. Bitcoin has no intrinsic value, but it does derive value from how it is used write large. A bet on BTC is a bet its use will increase.
It's a faith based investment. With a treasury, you are still hoping that the government won't default, which is why some government's notes have higher rates than others. Same thing with municipal bonds.
The market determines the price of anything based on supply and demand (which includes a risk calculation).
The market determines the price of anything based on supply and demand (which includes a risk calculation).
There's a difference between the market price and valuation. “Price Is What You Pay, Value Is What You Get”
An investor might determine what they would be willing to pay for an asset (i.e. a fair valuation) and compare it to the market price. If it's selling for less than what they believe to be fair market value then it's a buy. The same methodology can be applied to sell decisions.
If I buy a house to let, I can create a model to project future cash flows derived from rent, costs, taxes etc. I can then discount the cash flows (DCF) with my target rate of return to get a valuation. Yes there are variables that are difficult to take into account i.e. likelihood of government default. It's not possible to apply a cash flow valuation to BTC.
Yes there is a market which determines the price of something. But that does not necessarily result in a reasonable price.
An investor might determine what they would be willing to pay for an asset (i.e. a fair valuation) and compare it to the market price. If it's selling for less than what they believe to be fair market value then it's a buy. The same methodology can be applied to sell decisions.
If I buy a house to let, I can create a model to project future cash flows derived from rent, costs, taxes etc. I can then discount the cash flows (DCF) with my target rate of return to get a valuation. Yes there are variables that are difficult to take into account i.e. likelihood of government default. It's not possible to apply a cash flow valuation to BTC.
Yes there is a market which determines the price of something. But that does not necessarily result in a reasonable price.
Ouch - I was downvoted when i felt like I made some reasonable arguments without attacking anyone. Why was I downvoted?
Remember that most of the people down voting think that the stock market trades on actual financial multipliers like 10x earnings or whatever. Let them miss out on the ride, make your money. You can't convince crazy you just have to let them miss out on the ride.
I guess since you posted a comment twice. Not that familiair with HN unspoken rules. But I guess HN just like other forums don't appreciate double posts
You're challenging the conventional wisdom about how valuable Bitcoin is.
The way I see it, cryptocurrency gets a lot of its "value" from emotion--it signifies what people want to be true. Cryptocurrency is, in some ways, a dream incarnate. It's backed by nothing except the dreams of those who believe in it--and energy expenditure (if one believes that).
It's like a religion: Challenge the faith and you will be burned as a heretic, so-to-speak. I think that has a lot to do with why rational comments are down-voted so much on HN. You're assuming the discourse is rational when it is actually quite emotional. Cognitive dissonance abounds.
The way I see it, cryptocurrency gets a lot of its "value" from emotion--it signifies what people want to be true. Cryptocurrency is, in some ways, a dream incarnate. It's backed by nothing except the dreams of those who believe in it--and energy expenditure (if one believes that).
It's like a religion: Challenge the faith and you will be burned as a heretic, so-to-speak. I think that has a lot to do with why rational comments are down-voted so much on HN. You're assuming the discourse is rational when it is actually quite emotional. Cognitive dissonance abounds.
You left out those that might say that buying Bitcoin at any price is idiotic.
When you play poker, luck will win you a hand but skill prevails in the long run. I have a feeling Bitcoin will end up similarly, where much of the value will eventually transfer from the initially lucky to the pros. It will be interesting what increasing concentration will have on its popularity.
I don't know what is your position both in life and financially but sounds like you don't really care because you can tolerate risk and losses?
The BTC chart since last year looks very much like a classic bubble / burst sequence. Build up, running up to a hyperbolic frenzy, then precipitous drop, followed by long decline of lower highs and lower lows. This seems to be only punctuated by significant buys just around psychologically important 'support levels', which correspond with the several credible articles I've read about Tether coin being used to manipulate the currency.
The chatter is always about the next 'support level', and it always gets broken. I'm expecting it to slide down well into three digits (<= USD$ 999) before any real recovery, if there is one. The real use cases are materializing much slower than expected as the scaling issues and transaction times increase.
Edit: (& BTW, I'm a generally enthusiastic supporter of the cryptocoin concepts, just noticing that it is apparently much harder to really get there than originally thought)
The chatter is always about the next 'support level', and it always gets broken. I'm expecting it to slide down well into three digits (<= USD$ 999) before any real recovery, if there is one. The real use cases are materializing much slower than expected as the scaling issues and transaction times increase.
Edit: (& BTW, I'm a generally enthusiastic supporter of the cryptocoin concepts, just noticing that it is apparently much harder to really get there than originally thought)
There's fairly strong evidence that the rise from $6K to $18K was primarily the result of market manipulation [0], so in some senses it isn't a crash more like returning to normality. Although there is so much market manipulation going on it is hard to tell what normality is, e.g. the rise from $150 to $1K between Sep to Nov 2013 was due to the markus and willy bots [1]. That's one of the problems with a completely unregulated market where almost all the wealth has become concentrated in the hands of a few largely anonymous players.
[0] https://news.ycombinator.com/item?id=17302054
[1] http://uk.businessinsider.com/one-or-two-traders-may-have-ca...
[0] https://news.ycombinator.com/item?id=17302054
[1] http://uk.businessinsider.com/one-or-two-traders-may-have-ca...
Markets for speculative assets and commodities are generally down, and the dollar is up. So what do you expect?
So everyone thinks that cause Bitcoin is down from its high that it was a bad investment? The top has been reached and it's all downhill from here?
Nobody who invested 1+ years ago is down so save your judgements for the future.
Nobody who invested 1+ years ago is down so save your judgements for the future.
I just don't understand what the purpose of Bitcoin is. Everyone seems to be treating it as an investment, but its use as a currency doesn't seem to have obvious advantages over cash. Its value fluctuates wildly, transaction processing takes forever, every purchase you make is public record, the price is easily manipulated, and it takes a ton of electricity to operate.
What's the end goal of Bitcoin? What makes it worth investing in?
What's the end goal of Bitcoin? What makes it worth investing in?
Greater fool theory; "I'm buying this thing early, so that when it hits the mainstream a load of naive people will buy it and boost my value". That has probably largely passed now, though; I see train station ads to buy bitcoin all the time.
I'd be somewhat surprised if it ever goes back to its beginning-of-year heights.
I'd be somewhat surprised if it ever goes back to its beginning-of-year heights.
There might come one last hype cycle when/if the rest of the world (EU) enters a mainstream BTC hype. The last one was mostly US.
Or the network could collapse to 0 before.
Or the network could collapse to 0 before.
Bitcoin was quite a hype in the EU around December last year, with it being talked about in bars, at the hairdresser etc. And people putting all their money in of course.
The train and tram stations in Dublin were covered in etoro crypto trading ads a while back, so I think it’s been and gone in Europe. And I believe it’s already had its day in China and Korea.
Africa, maybe? South America? I doubt there’s much there, to be honest.
Africa, maybe? South America? I doubt there’s much there, to be honest.
Bitcoin is a store of value. And it's among the fastest, cheapest ways to send money worldwide. As we all know, there is a limit to the number of Bitcoins thus people think the value will increase with demand.
I'm not a Bitcoin investor. But I do buy other alt coins. All the points you mentioned are valid but are constantly being improved upon.
I'm not a Bitcoin investor. But I do buy other alt coins. All the points you mentioned are valid but are constantly being improved upon.
I could be wrong and certainly was wrong before, but I believe that what we're seeing here is the biggest game of musical chairs, ever.
There will be a lot of hurt when the music stops, represented by not finding anymore "investors" to fuel the hype.
In other words: I think you're spot-on!
There will be a lot of hurt when the music stops, represented by not finding anymore "investors" to fuel the hype.
In other words: I think you're spot-on!
> but I believe that what we're seeing here is the biggest game of musical chairs, ever.
Nothing like it; the amount of money invested isn't huge. It's nowhere near as scary as the various national mortgage bubbles in the noughties. When it collapses, damage will be limited.
Nothing like it; the amount of money invested isn't huge. It's nowhere near as scary as the various national mortgage bubbles in the noughties. When it collapses, damage will be limited.
On reconsideration you definitely have a point here.
I still believe there will be a lot of hurt for a lot of people. As I saud I may be wrong and virtually slap myself for not having jumped into the fray, when it was "only" 6000$.
(small edit: Typos [damn mobile screens])
I still believe there will be a lot of hurt for a lot of people. As I saud I may be wrong and virtually slap myself for not having jumped into the fray, when it was "only" 6000$.
(small edit: Typos [damn mobile screens])
Oh, sure, it’ll hurt a lot of people who gambled on it. It already has. But it’s not a systemic risk.
That’s bubble investing. Watching the face value only.
Is the face value of Bitcoin higher or lower than its economic utility value?
What is the economic utility of Bitcoin? I think that is the real underlying unresolved question that creates volatility. The market is unclear and so can’t set a price objectively.
Is the face value of Bitcoin higher or lower than its economic utility value?
What is the economic utility of Bitcoin? I think that is the real underlying unresolved question that creates volatility. The market is unclear and so can’t set a price objectively.
It depends on your perspective. A lot of people bought in 3 or 6 months ago and aren’t happy. Of course people who did that weren’t used to speculating and so are unhappy now that they lost substantial sums.
It’s significant news, but not really changing any of the fundamentals that I see.
Bitcoin will become a useful currency when it is stable for long periods of time. It doesn’t matter if that consistency is at 6k or 20k or 10.
It’s significant news, but not really changing any of the fundamentals that I see.
Bitcoin will become a useful currency when it is stable for long periods of time. It doesn’t matter if that consistency is at 6k or 20k or 10.
If I'm honest I'm a surprised it hasn't fallen further, the only practical use seems to be buying drugs and it's not ideal for that.
This is a very one sided view on things. I regularly use BTC as alternative for international payments. It's cheaper, faster, more secure and honestly it feels nice to not pay into the hands of visa and master.
Namecheap and FastTech.com being 2 big examples, as well as 2 of 3 of the hosting companies I use accept it.
Not to mention that alternative chains like Eth very well have a practical real world use outside if monetary value.
Edit:// I also order pizza and Chinese with Bitcoin like once a week. Saved me plenty of fees compared to other prepayment methods.
Namecheap and FastTech.com being 2 big examples, as well as 2 of 3 of the hosting companies I use accept it.
Not to mention that alternative chains like Eth very well have a practical real world use outside if monetary value.
Edit:// I also order pizza and Chinese with Bitcoin like once a week. Saved me plenty of fees compared to other prepayment methods.
So, current average fee is about a dollar. Plus you have to pay probably at least 1% to buy it, and the vendor has to pay similar to sell it again, and accept significant exchange risk. I struggle to see how this works out cheaper than, say, paying namecheap with a credit card...
In your very specific situation this might work. But problems that a lot of people would face:
1. unreliable local BTC exchanges that increase the risk substantially
2. local banks that will scrutinize or prohibit transfers to/from BTC exchanges
3. cheaper/faster/better options (e.g. SEPA)
4. in some countries it takes weeks to months to setup an account with a BTC exchange
On top of that, international payments are only a PITA because banks are lazy. Banks could easily make the process cheaper and faster if they were so inclined. If BTC ever gains ground in this market, it would not last for long.
On top of that, international payments are only a PITA because banks are lazy. Banks could easily make the process cheaper and faster if they were so inclined. If BTC ever gains ground in this market, it would not last for long.
> I regularly use BTC as alternative for international payments.
But how many people do this? I've sent like one international transfer in my entire life. I'd wager that the median number of international transfers among the US population is zero. In addition, BTC as a means for international transfer is totally decoupled from its price. If 1 BTC is $1 or $1m it works just as well for temporarily buying some and transferring it. This use case wouldn't really drive the price upwards.
But how many people do this? I've sent like one international transfer in my entire life. I'd wager that the median number of international transfers among the US population is zero. In addition, BTC as a means for international transfer is totally decoupled from its price. If 1 BTC is $1 or $1m it works just as well for temporarily buying some and transferring it. This use case wouldn't really drive the price upwards.
How are you saving on fees when you buy things with bitcoin? The seller pays credit card processing fees, and I don’t see them giving you a discount for paying bitcoin.
Where do you order pizza with bitcoin? The average transaction fee is like US$2 right now [0], so you must either order lots of pizza or not care how much you spend. My average pizza take out is like $20, so tacking on 10% in payment fees is really inferior to just using a credit card (3%) or using Venmo (0%).
With that much fluctuation I disagree that BTC would be cheaper. Especially as it keeps losing in value.
I'd rather pay $10 and know $9.80 goes to the company I am buying from (rest to VISA) than paying some random amount of Bitcoin for the $10 purchase which may be worth $11 or $9 or $20 on the day I purchase.
I'd rather pay $10 and know $9.80 goes to the company I am buying from (rest to VISA) than paying some random amount of Bitcoin for the $10 purchase which may be worth $11 or $9 or $20 on the day I purchase.
Visa and MC don’t get almost anything, most of the fee goes to your bank.
5 years ago, maybe. You can buy flight tickets and tech hardware (Newegg) with bitcoin.
This is objectively untrue. You either have no idea what you're talking about and don't use Bitcoin, or you're lying. I've used Bitcoin for years for all kinds of things. I can only surmise this isn't downvoted to oblivion because a lot of people who dislike Bitcoin (or its users) for ideological reasons use HN.
or you're lying
There is no need for that, you can disagree without being impolite.
There is no need for that, you can disagree without being impolite.
I use it for buying stuff from aliexpress on the regular.
As far as I can see, aliexpress does not accept bitcoin as a payment method.
http://activities.aliexpress.com/adcms/help-aliexpress-com/p...
http://activities.aliexpress.com/adcms/help-aliexpress-com/p...
[deleted]
Bitcoin is a pathetic way to boost Global Warming so that a bunch of Chinese miners can separate Westerners from their wealth!
[deleted]
Just for a second give thought to those who purchased bitcoin when it was at 18k.
Okay. The thought is "bloody morons".
There was this story on bitcoin, maybe on Ars, in which they interviewed a cleaning lady who'd put just about her entire life savings into the coin when it was near, what we now realize, its peak.
Since then, bitcoin's fallen precipitously and I've personally felt plenty of schadenfreude about it, but... as with nearly every financial scam, it is rarely those who deserve it who suffer the worst consequences.
Since then, bitcoin's fallen precipitously and I've personally felt plenty of schadenfreude about it, but... as with nearly every financial scam, it is rarely those who deserve it who suffer the worst consequences.
Putting your entire life savings into one asset is always a bad idea, I thought this was a well-known fact nowadays.
while it is a well-known fact it is not always possible to diversify effectively due to external factors like transaction costs, legislation (e.g.: managed pension plans), not enough principal, etc.
That's cold blooded. I'm sure a lot of good people were financially devastated by that poor decision. A hopelessly bleak existence can do a lot to your capacity for rational thought. A few people I know asked me if I thought they should invest in Bitcoin at the time. I'm thankful my answer was consistently 'nope'!
> That’s cold blooded.
Maybe, maybe not. For those that have never experienced a financial “lesson in violence” before, investing in Bitcoin is the equivalent of touching some strange shiny object that fell from the sky only to find out that the reason it’s glowing is because it’s bloody hot. Sometimes it takes the burnt flesh hanging off a bloodied stump to learn that maybe strange new objects that fall from the sky are to be avoided in the first instance, no matter how shiny they look.
To be honest, given the world we live in, and the knowledge that exists around basic investing principles I’m surprised that some people are surprised at how much they’ve lost.
For me, this just proves (yet again) that the human desire to get rich quickly is incredibly powerful and easily trumps logic and rational thought.
For the record, and just so people don’t think I’m heartless, I lost $20K of savings back in 1989 In an institution whose interest rates were (on hindsight) obviously too good to be true. I was 23. The company was called Pyramid (yes, really. Australian)
Maybe, maybe not. For those that have never experienced a financial “lesson in violence” before, investing in Bitcoin is the equivalent of touching some strange shiny object that fell from the sky only to find out that the reason it’s glowing is because it’s bloody hot. Sometimes it takes the burnt flesh hanging off a bloodied stump to learn that maybe strange new objects that fall from the sky are to be avoided in the first instance, no matter how shiny they look.
To be honest, given the world we live in, and the knowledge that exists around basic investing principles I’m surprised that some people are surprised at how much they’ve lost.
For me, this just proves (yet again) that the human desire to get rich quickly is incredibly powerful and easily trumps logic and rational thought.
For the record, and just so people don’t think I’m heartless, I lost $20K of savings back in 1989 In an institution whose interest rates were (on hindsight) obviously too good to be true. I was 23. The company was called Pyramid (yes, really. Australian)
The only person I know who bought bitcoin at that price inherited a load of wealth and has no real concept of money. I even told them they shouldn't at the time.
Some just expanded their investment horizon and now wait 100k by the end of 2019.
Past success unfortunately does not guarantee or even predict future success.
And then also think of those who purchased below $1.
Don't buy Bitcoin. It's going to crash: https://www.youtube.com/watch?v=XbZ8zDpX2Mg
I don't always buy bitcoin but when I buy it crashes
My biggest issue with BTC is that it's subject to how the market feels about it. There's no cash flow. When I buy USD, I can by 2yr treasuries yielding ~2.5%.