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Discussion in 'West Mall' started by AC, Mar 25, 2020.
When holders refuse to sell, what will price action be?
Bitcoin: The goal isn't too get money out of politics (that can only be lessened, never eliminated) but rather to take politics out of money.
The creation of money is largely a political action. Generally, banks create money through loan creation. Loan creation is assisted via federal reserve policies such as 'buying' US Treasuries and mortgage backed securities at prices higher than the market would bring. This lowers interest rates and increases bank reserves which entices certain entities to borrow. Because most of the borrowing is used to either purchase real estate or by corporations to buy back stock, asset prices continue to rise without much effect on wages and consumer prices. Major financial institutions use leverage to take advantage of the fact that the federal reserve will continue to facilitate growth in the money supply. Also, the government continues to spend more and more as the federal reserve purchases US Treasuries in order to minimize interest costs.
Like gold, what bitcoin would do if it replaced the current fiat dollar system would be to enforce spending limits and limit the expansion of money supply. Bitcoins are mined (created) at a fixed rate that is programmed to increase at ever smaller amounts into the future. It eliminates political decisions by the government or the federal reserve. Loans would be backed solely by collateral held. Economic growth would slow, but debt bombs would be virtually eliminated.
Bitcoin is Leading the Digitization of Money
RETURN TO THE BLOG
The below chart shows us that money moving from analog to digital is just starting. Nobody knows how it all ends up. See the chart below:
What we do know is that Bitcoin is the worlds first peer to peer digital currency that is totally decentralized and provably scarce. Every Bitcoin can be accounted for at any time, very important to remember. So how likely is it that a central bank digital currency (CBDC) becomes the global reserve currency? We don’t know at this time. If CBDC is the future or a basket of CBDC’s, how will that relate to Bitcoin in the next 10 years? Bitcoin is scarce and decentralized. CBDC is neither, if central banks create digital currencies and a basket of them become the global reserve currency instead of Bitcoin, will it still survive? We say it does because as technology increases deflation increases, and as deflation increases, currencies will be printed, money supply will grow to keep up. High money supply benefits a scarce asset like Bitcoin, not to mention it is decentralized and borderless. The Bitcoin network effect, which has shown all time historically high upside growth, will only get better as the global economy gets more and more deflationary. Think of computers or televisions or even cell phones. They keep getting cheaper as technology improves. Same thing for electric cars and the automotive and travel industries. As real products that are technical, get cheaper, that leads to deflation. Raising money supply, even digital currency, will allow more money to spend on research and development of these technologies. Central banks around the world are currently fighting deflation by debasing their currencies and controlling interest rates. Currency is therefore, being debased, long term. It loses value over time. Currency weakness will lead to strength for Bitcoin and even Ethereum as well.
The next graph shows how supply of Bitcoin held on exachanges dropping off, helps scarcity and increases the Bitcoin price:
Bitcoin coming off of exchanges so it can be stored long term and held, leads to a supply shortage, scarcity. This scarcity is not changing anytime soon. Bitcoin may very well be overdue for a larger pullback, but longterm, this bull run is far from over. Neutral ATM is long Bitcoin, and we do hold more Ethereum than we did a few months ago. We are long both of these cryptocurrencies. Etheruem came out with its 2.0 version recently, and now Visa will be building on the Etheruem platform for digital payment systems. Bitcoin is the store of value, Ethereum is the mode of exchange. They each have differing strengths. Bitcoin is still king, remember that as well.
A growing number of publicly traded companies are now holding Bitcoin as a % of their cash reserves. In early October this totaled $5.5 Billion in value. Now that number has tripled. Network effect, demand growing on itself for multiple reasons, leading to more demand:
The primary reason so many publicly traded companies are trading US Dollars for Bitcoin, is the fed policy in response to Covid 19, and going back to the late 2000 tech bubble, has been to control the yield curve and print USD! See this chart on money supply:
Give Neutral ATM a try. We have low rates, convenient locations and we are expanding. Contact Neutral ATM, we will answer all your questions about Bitcoin and using our ATM machines. Find a Neutral ATM Bitcoin machine location near you.
The Bitcoin I got about a month ago is up 60%. Bought more.
It’s consolidating now, but when it goes..........
Macro Investor Raoul Pal predicted a “wall of money” coming from institutions.
Article on Bloomberg:
169-Year-Old MassMutual Invests $100 Million in Bitcoin
Massachusetts Mutual Life Insurance Co. has purchased $100 million in Bitcoin for its general investment fund, the latest mainstream firm to dabble in digit assets.
The mutual insurer also acquired a $5 million minority equity stake in NYDIG, a subsidiary of Stone Ridge that provides cryptocurrency services to institutions, according to a statement. NYDIG, which already keeps more than $2.3 billion in crypto assets for clients, will provide custody services for MassMutual’s Bitcoins.
MassMutual, which has been around since 1851, is the latest company to invest in the largest cryptocurrency. MicroStrategy Inc. has expanded its investments into the coin, and Square Inc. has poured money into the world’s most popular cryptocurrency as well amid talk of growing institutional adoption and demand.
The investment in Bitcoin will represent 0.04% of the general investment account of nearly $235 billion as of Sept. 30, MassMutual said. “We see this initial investment as a first step, and like any investment, may explore future opportunities,” spokeswoman Chelsea Haraty said in a email.
Bitcoin has more than doubled in price this year, and hit an all-time high earlier this month. Advocates say that Bitcoin is a kind of digital gold, likely to retain its value during times of turmoil and as a hedge against inflation despite the historical volatility of the cryptocurrency.
One of my customers lost his BTC on Blockchain.com and tonight, I got it back for him! He was elated. Now he wants to invest some IRA money in BTC.
Lost it? How did that happen?
Long story. Always use a cold storage offline wallet. Then hide your private keys. I can’t stress enough how important that is. He was new to BTC and tried to send it to his cold storage wallet but didn’t. He thought he lost it. We got lucky!
Oh crap, now you got me worried cause I have no idea what your talking about and I bought some on Coinbase awhile back.
I suggest getting off the exchanges but only when you are comfortable moving to offline storage. Do you know someone you can trust to help with that?
Dion, I don't. What does that mean?
Go to both sites and read up on using an offline wallet. My company Neutral ATM does Bitcoin ATM’s SW Houston and towns West of Houston. I help customers that buy a decent amount get their coins stored offline. Once you learn it it’s not bad. I went from cold turkey to storing all my coins offline in 5 weeks. I’ll help you remotely. I don’t want anyone getting hacked!
Read the websites and pick your storage device. They ship in 3-5 days. I have a Trezor Model T. No issues!
To add to @AC’s comment, when you purchase bitcoin on an exchange (eg, Coinbase.com), this is considered a “custodial wallet” because your coins are under the custody of the exchange. You can control them (send or receive) but ultimately the exchange holds the private keys, not you. The private keys are essentially the “password” that allows access to the funds.
If the exchange were to be hacked or shut down and the private keys compromised, the coins could be taken and you have no recourse.
If you have a non-custodial wallet like the Trezor or Ledger device mentioned, you can transfer control of your bitcoin from the exchange to your offline device. Now the coins (and private keys) are entirely under your control with no counter-party risk.
The flip side of a non-custodial (offline) wallet is that you are now solely responsible for your coins. If you mess this up you could lose it all.
dang it all this talk of “losing it” has made me nervous. Thinking I need to sell while it’s up.
Understood, but if you think there is long term value to bitcoin then you may one day regret selling out of fear. If your coins are on an exchange now I would suggest leaving them there rather than selling, at least until it gets easier to move them offline, or you have someone to help you do that. Just my opinion, you have to do what makes sense to you.
Thanks Dion, long term for me is ohhhh about 5 years. Ha, getting old sucks and ain’t for sissy’s. Trust me on that. But I kept pushing onward.
Yea I wondered how short "long term" can be.
5 years is a good while in Bitcoin, a lot can happen.
The bull run we are in should last into 4th Qtr 2021 or perhaps 1 Qtr 2022. It has barely begun and Bitcoin is up 494% since the Coronavirus crash, March 13. The next bull run will start 2024 and into 2025. Who knows how far out it goes being that far in the future. I paid $159 for my Trezor Model T. I buy BTC on Kraken or Cash App then I transfer the coins to my Trezor wallet. All you do is tell cash app or any exchange to transfer the coins you type in the amount and click transfer. Then you type in the private keys which you would read from your Trezor or Ledger offline wallet. To get the private keys to display just click receive on the offline wallet. I always go to the website so I can operate it from my keyboard. It’s just easier. These wallets are small. 2” x 2”. I’m happy to help just message me. I’ve helped a lot of people saving coins offline. I just try to keep people from getting hacked. Hope that helps, I know Dion’s post was helpful!
Bitcoin declined to comment on the matter
I am so ignorant so if my questions are too stupid I understand
I probably too naive and scared to actually buy bitcoin at the price now
Can I buy into a bitcoin ETF? is that an ok thing to do?
keep in mind my level of knowledge is I think Scott Burns couch potato investing is complicated
ps Thnaks to all who have explained about this. I know more than most others out there
There is no bitcoin ETF now but I expect there will be at some point.
You can buy shares in GBTC (Grayscale Bitcoin Trust) to get some exposure in an IRA, for example. I don’t have a recommendation on it one way or the other, just pointing it out.
GBTC is a good option. Bitcoin IRA is for transferring IRA money to BTC or Gold.
The ETF is coming in 2021, I believe it will be from JP Morgan.
Got some GbTC back when I got the Coinbase, you guys are making me feel a lot better about that one.
I saw something a couple days ago about $2 billion of inflows to GBTC since October. Grayscale, Square, and PayPal have been buying pretty much all of the new bitcoin supply. About $7 billion has moved out of gold ETFs in that period.
Yesterday's Blog on www.neutralatm.com or @neutralatm or @stewartcfulton1 on twitter:
Bitcoin’s big week, or will it be next month, or does it even matter?:
For 3 weeks Bitcoin has been accumulating under $20K. There are signs this might be the week it finally breaks through. Keep in mind, I have also mentioned January in the past:
Bitcoin had a lot of trouble with $10K and broke through after weeks of rejections and accumulation. Then it got to $19,952 in 8 weeks or so. We see that again. We may hit $20K this week, or it may be into January. Then, it breaks $20K, $30K, and $40K quickly. That is how Bitcoin operates and it has for a long time. Every rejection has been bought up at $18K. There have been two tests of that level since Thanksgiving. For the last day or so, Bitcoin has been in a descending triangle and those break up most of the time. Stay patient, Bitcoin will prevail!
This chart shows Bitcoin comparing risk and reward. It gives the highest returns and lowest risk of any asset:
The next chart shows the seasons we have mentioned in previous blogs. It is 10 years of annual returns comparing all asset classes. Bitcoin averages 203.5% per year. Second place is Nasdaq at 20% per year. Notice 2011, Bitcoin had 1473% returns. 2010 was better. Then in 2013, Bitcoin summer hit, the year after the 2012 halving. Bitcoin had 5507% returns that year! 2014 was Bitcoin winter (-58%), then 2015 was Bitcoin autumn (35%), 2016 was Bitcoin spring (125%), and 2017 was Bitcoin summer (1331%):
This blog over the 4 months we have run it, has discussed global macro economics, some financial history, and related Bitcoin to all other assets using many different measures. We believe 100%, Bitcoin will grow tremendously in 2021 because of the inevitable money printing, and QE infinity the Fed has promised us. Once the Biden administration is sworn in (assuming that happens), Yellen will start pushing to print, and a lot more stimulus will roll through congress. If and when a deflationary stock market crash does happen. Bitcoin will only get more popular in the after effects of all of that. Bitcoin was born in 2009 and conceived in 2008 after a massive stock market bubble and collapse. We know this 2020 stock market bubble will collapse. We just don’t know when. Bitcoin will eventually, be the beneficiary of that, because it is the antithesis of loose fiscal policy, which obviously got the economy in this mess to begin with.
"If pension funds and insurance companies in the U.S., euro area, U.K. and Japan allocate 1% of assets to Bitcoin, that would result in additional Bitcoin demand of $600 billion, the strategists said."
Nikolaos Panigirtzoglou – JP Morgan
A $600 billion increase to Bitcoin’s market cap would nearly triple the price. A lot of the gains in market cap Bitcoin has already received in 2020, have still not been priced in. Derivative markets have held Bitcoin growth back, below $20K, so that more accumulation below $20K could occur. This will come to an end. When it does the price will skyrocket! Don’t be left with zero position in the safest, most secure, digital network in the world. The greatest assymetric bet in this generation. The world’s first digital currency, built on the blockchain, never hacked, proven since 2009, highest annual returns in the world since 2010, recipient of the largest wealth transfer from fiat currency to digital currency, in generations. Neutral ATM is here to get everyone off of zero Bitcoin.
I have convinced the wife to let me sell 30% of our Gold and buy Bitcoin with it. It has had the trajectory of that drive from Junction to Midland the last two months. I do think it will gain a return over the next 4 years. But compared to Bitcoin, its like Texas at Alabama. Mudhole!