150k bitcoin predicted by lee,,..1 billion by others!!

[engineering]

But while we're here, let's explore the idea of how to value a network

So do it instead of assuming how I'm doing, try to give me a model for Bitcoin's price that's driving factor is anything other than speculative mania.

The big point with the hedging discussion is that being a hedge for something has a specific definition and can be quantitatively evaluated.

With Bitcoin, people like to talk about things like the number of users, number of transactions, hash rate, but as I see it, it all really just comes down to FOMO and speculative mania.

Look at this chart.
https://www.blockchain.com/explorer/charts/trade-volume
Clearly the price is not well correlated with transaction volume.

If you look at this chart you'll see unique addresses in use are actually declining
https://www.blockchain.com/explorer/charts/n-unique-addresses
(Despite a rising price)

Looking at the SPY and Bitcoin they seem to be significantly better correlated than either of the previous charts

I would find that chart particularly unsettling if I wanted an asset that would not crater during a stock market crash.


Take your comment regarding settling $100T/yr. What do YOU think that means for the price? I don't see it as particularly meaningful for the price given previous price vs volume performance.

And with these metrics, the value of a single bitcoin, a scarce asset that is required to utilize the global monetary network, is $70k (currently)

But it (basically*) doesn't matter what Bitcoin's price is if I just want to use the network to move funds. A single Bitcoin could cost a dollar or a million dollars. If my purpose is just to move money, I buy and sell the appropriate amount.
The price is being driven by price speculation, not a shortage in the available float.

*Imagine if we were talking about transferring money using bars of gold or shares of Eli Lilly. Buying something, handing it to someone else and that person the selling it the same day doesn't really drive the price. Eventually, if your daily volume was on the order of the float, you might drive the price upwards just to pull more into the market, but if instead of selling the same day you hold the asset that really drives the price up quickly.
Bitcoin is being driven by balance of the in and out flow not the transaction volume.

 

[NoahA]

But it (basically*) doesn't matter what Bitcoin's price is if I just want to use the network to move funds. A single Bitcoin could cost a dollar or a million dollars. If my purpose is just to move money, I buy and sell the appropriate amount.
The price is being driven by price speculation, not a shortage in the available float.

*Imagine if we were talking about transferring money using bars of gold or shares of Eli Lilly. Buying something, handing it to someone else and that person the selling it the same day doesn't really drive the price. Eventually, if your daily volume was on the order of the float, you might drive the price upwards just to pull more into the market, but if instead of selling the same day you hold the asset that really drives the price up quickly.
Bitcoin is being driven by balance of the in and out flow not the transaction volume.

I don't want to speak for John, but here would be my answer for you.

You're forgetting the most important aspect of where we think bitcoin is going. It will underpin the entire financial system. When you price a painting, it will be priced in bitcoin. When you price a house, it will also be priced in bitcoin. You see, when you price these things in USD, the price keeps going up because dollars keep getting printed and losing value. When you price in bitcoin, the price keeps going down. So at some point, everyone figures out that holding dollars is pointless since they will always lose value, and they give too much power to the government to control you.

So if you add up the current value of all assets in the world, stocks, bonds, real estate, precious metals, cash in bank accounts, supposed retirement money that is saved somewhere for you, it all adds up to about $900T if measured in USD. I've seen numbers such as $450T as well, so I guess its some number in the 3 digit trillions. Now you figure how we can represent this number not in dollars, but in bitcoin. We know how many bitcoin there will ever be.

Look at it like this. You know the half-life principle of atomic particles, right? These atoms spontaneously decay at a know rate. You start with one element, and it loses particles and turns into a different element. Now imagine if gold did this. Imagine you buy 1oz of gold, 33g, and it has a half life of 1 year. So in a year, you have only 16.5g. Now tell me, would you use this as a way to store your wealth? Well this is USD, guaranteed to lose value. Once everyone figures this out, we will be on the bitcoin standard.

The beauty about bitcoin is that is does everything in one package. USD is great as a method of exchange. Everyone takes it, and its easy to send electronically, if you have the permission of course and access to banks. Gold has universal appeal at a store of value, but its horrible as a method of exchange, and of course difficult to audit.

But with bitcoin, you literally won't need anything else. You can have it yourself in cold storage, to satisfy the need for savings, and you can have a bunch in a hot wallet for your purchases, to act as method of exchange. You don't need yield because it will always go up in value, and the world will be able to follow the natural path of deflation because we will finally have the right currency that matches the natural order.

You can fight it all you want, but every day, more and more people figure this out.

 

[johnarb]

With Bitcoin, people like to talk about things like the number of users, number of transactions, hash rate, but as I see it, it all really just comes down to FOMO and speculative mania.

Look at this chart.
https://www.blockchain.com/explorer/charts/trade-volume
Clearly the price is not well correlated with transaction volume.

If you look at this chart you'll see unique addresses in use are actually declining
https://www.blockchain.com/explorer/charts/n-unique-addresses
(Despite a rising price)

Thank you for your detailed response. Whales are buying during the shakeouts, thus consolidating more bitcoins into fewer and fewer (whale) addresses

It's been happening for a while, apparently the big dumps, and other tactics that may be considered illegal price manipulation in other markets are not in the bitcoin markets

Take your comment regarding settling $100T/yr. What do YOU think that means for the price? I don't see it as particularly meaningful for the price given previous price vs volume performance.

But it (basically*) doesn't matter what Bitcoin's price is if I just want to use the network to move funds. A single Bitcoin could cost a dollar or a million dollars.

Supply and demand, the price of a single bitcoin is set at the margin,

just like much of everything else, AAPL share price is determined by what's actually trading in the market much of the circulating shares are locked up in index funds and 401k's

Same as real estate (comps) in Manhattan determined by sales in the past year

It does not take $1 Trillion to double the market cap of bitcoin, price is set at the margin

Anyway, my experience in 2013 or even in 2017 that when the bitcoin network was much smaller, the number of users were much lower, the demand for Bitcoin digital asset was lower, the number of supplies in exchanges were higher, the percentage of bitcoins circulating supplies moving on the blockchain were much higher, over 75% of the existing bitcoins that have not moved in 6 months is unheard of

Supply and demand

If you actually believe that the Bitcoin global monetary network able to settle 5 times the current rate $21T/yr already more than Visa payment network will not affect the price...

We're talking about hundreds of percent in demand of the Bitcoin digital asset

During an ever decreasing supplies due to the accumulators, Blackrock, Fidelity, Bitwise, et al, MSTR, SQ, El Salvador, RIA's, hedge funds

Supply and demand, supplies decreasing, demand increasing, network utilization growth, network participants growth (I did mention 1 Billion users fighting for a piece of the supplies as well)

And yes, the price of a single bitcoin will not be affected makes so much sense, it will probably even go down, the logic is sound

 

[schizo]

It's been happening for a while, apparently the big dumps, and other tactics that may be considered illegal price manipulation in other markets are not in the bitcoin markets

Did you really had to wait until now to realize that the whales are out manipulating the hell out of the noobs? This is why I consider Bitcoiner such stooges. Sorry, I just had to say it.

 

[johnarb]

Did you really had to wait until now to realize that the whales are out manipulating the hell out of the noobs? This is why I consider Bitcoiner such stooges. Sorry, I just had to say it.

Come on, mate, you know Bitcoiners are not affected, the hodlers, our bitcoins are not moving in the wallets and you know I stopped trading the perpetual futures over 2 months ago

You know who was whipsawed? the traders

I don't want to put you on the spot, but did you not get stopped out on your short when bitcoin shot up to 71k?

and a few days ago you got stopped out on your long even calling bitcoin a piece of shit as it went below 69k?

PS: your frustrations are showing, you said you'll stay away from the "fighting" but here you are calling Bitcoiners stooges,, I did not even take your bait when you said bitcoin is a piece of shit... but it's ok, go ahead and vent, the bitcoin markets are very frustrating


-----------

[I do have a short term trade via mstr call options, only have 2 months left, the good news is that the share price has gone up 600 points in the past week and a half, could cash out now at a good enough price

but I'm watching bitcoin price intently, hence, even though I'd rather just not pay close attention to the whipsaws and whale manipulations, I still have to until I close out the mstr call options position]

 

[engineering]

So if you add up the current value of all assets in the world, stocks, bonds, real estate, precious metals, cash in bank accounts, supposed retirement money that is saved somewhere for you, it all adds up to about $900T

This is a silly way to value Bitcoin. It essentially assumes that everyone is going to sell all their productive assets and use them to buy Bitcoin, which produces nothing. It's useful for placing a cap on the possible price of Bitcoin assuming mass hysteria, but practically it will not happen.

If I can snap up shares of Valero for $12 because everyone else has gone insane, you can bet I will do it. And I won't be selling refinery products in order to get Bitcoin. If you insist on giving me Bitcoin I'm going the immediately convert it to something else productive.

Well this is USD, guaranteed to lose value. Once everyone figures this out, we will be on the bitcoin standard.

This represents a major misunderstanding of how the current financial system works. For the most part people don't sit on large piles of cash. They invest it into something that generates income.
Wealthy people don't have some idiotic Scrooge McDuck value full of cash.

 

[NoahA]

This is a silly way to value Bitcoin. It essentially assumes that everyone is going to sell all their productive assets and use them to buy Bitcoin, which produces nothing.

If you look at some studies on real estate, you find that it doesn't return much when you factor in maintenance, property taxes, management fees, etc. And this was even during the historic bull run of the past 20 years thanks to low interest rates. Going forward, I think many investors will see RE as a horrible investment, so its highly likely that trillions of dollars flow out of RE and into BTC.

This represents a major misunderstanding of how the current financial system works. For the most part people don't sit on large piles of cash. They invest it into something that generates income.

M2 money supply is about $20T I think. US debt is another $34, and all of this is denominated in USD, so I consider this a cash equivalent, without taking into account maturation of course.

The point is that everything you need is priced in USD, and that number keeps going up quickly, but your ability to acquire USD isn't keep pace. Lynn Alden says it best in that you don't need yield on a currency that isn't inflating. The reason why people invest instead of holding cash is because that cash will lose value. But not saving for the future is exactly what collapses an economy and country. Even without yield, bitcoin will keep gaining value, so its an excellent "investment" that you just sit on.

I'm not saying USD goes away, I'm just saying that if you consider a South American country with huge inflation, they have their own currency but prefer dollars. One day, most people will be happy to receive bitcoin, and if they do receive USD, they will quickly convert into bitcoin. I have no idea how bad everything else looks when the dollar functions like a third world currency, but lets just say we make it to $100k this year, and bitcoin puts in yet another higher high. How many more people will recognize the trend and switch over?

You can't consider bitcoin like a bubble stock because its not a company producing something. It would be like saying, in year 2000, that the internet is bound to collapse once another 100 million people get online. And then after thousands of more websites pop up, you'd be screaming that the collapse is close. And then people can browse from their phones, and not be tied to a desktop at home, so surely this must be the top! Don't compare bitcoin to a stock. Consider it more like a network where more adoption isn't the sign of a top, but rather, more adoption leads to the network effect which strengthens the network and increases even more adoption.

You have to consider that you might be wrong because you're nothing compared to the majority. I can tell you that as a barely middle class person, I know I'm getting royally screwed by the current system and the only way for me to vote for a change is by buying bitcoin. Most people are in my shoes, screwed by the system, but they just haven't realized how to express their frustration yet. The 90% of us will outnumber the small number of you guys thinking bitcoin is a bubble. Even the top 1% who are doing just fine in this current system will be smart enough to realize that change is coming, and they better get on board or be left behind.

 

[engineering]

M2 money supply is about $20T I think. US debt is another $34, and all of this is denominated in USD, so I consider this a cash equivalent,

Which is wrong. Let's leave the crazy magic of turning liabilities into assets for the FED

Lynn Alden says it best in that you don't need yield on a currency that isn't inflating

You're a retard if you loan money at zero percent. Any investment has risk. If you're not being compensated in some way for your risk you are a fool.

It would be like saying, in year 2000, that the internet is bound to collapse once another 100 million people get online. And then after thousands of more websites

No it would be like looking at the fundamentals of a specific dot com company and seeing
-no business plan
-no special assets or market position
-operations dramatically smaller than what thearket cap would suggest
-losing money with no end in sight
And the saying "people are going to lose their shirt on this"

People like to analogize Bitcoin as the Internet, but you not buying the Internet you're buying one specific thing. For which there are many alternatives. If Bitcoin was protected by key patents licenses that would be an important fact, but it's not.
Personally I think Bitcoin will be the Netscape navigator of cryptos.

You have to consider that you might be wrong because you're nothing compared to the majority. I can tell you that as a barely middle class person, I know I'm getting royally screwed by the current system

I can sympathize with this.
Unfortunately, my expectation is that hundreds of thousands of middle class Americans get wiped out when Bitcoin finally craters.
Take another look at that chart that showed Bitcoin move right with the SP500. That is not the behavior of a safe haven asset.

 

[NoahA]

You're a retard if you loan money at zero percent. Any investment has risk. If you're not being compensated in some way for your risk you are a fool.

But this is the thing. You don't loan your bitcoin. And this is because you don't need to. When you save money, you need yield because it goes down in value. When rates were 6, 7 or 8%, you could likely keep your purchasing power, but this all went out the window after 2008. Saving dollars in a bank account is throwing money away. But saving is essential to the health of a nation. With bitcoin, the bigger risk is lending it because you might not get it back. We all expect bitcoin to do way more than 5% per year over the next decade, so there is no need to take the risk of lending it.

People like to analogize Bitcoin as the Internet, but you not buying the Internet you're buying one specific thing. For which there are many alternatives. If Bitcoin was protected by key patents licenses that would be an important fact, but it's not.
Personally I think Bitcoin will be the Netscape navigator of cryptos.

I completely sympathize with this viewpoint and its 100% logical. The market as a whole, the global market, gets to decide what will be the future of digital currency. But this is now where we have to do a bit of research to see why bitcoin is so different than everything else.

We actually already have a very good example of a bitcoin competitor, and that is bitcoin cash. If you learn about the block wars, you find out that in 2017, people wanted to increase the amount of transactions that can be included in a block. Bitcoin forked over this. This means there was the original bitcoin with the code unchanged, and the new bitcoin called bitcoin cash, which allowed for bigger blocks. Everything else is the same.

And what is the result? BCH has a market cap of $9B, and the original bitcoin has a market cap of $1,354B (150x difference). So as you can see, its not that easy to just make an alternative.

Now, can there be one in the future? Absolutely. But how do we get there? We need a bunch of geeks to create it, without any compensation to them. You see, all these new cryptos that are created now have this amazing feature (and by amazing I mean shitty), that many coins are already pre-mined. The founders get some crazy number like 30%. Now you tell me, do you really want to support a project where the founders make out like bandits?

And this is just one parameter that a new coin to dethrone bitcoin would have to overcome. You simply cannot introduce a brand new project that will quietly gain in size, reaching the point of computing power that nobody can compete with and expect this somehow take hold. It would be like asking everyone to buy a new modem and network card for their computers and laptops because you invented a new protocol for sending data over the internet. Why would anyone switch when the TCP/IP protocol already does everything we need it to do? Your new solution would have to in some way be so superior that people would be happy to get on board at the early stage.

Plus lets not forget that for bitcoin to get to where it got, it had to grow large enough so that it was fully decentralized, without anyone taking it down before it reached this critical size. If you start a new project now, and even if you throw billions at it, it won't reach escape velocity to be large enough to be untouchable. Don't forget, a bitcoin competitor needs to be completely decentralized and offer no benefit to the creator. It has to be such that there is no central point of control, and this is something that only bitcoin can claim. Every other coin has central computer and validators that can be found and attacked. With bitcoin, you can blow up an entire mining operation in Texas and you won't have achieved anything in terms of taking down the network.

So after you go down this thought experiment of building a better bitcoin, you realize that you're better off just joining the current bitcoin network. If you want to drive from New York to LA, but hate the occasional rough road, are you really gonna suggest building a brand new highway that will stretch 4,000 miles? No, you invent a better tire and suspension to deal with the road issues as they are. So if bitcoin currently doesn't have a feature you want, you don't propose a new blockchain and say bitcoin will be dethroned, you build on top of bitcoin on higher layers to introduce what feature you think would be beneficial.

Bitcoin has what is called immaculate conception. It can only happen once.

 

[NoahA]

I can sympathize with this.
Unfortunately, my expectation is that hundreds of thousands of middle class Americans get wiped out when Bitcoin finally craters.
Take another look at that chart that showed Bitcoin move right with the SP500. That is not the behavior of a safe haven asset.

Oh, and with this last point, I am sympathetic as well. It could crater and wipe out a shit ton of wealth, or it can go to the moon and leave everyone else who doesn't have any in the poor house. The US banning it was a threat at some point, and why I didn't get in at a much earlier date. I simply assumed "they" wouldn't let it compete with the dollar. But now I understand that "they" have no control. When enough people join the network, "they" will be forced to as well, unless "they" want the country to end up like North Korea.

With the ETFs now, and support from Trump, the regulatory framework is much clearer. Any legal action against bitcoin that might happen at some later date will in fact hurt the country much more than hurt bitcoin. At this stage, I think the US needs to actually worry about its own survival because the rest of the world is sick of US hegemony. The new world will not have one super power. So if you want to stay relevant, you need to adopt the new monetary system that the rest of the world will adopt.

I admit that these past few months of price action aren't that great, especially considering all the inflows, and I do think there is a chance of a major dump and not even breaking 74k, but this is based on shit really hitting the fan in the financial markets. Everyone expects the Fed to print like crazy, but what if they actually say they won't? What if to protect the dollar, they let everything go to shit? This will absolutely dump the price of bitcoin, along with every other asset, but all other currencies and economies will dump even harder, so its still a win for the US.

So this is on my mind to be honest, but not because bitcoin will break, but just that the monetary system doesn't change like everyone suspects. The US might want to push the world into deflation as opposed to accelerating inflation and money printing. Someone is selling coins to all the ETFs that are buying them up, and yet, price hasn't moved in 3 months, so there has to be a reason why.