Global Macro Trading Journal

Banning bitcoin would be very similar to banning gold or dollars, a behavior that goverments engage from time to time. Argentina right now is, for all intents and purposes, trying to ban the ownership of dollars, by severly restricting access to it. Yet on the black market dollars are worth a lot, it matters little that there are laws against it. Market participants will look for defenses against money printing, even if they means jail. What Dalio doesnt talk about is a potential ban in gold actually benefiting bitcoin. If the US government were to ban gold like it did in the past, bitcoin is atually a way to protect against money printing that the government cant do much about. Gold is easy to spot and see, but if I break down my private key in thirds and keep these characters around my house (or something along those lines) how the can the government even know what these characters means? I could store over a billion dollars with a line of characters. And if I memorize them, I can even "transport" it in an airplane without a single pound of luggage, go do that with gold...

Dalio's argument is like saying 'I dont want to own gold, if this works, the government will ban it', its lunacy. If governments ever were to get around to ban bitcoin, the price must have been so high (to get their attention) I could still sell at a huge profit from current prices
 
Daal said:
The price would collapse (for a while) but that wouldn't STOP bitcoin, it would continue to be mined, transacted and function. Which is my point
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That might be strictly true, but it's sort of a "if a tree falls in the forest..." thing. Obviously, people buying or holding crypto today are doing so because they expect that the price will continue to rise, and ownership will become more widespread. If G7 governments announced they would outlaw crypto exchanges and related bank transactions starting tomorrow, all of a sudden this investment case vaporizes and and the price will fall 99%, if not 99.999%, as will trading volumes. I think from a trading or investment standpoint, it's moot whether the market continues to limp along at miniscule volumes.

The 1970s ban on gold, or Argentina banning dollars aren't good analogies. In both these cases, the item wasn't "banned" but rather effectively confiscated at an artificially low price, in order for the government to realize profits on their own holdings. The confiscated items remained widely seen as stores of value, and continued to have an active role in international trade - which is why they were confiscated in the first place.

Nonetheless, I've never heard or read that there was any significant black market trading of gold bullion in the 1940s-60s; casual investors/speculators just moved on, and the really hardcore precious-metals fans or inflation hawks could buy diamonds, silver, or gold jewellery. It just didn't make sense to go through a tremendous amount of hassle and legal risk to buy black-market bullion when plenty of near-substitutes were available. Argentina's situation is different because dollars are both needed and received in the normal course of trade, the issue is how much you can dodge the government's artificial exchange rate.

Either way, I think the prospect of a strictly-enforced crypto ban is remote, but still a risk which must be factored in.
 
@Specterx is right regarding BTC but potentially wrong regarding crypto in general. Other cryptos/blockchains with real world use cases are on the same fiat payment rails as BTC to acquire.

The only possible outcome under a complete shutdown is government mandated blockchains only.
 
Specterx said:
"all of a sudden this investment case vaporizes and and the price will fall 99%, if not 99.999%"
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I disagree, do you really expect that a G7 ban would take the BTC price down to $100? If that happened I would buy all the BTC I could, and anyone that understands bitcoin would do the same. In my mind the smart money support would come at lot sooner. The reason is that you can prevent people from converting BTC to cash through exchanges and banks but you cannot prevent people from doing that with one another. If someone wants fiat for their BTC, someone else can offer to buy that in exchange for BTC even if completely illegal. That is not much different from what happens now with marijuana and drugs GLOBALLY, despite a consensus that drug trade is illegal (except for mj in certain places)
So, it would create a short-term drop in the price, of how much I dont know, but certaintly not 99%, probably 70-80% but that would be a buy as the market adapted and the price would likely completely recover within years
These laws cannot change the intrinsic long-term value (or usefullness) of BTC relative to fiat. The same way that gold bans cant change the value of gold, or dollar bans cant change the value of dollars versus pesos. If that werent the case then price controls would work but they don't. People adapt
 
Daal said:
These laws cannot change the intrinsic long-term value (or usefullness) of BTC relative to fiat. The same way that gold bans cant change the value of gold, or dollar bans cant change the value of dollars versus pesos. If that werent the case then price controls would work but they don't. People adapt
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I guess this is the main difference between your view and mine - you're saying that value exists mostly in a vacuum independent from factors like liquidity, institutional sponsorship, and sentiment/narrative power. I think that's basically true for securities, but not when it comes to non-cashflowing investments like gold, BTC, artwork or fine wine.

How much of gold's rise after 2004 had to do with the creation of GLD, which sent a large marginal buyer into the market and made it much easier for retail to invest in gold? Something similar is underway today with the growth of GBTC, and increasing institutional presence in the crypto market as sources of liquidity and marginal demand.

In any case, it's always interesting to see opposing views.
 
Specterx said:
I guess this is the main difference between your view and mine - you're saying that value exists mostly in a vacuum independent from factors like liquidity, institutional sponsorship, and sentiment/narrative power. I think that's basically true for securities, but not when it comes to non-cashflowing investments like gold, BTC, artwork or fine wine.

How much of gold's rise after 2004 had to do with the creation of GLD, which sent a large marginal buyer into the market and made it much easier for retail to invest in gold? Something similar is underway today with the growth of GBTC, and increasing institutional presence in the crypto market as sources of liquidity and marginal demand.

In any case, it's always interesting to see opposing views.
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I agree that these things have an effect but my disagreement is that the government can permanently hurt them. People will adapt, there are already exchanges that run in a decentralized fashion. The link to fiat can be reestablished by peer to peer transactions. And BTC went from 5 cents to 20K without much institutional support, so its nice and it will pump this run but if the governments tries to kill it, someone else will fuel the next run. There are a lot of rich people in the world, there are lot of governments printing money
 
But in any event, I find it pretty difficult for big goverments to shutdown crypto's link to fiat (through bank regulation) because they all agree that tax havens are bad (for them) but there are still plenty of small countries that disagree and they are the havens. If they were to shutdown crypto banking, that opens an opportunity for the Panama's of the world to say 'take your crypto business here', and then they charge a crypto tax and raise a lot of revenue.
Also, if central banks create their digital currency, what's to prevent FedCoin/BTC pairs from popping up on binance or a decentralized exchange? I bet there will lots of way to convert BTC to FedCoin in a resonable fashion. Unless the US government is ready to arrest millions of people, it will be game over for them once FedCoin is out
 
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I think Dalio is right about this
https://www.bloomberg.com/news/arti...ent-for-markets-as-china-ascends?srnd=premium

“Simultaneously there’s the rapid development of the Chinese capital markets, the opening up of the markets to foreign investors, the relative attractiveness of them, and the underweightedness of global investors in them,” he said. “This is happening when the fundamentals of the U.S. and U.S. dollar are becoming more challenging, making it a relatively competitive place to move one’s capital.”

The US is quickly becoming uninvestable giving rising valuations, rising risks (fiscal debt crisis) and rising complacency. TINA is a reflexive boom-bust style move that seems to be driving US technology shares into unsustainable levels
 
It's notable that agricultural commodities after being dead money for a long-term finally started to move
big.chart
 
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