The Cryptocurrency Trading Journal

[johnarb]

Pal thinks because debt levels are high, people can't support a hike in rates. I think he is wrong, if Powell were to embark of a hiking path

This is where I agree with Raoul Pal quite strongly and disagree with you. We're not talking about people getting hurt, we're talking about the US government with its $30T in debt and rising that's going to get hurt more

The cost of servicing debt becomes a huge burden, the $ may get stronger as a result of increase in interest, lowering trade competitiveness, possibly lowering US GDP, causing severe recession, ala great recession

Nope, I think Powell and cohorts will not be raising rates any time soon per their last statement not until 2023, when imo it's even way past that...

 

[Daal]

I am aware of difficulty selling when it's off the ath price, but I'm wired differently than most traders. I get scared as the price goes down and want to preserve profits

Why no significant sale in the last 2 bear markets then?

 

[Daal]

This is where I agree with Raoul Pal quite strongly and disagree with you. We're not talking about people getting hurt, we're talking about the US government with its $30T in debt and rising that's going to get hurt more

The cost of servicing debt becomes a huge burden, the $ may get stronger as a result of increase in interest, lowering trade competitiveness, possibly lowering US GDP, causing severe recession, ala great recession

Nope, I think Powell and cohorts will not be raising rates any time soon per their last statement not until 2023, when imo it's even way past that...

In the US, interest expense is about 5% of federal spending. It can go up quite a bit and still be fine. Of course, the rich will be taxed more but specially big corporations. Biden is already moving in that direction. I wouldn't want to own the Nasdaq during Biden. I dont think the US is at the 'point of no return' where if rates rise, there is a death spiral of higher rates and higher budget deficits. Maybe Japan is. But in the US, if rates rise, it will mean NGDP growth is 10% or so, so tax revenues will be doing well, so the deficit will be coming in. Offsetting any increase in interest expense (plus the Biden tax hikes will also offset that)

 

[BKR88]

I plan to sell off all non btc cryptos to fiat and stable coins, but as I hinted on a post or 2, I may hodl 10 btc's

Curious, why do you plan on selling all alts and hold only BTC for the long-term?
I know very little about crypto fundamentals but I've sold about 40% of GBTC and have accumulated >20 alts which I had planned on holding long-term. Is my plan backwards?

***All crypto is small for me so not a concern if they all go to zero.

 

[johnarb]

Why no significant sale in the last 2 bear markets then?

I did have what I consider sufficient sale, but was not convinced that we had a bear market and rode it all the way down. Have a job, have everything I need, and my biggest mistake was that I did not trust Tether and as an extension of that all stable coins

I did not know about the on-chain analytics during the last bear market cycle

Anyway, I'm urging you to look at the on-chain analytics and signaling. You might think Willy Woo is a fake guru, but do some research and you will know he called the bear market and all other bear market rallies in 2018-2019, purely by watching on-chain bitcoin movements

No one can lie on the blockchain

 

[johnarb]

Curious, why do you plan on selling all alts and hold only BTC for the long-term?
I know very little about crypto fundamentals but I've sold about 40% of GBTC and have accumulated >20 alts which I had planned on holding long-term. Is my plan backwards?

***All crypto is small for me so not a concern if they all go to zero.

I've experienced 2 bear market cycles and from those 2 experiences, bitcoin may have gone down over 80% peak to trough, but alts have gone down all the way to 99%

That's why in a bull market, alts outperform btc, because from the very lows, they can jump much, much higher in percentage returns, look at Eth, doge, dgb, ada, link, and many others

But btc is king, bitcoin bull market and bear market, it's the leader, the reserve currency of the cryptoverse, and it will hold the value the most in a bear market and this bear market may not go to severe levels as in the past, we have Rick Astley buyers (the institutions ,never gonna let us down) that will always provide a support level price floor for btc and has no plans to sell in the next 5-10 years, they're in the game not for more fiat but as an inflation hedge

 

[Daal]

I did have what I consider sufficient sale, but was not convinced that we had a bear market and rode it all the way down. Have a job, have everything I need, and my biggest mistake was that I did not trust Tether and as an extension of that all stable coins

I did not know about the on-chain analytics during the last bear market cycle

Anyway, I'm urging you to look at the on-chain analytics and signaling. You might think Willy Woo is a fake guru, but do some research and you will know he called the bear market and all other bear market rallies in 2018-2019, purely by watching on-chain bitcoin movements

No one can lie on the blockchain

I think this stuff can help, but at the end of the day if you think about that this is scientifically, there is not very strong evidence that it works.

Why do we think a Moderna vaccine works? Because we have several double blind placebo controlled trials saying that it works, so we can make predictions that a person vaccined is unlikely to struggle with covid as someone who is not. We dont have a correlation study as the foundation, which is a much weaker form of evidence. We certaintly dont have a correlation study with a tiny sample size backing the whole thing. That would be crazy

What are statistics as applied to blockchain investing? Its a correlation study ("it happened in 2017 and prices went down") with a tiny sample size (often samples of 1 or 2). No one would make strong predictions in any field using correlations with tiny samples, but in markets, people literally bet their life on it. Which is nuts. Especially given that market data is a 'extremistan' data set, which makes statistical work even MORE unreliable (and Taleb does good work explaining that on the Black Swan). The human body and the data it provides is a lot more predictable, markets are not. To have a lot of confidence in correlational studies with tiny samples in extremistan datasets, scientifically, doesnt make sense

So yeah, I will take a look at onchain stats, but I dont trust the predictions that come out of these numbers like most people. People like they sense of control that gives but I believe that is false confidence

 

[johnarb]

In the US, interest expense is about 5% of federal spending. It can go up quite a bit and still be fine. Of course, the rich will be taxed more but specially big corporations. Biden is already moving in that direction. I wouldn't want to own the Nasdaq during Biden. I dont think the US is at the 'point of no return' where if rates rise, there is a death spiral of higher rates and higher budget deficits. Maybe Japan is. But in the US, if rates rise, it will mean NGDP growth is 10% or so, so tax revenues will be doing well, so the deficit will be coming in. Offsetting any increase in interest expense (plus the Biden tax hikes will also offset that)

And raising rates won't affect the fake bull market and corporate earnings causing all kinds of domino effects, decrease in capex, higher unemployment, suppliers going out of business, lowering consumer demand, a crash in real estate, and other disposable income industries and industries tied to wealth effects from the bull market stock market and inflated real estate, and so forth, etc?

I'm not an expert on this but was listening to CNBC the other day, that much of the growth was due to very cheap issuance of debts and using capital markets to fund manufactured growth via share repurchase, lowering circulating supplies, increasing P/E levels, but I'm just not an expert on this to even say I got the mechanics correctly

 

[johnarb]

If the ET crypto haterz really think that bitcoin will go down 80%+, they would be putting all kinds of synthetic positions 3 standard deviations on the downside to profit massively on such a btc crash, but no, they are just salty and have no conviction to put skin in the game

Taleb turned bearish on bitcoin recently. Having read his books that he's always long tails, he's probably going to profit huge if bitcoin crashes. He's talking his book, imo, pun intended

 

[Daal]

And raising rates won't affect the fake bull market and corporate earnings causing all kinds of domino effects, decrease in capex, higher unemployment, suppliers going out of business, lowering consumer demand, a crash in real estate, and other disposable income industries and industries tied to wealth effects from the bull market stock market and inflated real estate, and so forth, etc?

I'm not an expert on this but was listening to CNBC the other day, that much of the growth was due to very cheap issuance of debts and using capital markets to fund manufactured growth via share repurchase, lowering circulating supplies, increasing P/E levels, but I'm just not an expert on this to even say I got the mechanics correctly

Interest rates will have some effect but that will be smaller as compared to a 10% NGDP growth. Thats what I think Pal is missing. He is not looking WHY rates rose. Scott Sumner talks about that a lot, you cant reason from an interest rate change (I think Friedman popularized this idea back in the day). Rates were high in the 70's but monetary policy was loose. Rates were at 0% in the US in the 30's and in Japan after 1990, but monetary policy was tight. What matters is not where rates are, its why it is there and other factors

Rates in the US can be at 4-5% with monetary policy still loose, which supports debtors. If you look at the US in the 70's, that's what happened (though there was no published fed funds back then). Pal, says that inflation was driven by baby boomers buying stuff. I dont think he studied monetary policy very much, he seems to have a different model that I do about how inflation works so time will tell who is right