Seriously, some time ago you could debate if you're an early adopter (winning from a raise in the bubble even if it pops later) or a laggard who'll only lose in it; but if you're investing after a random taxi driver has taken a mortgage to do so, then (hint-hint) you're not one of the early ones.
[1] https://steamcommunity.com/games/593110/announcements/detail...
I think slowly selling on the way up is a good strategy. For example everytime it doubles you sell 10% or 20% (depending on the risk you are willing to take). At https://bitcointalk.org/index.php?topic=345065.0 there's a better description of this approach and at http://bitcoinsavingsplan.com/ there's a calculator to check scenarios with different numbers.
Any other better approaches?
The early transactions were at a much lower conversion rate so they would be of larger BTC that tended to raise the average $/txn. But if Bitcoin as a payment network were growing exponentially, we would expect a large proportion of transactions to be relatively recent and at recent valuations.
So either: A. Bitcoin is used for transactions of over $1000 on average, or B. speculation is driving up the valuation far beyond its utility.
In either case, it's clearly not about frictionless microtransactions anymore.
What's involved in processing a transaction?
Well, what else could it be?
"I thought of how Henry Ford called his broker and instructed him to 'sell everything' when his doorman or elevator-operator (anecdotes differ in detail) started telling him about stocks in 1929."
I'd buy them for shits and giggles but the transaction costs are ridiculous.
It's not wrong, buuuuut....
Whereas before those millionaires may have been reluctant to open an account with (i.e., send all their identity documents to) some unregulated crypto exchange, they already have brokerage accounts that can now or will soon be able to trade them.
Thanks for sharing.
All just to make up for somebody's bad investments?
If you want to know how stingy people are with their money, you have to only look at how they think about paying taxes.
Stop calling them tulips. The most “educated” answer is that you don’t understand them. Stop pretending you do. A thing like this is the first off, many rules of economics don’t apply.
Bubbles are generally about Human psychology not about the underlying asset. Tulips, student loans, homes, internet domains, websites etc etc.
The problem there is really Human psychology. For that matter people still continue to take student loans, buy homes, buy tulips or whatever. Its just not at the bubble prices.
Tragedy of the commons. Even if I "want" the price of bitcoin to go up, any dollar I invest in Bitcoin will only increase the value that I actually capture by an infinitesimal amount.
No.
Once everyone is invested the pool of potential new investors has been exhausted and the bubble pops.
The big questions are if that's ever going to happen, and if so, when?
Unless you've got a time machine or have cornered the market, though, I'm not sure how you could ever know.
With bitcoin though, I don't see a good way to say bitcoin "is overvalued, here's x, y, z that explain why it's overvalued." There's really no explanation for it's value at all, that's the aspect of bitcoin that resembles a currency.
There are already problems withdrawing from exchanges, if a mass of people panic and want out, it could trigger a run on the exchanges, some of which are rumored to be running some kind of fractional reserve.
All it’s going to take is a few grannies losing their retirements for the congressional hearings to start, etc.
I think it can probably still double or triple from here, so I’m not gonna try and call the top, but chronologically, I don’t think it’s too far off—6-9 months is my guess.
At some point in time. The price of one single coin will be bonkers to the point of disbelief. Round about the same time, there won't the next set of greater fools to drive the prices any more up.
Then a good deal of people will want out. Demands comes down, supply goes up and prices come crash down.
At the end people just sit down and realize along the way it generally never was a good idea to be playing this game at all.
Ultimately, the mania present in a bubble can persist longer than one can stay liquid, i.e. Bitcoin could double or triple before the bubble bursts, which would trigger a margin call on a short position.
At this point, the market's too hot - there's too much going on. And Bitcoin itself isn't seeing the meteoric growth today that it has over the past 2 weeks - where is the growth from the Futures exchange?
You will go broke first when the price first doubles.
Then them will go broke when the price crashes.
Bitcoin: my answer to the repeated questions. No, there is NO way to properly short the bitcoin "bubble". Any strategy that doesn't entail options is nonergodic (subjected to blowup). Just as one couldn't rule out 5K, then 10K, one can't rule out 100K. Gabish?
The only problem: none of these stories are true.
https://www.smithsonianmag.com/history/there-never-was-real-...
> That’s not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis—but only because it undermined social expectations.
The tulip craze was real, it just didn't cause society to crumble.
"That’s not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis--but only because it undermined social expectations."
"In this case it was very difficult to deal with the fact that almost all of your relationships are based on trust, and people said, ‘I don’t care that I said I’m going to buy this thing, I don’t want it anymore and I’m not going to pay for it.’ There was really no mechanism to make people pay because the courts were unwilling to get involved," Goldgar says.
I see it mentioned at least 10 times a day.
Over the last few months, it's gotten to the point where I can't snark about Bitcoin (to my security industry friends) without getting aggressive pushback from the people I went to grade school with, none of whom are in the technology industry, many of whom are cheerleading their social circles into investing in Bitcoin.
None of them are transacting in Bitcoin (to a first approximation: nobody is transacting in Bitcoin). They're buying for the same reason people bought into Pets.com.
Here's an example:
November 29 at 11:03am: Bitcoin just topped 11k! That's a 77% gain in just the last 30 days. Who wants in??? [21 likes, 19 comments].
This is from a home mortgage loan officer I went to grade school with. The comments are all variants of "Me, I want in."
I don't know what weird threshold we crossed in the middle of this year, but cross it we did.
To me, this indicts Bitcoin's most aggressive promoters, not the investors.
You already own property and take a loan with the property as security.
We're already past the point where bitcoin could have any value as a currency, as the higher and higher transaction fees ensure the only remaining users are traders. I mean I can hardly see anyone using bitcoin today as anything but a store of value for speculative reasons. Any real users (which treat it as a currency) should have already left for cheaper currencies. It's going to fall, and fall hard, and it will be painful. When it will crash, it's going to take similar protocols (who can use the same setups / hardware / asics) down with it as miners try to reuse their hardware on more effective currency.
I love Bitcoin and other crypto currencies but driving yourself into debt to buy in is grossly irresponsible. Worst of all these will be the same people clamoring for regulation when they lose all their things.
This information needs to be the first thing people learn about cryptocurrency.. long before putting any money in
