No, it actually is a ludicrous bet. No rational investor would ever make this investment. The absolute max value stands at less than a third of that. This sort of call only makes sense if it's designed to manipulate fools into a buy spree to supply liquidity to mask a massive cashout.
> Bitcoin tripled in value
Ah yes, and lightning will certainly hit the same person again and again.
Do you happen to have any money on bitcoin by any chance?
How many of these call options have you sold? And if the number is zero, then what are you waiting for? Why not take advantage of how much smarter you are than all of these sheep and make some easy money?
(attributed to John M. Keynes)
As a rational investor/gambler, when I hear that someone is willing to make a “ludicrous bet”, I’m happy to book their action.
This is the only bubble WITHOUT credit and institutional leverage so far
I would take the opposite side of your bets, there simply aren’t enough whole bitcoin units for even every schmuck with a million dollars
Wake me up when crypto ventures are built entirely on rehypothecated assets in the crypto ecosystem, and Morgan Stanley is leveraged 5,000% again
Do the math: Given the extreme volatility (https://www.bitmex.com/app/index/.BVOL) of Bitcoin that price is not unreasonable for that call per conventional means of valuing options.
And every party that is long bitcoin and who isn't selling that position is implicitly taking that position as well: in the sense that, at least in theory, they could also sell those calls but have not (yet). Or perhaps your argument was that no rational investor would own Bitcoin at all? :)
Σ(all bitcoin) = 0.1% world money supply? 1%? 10%? 100%? Even more? At some point it will go down. If you have a rational model for what value is too high, great! But if you don’t, you’ll gamble yourself into poverty, like so many other speculators over so many centuries.
This is 27x the current market cap so if the current price is $16704 a good target is $451,008. Prices above that would seem excessive to me.
I shared some of my reasoning here: https://news.ycombinator.com/item?id=15840591
You are not going to get 1000x higher prices than the current price, my opinion. It's not justified. On the other hand, 3x, 5x and so forth prices are easily justified given what bitcoin "is" and the role it can serve. This remains so even if transaction prices are very high, the blockchain is very slow, and there are more liquid and easier alternatives. This is because bitcoin serves as a kind of "gold" for various usages of that term. The only difference is that when you hold a piece of gold in your safe, there is no physical possibility that due to a coding error in the fabric of the universe, it disappears from your safe.
However there is a very large possibility of bitcoins disappearing entirely, due to a coding error. It is very important to hedge against this or account for this possibility.
That is redeeming quality though. It's rare so you can be pretty sure people won't dig out 10 as much so its value won't drop rapidly. It's durable so it won't corrode away, combust or fly into space if you don't handle it carefully. You can hold it in your pocket or under your materace. This makes it excelent store of value. Not perfect though. If you own it you need to keep it physically secure. If you buy it you need to know how to not get duped. To sell it or buy it you need to physically meet with the buyer or a third party you both trust. Risk of all those operations grows with the value of your holdings.
Now this new thing comes up. It's also rare. You can store it perfectly securely without anyone knowing that you do. You can sell any fraction of it to highest bidder on Earth, from your home and that only requires you trusting sigle third party (that you can choose out of few) that trades over billion dollar's worth of this stuff every 24h.
I think you can easily see that half of value that humanity currently keeps in gold is very safe bet for bitcoin max market cap.
TBH, while I don't know enough to have an educated opinion on Bitcoin's price, I can't help but feel skeptical about your comment, if only because of the amount of confidence you express.
It did though. Again and again.
Will it keep doing so ?
Possibly, possibly not.
I don't think anyone can make a reasoned prediction one way or the other.
Common sense about Bitcoin flew out of the window long ago.
Are the current buyers of bitcoin rational?
> Ah yes, and lightning will certainly hit the same person again and again.
Not a person but a tall grounded metal rod in the middle of nowhere that was designed and built to have physical qualities to attract lightnings. It works for that purpose as was demonstrated multiple times already.
Analogies, aren't they fun?
Maybe you don't have anything in BtC and are therefore exhibiting criticism on the basis of projected schadenfreude? I mean, it can work both ways, this argument of if you've got a "Vested Interest" .. or not.
i think the notion of "rational investor" gets redefined with the speed of the BTC price growth :)
Depends on your situation. But of course you need to assume that this is a very high risk investment... It could go to $500k or $0.50.
> Do you happen to have any money on bitcoin by any chance?
I only have a very small fraction of 1 Bitcoin... nothing to be excited about.
Care to elaborate?
