- Market cap is sort of a misleading stat. Microsoft's market cap is ~1.75 trillion, but it's p/e ratio is 34. So if they stopped reinvesting in their business, I'd be making 3% yearly on that investment with a hedge against inflation since they can just raise prices. A lot more goes into their valuation than that, but my point is that even if you are a huge skeptic of Microsoft's current valuation, the company is still worth a ton of money. I don't have a number, but I'd imagine that at $500 billion, pretty much every investor on the planet would think that Microsoft is a crazy steal. On the other hand, bitcoin's value is based on perception of its value and nothing else. The fact that some people are willing to buy in at $50k doesn't mean that every investor on the planet would think that bitcoin is a steal at 10k. There'd still be plenty of people who consider that price to be way to high as well. Since market cap is determined entirely by people willing to pay the most, it's hard to say what market cap means for something like bitcoin.
- I agree that there comes a point in time where even a skeptic has to give in. BTC really started to explode about 3 years ago. For me, that's just not enough time. Subjectively, after 10 years at reasonably high values, I'd probably have to reconsider, assuming it gets less volatile over time.
- The volatility is the main concern for me. Gold had a low around 100 and a high close to 200 in the past year of craziness, so it almost doubled. BTC went up about 10x from it's 2020 low to its recent high. Even Zoom and Peloton are only up ~4x from a year ago and this pandemic has fundamentally changed their businesses. I think if BTC got to a point where it didn't change more than 25% value in a year with a normal-ish economy, I'd have to reevaluate.
equities markets cant be compared to a commodity. so that invalidates your entire first paragraph, the longest one. as a corollary to that, don't derive your confidence from equities investors opining about commodities for the first time in their lives. you have equities investors that never traded tech and never traded commodities talking about bitcoin, you cant call that insight. bitcoin is looked at in market cap terms because it has a more transparent supply than any other commodity. this is completely new to the universe of assets and the market likes that. it removes a risk with gold, oil, etc.
paragraph two and three: you want high price for a longer period of time, but are turned off by the exact and only mechanism in which it gets there - large % and large $ amount price increases. fascinating.
more tech equities comparisons. mmmmk
I’d like to leave you with an alternative tool for valuing, and its just scarcity. if thats not good enough for you, then just stay out of the market. retail investors en masse never got married to commodities markets for the exact reason that they are not buy and hold outside of some metals. volatility is not controversial in the commodities markets, its termed as seasonality, as supply and demand ends up having a frequency in some markets. A lot of the equites market style comparisons to bitcoin is because it started with retail (non-institutional) who never traded anything else. But don't be like them. Bitcoin’s not a company so dont use company comparisons.
It's not really a commodity. More of a currency.
> you want high price for a longer period of time, but are turned off by the exact and only mechanism in which it gets there - large % and large $ amount price increases. fascinating.
I'm not saying it's worth nothing. If bitcoin stays above 5k for a long time, i'm willing to say it's worth at least 5k. If it stays above 50k for a long time, i'll come around and say it's worth at least 50k.
> I’d like to leave you with an alternative tool for valuing, and its just scarcity.
Scarcity alone doesn't mean anything. I can create a cryptocurrency any time that's scarce. Doesn't make it valuable.
> Bitcoin’s not a company so dont use company comparisons.
The only commodity that it is comparable to is gold and maybe a few other precious metals that serve as value stores. And gold, for one, has held high value for thousands of years. Maybe it doesn't have intrinsic value in the way that canned beans do, but the chances of it being near worthless tomorrow are very very low since it has a 5000+ year track record. On the other hand, yes, there's seasonality and volatility in things like oil and pigs, but there are also real world use cases for those.
But BTC advocates do so all the time by using an equity markets term, market cap. As far as I know that isn’t a term applied to commodities.
Also commodities have a use value. In what way is bitcoin a commodity?
You could probably cherry-pick some dates between Q2 2018 and end of 2019 that would come pretty close to this criteria.
But Bitcoin seems to have no use case, and it takes more and more energy as the price goes up.
The higher price absent any use case or advantage seems like it only has speculative value. It could become a religious thing where it has value because people value it: a lot of gold’s value exists for this same reason.
But I’ll wait to see how things play out with Tether before thinking that is likely. They are under pretty severe reporting requirements for the next two years and if they can’t show reserves for the $30 billion they printed last year they are in trouble.
Please share which asset class has value without humans valuing it? If earth was to be wiped out of its human inhabitants, would any asset have any value in human terms? The Indian Rs 500 note lost value instantly as soon as it was banned, just as the German Reichsmark did through inflation. Tribal humans used seashells and beads as currencies. Their belief was no different than your belief in Apple or USD, and my belief in Bitcoin :)
Energy : The power that nation states derive from printing money aka foreign interventionism, military, inefficiency in all processes etc. is likely orders of magnitude higher. BTC energy consumption is concerning but shouldn't be viewed in a void.
Tether afaik is a nothing burger and will not hurt BTC valuation.
I'm overall "just fine" with Ethereum though. There's a lot of speculation going on, but it's also a rather productive idea that I hope takes off in the future.
I'm a fan of cryptocurrency in general, just not really Bitcoin.
edit: Thinking about your question though, maybe it could be interpreted as "if the market cap/price of BTC was more stable, would you like it?" and the answer to that is yes, however still I don't believe that it provides much utility compared to other cryptocurrencies.
If BTC was more stable and you'd like it then, it implies you are likely a late stage investor here. Volatility comes with price discovery. The publicity and speculation come and go but build on each other over time. We're conflating the short term volatility and hype cycles with long term value, and if you only focus on the former it is like missing the forest for the trees (my opinion).
I am not a BTC purist, and think Eth has its place too. If that connects with you better, cool! Who knows if BTC will die and ETH is the future of crypto. ETH is more volatile objectively, but if your belief in ETH makes you hold through the cycles, more power to you.
