Bitcoin, crypto currency and block chain...

[boji]

my inclination.. perhaps USB drive and paper backup JIC

+1  Offload the wallet onto a thumbdrive.  Stick it in a waterproof, electrostatic bag and forget about it. 

 

[boji]

btw, once PoWiFi gets going, IoT devices are going to explode in popularity, and I'm sure they'll be tons of ways to code for ETH micro-transactions that will make it profitable for the targeted, dynamic, wearable advertising industry. The idiocracy cometh!

 

[dmp]

I am still skeptical but the technical analysis looks promising in the near term (years)...

Fatal last words, haha

What's the difference between an investment and a casino (gambling)?
An investment has a positive return while a casino has a negative return, once randomness is washed out (i.e. long enough time period). Roulette pays 36:1 but there are 36 numbers PLUS 0 and 00 (38:1). So over the longterm, it is a moneymaking machine for the casino. 
Does volatility make something a bad investment? It only depends on how short your time horizon is and whether you can ride out the downturns (mentally).
A common misnomer of the 'casino' label when applied to things is mistaking volatility for a negative long term return. 
Volatility, risk, and return are connected, however. It makes sense in hindsight.

+1  Offload the wallet onto a thumbdrive.  Stick it in a waterproof, electrostatic bag and forget about it. 

include redundancy (a copy stored in a separate place). 

 

[Script]

I am still skeptical but the technical analysis looks promising in the near term (years)...

A bit late already?

I had predicted  in Jan 2018(?) that it would probably go down from 8000 to 5000. It plunged even further. Shortly after that, back then, would have been a good time to buy.

 

[JohnRoberts]

A bit late already?

I have been buying common stocks since the 60s, more and less at different stages of my life.

These days at my age I should be mostly in bonds and debt, but 2% interest sucks.

I had predicted  in Jan 2018(?) that it would probably go down from 8000 to 5000. It plunged even further. Shortly after that, back then, would have been a good time to buy.

I have been following bitcoin from a distance for years. It has been a casino bet for years and probably still is, with the extra risk of not having a secure trading vehicle (like gold ETF).

Further, investments need to have a fundamental thesis... Like earnings, P&L, dividends. BITCOIN is a exotic alternate asset class engineered to appreciate, so far with scary volatility.

Since there is no fundamental proposition to vet, all we have is statistical analysis to gauge market price interest. I read at least one book on statistical analysis, and smarter technicians than me have identified statistical patterns that reveal accumulation (prices building a base), and a break out pattern suggesting next near term move is up.

Of course there are no guarantees but it appears to be up almost $1k since the pattern was identified (that's what I mean by late). The BITCOIN touts talk up the next (halvening?) when amount in circulation declines or gets harder to grow new. This is part of the engineering to boost scarcity and increase price.

Low information investors hear the news reports about Facebook offering its own cryptocurrency, and ASSume that should increase the value of BITCOIN (not really). A more likely stimulus could come from major banking participation in BITCOIN ETF or their own secure BITCOIN exchanges.

I am too old to even be thinking about this, but my modest position in gold is only down something like 9% since I bought it. It was down more than 20% in past years. (Low interest rates drop value of dollar, raising price of gold and presumably BITCOIN if it ever becomes a currency hedge. )

Do not buy BITCOIN based on my blather, but if you do a small position should limit the pain from total collapse, and if it goes hyperbolic will still pay off...  I advise more old school common stocks for long term investment but the current bull market is arguably long in the tooth with slowing earnings growth and low inflation expectations.

The low interest rates should be supportive for new home buyers to get cheap mortgages.  But what would I know.  ;D ;D

JR

 

[dmp]

Since there is no fundamental proposition to vet, all we have is statistical analysis to gauge market price interest.

Agreed, it does not have a cash flow like other investments, but statistical analysis is the investor's fortune teller, imo.
Bitcoin is a asset that may become more valuable or may become worthless. Nobody can see the future.

It certainly doesn't have negative cashflow for the past 8 years like netflix, 
Nor did it lose a billion dollars last year like uber.
Nor is it a fake meat company with no barriers to competition valued higher than many established, profitable companies. 
;D

Anyone considering buying bitcoin should just read the white paper and decide if you consider it a technology with value.
https://bitcoin.org/bitcoin.pdf

If you think blockchain is the key technology and not bitcoin, then you probably shouldn't buy it.
If you think other cryptocurrencies will create inflation, then you probably shouldn't buy it.
If you think government regulation is an existential threat, then you probably shouldn't buy it.
If you are only buying due to FOMO, then you probably shouldn't buy it.

The BITCOIN touts talk up the next (halvening?) when amount in circulation declines or gets harder to grow new. This is part of the engineering to boost scarcity and increase price.

The halving is about the mining reward - does not reduce the amount in circulation. The growth of the supply slows.

Do not buy BITCOIN based on my blather, but if you do a small position should limit the pain from total collapse, and if it goes hyperbolic will still pay off...  I advise more old school common stocks for long term investment but the current bull market is arguably long in the tooth with slowing earnings growth and low inflation expectations.

As this business cycle slows down, the key question for stocks is will there be an earnings recession.
How bitcoin performs in a market downturn / economic recession is a big question.
Usually as fear takes over investors flee to cash. 

 

[JohnRoberts]

Agreed, it does not have a cash flow like other investments, but statistical analysis is the investor's fortune teller, imo.
Bitcoin is a asset that may become more valuable or may become worthless. Nobody can see the future.

I sure can't...  But statistical analysis is thousands of years old. While it cannot predict future prices specifically it can estimate probability of size and direction of future moves.  Up this much, or down this much. Logically averaged over multiple positions with bias toward buys that have projected larger upside than downside can be profitable...

I do not believe in depending on statistical analysis alone, but do often use it to time investments after I have decided for more fundamental reasons... (completely lacking with BITCOIN, another reason to avoid).

It certainly doesn't have negative cashflow for the past 8 years like netflix, 

An investment in a brand and customer base.  I do not believe in netflix or use it, but many do.

Nor did it lose a billion dollars last year like uber.

Some touts are enthusiastic about uber as a new way to do business... I am not so sure.

Nor is it a fake meat company with no barriers to competition valued higher than many established, profitable companies. 
;D

indeed fake meat is real trend, but the stock appears to be a fad without significant barriers to competition. Danger Will Robinson. 

Another observation... recent new company IPOs have been distorted by several factors for years. First private venture capital has been too involved in multiple rounds of pre IPO capitalization growing these would be unicorns, so venture capitalists can participate in more of the gains. Then when they finally do go public they only offer a thin float (not many shares) making the stock more volatile, while the massive private venture capital holdings are a negative overhang on future stock price, as they will cash out eventually. 

Anyone considering buying bitcoin should just read the white paper and decide if you consider it a technology with value.
https://bitcoin.org/bitcoin.pdf

If you think blockchain is the key technology and not bitcoin, then you probably shouldn't buy it.
If you think other cryptocurrencies will create inflation, then you probably shouldn't buy it.
If you think government regulation is an existential threat, then you probably shouldn't buy it.
If you are only buying due to FOMO, then you probably shouldn't buy it.
The halving is about the mining reward - does not reduce the amount in circulation. The growth of the supply slows.

LIke I said, if you must only buy a tiny amount you can afford to lose.  Block chain is the real deal, but BITCOIN is still a casino bet.

As this business cycle slows down, the key question for stocks is will there be an earnings recession.

This is well inspected and indeed we are late in this cycle when things should be slowing. Remarkable that the market has held up as well as it has, as long as it has.

How bitcoin performs in a market downturn / economic recession is a big question.

How BITCOIN performs in any circumstance is a big question.  :

Usually as fear takes over investors flee to cash.

While you wouldn't know it from the news heavily biased on all thing political, there is plenty of uncertainty in the world driving international investors to buy safer US securities. Bonds are down around 2% because of all that buying ..... that sucks...

Good international news, it appears china has blinked about extradition policy change for hong kong.

Bad international news, Iran is acting out over economic sanctions stress, they just announced they would expand uranium enrichment. They messed up oil shipping in the gulf back in the 80s (along with Iraq who is no longer a bad actor in the region)... things are also a little different now (for us), thanks to much increased domestic US energy production. But still could go badly for the rest of the world's energy markets.

JR

 

[Script]

I had based my prediction on breakout point, peak, Febonacci and support line. Going below 5k came somewhat as a surprise -- -- nay, it didn't... actually.... when following the news.

My observation over the years has been that automatic trading must have become ever more based on and programmed around statistical data as the above.

Self-fulfiling prophecies for sure and clearly not to be trusted cos utterly detached from real economic development -- but it has definitely helped me in making more sucessful purchasing and selling decisions. So I'm happy with it.

As for Bitcoin, the FAD is the fundamental 

 

[john12ax7]

Speaking of technical analysis,  anyone with insights or thoughts on the type of techniques Jim Simons uses?

 

[JohnRoberts]

Speaking of technical analysis,  anyone with insights or thoughts on the type of techniques Jim Simons uses?

I have no idea who that is... Technical analysis is thousands of years old and there are many books on the subject...

The highest profile technical analyst I am aware of is Louise Yamada, but you probably have to pay to hear her wisdom... I give you guys these pearls for free....  8)

OK I looked up Simons and he ran a quant fund...  Quants use computer intensive analysis and pattern analysis...

letting my fingers do the walking I found this  "the Medallion Fund, which used an improved and expanded form of Leonard Baum's mathematical models, improved by algebraist James Ax, to explore correlations from which they could profit. "

I don't know if this is the specific answer you were looking for .  There is a wiki page about Renaissance Technologies with more poop... Simons was a math teacher and apparently figured out how to make it pay..  8)

JR

 

[dmp]

I've read some interesting analysis about how alpha disappeared once insider info became illegal
I don't think anyone knows how Renaissance does so well. A time machine?
Quantitative strategies scrape data, leading indicators - i.e. satellite images of target parking lots, etc...

Self-fulfiling prophecies for sure and clearly not to be trusted cos utterly detached from real economic development

You get it...

Keynes described it as a newspaper beauty contest in General Theory. 2nd ,3rd, and higher orders of abstraction. Everybody guessing how everyone else will react to changes in price.
Complex chaotic system.

 

[Kingston]

If you think blockchain is the key technology and not bitcoin, then you probably shouldn't buy it.
If you think other cryptocurrencies will create inflation, then you probably shouldn't buy it.
If you think government regulation is an existential threat, then you probably shouldn't buy it.
If you are only buying due to FOMO, then you probably shouldn't buy it.

I am sorry for you but this is just regular brainwash material without substance.

I presume you even have feelings involved.

 

[john12ax7]

letting my fingers do the walking I found this  "the Medallion Fund, which used an improved and expanded form of Leonard Baum's mathematical models, improved by algebraist James Ax, to explore correlations from which they could profit. "

That's a good start in the right direction. The medallion fund returns about 40% per year,  wow.  But it's not open to outsiders and they are a bit secretive with the strategies.

 

[Script]

Bitcoin retracing to 6.8k ? Nothing but a wild guess. Or pivot extension to 11k ? Even more of a guess. There is too much of diffuse information.

BTC sometimes seems to have taken over the function and behaviour of gold. Until it hasn't.

Technical analysis is a tool -- just like a screwdriver -- no more but also no less. And I don't believe in efficient markets. 'Choatic' is just another way of saying ' highly complex'.  A lot, if not most of it, is psychology, fuelled and feedback-looped by 'news' -- and more often then not big but blatantly random news cited as pretext.

'Observing' markets is highly time consuming.

 

[JohnRoberts]

That's a good start in the right direction. The medallion fund returns about 40% per year,  wow.  But it's not open to outsiders and they are a bit secretive with the strategies.

I am not a big fan of quants, or hedge funds but will credit medallion/renaissance with filing a patent on a technique to thwart high frequency traders who apparently bother them too... The m/r approach is to use precise atomic clocks to synchronize trades across multiple exchanges to prevent front running or other ways to use a speed advantage to skim profits from trade data.

  There is a lot going on in the shadows of these markets. Some exchanges have started adding speed bumps (intentional delay) to thwart high speed traders. But they are like weeds so will adapt and adjust and find new ways to game the markets to take advantage of casual traders.  :

JR

 

[JohnRoberts]

Since I have been chewing on this over recent months for a small trade, Bitcoin has popped from <$8k to >$11k . Since I missed this move, I am no longer very motivated, and that is probably a good thing.  8)

Gold is also rising. My small JIC gold position is now only down 4%, in the past it has been down over 20% .

It appears that international financial system is still recovering from 2007/8 collapse. Interest rates are even worse than they were. Or better depending on your POV. 

JR

 

[Script]

Could have averaged down on the gold position instead... But somewhat risky too, considering its development over the last couple of years.

 

[Script]

FED statement -- ECB statement --
and now waiting for Osaka G20 outcome wrt Trump vs. Jinping...

 

[JohnRoberts]

Could have averaged down on the gold position instead... But somewhat risky too, considering its development over the last couple of years.

Too bad we can't go back in time and make trades based on what we know now.  ;D ;D Gold appears to be basing and technically could break out higher, but gold is a hedge against currency inflation which seem stuck below  2%, not a real investment. At some point the tight labor market should significantly move up wages, and probably is already in the margins. My gold position is maybe 3% of my portfolio so not crazy to increase that from here (I'm old). 

The market feels a little overbought, but that is not an investment strategy either.

The relatively short term CDs I bought a while back that seemed completely puny at the time look brilliant now compared to current rates that are dipping down around 2%, of course that is still better than the several countries with negative interest rates.

For a testament to how quickly we forget, investors in a pursuit of investment income are looking at bundled mortgage backed debt... The iceberg  that almost sunk our banking system over a decade ago... Todays housing market is different than back then, but has different distortions.  I'd buy bitcoin  ($12k) before those derivatives, but still pass on that too. 

The housing market today, especially the low end where most first time buyers participate is distorted by commercial house flippers... Funded by wall street hedge funds and too easy borrowing, they already scooped up most of the real bargains years ago, but  now their ability to pay cash for homes makes it harder for first time buyers to compete even with today's historic low mortgage rates.

In hindsight I can see lots of things I "could" have bought. The future is less obvious.

JR

 

[Mbira]

Here's my technical analysis that has served me well since buying my first BTC in 2011:

Buy when no one is talking about it.  Sell (or at least DON'T buy) when you start seeing everyone on facebook asking the world whether they should start buying.  Has served me well so far.