[janoside]

What's the point, you ask...

Here is Ross Stevens, CEO of Stone Ridge Asset Management, describing "the point" for an hour:

https://www.microstrategy.com/en/bitcoin/videos/bitcoin-macr...

It sounds like you've made up your mind about Bitcoin, but I believe you've missed the big picture. The above video, if you watch it with an open mind, will help you to glimpse it. Hint: it's not about cappuccino, it's about living in a world of competitively devaluing currencies and resulting asset inflation.

[arcticbull]

You haven't shared "the point" just a link to MicroStrategy, a failed software company whose CEO had to pay an $11 million dollar SEC settlement decades ago for cooking the books, making a desperate Hail Mary play buying near the top of a speculative mania in a bid to gain relevancy. MSTR is the new "Long Island Iced Tea" -> "Long Blockchain Inc" rebrand [1]

Humorously enough, the same is roughly true of Tesla, a car company which sells 5% as many cars at Toyota while valued about twice what the entire rest of the car market put together is worth.

Their only source of profit is selling carbon credits to traditional automakers who won't need them anymore as they're all moving electric too. One more Hail Mary distraction to maintain the one thousand three hundred P/E ratio. In a manufacturing business. Not software with zero marginal cost. Manufacturing. The industry average P/E is right around 15.

> ...it's about living in a world of competitively devaluing currencies and resulting asset inflation.

Currency is an intentionally-lossy temporary store of value. It only needs to hold its value for as long as it takes you to buy assets with them. At 2% inflation it does. Anything else is a straw-man you'd recognize if you attended ECON 101.

Asset inflation isn't inflation, it's an ROI. CPI is inflation.

This is a typical set of r/Bitcoin talking points that are easily debunked.

[1] https://qz.com/1659246/the-fbi-wants-more-information-about-...

[DSingularity]

You know, your point about Tesla has given me lots of conflict. What did I miss? Obviously this question came when I sold off my TSLA stock at 500$ thinking — it was overvalued — and then watching it rise to the equivalent of 4,000$. I reached the conclusion it’s no longer solely about cash flow and debt ratios and market cap and addressable market and whatever other traditional metrics we previously used to value companies. The emotional component has become more important.

People are buying TSLA because they want to do something about climate change. Or maybe cause they worship Musk. This is probably holding for other companies in other industries. Bitcoin is definitely not only being bought because it’s digital gold. It’s being bought because people are emotionally attached to resetting the system. A bunch of middle fingers to the dollar rich (Bitcoin poor) by a bunch dollar poor (Bitcoin rich). This is why people are buying BTC.

Whether it is TSLA or BTC — value itself is being disrupted.

[arcticbull]

> People are buying TSLA because they want to do something about climate change.

I hope given Tesla's new affinity with Bitcoin that what they want to do is "make it worse" lol. Tesla is literally selling its green energy credits to dirty car companies, then throwing it at Chinese coal miners.

The market goes through particularly bubblicious periods of pricing mania from time to time. It's happening now, it's happened before, and it'll happen again. I wouldn't read too much into it.

  "..in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company." - Benjamin Graham

Prior to the pandemic stimmy money, poor people weren't investing and middle class folks were. When the pandemic hit, poor people lost their jobs, middle class folks kept them. Both poor and middle class folks received stimmy money. The middle class folks invested it.

The whole run up there were trillions on the side-line, and folks who remember 2008 weren't about to let another V shaped recovery pass them by. They plowed money into whatever they could. Literally everything exploded in value last year. My personal trading account is up almost 14X on a 1-year basis today.

It's nothing to do with fundamentals, just a bubble. It'll revert in time, and then it'll grow again.

[DSingularity]

It will only revert if people sell. What if nobody sells because they equate selling with giving up on their dreams of fighting climate change?

[kipchak]

Retail might never sell, I doubt commercial institutions Vanguard for example would not sell for idealistic reasons.

[DSingularity]

Vanguard doesn’t try to call tops. If they sell shares it would be to lock in profit and diversify their EV investment.

[arcticbull]

Again, Tesla makes climate change worse by investing in Bitcoin so if climate change is the driver they should sell ASAP. I think you're overestimating the average speculator's love of the environment.

Yes, this time could be different. Past performance is not an indication of future performance. That said, it would be the first time something's gone parabolic upward (while lacking the fundamentals) without retracing, and I don't see any reason this time would be different.

[edit: Check this out: (1) https://imgur.com/a/HATGeWr (2) https://imgur.com/a/umQLsnK]

[DSingularity]

I’m not debating the subtleties of Tesla’s carbon footprint. Im just asking what if the people buying TSLA are not buying for profit? What if they are buying because they believe it is the way they can fight climate change.

Will it eventually retrace? Probably. Almost surely. But it will probably not matter at that point relative to today.

I think we are in an era where stocks are mostly detached from fundamentals. Ask yourself who truly cares about fundamentals? It’s the uber wealthy who are trying to preserve their capital. Wealth disparity is huge so those numbers are fewer.

The Robinhood investors aren’t pouring over spreadsheets to decide where the best PE ratio tradeoff is most favorable. They aren’t trying to balance growth and income. They are literally buying whatever hyped them the most.

Now regarding the AMD chart. You should consider it in context of their defeat by Intel and subsequent turnaround. That, I think, drove the price movements shown in the chart. Did profit taking from amazing runs also matter? Probably. But you can’t ignore that AMD was nearly bankrupt and had to reinvent itself because it lost so much ground to Intel.

[whobar]

I think you can't judge whether TSLA is overvalued or not until they are no longer instantly selling out of all their products. People are bullish on TSLA because they have a product that many, many people want, more than they have the capability to supply.

Once they have their peak production capacity and have surplus stock across all markets we will get a better idea of their true value.

The most that the price of TSLA and BTC have in common is that both their values can be represented on a graph.

[arcticbull]

Yes, I agree, but I'm confident they're not worth twice the sum total of the entire car market by themselves.

> The most that the price of TSLA and BTC have in common is that both their values can be represented on a graph.

Well, that and one holds a chunk of the other. They're also surprisingly heavily correlated from a price action POV. I suspect there's a bit more going on than meets the eye. Burry tweeted the crazy level of correlation a few days ago.

[jerry1979]

CPI probably doesn't reflect inflation the way Fed looks at it. They use PCE[1]:

>An accurate measure of inflation is important for both the U.S. federal government and the Federal Reserve's Federal Open Market Committee (FOMC), but they focus on different measures. For example, the federal government uses the CPI to make inflation adjustments to certain kinds of benefits, such as Social Security.[3] In contrast, the FOMC focuses on PCE inflation in its quarterly economic projections and also states its longer-run inflation goal in terms of headline PCE.

[1] https://www.stlouisfed.org/publications/regional-economist/j...

[imtringued]

That's quite interesting but the overall picture is the same in both CPI and PCE. It's just another way to measure inflation in consumer goods and services. Compare that to the usual Bitcoin advocates talking about inflation of the dollar relative to Bitcoin. It's measuring something completely different.

[janoside]

Your view on currency exposes your extremely elitist bias.

Are you aware that a large portion of the population is unable to purchase assets? What do you say to these people? What do you say as the dollars they earn pay less of their rent? Less of their healthcare? Soon...less of their groceries?

[arcticbull]

Nah quite the opposite. The world has had 14 years to buy Bitcoin. Happened at the same time as the iPhone. Everyone in these poor countries has iPhones or android devices and nobody wants Bitcoin for them except the first world pushers. I defer to the locals. If they thought it was any good they’d use it. They don’t.

I would tell those people that if their government is broken they have bigger problems than their currency and once they solve their leadership problems the currency won’t be an issue anymore. Tough but true. Nothing there changes with Bitcoin and it’s $20 transaction fees.

[throwaway20875]

>CPI is inflation

Lol

[arcticbull]

Right, yeah, if you pretend how much AAPL appreciated matters to anyone, asset inflation counts. Otherwise, it's CPI, and [citation needed] if you want to posit otherwise.

[danhak]

Housing, healthcare, education and childcare costs matter. I don’t believe CPI is accurately capturing the skyrocketing costs of these things, which are the most significant expenses for most households.

[arcticbull]

And yet you and everyone else are unable to produce any meaningful sources or analysis that justify your beliefs. [citation needed] and we can talk about it.

Healthcare is a social policy matter, not monetary policy, and nothing to do with increase in the money supply. You take that up with your representatives not the Fed.

Housing is a function of city council zoning policy. You take that up with your city council not the Fed, or with the federal government it you want Japanese style zoning rules. [1]

Childcare is social policy, not monetary policy, and you take that up with your representatives not the Fed.

You can't just point to anything you don't like and say the Fed Did It or is responsible for it. All they do is control the money supply. Nothing more.

A reduction in your welfare isn't inflation. Necessities can outpace inflation. It's bad social policy, but it happens. What you fail to understand is that these prices will continue to outstrip a platonic ideal even if denominated in Bitcoin because the increase in pricing has nothing to do with monetary policy. Any temporary reprieve is due to speculative mania.

[1] http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html

[danhak]

> Housing is a function of city council zoning policy...

This is the laughably reductionist take that predictably appears on HN when folks think the dynamics of San Francisco apply everywhere.

Housing costs have nothing to do with the Fed? Really? You don’t believe record low mortgage rates are driving demand at all?

Nah, it must be city council zoning policy that is sending home prices soaring all over the country—-even in rural and unincorporated areas.

[chordalkeyboard]

> the increase in pricing has nothing to do with monetary policy.

This is incorrect.

[rank0]

There's actually considerable debate on the subject. I find it reasonable that things which are outside the CPI basket can indeed experience inflation.

https://www.investopedia.com/articles/07/consumerpriceindex....

If 25% of circulating USD were created last year, and our economic value is the same or even diminished, wouldn't it follow that there must be significant inflation?

[arcticbull]

> If 25% of circulating USD were created last year, and our economic value is the same or even diminished, wouldn't it follow that there must be significant inflation?

Not necessarily, no. The value of money is a function of supply and velocity. If the velocity went down and the supply went up 25% the fed can still nail its 2% target. [1, 2, 3] If the velocity increases next year the fed can shrink the supply commensurately to maintain its targets.

[1] https://www.investopedia.com/terms/v/velocity.asp

[2] https://www.stlouisfed.org/on-the-economy/2014/september/wha...

[3] https://www.investopedia.com/ask/answers/042015/how-does-mon...

[rank0]

That's very interesting I was not familiar with the concept of velocity.

It still seems to me that velocity can vary depending on the underlying entity. So unless every asset has the same velocity measure as the items in the CPI basket, it seems that there has to be some amount of inflation somewhere like possibly US equities.

[BTCOG]

These people are all disingenuous actors. They know the point, but they want to flood all of these threads and act clueless. Bitcoin is digital gold, gold's replacement. It's been here for 12 years and yet, all these actors show up in every Bitcoin thread. It's the greatest monetary shift in hundreds of years.

ArcticBull below me shows up in EVERY single Bitcoin thread to trash talk Bitcoin. Here's where we are at; some love Bitcoin, and others show up just to talk trash. Bitcoin is only going to grow beyond $100k the next couple years regardless of how sourly "ArcticBull" wants to astroturf.

[raiyu]

Bitcoin is a modern day example of what happens when you have a currency that has deflation instead of inflation at it's core.

It becomes actually more expensive to buy anything in the present, as a result, consumers stop purchasing, and as a result economic activity decreases.

DigitalGold is also non-sensical, because that is simply designed to track against inflation, to prevent the loss of today's buying power tomorrow because of inflation. But when something appreciates 10,000x it's not really a hedge against inflation anymore, but a different speculative instrument entirely.

[fennecfoxen]

Opinion: NYSE:GLD and NYSE:IAU are better at being "digital gold" than a blockchain thing ever will be.

[BTCOG]

@ArcticBull - Why would I ever want to make 100% ROI on a rigged stock market when I've made thousands of % in hard money?

[imtringued]

The irony behind bubbles is that you cannot profit off of them by acting rationally. If everyone participating in the bubble were acting 100% rationally, the bubble wouldn't exist in the first place.

[arcticbull]

see, with those glasses on it's not possible to have a real meaningful conversation. I'm sorry, bitcoin is in no way 'hard money'.

[arcticbull]

> ArcticBull below me shows up in EVERY single Bitcoin thread to trash talk Bitcoin. Here's where we are at; some love Bitcoin, and others show up just to talk trash. Bitcoin is only going to grow beyond $100k the next couple years regardless of how sourly "ArcticBull" wants to astroturf.

So what? My argument has never been about price but about fundamentals. The fundamentals are crap. I don't care if gets to $100K in the "next couple of years" and neither should you. The price going up doesn't make it good, the price going down doesn't make it bad.

Spending an Argentina of power for 7 tx/sec makes it horrifyingly bad.

Wanna make a 100% ROI? That's not that hard. Risky, but you can make one overnight if you spend some time on r/WallStreetBets.

[Geee]

Yeah, I noticed this too and he has many very flawed arguments. It looks like he just wants to spam as many comments as possible and confuse people.

[whobar]

Hedge fund managers are never going to publicise an impartial view about anything, especially not something they are heavily invested in. Forming a positive opinion about Bitcoin based on what two hedge fund managers, both bullish on BTC, have to say, seems pretty dumb.

Unless fiat is abolished, the price of something in BTC will always be pegged to USD. As USD devalues as a result of inflation, the price of a product in BTC decreases.

I don't see the difference between someone in Venezuela choosing to hold their net worth in BTC (which could halve at any moment), versus their native, rapid inflationary currency. Both are risky, but if the central bank sorted itself out and fixed the currency issue, no one will have any reason to hold BTC any more.

[lottin]

Please don't fall for the trap of calling actual money fiat as if bitcoin wasn't fiat. If at some point bitcoin becomes money it will be fiat money, as bitcoin is not backed by a commodity. So far bitcoin isn't money because it's not the most liquid asset. In order to buy anything with bitcoins, first you'll have sell them for actual money and use that to buy stuff, hence not money.

[TwoHeadedBeast]

Good point, I think they've borrowed the terminology from goldbugs without really understanding it.

[arcticbull]

Indeed - if your government is crap, you have bigger problems to worry about than your currency. Once you sort out the government you no longer have to worry about your currency. There's no world where simultaneously you have an untrustworthy government and you can bandaid over it with crypto.

[codebolt]

Any real value analysis of Bitcoin that doesn't take Tether into account isn't worth much. As long as the whole crypto market is built around a currency issued by an unregulated and unaudited company with a mile-long list of past controversies, any unbiased take on the future of Bitcoin has to allow for a significant downside risk.

[heterodoxxed]

Tether is a real Michael Burry moment for me. They claim to have 30 billion in reserves right now and are "printing" a billion tethers at a time. Yet nobody can confirm their reserves and the company itself is absurdly opaque.

Either there is an incredible amount of criminal fraud behind this or... this is perfectly reasonable?

Except nobody can really explain or confirm why.

[codebolt]

Yes, but as long as nothing is stopping them from simply minting out of thin air, I wouldn't bet against their ability to keep pushing the prices up.

Daily volumes of tether trades are consistently a high multiple of the total supply. (Today it's 130bln vs 30bln.) So I don't know if it's safe to even trust that number.

As per Steins law, anything that cannot go on forever must eventually stop. Question is how long?

[fl0wenol]

If they want non-idiots to use their stuff, then they need to open up and give a few tours of their "vaults" or whatever.