Topic: rpietila Wall Observer - the Quality TA Thread ;) - page 117. (Read 907229 times)

* The price of LTC is $4.9290
* LTC will have 4 x the supply of BTC
* Thus, the value of LTC should be BTC/4.
* The fair value of BTC could therefore be LTC/USD * 4

4.9290 * 4 = $19.7


My suggestion: Short the rallies, avoid buying back on dips.

Very interesting...I invested a significant sum in crypto+miners, so my percentage of active capital (not counting real estate equity) in crypto is ~20% .
I don't think that I will "actively" up it up to 50% (if it goes there by appreciation-fine)
Monero-invested (exchanged) 2% of my BTC into XMR.

I've made much more conservative assumptions, but even VERY conservative assumptions make a strong case for buying.  I use M2 calculations because I believe that M2 is a very good measuring stick for what BTC represents because it speaks to money as a medium of exchange and also as a store of value.

Best guess I can come up with for GLOBAL M2 is around $55 trillion. I'd suspect it may inflate over the next 5-7 years to, let's say, $65 trillion.  I can't remember what the BTC emission schedule looks like, but let's say there might be 17 million BTC by then.  Total money supply in BTC, theoretically, would be 3095238, or roundly 3,100,000 BTC.  I'd say 1% is pretty aggressive, given that most of the world's population may not be capable of storing or transmitting currency in that way.  But 0.5%?  Maybe a little less?  That STILL gets you to a valuation of $15,500. 

The other thing to consider is velocity.  I've read that people believe BTC's velocity to be similar to that of USD.  In my view, they are including mining transactions, which don't belong in the velocity discussion any more than it's a measure of velocity to have fiat coming off a printing press.  My guess is that BTC velocity will grow into a USD-like velocity, possibly slightly slower, which would grow velocity by an estimated 5x.  That gets us to a valuation of $3100.

I have not batted an eye at buying more and more as the price has dipped under $500.  A lot of things can happen.  The adoption trendline could accelerate or decelerate.  My pulled-from-ass guess about velocity could change.  But I think a 2020 fair value for BTC might be around $3100. 

I don't expect to retire on 20-30 BTC.  But if that investment grows from $10K-$15K to $60-90K, it is still a lot better than many other investments I've made.

What?? Bears infesting my thread?  

The correct way to value BTC is to take a scenario analysis:

- What is the value per unit if A) it fulfills its promise?
- What is the value if B) it does not?

- What is the probability of A)?
- How long does it take?
- What is the current price?

A: value $1,000,000
B: value <$100,000
A: probability 20%
A: duration at least 3 years, up to 10 years
current: $500.

It seems to me that (with the caveat that better investments such as Monero may be available) I should invest everything that I can afford to lose.

Kelly formula: With essentially infinite payoff, invest same % as is the probability of success = 20%. (Kelly is valid if B automatically leads to loss of entire investment, and is higher if this is not the case.)

My suggestion: 50% of investment capital in crypto, of which the %-age of Monero should approach 50% if the sum is very small but be much less if the sum is significant.

Here is the most recent 7-day moving average chart of adjusted number of bitcoin transactions from Blockchain.info. Note that the dip in late August has reversed back towards upward growth. I am closely watching to see if the number can exceed the previous peak near 75,000 per day. Currently the smoothed value is 67,330 per day.

http://btccharts.everdot.org/commodities/silver_8y.gif

This "market", and any market, needs BULLS to get in there and buy and keep buying for the market to move up. This is specially true in regards to BTC. I do not see anyone in their right mind looking at the daily thinking "I'll invest millions in this thing because the risk/reward looks so attractive right now".

The same is not true for the market to move down, any market will grind downwards as long as there is no buying pressure. This is specially true here due to the constant drips from miners and merchants.

The only really bullish factor BTC and LTC has going for it right now is the sher amount of shorts. Right now we are talking 8,356.52 BTC and 142,122.51 LTC at Bitfinex alone, see http://www.bfxdata.com/combined/btc.php for details. Now, you may assume that this means we will get a short-cover rally to the moon. Check out the 6 month graph if you believe this is true and notice that when shorts peaked at around 10000 BTC short the "market" actually went from $530 to $400.

The similarity between silver and the daily chart for BTC, LTC and DOGE is staggering.

http://www.nestmann.com/relinquish-or-renounce


So 6 - 12 months to go before seeing significantly higher prices, while downside remains. Thus risk vs. reward says to move some to cash now if you may need to cash out before 12 months.


Similar pattern existing in 2012. Price didn't move up.


I could be entirely wrong, but I see a lot of downside risk as the BTC chart looks like silver's peak in 2011. I don't see any possible earth shattering great news on the near-term horizon for BTC. So the upside is very limited near-term yet the downside risk is palatable. Ecuador, New York, China, and many other jurisdictions are in the process of making Bitcoin essentially illegal. Bitcoin mining, development, and foundation is entirely centralized. I warned about this several months ago at $600 when I warned it would bottom at $350 (and then it did) and be stuck in a much slower log-logistic adoption rate, not the much faster logistic.

Gentlemen!  Time for thinking outside the box.  Consider Galt's Gulch The Principality of Equestria!



Stable, sovereign, and prosperous.  With nice friendship and magic--not rotten taxation.

*Investment opportunity--lots going fast!!1!  Send money NOW!

There is still the Ocean.

How ironic that the main driver for 'the colonies' wanting independence was freedom from taxation.

loved the chart porn.  thanks.

The main reason that people renounce United States citizenship is that the United States is one of only two countries in the world that levies income taxes on the basis of citizenship. They also coerce financial institutions around the world in order to enforce this tax collection on their customers. One of the results of this is that being a United States citizen makes a person persona non grata when seeking financial services in many parts of the world. Both of these reasons provide a powerful incentive for ex pat United States citizens to renounce their US citizenship.

IANAL, but I think what you did is referred to legally as relinguishing your citizenship, as opposed to the more formal procedure of renouncing it.

The US does not charge people who relinquish either, but renouncement is a formal procedure with a lot of paperwork and bureaucracy involved, so there is a fee associated with it.

It's not clear to me why some people choose to renounce - it is pretty much irrevocable, as well as more work, and much more expensive - but there must be some legal reason why some people go that route.

Wow they charge a fee? I would just burn the passport, send them a letter telling them to go fuck themselves and never return on US soil.

A curios factoid:

1. US just increased cost to renounce citizenship to $2350 from $450 ($422%). $2350 is ~20 times higher than other industrialized countries.
http://www.forbes.com/sites/robertwood/2014/08/28/u-s-hikes-fee-to-renounce-citizenship-by-422/

2. Russia decreased cost of renouncing citizenship from $500 to ~$100, which is in line with other countries and very easy to afford. Russia boosted cost to $500 in the 90ies with a lot of emigration. $500 was a LOT of money then.

I find it strange. A free country should not make artificial barriers for its citizens to exit. Isn't it what we were telling the USSR before?

Rpietila, are you in some way related to this person working on The Simpsons: http://en.wikipedia.org/wiki/Bonita_Pietila? I always see her name while the credits roll after an episode and I can't but think of our favourite Bitcoin Supernode

In the past few years the big spike of price in Bitcoin correspond (broadly) to big spike in inflation of USD MB and M1 (mainly M1)
Also, corrections of the price correspond to slowing down of inflation of MB and M1.
But we must remember, until November 2012 (first halving) BTC's inflation was around 25% per year, then it halved and for short period of time was lower than M1 inflation (not much), then went over it as M1 inflation went down (in the mean time we had the 2nd Bubble in March). During spring and summer inflation difference increased and when it stabilized, there was the start of the second bubble.
It would be interesting compare inflation in Yuan MB and M1 in the same period.

Both inflation in M1 and BTC supply started to converge in January and they are bound to cross again in the next weeks.
I would suggest, when inflation of BTC supply will equal inflation in M1 (previous 52 week for both) and then become permanently lower the winds will start, again, to blow permanently in our winds.

In 2011 the difference fell a lot, but then BTC inflation was in the 30% per year when M1 was 20% per year.
https://docs.google.com/spreadsheets/d/17Jjhd_nnfRJ9EyYuOM1ACPMwRod3hhPqRk4YQp7FIZE/pubhtml#

Now, the only (short term) problem could be if the Fed. stopped money printing and MB inflation went to zero and M1 started to fall under 10%.
This would lower the appeal of BTC as a store of value against the USD (but it would have a lot of other interesting features anyway) but, in the same time, the banking sector and near all economy would grind to halt as interest rate would soar. And with interest rate soaring, government interest payments would start to raise banckrupting the federal government and many state and local governments (Europe and Japan would not be in different shape, anyway).

Agree with Eurotrash any low under 400 $ is very improbable to happen or last more than a few hours.
Adoption is taking care of placing a solid base under quote 400. And it is raising it.


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Thanks! I think the fact that reward halving is so far away in the future will slow recovery down. But not much.
IMO no way we are tanking to $100, because of this:



400s or even 300s are possible 'tho.

Interesting, EuroTrash! Do you think that the fact of the reward-halving still taking some time plays a big role or not so much? It's an interesting approach nevertheless, though. We may very well be in for quite some sideways movement now... Which is still better than tanking to $100 in my books!

Meh. It is still slowly dropping.
This is what I think. End of January 2012. With the difference that blockchain reward halving is 2 years ahead not one year ahead.



So what? I have been wrong in the past.

And still ain't selling any.