Topic: rpietila Wall Observer - the Quality TA Thread ;) - page 99. (Read 907229 times)

I would suggest that an average billionaire did not take this action...YET, otherwise we would hear much more about how wonderful bitcoin is.

That is really great and makes a lot of sense - however, even though there seems to be a lot of very wealthy people out there, it does NOT appear that too many of them are yet taking the hedging (and or speculation) actions that you are describing to be reasonably within their financial interest.

Nice to see that the fundamentals are upheld. I have devoted a little too much time to Monero lately. It is small, and it is easier to make your voice heard even in a global scale. Perhaps you could propose me what I could do for Bitcoin, I have been feeling unemployed. Even my castle is far away for visitors who are suddenly poor because of bitcoin's price falling... Luckily this week we have a conference! 

To maintain their wealth should bitcoin supersede fiat, your hypothetical billionaire would only need to acquire the same % of the bitcoin money supply that he presently controls of the fiat money supply.  Let's consider only the USD.  US M2 is approximately $11.5 trillion, and let's assume billionaire Bob has exactly $1,000,000,000 in USD (we ignore his other assets [companies, real estate, etc] as these aren't directly affected by a transition to bitcoin).  He thus controls 

 $1x10^9 / $11.5x10^12 = 0.0087%

of the USD money supply.  To control the same % of bitcoins (at full issuance), he needs:

  0.000087 x 21,000,000 = 1826 BTC

At $400 / BTC, that would require an investment of just under 3/4 of a million dollars--less than 0.1% of his total USD holdings.  One could purchase this amount of bitcoins very easily without significantly moving the price. 

So that's the amount he needs in order to "hedge."  But our hypothetical billionaire is a billionaire for a reason.  If he believes that his other fellow billionaires will hedge in a similar way, he can see that while his action may not cause much price slippage, the action of everyone hedging like this will cause slippage--a lot of slippage.  So now he has an inducement to actually purchase a speculative position on top of his "hedging" position--and to make those purchases sooner rather than later.   And if he does this, he actually gains in a potentially big way should bitcoin adoption continue. 

To maintain their wealth should bitcoin supersede fiat, your hypothetical billionaire would only need to acquire the same % of the bitcoin money supply that he presently controls of the fiat money supply.  Let's consider only the USD.  US M2 is approximately $11.5 trillion, and let's assume billionaire Bob has exactly $1,000,000,000 in USD (we ignore his other assets [companies, real estate, etc] as these aren't directly affected by a transition to bitcoin).  He thus controls 

 $1x10^9 / $11.5x10^12 = 0.0087%

of the USD money supply.  To control the same % of bitcoins (at full issuance), he needs:

  0.000087 x 21,000,000 = 1826 BTC

At $400 / BTC, that would require an investment of just under 3/4 of a million dollars--less than 0.1% of his total USD holdings.  One could purchase this amount of bitcoins very easily without significantly moving the price. 

So that's the amount he needs in order to "hedge."  But our hypothetical billionaire is a billionaire for a reason.  If he believes that his other fellow billionaires will hedge in a similar way, he can see that while his action may not cause much price slippage, the action of everyone hedging like this will cause slippage--a lot of slippage.  So now he has an inducement to actually purchase a speculative position on top of his "hedging" position--and to make those purchases sooner rather than later.   And if he does this, he actually gains in a potentially big way should bitcoin adoption continue. 

I think that the main force preventing the widespread adoption of bitcoin is that elites don't have much inducement to use bitcoin.
The majority of bitcoins ever existing were already mined and are in possession of early adopters (mostly) and I don't see how current paper billionaires can redistribute btc toward themselves.
Current billionaires are unable to accumulate any decent % of their wealth (6.5 trillion) in bitcoin. Just 1% of 6.5 trillion is 65 billion, which is more than ten times BTC market cap.
Billionaires might be tempted if major currencies would be failing, but all major currencies are quite stable with benign inflation in most parts of the industrialized world.
This (transition from fiat to crypto) might take longer than I envisioned last year, maybe 50-100 years.

Well, I see two counteractive forces at work - each remaining miner will solve more blocks and at a lower cost collectively, yet the reward from each block is shrinking in terms of fiat. Therefore, to lower the selling-percentage, the benefit of the former must outweigh the latter for a given price drop. Maybe this is what you're saying however.

I think that the main force preventing the widespread adoption of bitcoin is that elites don't have much inducement to use bitcoin.
The majority of bitcoins ever existing were already mined and are in possession of early adopters (mostly) and I don't see how current paper billionaires can redistribute btc toward themselves.
Current billionaires are unable to accumulate any decent % of their wealth (6.5 trillion) in bitcoin. Just 1% of 6.5 trillion is 65 billion, which is more than ten times BTC market cap.
Billionaires might be tempted if major currencies would be failing, but all major currencies are quite stable with benign inflation in most parts of the industrialized world.
This (transition from fiat to crypto) might take longer than I envisioned last year, maybe 50-100 years.

Yes, at first. What I meant was when inefficient miners start to drop out, the collective selling-percentage would decrease again.

According to the OP, this is the official thread for enjoying wine and cigars. I recently came to Malla after a longish break. While I was quietly minding my own business with some reasonable quality wine (Dow's 20yo Tawny Port) and some really nice vintage cigars, including, but not limited to Bossner Baron 2000, Davidoff Eminentes, and Diamond Crown 2004, I decided to go out since it had already become dark.

The day had been really quiet of cars, so a sight of a large pick-up coming, immediately caught my attention, especially as it turned from the road to my yard. When walking towards it, it did not stop to greet me, rather passed, went to turn around in the other side of the yard, and passed me again while I just walked towards it and stared at it in my friendly way.

A similar incident, my staff told me, had already happened this week with a car with no licence plates.

I should have no enemies in Estonia, and I am not doing any business here really that would interfere with somebody else's business without me even knowing. So what comes to the incidents, I have to deduce that either it is some larger agency conducting intelligence (very plausible, because several agencies are not doing their job unless they have a plan for raiding this place, just in case) or common thieves conducting intelligence in a similar way, but for somewhat different ends.

The conference is starting Tuesday, so we have had some preliminary action. Hopefully this was it, but you never know.

If the price drops so that the increased portion of the cake they earn is worth less in fiat terms, then would they not need to sell a larger percentage of coins to cover costs?

According to the OP, this is the official thread for enjoying wine and cigars. I recently came to Malla after a longish break. While I was quietly minding my own business with some reasonable quality wine (Dow's 20yo Tawny Port) and some really nice vintage cigars, including, but not limited to Bossner Baron 2000, Davidoff Eminentes, and Diamond Crown 2004, I decided to go out since it had already become dark.

The day had been really quiet of cars, so a sight of a large pick-up coming, immediately caught my attention, especially as it turned from the road to my yard. When walking towards it, it did not stop to greet me, rather passed, went to turn around in the other side of the yard, and passed me again while I just walked towards it and stared at it in my friendly way.

A similar incident, my staff told me, had already happened this week with a car with no licence plates.

I should have no enemies in Estonia, and I am not doing any business here really that would interfere with somebody else's business without me even knowing. So what comes to the incidents, I have to deduce that either it is some larger agency conducting intelligence (very plausible, because several agencies are not doing their job unless they have a plan for raiding this place, just in case) or common thieves conducting intelligence in a similar way, but for somewhat different ends.

The conference is starting Tuesday, so we have had some preliminary action. Hopefully this was it, but you never know.

I agree with you. There have been lengthy arguments about "hashrate follows price" or "price follows hashrate" for years now. I'm in the former camp.

Also: supply is not a function of price and cost in the case of bitcoin mining. Supply is pretty much constant, miners just fight among each others over the fixed-sized cake. So only way in which mining influences price is by one variable: the percentage of coins sold by miners into the market.

I think this percentage is increasing with falling price, up to some point... some miners will reach > 100% and switch off. If they want BTC they'll buy instead. Mining efficiency (of the remaining miners) increases and cost decreases. Their selling-percentage decreases. All this has positive effect on price, further decreasing the percentage that has to be sold to cover cost. I'm not sure we've reached low enough price (or competitive enough mining landscape) for this to play out to a meaningful extent.

Maybe moat dredging and gatehouse time is coming after the thaws?

Someone interested in your digital wealth?

Can someone explain me why the hashrate going up is good for the price?

I mean, I know economics. I know that the supply is a function of price and cost. So if cost goes up for miners, then the supply will shrink. But why the hashrate should be consider as proxy of cost?

It's is quite possible that the cost for most of the miners is actually going down while the hashrate and difficulty are increasing. If there is a consolidation of the mining market, big mining farms are making economy of scales, so their margins increase while the hashrate increase too, so they could very well selling a greater proportion of their mined coins to enjoy their high margin.

All of that to say that I am not convince that the hashrate is a good proxy for evaluating the cost of mining BTC, therefore not necessary a good indicator for the future price of BTC.

According to the OP, this is the official thread for enjoying wine and cigars. I recently came to Malla after a longish break. While I was quietly minding my own business with some reasonable quality wine (Dow's 20yo Tawny Port) and some really nice vintage cigars, including, but not limited to Bossner Baron 2000, Davidoff Eminentes, and Diamond Crown 2004, I decided to go out since it had already become dark.

The day had been really quiet of cars, so a sight of a large pick-up coming, immediately caught my attention, especially as it turned from the road to my yard. When walking towards it, it did not stop to greet me, rather passed, went to turn around in the other side of the yard, and passed me again while I just walked towards it and stared at it in my friendly way.

A similar incident, my staff told me, had already happened this week with a car with no licence plates.

I should have no enemies in Estonia, and I am not doing any business here really that would interfere with somebody else's business without me even knowing. So what comes to the incidents, I have to deduce that either it is some larger agency conducting intelligence (very plausible, because several agencies are not doing their job unless they have a plan for raiding this place, just in case) or common thieves conducting intelligence in a similar way, but for somewhat different ends.

The conference is starting Tuesday, so we have had some preliminary action. Hopefully this was it, but you never know.