Blockchain update

[thriftyandboringinohio]

Re: Blockchain update

"Never catch a falling knife"

Ha! thanks vt, that's one of my all-time favorite bits of investing advice.

Since the cryptos have fallen off the front pages I would love to hear the opinions of people who know them deeply both before and after the mania.

[vt]

Re: Blockchain update

Beware of parabolic rises and after the fall begins:

https://blog.stocktwits.com/the-para...s-a732cc750c2b

https://www.cnbc.com/2018/11/20/bitc...-the-year.html

[patrikkorda]

Re: Blockchain update

Thanks PK. Do you see an upside coming that might bring some gains? Will you be buying in?

Some context:

• Wrote an article about the second bitcoin bubble in 2013: https://mises.org/library/bitcoin-mo...shioned-bubble
  - the market crashed by over 50% on the same night that the article was published.
• Decided Ripple (XRP) was a good play in 2013: http://www.personal.ceu.hu/students/13/
  - based on the idea that bitcoin would eventually have scaling issues.
• I have been bearish since late last year; having seen a number of these bubbles already.

With that being said, I believe there is one more bubble to go for two main reasons:
(1) This is the first truly global mania: Every other bubble I can think of has been limited primarily to the domestic population and a small number of foreigners. Thanks to the proliferation of the internet and the open-source nature of blockchains, bitcoin is tailor-made for the news. If the media kept talking about Nike (free advertising), people would rightly suspect a conflict of interest. However, with bitcoin, there is no one that can be clearly identified as benefiting from the constant coverage.

(2) Not even a trillion yet: At the height of the most recent bubble late last year, the total market cap of all the coins (not just bitcoin) reached ~$800 billion. Considering this is the first truly global bubble, it would be rather disappointing if it didn't break through the trillion mark. For context, even the ongoing student loan bubble has been able to exceed a trillion: https://fred.stlouisfed.org/graph/fredgraph.png?g=lIfb

The last bubble was clearly dominated by the scalability narrative (hence the sharp rise in XRP). I believe the next bubble will be dominated by another narrative, and a different set of coins will benefit the most.

In any case, I do think we have some more downside ahead. Consider that a lot of the euphoria last year happened after Thanksgiving. This means that a lot of people talked about bitcoin last year during Thanksgiving and decided to invest shortly afterwards based on those conversations. This year, there will be a lot of resentment at the dinner tables. It will look a lot like this:

[thriftyandboringinohio]

Re: Blockchain update

Thanks pk, you insights are fascinating.