Trading Financial markets : BITCOIN as an alternative to regular currency

Long, short, Bitcoin, forex - Plenty of alternate market disuccsion.
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cyxstudio
Posts: 253
Joined: Sun Mar 23, 2014 11:18 pm

Sat Feb 03, 2018 2:53 pm

RicHep365 wrote:
Sat Feb 03, 2018 2:26 pm
What I find interesting about Crypto currencies is that the amateur investors that are getting involved seem to have a completely different attitude to your traditional investor. They are absolutely convinced by the tech and don't seem to care about the price fluctuations. They are resolute with this 'HODL' business, all seem convinced that the price crashes are caused by 'Whales' and market manipulation and constantly talk of buying the dips.

Makes me wonder whether another bubble could form, irrespective of the calamity that has taken place.
yes thats true. over the long period of time (50-100 years) your fiat would be devalued beyond recognition. bitcoin has a supply cap so its value will retain in the grand scheme of things assuming it doesnt get replaced.

bitcoin is just like antiques or art paintings. The older they get the more value it has because there is simply only 1 of such kind in the world. Thats why people HODL.

cyxstudio
Posts: 253
Joined: Sun Mar 23, 2014 11:18 pm

Sat Feb 03, 2018 2:59 pm

marksmeets302 wrote:
Sat Feb 03, 2018 2:05 pm
That's my point. Holding a stack of US dollars doesn't give you any interest either. (Bring that stack of cash to the bank and now you have bought a short term bond, it's no longer cash)
bitcoin isnt a bond, why would cash flow into it?

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marksmeets302
Posts: 505
Joined: Thu Dec 10, 2009 4:37 pm

Sat Feb 03, 2018 3:05 pm

bitcoin isnt a bond, why would cash flow into it?
:-) Read again. When interest rates rise, people get OUT of bonds, and into bills (short term bonds) or cash.

cyxstudio
Posts: 253
Joined: Sun Mar 23, 2014 11:18 pm

Sat Feb 03, 2018 3:07 pm

marksmeets302 wrote:
Sat Feb 03, 2018 3:05 pm
bitcoin isnt a bond, why would cash flow into it?
:-) Read again. When interest rates rise, people get OUT of bonds, and into bills (short term bonds) or cash.
yea... bitcoin isnt short term bonds.

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marksmeets302
Posts: 505
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Sat Feb 03, 2018 3:18 pm

cyxstudio wrote:
Sat Feb 03, 2018 3:07 pm
marksmeets302 wrote:
Sat Feb 03, 2018 3:05 pm
bitcoin isnt a bond, why would cash flow into it?
:-) Read again. When interest rates rise, people get OUT of bonds, and into bills (short term bonds) or cash.
yea... bitcoin isnt short term bonds.
It's more like cash than like bills or bonds, since it doesn't pay interest. So in reaction to your statement that the price of bitcoin goes down because of rising interest rates, I gave arguments that the opposite should have happened. It didn't and therefore I think there is no relation.

cyxstudio
Posts: 253
Joined: Sun Mar 23, 2014 11:18 pm

Sat Feb 03, 2018 3:26 pm

marksmeets302 wrote:
Sat Feb 03, 2018 3:18 pm
cyxstudio wrote:
Sat Feb 03, 2018 3:07 pm
marksmeets302 wrote:
Sat Feb 03, 2018 3:05 pm

:-) Read again. When interest rates rise, people get OUT of bonds, and into bills (short term bonds) or cash.
yea... bitcoin isnt short term bonds.
It's more like cash than like bills or bonds, since it doesn't pay interest. So in reaction to your statement that the price of bitcoin goes down because of rising interest rates, I gave arguments that the opposite should have happened. It didn't and therefore I think there is no relation.
your right. cryptocurrency doesnt pay interest , at least not in the traditional sense. When i was refering to rising interest rates i was referring to US dollar rate hikes.

So if US dollar pays more interest rates now, money would flow into bitcoin? because bitcoin pays interest rates at US dollar rate? or is there something else you meant that i didnt understand.

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marksmeets302
Posts: 505
Joined: Thu Dec 10, 2009 4:37 pm

Sat Feb 03, 2018 8:04 pm

Not sure how to explain without repeating myself. I'll try anyway:

Let's say I own long term US bonds (actually, I do). Now that interest rates are rising I worry because this makes the price of my bonds go lower. When I bought them they gave a yield of let's say 2%. Right now I can buy bonds that yield 2.7% or thereabouts. This makes the bonds I currently hold less attractive, so their price goes down. After the price reduction my bonds also yield 2.7% to someone that would buy them from me. The interest payout of my bonds hasn't changed as this is contractually guaranteed. The only thing that has changed is the market price of my bonds. Of course I'm not happy about that. So, if I think the rates will continue to go up, the best thing I can do is get out of those bonds and buy something to park my money. Like cash, gold, art or bitcoin. Once I think the rates aren't going to go up much more I will buy back the bonds, at lower prices of course.

If I and other people desperately need cash, gold or bitcoin, the price of those assets goes up. I choose cash, gold, art or bitcoin because they don't pay interest and therefore don't become less attractive when interest rates change. Perhaps that's what I haven't been able to make clear: when interest rates rise people want to park their money. Cash is the best option because it is stable. Gold, art, and bitcoin are speculative investments themselves and you might have an opinion on them that makes you either buy them or stay away from. Gold can sometimes act as a protection against inflation so that could be a reason. For bitcoin I can't think of a reason why it would be impacted by rising rates.Well, one but that's also a positive for bitcoin, not a negative: if the rising interest rates lead to a massive panic in the markets banks may shut down and your money might actually be safer in a decentralized system. But we're nowhere near that scenario :-) Also note that you don't want to put your money in stocks because those too will get hit by rising rates: companies will have to pay a higher rate to borrow money and this will limit their ability to grow.

but let's also turn it around. You are saying:

1) interest rates go up
2) ...
3) bitcoin goes down.
What is 2?

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Euler
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Sat Feb 03, 2018 9:36 pm

The most interesting aspect of Bitcoin is that it's not linked to anything, making it pretty much a pure speculation play.

I know they said quantity is limited, but I'm sure somebody will find a way to issue more or create a synthetic which will undermine the limited quantity argument.

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rinconpaul
Posts: 112
Joined: Wed Dec 03, 2014 10:39 pm

Mon Feb 05, 2018 9:37 am

Not here in Australia, Bitcoin betting set to be banned!
The chairman of the Racing Commission ... is intending to issue a formal communique to all sports bookmakers and betting exchange operators licensed in the NT if currently transacting in cryptocurrency (for example Bitcoin, Ethereum and the like) for their wagering operations to immediately cease and desist,"

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Euler
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Mon Feb 05, 2018 3:42 pm

Getting close to 7k now, down 60%+ from highs. Watch some ICO's double down or give up because of this.

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