Trying to compare Fidelity to FTX is quite a reach. LOL!
OT: Bitcoin, Altcoins, NFT's & All Things Crypto
- Thread starter bob-loblaw
- Start date
Shocker - I actually agree with Bob. If you truly believe in BTC based on its potential to change the world of finance you aren’t buying a Fidelity crypto fund. It’s counterintuitive. Now, if you want to try and make a few bucks off BTC/crypto swings that’s a different story.
I wasn't sure whether to post this in this thread or the stocks thread. If you all think I should post it there also, let me know. More food for thought from Pompleano:
There is a massive financial crisis underway at the moment. Alarm sirens are going off almost every day. As a friend told me yesterday, “bodies keep floating to the surface.” This is really, really not good.
The shut down of Silvergate Bank, along with the takeovers of Silicon Valley Bank and Signature Bank, have been well documented. Two days ago we got word that Credit Suisse was under immense stress and the Swiss National Bank agreed to step in with tens of billions of dollars in liquidity. Yesterday it was announced that First Republic Bank was going to receive $30 billion in deposits from 11 other banks.
$30,000,0000,000 doesn’t get handed to you by your competitors if there aren’t some major issues at hand.
But all these bank issues are just the appetizer in my opinion. The main course started last night when we received confirmation that the Federal Reserve increased their balance sheet last week by nearly $300 billion.
This increase in the balance sheet comes after a year of quantitative tightening, which contracted the Fed’s assets. But now we have a pivot in the Fed’s balance sheet strategy.
One of the biggest problems with this pivot is that the Fed has not yet won their battle against inflation. In fact, the Fed increased interest rates by 4.5% and dumped about $1 trillion off their balance sheet, but they never got inflation below 6%.
MAJOR. PROBLEM.
The Fed is increasing their balance sheet because they have to lend money to the banks. Without this new injection of liquidity, many of the banks appear to be insolvent due to their unrealized losses on long-duration, low-yield debt.
Why do the banks have unrealized losses on that debt?
Because the Fed jacked up interest rates at the fastest pace in history and the banks didn’t properly hedge their positions against this scenario. On one hand it is understandable why there was no hedging — the Fed told everyone that interest rates were going to be 0.5% or less right now. On the other hand, when has it ever been a good idea to believe everything a central bank tells you?
It may be worse than that though — Balaji Srinivasan describes the gravity of the situation with the following:
The record shows that the entire US banking system — the Fed, the banks, and the bank regulators — knew by 2022 that they had lost the money of many millions of depositors.
Banks tried hiding the losses via hold-to-maturity accounting tricks (should be called hide-to-maturity). And regulators allowed them to bury the fact of their literal insolvency in footnotes. But this just deferred the judgment for a bit. In a sense, the entire bill for many years of printing was coming due all at once. Hundreds of billions of dollars in losses for the central bank, the commercial banks — all of it had to be imposed on someone.
One way to think about what has happened here is to compare Sam Bankman-Fried’s FTX debacle to the actions of US-regulated banks. FTX reportedly took in customer deposits and invested them in high-risk assets, which ended up leading to massive financial loss of the depositors’ funds. These loses, and the overall failed scheme, was exposed when depositors conducted a run-on-the-bank last year.
US-regulated banks have done something that looks eerily similar. They took customer deposits and invested them in the wrong assets. Now the big difference is that the banks were not buying crypto assets, but rather buying US Treasuries and other debt instruments, which have been historically seen as low-risk. Regardless of the risk profile though, the banks now have immense unrealized losses on their balance sheets and when the bank runs started at some of the banks last week, these losses were exposed for everyone to clearly see.
It is absolutely insane to think that FTX and these regulated banks had a comparable mechanism at play. Thankfully, the regulated banks were able to preserve 100% of depositors’ money after the government bailed them out, but the equity and bond holders of both FTX and Silicon Valley / Signature Banks ended up in the same situation. That is exactly how capitalism is supposed to work.
This brings us to the current crisis.
The Federal Reserve and other central banks around the world are in a lose-lose scenario. If they increase their balance sheet and stop hiking rates, they will be able to quell the banking crisis. The trade-off will be a loose monetary policy in a high-inflation environment, which will almost certainly lead to significantly higher inflation in the future.
If the Fed chooses to ignore the current banking issues and continue hiking rates, which would be in-line with what the economic data is telling them to do, then we will test whether the US government, who is currently facing a debt limit crisis, can actually come up with enough money to backstop every bank’s deposits.
That is not an experiment I want to see us run.
This leads me to what I believe the base case for the US economy and dollar will be moving forward. I do not think the Federal Reserve, FDIC, OCC, and other organizations will allow a banking crisis to occur on their watch. That is a good thing. But in order to prevent the banking crisis, we will likely see a return of loose monetary policy and inflation will continue to resist the Fed’s demands.
It is not only unclear how high inflation can go, but it is also impossible to predict how long the high inflation environment could last for. The United States is responsible for the global reserve currency. If our monetary policy decisions create high inflation, we should expect people to flee the dollar and look for alternatives.
The traditional finance people will point to gold or foreign currencies as a potential solution. I disagree. As I have been saying for years now, bitcoin is going to be the big winner in my opinion. The decentralized, digital currency was built out of the ashes of the last financial crisis and I believe it will achieve global adoption through the current one.
I know that many people will question whether we are actually in a financial crisis right now. All that I ask is for you to do your own research. Look at the data. Identify the strong and weak points of the economy. Take a look at bank balance sheets, government debt, and the current inflation levels that are accelerating, rather than decelerating month-over-month.
This situation is very troublesome. Some of you will also argue that bitcoin is not the solution. That is fine. In fact, it is good to be skeptical. Bitcoin needs critics. But if you are going to take that position, make sure you have done your homework first. Read the bitcoin white paper. Ensure you understand the pros and cons of a programmatic monetary policy, especially in light of undisciplined fiat monetary policy.
It is going to be essential that you pay attention in the coming weeks. You need to be informed. As Vladimir Lenin said, “There are decades where nothing happens; and there are weeks where decades happen.” Given that two of the three largest bank failures in US history happened last week, these may be a few weeks where decades happen.
There is a massive financial crisis underway at the moment. Alarm sirens are going off almost every day. As a friend told me yesterday, “bodies keep floating to the surface.” This is really, really not good.
The shut down of Silvergate Bank, along with the takeovers of Silicon Valley Bank and Signature Bank, have been well documented. Two days ago we got word that Credit Suisse was under immense stress and the Swiss National Bank agreed to step in with tens of billions of dollars in liquidity. Yesterday it was announced that First Republic Bank was going to receive $30 billion in deposits from 11 other banks.
$30,000,0000,000 doesn’t get handed to you by your competitors if there aren’t some major issues at hand.
But all these bank issues are just the appetizer in my opinion. The main course started last night when we received confirmation that the Federal Reserve increased their balance sheet last week by nearly $300 billion.
|
One of the biggest problems with this pivot is that the Fed has not yet won their battle against inflation. In fact, the Fed increased interest rates by 4.5% and dumped about $1 trillion off their balance sheet, but they never got inflation below 6%.
MAJOR. PROBLEM.
The Fed is increasing their balance sheet because they have to lend money to the banks. Without this new injection of liquidity, many of the banks appear to be insolvent due to their unrealized losses on long-duration, low-yield debt.
Why do the banks have unrealized losses on that debt?
Because the Fed jacked up interest rates at the fastest pace in history and the banks didn’t properly hedge their positions against this scenario. On one hand it is understandable why there was no hedging — the Fed told everyone that interest rates were going to be 0.5% or less right now. On the other hand, when has it ever been a good idea to believe everything a central bank tells you?
It may be worse than that though — Balaji Srinivasan describes the gravity of the situation with the following:
The record shows that the entire US banking system — the Fed, the banks, and the bank regulators — knew by 2022 that they had lost the money of many millions of depositors.
Banks tried hiding the losses via hold-to-maturity accounting tricks (should be called hide-to-maturity). And regulators allowed them to bury the fact of their literal insolvency in footnotes. But this just deferred the judgment for a bit. In a sense, the entire bill for many years of printing was coming due all at once. Hundreds of billions of dollars in losses for the central bank, the commercial banks — all of it had to be imposed on someone.
|
US-regulated banks have done something that looks eerily similar. They took customer deposits and invested them in the wrong assets. Now the big difference is that the banks were not buying crypto assets, but rather buying US Treasuries and other debt instruments, which have been historically seen as low-risk. Regardless of the risk profile though, the banks now have immense unrealized losses on their balance sheets and when the bank runs started at some of the banks last week, these losses were exposed for everyone to clearly see.
It is absolutely insane to think that FTX and these regulated banks had a comparable mechanism at play. Thankfully, the regulated banks were able to preserve 100% of depositors’ money after the government bailed them out, but the equity and bond holders of both FTX and Silicon Valley / Signature Banks ended up in the same situation. That is exactly how capitalism is supposed to work.
This brings us to the current crisis.
The Federal Reserve and other central banks around the world are in a lose-lose scenario. If they increase their balance sheet and stop hiking rates, they will be able to quell the banking crisis. The trade-off will be a loose monetary policy in a high-inflation environment, which will almost certainly lead to significantly higher inflation in the future.
If the Fed chooses to ignore the current banking issues and continue hiking rates, which would be in-line with what the economic data is telling them to do, then we will test whether the US government, who is currently facing a debt limit crisis, can actually come up with enough money to backstop every bank’s deposits.
That is not an experiment I want to see us run.
This leads me to what I believe the base case for the US economy and dollar will be moving forward. I do not think the Federal Reserve, FDIC, OCC, and other organizations will allow a banking crisis to occur on their watch. That is a good thing. But in order to prevent the banking crisis, we will likely see a return of loose monetary policy and inflation will continue to resist the Fed’s demands.
It is not only unclear how high inflation can go, but it is also impossible to predict how long the high inflation environment could last for. The United States is responsible for the global reserve currency. If our monetary policy decisions create high inflation, we should expect people to flee the dollar and look for alternatives.
The traditional finance people will point to gold or foreign currencies as a potential solution. I disagree. As I have been saying for years now, bitcoin is going to be the big winner in my opinion. The decentralized, digital currency was built out of the ashes of the last financial crisis and I believe it will achieve global adoption through the current one.
I know that many people will question whether we are actually in a financial crisis right now. All that I ask is for you to do your own research. Look at the data. Identify the strong and weak points of the economy. Take a look at bank balance sheets, government debt, and the current inflation levels that are accelerating, rather than decelerating month-over-month.
This situation is very troublesome. Some of you will also argue that bitcoin is not the solution. That is fine. In fact, it is good to be skeptical. Bitcoin needs critics. But if you are going to take that position, make sure you have done your homework first. Read the bitcoin white paper. Ensure you understand the pros and cons of a programmatic monetary policy, especially in light of undisciplined fiat monetary policy.
It is going to be essential that you pay attention in the coming weeks. You need to be informed. As Vladimir Lenin said, “There are decades where nothing happens; and there are weeks where decades happen.” Given that two of the three largest bank failures in US history happened last week, these may be a few weeks where decades happen.
I have to admit a lot of it makes sense. I have no doubt this crisis is way worse than the Fed/Gov’t will have us believe. But why go with BTC over gold? Crypto will somehow end up at the center of this mess whereas gold is a safe bet.
BTC has performed better than gold during this banking crisis. Also, you can't really use physical gold in day to day life.
Not at all. There was a period where FTX was actively trying to acquire Robinhood. That doesnt matter though. The reality is that it was viewed as a trusted institution.... until it wasnt.
You do you, but I would not want to hold BTC anywhere that I could not immediately withdraw it to cold storage.
It's why I like Strike so much at the moment. I hold zero cash in that account. It's linked to my debit card. If I want to buy $100 of BTC, I can immediately fund my account, purchase said BTC then immediately withdraw to cold storage. No waiting, No pending holds, etc.
I could be way off base here, but the btc 🚀 is about to take off. Buckle up. There's a lot of noise on fintwit right now.
Correct.
There will be a successful reversal in the next 1-2 months. Longer term backwinds of a weaker dollar will likely give BTC a multi year bull run
Last edited:
Too bad, I only started rebuilding BTC and ETH positions. How much are you willing to chase on price?
I’m not adding to BTC at the moment. I own 2.5 tokens with a cost of 13k along with 8 ETH tokens at a cost under 800. I’m dabbling in some alt coins which if we are headed into a bull market have potential upside of 10-100X. None of those positions cost more than 1k. I’m also watching my GBTC move which I own at a significant loss but hopeful that its discount disappears and can convert to an etf. I will dump it at that point. I did make several great trades with GBTC before the crypto winter. Just got stuck in this current position and I’m not willing to take a loss on it at this time
If BTC and ETH about to take off, would GBTC and ETHE (as an investment, of course) make sense given its steep discount? Thoughts?
That discount will close a bit with a prolonged run of positive sentiment. However, I don't think it will fully close until they are able to convert to spot ETFs. GBTC/Grayscale court case ongoing (but the hearing was very positive).
I actually detest gambling.
Depends on what level of risk you want to incur. Is the discount worth potentially losing all of your money? That's the question you have to ask yourself putting money into a Greyscale product.
@bob-loblaw:
I know you got rid of your alt(shit)coins. I still own a handful based on real world potential utility, who the investors are and circulating tokens vs total tokens. What were your criteria when you were buying them?
I know you got rid of your alt(shit)coins. I still own a handful based on real world potential utility, who the investors are and circulating tokens vs total tokens. What were your criteria when you were buying them?
Where would you suggest investing if you want to create alpha relative to bitcoin? Miners? If miners, then which would you suggest?
@ScarletNut has a lot of experience with trading miners. Traditionally, MARA and RIOT are the best for maximizing BTC pumps.
I’d stay away from miners at the moment. I traded and still own some MARA. They got hit hard when BTC prices were down and energy prices were high forcing them to sell BTC from their holdings which further brought down BTC prices. MARA traded as high as $80 when BTC was at 69k, now it’s around $7 and not moving up proportionally with BTC like it used to. I suppose you could say it’s cheap and worth buying but I really don’t know if it will run with BTC again (though logically it should).
There's a ton with potential utility. Potential is the huge word there. It's like we're in 98/99 trying to pick a winner amongst Lycos, Altavista, Pets, Amazon, Yahoo, iWon, Geocities, Askjeeves, Excite, Priceline, Aol, et al. I feel like we're really reaching trying to find real utility for some of these tokens/chains. There's going to be some winners in time, I just dont think I have it in me to really do DD in finding ones that arent rug pulls.
I have a handful of friends who work on the street and are big crypto bulls. When one of them does DD I'll look into an alt. Unfort, I really just don't have it in me to try to find something that appears to have a future.
I only own one mining stock - DGHI. I owned CORZ last year. Made a good profit early on, then got greedy and they went bankrupt. DGHI is much smaller with better cashflow. I grabbed 1000+ shares at $.50. It's been over $1 since the btc run over 22k. I want to see what their btc output with their new suburban Buffalo power plant now live.
The best btc exposure w/o actually owning bitcoing is probably Microstrategies. But even then you have to worry about new issuance.
Thanks for the info. The technical setup for the miners looks great. I feel that if we get a 25 bp rate hike, it would do nothing to slow down inflation and is likely only to "save face". That combined with the banking concerns would also set up bitcoin for a run up higher. I have enough BTC and ETH for now and don't want to add more to my collection. I am lite on miners and added MARA, HUT, RIOT and DGHI in the past 2 days. I bought a very small amount of DGHI compared to the other 3. RIOT and MARA are the largest buys followed by HUT.
Busy with Coinbase as well...
Coinbase warned by SEC of potential securities charges
The SEC issued crypto exchange Coinbase a Wells notice, warning the exchange that it identified potential violations of U.S. securities law.
And here we go again. Gemini back at it. Not to mention you can imagine the hodlers and retail sheep saw the $2M bet that BTC goes to $1M in 90 days and started piling in.
www.cnbc.com
Bitcoin at $100,000? Insiders say the cryptocurrency could test new highs this year
The predictions of new record highs mark a more optimistic outlook than in January when industry executives told CNBC they expected 2023 to be a year of caution.
Where you been the last 5 days? I was purposely not going to bring up "The Bet" here, but since you lobbed this one in, I may as well...And here we go again. Gemini back at it. Not to mention you can imagine the hodlers and retail sheep saw the $2M bet that BTC goes to $1M in 90 days and started piling in.
Bitcoin at $100,000? Insiders say the cryptocurrency could test new highs this year
The predictions of new record highs mark a more optimistic outlook than in January when industry executives told CNBC they expected 2023 to be a year of caution.
Balaji raises some pretty interesting points in his "Bitsignal"
He was challenged on this and offered up "The Bet"
Here's two recent podcasts he was on for context:
Pomp
Reading all of this over the weekend was the basis for my "I could be way off base here, but the btc 🚀 is about to take off. Buckle up. There's a lot of noise on fintwit right now." message Sunday AM.
Do I think this is going to 1mm in 90 days? No I do not. I am frightened to high hell by his message though. He has not been known to be a rocketship too the moon type floating out crazy price predictions. For context on Balaji this was him in Jan 2020, the last time he really put a strong message out there, Paul Revere-ing Covid to anyone who would listen.
I highly encourage anyone intrigued by this to read his tweets and listen to his interview with Pomp.
Yup, and I’m sure Balaji will make way more off his pumping than the $1M he’ll end up paying when he loses the bet.
Well yeah, he essentially bought crypto twitter for the next 3 mos for 1mm. But do I think he's doing it for malicous purposes, no. I've followed him for a long time and this is out of the ordinary. Time will tell
Everyone joining the partyAnd here we go again. Gemini back at it. Not to mention you can imagine the hodlers and retail sheep saw the $2M bet that BTC goes to $1M in 90 days and started piling in.
Bitcoin at $100,000? Insiders say the cryptocurrency could test new highs this year
The predictions of new record highs mark a more optimistic outlook than in January when industry executives told CNBC they expected 2023 to be a year of caution.
Similar threads
