bitcoin isnt a bond, why would cash flow into it?marksmeets302 wrote: ↑Sat Feb 03, 2018 2:05 pmThat'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 as an alternative to regular currency
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marksmeets302
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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.marksmeets302 wrote: ↑Sat Feb 03, 2018 3:05 pmbitcoin isnt a bond, why would cash flow into it?
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marksmeets302
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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 wrote: ↑Sat Feb 03, 2018 3:07 pmyea... bitcoin isnt short term bonds.marksmeets302 wrote: ↑Sat Feb 03, 2018 3:05 pmbitcoin isnt a bond, why would cash flow into it?
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.marksmeets302 wrote: ↑Sat Feb 03, 2018 3:18 pmIt'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 wrote: ↑Sat Feb 03, 2018 3:07 pmyea... bitcoin isnt short term bonds.marksmeets302 wrote: ↑Sat Feb 03, 2018 3:05 pm
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
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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?
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?
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.
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
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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,"
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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marksmeets302
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bitcoin future is now ... 1320! Coinmarketcap still reports 7K. Maybe it's lagging. S&P down 2.5% and the Vix shot up to 35. I *love* it
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marksmeets302
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edit: it's still 7K in the future as well.marksmeets302 wrote: ↑Mon Feb 05, 2018 8:33 pmbitcoin future is now ... 1320! Coinmarketcap still reports 7K. Maybe it's lagging. S&P down 2.5% and the Vix shot up to 35. I *love* it
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marksmeets302
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Congratulations, that position is probably paying off today!
I'm long vix as well, through options I use as a tail risk protection for my short volatility. Problem is... nobody wants to buy them from me
Guess I'll have to wait until expiration in two weeks. Hopefully the vix will remain high.Down to 6K now. Two economists calculated the value of bitcoin based on actual use as a currency (minus all the speculation and trading). They found the 'true value' of Bitcoin to be $US 20. Still has a long long way to fall
https://www.businessinsider.com.au/2-ec ... ?r=US&IR=T
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Shardhhajain23
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Bitcoins are completely virtual coins designed to be ‘self-contained’ for their value, with no need for banks to move and store the money.
Once you own bitcoins, they possess value and trade just as if they were nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years. Bitcoins are traded from one personal 'wallet' to another.
Once you own bitcoins, they possess value and trade just as if they were nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years. Bitcoins are traded from one personal 'wallet' to another.