On the Eve of the Coinbase IPO
For different reasons, as I heard this piece on yesterday’s Breakdown, then read it, I thought of you two in particular.
@JAG because I’m always wanting to convince you to take at least a small holding position in BTC specifically;
@sand_puppy because of your continual thirst to understand the space more broadly and deeply.
Tomorrow, April 14, Coinbase will debut its IPO. The IPO was delayed until 2021 Q1 numbers were in because they are so bullish for the price, and the wait will prove worthwhile for the company’s early investors. (Disclosure: I am not one of them – I’m irresponsibly single-minded.) But what can this imminent stock market first mean for the crypto space overall, and bitcoin in particular?
A crypto trader known on Twitter as byzantine general (@byzgeneral) offered a high view in a 45-tweet thread, complete with the “Alice’s Restaurant” treatment (for the non-boomers: charts and graphs and paragraphs (or at least sentences) explaining what each one is). You can read it and study the charts here. Or listen to NLW’s read and framing, sans charts, here (23-minute listen).
OK so what is happening this morning??
VT, thank you for the links above to Byzantine Generals explanations. My daily reading assignment!
VT: @JAG because I’m always wanting to convince you to take at least a small holding position in BTC specifically;
I actually took your advice, lol, a few weeks back when I did my taxes. I had a pretty good year trading (last year), but this year I put my trading strategy to the test and it failed.
I took smaller positions in the crypto spectrum that I’m comfortable holding for the long term. When the crash comes I will add to them. Last year I put all my savings in crypto and it really stressed me out.
I would like to get your opinion on this latest Raoul Pal video:
It really disturbs me the way this guy flip flops between doomer and moon boy.
XRP (Ripple) has gone nuts over the last month after years of stagnation. After some quick DD some years ago I thought negatively of it. Is there something new and important afoot that we should consider? Thank you, Jim
I saw this one; first of his material I’d looked at in awhile.
I have two general thoughts about Pal.
First, that he loves the hunt. He’ll always be a trader, and so he imagines a day when he’ll sell his btc to pick up something else. He does seem to believe btc is the best trade for today, but he’s always scanning the horizon for the next prey, anticipating what it’ll taste like.
Second, that especially since he started his RealVision crypto division he wants to be all things to all people. I get the feeling he’s become most interested in building his audience – that it at times trumps him clearly articulating his original perspective and helpful thinking. It’s the desire to please a much broader audience, now, that I think makes him sound increasingly weaselly.
Sometimes I think it’s no longer the market as such, but the next subscriber peeking over the horizon, that is his real target; the analytical content only the means to draw that subscriber into the kitchen.
I don’t listen to him nearly as much as I used to do.
Not that I know of; I think perhaps Ripple is riding its own reputation.
I had some XRP that I’d bought way back around 9 cents. I sold it a few months ago around 45 cents, just before it retreated into (what was it?) low 30s or so. I thought then that its legal trouble would be greater than it has turned out to be, and that is likely helping its bull case during this slowly growing crypto bubble. It is, after all, the 3rd place crypto by market cap.
I got out also because I don’t like the built-in inflationary character of the owners’ deep vault of XRP that they can dump into the market whenever they choose. I think they were using it to tamp down the price for years – though I’m not sure why, perhaps to maintain liquidity and low price while encouraging global adoption. The fact of so much liquidity in the wings leaves me thinking it’s not substantially better than USD over the long term, and subject to the same kinds of manipulation that I came to crypto to get away from.
I’m in btc and will try to get a very few shares of COIN tomorrow at the open. I suspect it will get beyond me fast so maybe a market order for two shares for this peon will be it. I’d get a call option but I’m not nimble enough unless I practice the steps, and sketchy but expensive WiFi is no help. BTGC is a closed end fund holding BTC, was selling at a 10% discount to asset value at start of today, has 2% annual fee. best thing us can buy it in IRA_, not a bad option IMO.
I just had a conversation with my neighbor about crypto….Geezus.
He is the best neighbor in the world and a total genius in many ways, but talking with him about crypto is like reading a Time Magazine cover that says “Bitcoin is God!”
Combine that “real world” sentiment indicator with the IPO, and you got a one-two combo from Mike Tyson in crypto’s face.
Follow that with a knee to crypto’s coins by perma-bear Pal suddenly transforming into Rocket Raoul.
Then, while all this is going on, the Pi Cycle Top indicator just tripped last night:
Black Bitcoin Thursday, coming to a phone screen near you.
I don’t know the Pi Cycle Chart, but I greatly doubt bitcoin is going to go to the regression band either short term or long term. I don’t think it’s going down 20% either, esp in the short term. But I suppose this is a good test of the Pi Cycle, given it was created looking backward. It’s predictive ability is to be tested. And since we’re now at all time highs, now is the test period.
I’m more inclined to follow Willy Woo’s on-chain data analysis. He’s much more tuned in to the crypto space and btc in particular. A few days ago he tweeted his disagreement with the Pi Cycle expectation and provided a couple charts to illustrate. In essence, he notes that the 128-day MA doesn’t track the dips in this cycle as it did in past cycles, and says that’s because of the high reflexivity in this cycle. Also, he notes that the NVT ratio is not at all indicating a top, being very close to the fundamental floor.
Here’s his tweet on Pi Cycle. Click on the text image to read, and then scroll right for 2 charts.
Here’s a definition of NVT.
Additional Woo perspective: He thinks the sideways chop we’ve seen over recent weeks is evidence bitcoin failed to have a local top followed by a consolidation. That, he said in a separate podcast interview, is because there have been eager buyers waiting just below the price who have been snapping up any sizeable pools of bitcoin as soon as they hit the market. The result is chop. Five days ago he said he thinks the chop is about over, based on the rising triangle. This morning we see btc clearly – but not highly exuberantly – on the pump. Here’s that tweet.
I’m revisiting my Raoul Pal analysis based on a podcast interview of him that I heard last night. He’s hinted that he’s rethinking everything about the macro picture, and on a few occasions he has mentioned an element or two that are occupying his mind, but in this interview he comes much closer to clarifying how he’s reframing the macro. It is centered around his strong appreciation for network effect. He revisits the dot com bust and asks whether it was a bust or just a deep consolidation in the early stages of the adoption of new networks – that is, early-cycle high volatility (of the kind we’ve seen in the first decade of bitcoin’s developing network effect). And he looks forward, beginning to speculate on how the network effect’s changes in how society is organized will look in 5 or 10 or 20 years.
When I think about the various individual things that have bothered me about Pal’s recent perspectives in his larger macro sketch, I see more internal consistency. His picture is – or certainly has the potential to be – rather dystopian, but it also seems plausible. (I suppose how it turns out is going to depend on (a) who’s writing the script, and (b) what the populace is willing to settle for; because we only ever get as much as we’re willing to accept.)
If you have the time to listen to it, I’d be interested in your take.
@ChrisMartenson – you might find this interview/macro view intellectually stimulating