Forum Replies Created
On the rebound, 1050 was no problem – selling didn't emerge until 1100, and/or buying petered out.
However 950 looks to be decent support. We need a bit more time for the pattern to develop, currently we're trading in a range. A break above 1100 is bullish (longs will jump on board, afraid to miss out), and a break below 950 will lead to more selling, where longs will become afraid of losing the money they've already made. Its all about fear & greed, as always.
I have to say, BTC is a lot of fun to watch.
Nice data-filled response. I think it is unfortunate you liberally sprinkled your response with ridicule. I'm not sure why you do this, since I think your points are interesting. Perhaps next time you might do me a favor and lose the ridicule. It makes for a more civilized conversation.
But I digress.
As always these things depend on the assumptions we make. Lets look at some back-of-the-envelope calculations.
If we put the entire money supply (M2) of the eurozone AND the US into bitcoin, that's 10.9T + 9.2Tx1.35 = 23T US / 12M BTC = $1.9M/BTC. Your estimate was 1M/coin. Do I think that 50% of the M2 of Europe AND the US will go into BTC? No, I do not.
If we assume bitcoin will replace ALL euro and the dollar cash in circulation we get a valuation of 191k per bitcoin. (2.3 trillion US / 12M bitcoins = $191k/BTC). Do I think BTC will replace all currency in circulation? No, I do not.
I also don't think it will become the reserve currency.
I think BTC will have competition. There's too much money involved for it NOT to have competition. That competition may take the form of something we haven't seen yet. Or there might be official competition. Or a combination of official competition + a law enforcement effort.
I think once things become serious (12 billion is not serious right now – although I freely admit BTC moved higher than I thought it would on this run) then law enforcement will be dragged in on behalf of rich and powerful entities that will be the losers in a bitcoin world. How might such a thing work?
Under such a regime, running a bitcoin validation server might be illegal. Possessing bitcoins might be illegal. Selling things using bitcoins? Illegal. And sending packets to a bitcoin server – illegal. Enforcing possession laws = impossible. But whacking the servers and detecting retailers that execute transactions? Easy peasy, especially if the NSA gets involved. Charge all involved with "faciliating money laundering." The RIAA was unable to stop torrents, but they are toothless wonders compared to the banking cartel's political power.
And if 95% of retail doesn't go along because of the legal issues, the level of interest will decline dramatically, and with it the BTC valuation. BTC won't be kllled, but the valuation will drop through the floor, because the amount of stuff you can buy with a BTC will be dramatically limited.
I understand what remittances are. I even know someone who used to be in the business. The choke point is the business where BTC is converted into local currency. The remittance in BTC ends up happening, but the recipient can't pay rent until the BTC conversion to local currency occurs. If that sort of BTC-currency conversion is forced underground because of local banker influence, the whole remittance via BTC gets a lot more risky, and thus less interesting.
As for wire transfers – its an interesting point. I've done a number of them to my favorite emerging market country. I pay about 1%. If I bought bitcoin, dragged it across the border with a slip of paper, and redeemed it in the destination country, I'd have a bunch of cash, I'd pay bid/ask spread on both sides, and if I were dealing with some official entity, it might be worth saving a few hundred bucks to go through the exercise. If it were unofficial – i.e. black market – I wouldn't even bother. The risk of "something bad" happening to me just wouldn't be worth it. Bottom line – the 1% banker skim is not an attractive enough of a market. 9% yes, 1% no.
As a result, I'm still sticking to the 400B business opportunity, assuming no local law enforcement interference.
End of the day though, when this much money gets involved, people start dying. I just don't see it playing out as cleanly as you do. File sharing is one thing, but picking banker pockets is quite another. Don't get me wrong, I'm all for disintermediating the bankers – but I don't think it will work out as neatly as you project. And the more successful it gets, and the more profit it takes away, the larger the effort will be to make it illegal.
"This guy used BTC to pay for a terror attack. BTC needs to be illegal."
…credit growth is back on track, and it doesn't matter where the bubble is forming, be it student debt (yes) or Gov't deficit spending (yes).. it is still credit growth.
Interesting. Here are three simple (related) questions for you. Since you look at data all day long, answering them should be reasonably easy:
What level is credit growth today, year over year?
What level is average credit growth over the last 60 years, year over year?
How do you define "back on track?"
If you can answer these three questions, I will be very impressed at your ability to both discover the truth and faithfully report it.
I believe you are actually the subgroup here Dave.. .one of the few who believes that what the markets are telling us is somehow useful, rather than being a charade .
I didn't realize that the truth was one of these "majority rules" sorts of things. Silly me, I guess I'm outvoted. Extra credit question: what sort of logical fallacy did Jim just use there?
Most Western nations are on a runaway train to unsustainable debt growth in a world of depleting resources .. most of us are here to try to understand the implications of that.
Now here's a point of mostly-agreement. However, I don't think its debt growth that is the problem, I think it's existing debt that causes the trouble. And depleting resources – 100% agreement, that means those governments can't expect growth to rescue them from their massive debt burden.
The way out? The simple answer is inflation. But…how? Not by more debt growth. That path has been (more or less) cut off. People are now generally aware they can't grow national debts without limit. And private bank credit has stopped growing in the US, and its collapsing in the eurozone.
What's the implication of that? Inflation? Yeah, not so much.
That leaves money printing. But if money printing (in its current form) led inexorably to inflation, we'd have inflation right now. But we don't.
The goal of the Fed extricating the economy via moderately high inflation argument makes sense, but its just not happening today.
So for me – I await the logic of events, remaining guided by the data I see.
Regarding lunch – last I heard, Jim wanted to bring a camera crew, a personal defense team, and had scheduled an interrogation session. Me, I just wanted to hang out and chat, so, I don't think we have a meeting of the minds here. The whole affair smacked of the worst sort of MSM adversarial octo-boxes that end up with ego-filled chestbeating with lots of heat and zero light.
Talk about old paradigm. So no, I'm not interested in that.
Dave made a post yesterday that is just pure Paperbug BS… if you have not realized it before, DaveF is our stealth defender of the dollar and TPTB. Dave wants you to believe that the current paradigm will go on.. he wants you to feel confident in the FED and the dollar. That is his message.. and as always, I find it subversive in the context of our discussions here at PP.com.
It seems that Jim felt he had to recharacterize my belief systems in order to discredit what I had to say. For some reason, he doesn't like addressing the merits of my post. Its just another day here at PP.
So who am I again?
1) Apparently I'm a stealth defender of the dollar – his main evidence for this is that I have this sneaky habit of looking at the data to verify my worldview, and I go the next step of having the effrontery to actually point out that the buck isn't crashing when…it's not crashing. I think he has the same problem with my analysis of the gold market.
2) Apparently I want you to believe that the current paradigm will go on. (Jim presents zero evidence – in fact he just manufactured this one from whole cloth – "I see you are still beating your wife" sort of thing)
3) Apparently I want you to feel confident of the Fed. (Another manufactured charge, with zero evidence; its not how I feel, but – with Jim, facts aren't so important)
4) Apparently I want you to feel confident of the Dollar. (Half true. If you already have some non-dollar insurance – gold would do for that – then as long as the chart doesn't break down, definitely, you should feel confident of the dollar. As soon as the data changes, then – gasp – stop being confident! Subversive and paper-buggy, isn't it? If your debt payments are in dollars, and your living expenses are in dollars, to me it kinda makes sense to have some dollars around.)
Now then, on to the merits of my actual post. Is a hypothetical Fed-provided internet currency directly convertible 1:1 to USD a possible competitor to BTC? I think so. Calling me a bunch of names and manufacturing a fake belief system for me doesn't change this risk.
I think there are significant forces standing in the way of the Fed deploying FDC, but if they did, I believe it would definitely be accepted by internet retailers, regardless of the "non-open-source" nature of the offering.
I know, I'm a party-pooper. The future for BTC isn't infinite, and there might actually be some risks. The dollar isn't crashing. Gold has yet to rally. Bad Dave, such a Debbie Downer.
Regarding debt growth – TCMDO over 5 years is growing at a fantastic 2% per year, the vast majority of that due to government deficit spending, not private borrowing. During 2000-2008, TCMDO was growing from 8-12% per year, and the vast majority of that was due to private borrowing. And in the eurozone, overall debt is shrinking pretty dramatically.
Overall, at best we have zero credit growth in the two main economic zones of the OECD. The debt bubble has popped. Debt-money-driven inflation is dead, at least for now. Without willing borrowers and private credit growth, the Fed and ECB will find it very difficult to inflate "the old-fashioned way" no matter how much they want it to be so. Which they do, of course.
Now 1050 should act as resistance – selling pressure will emerge as the price bounces back up to 1050 on the rebound. The 1050 level is a good place to go short – or a good place to sell.
The selling on the breakdown was massive and sustained – 4 hours of high volume selling.
I have noticed that the price of bitcoin seems to track "google trends" interest level. Gold did something similar, although not quite as closely. Apple stock most definitely tracked its google trends results.
So regardless of whether or not bitcoin is "the new new thing" (to quote a book from the dotcom boom) as interest in bitcoin wanes, so does the price. And the opposite is true too – the higher the interest in bitcoin, the higher the price.
Only problem is, google trends doesn't update frequently enough to be useful for buy/sell signals in bitcoin.
So what do I mean by a "close" below 1050 in an instrument that never closes?
I'm looking at the 1-hour chart. If one of the candles on the 1-hour chart ends the time bucket below 1050, it will be problematic. A candle with a spike below 1050 and back up again (we'd call that sort of candle a "hammer" or a "doji") doesn't count, since that shows there is serious buying pressure below 1050 – enough to bid the price back up above it rapidly.
But one of those nasty big red candles that shows solid selling and not enough buying to stem the move down – that's just selling pressure, money flowing out, sellers overwhelming buyers, etc.
So – "an hourly close" below 1050.
A double top formation is bearish. An attempt was made to push BTC higher, but it has failed. There are not enough new bullish buyers to move the price higher. This usually leads to some sort of selloff – longs want to ring the cash register before the price drops too far. We see this in progress now.
Now we have to look at support, which is at 1050. A break through 1050 will likely lead to some serious selling. If 1050 holds, we'll see what the bulls have to say – will the dip be bought, and how high will they chase BTC?
This is something I read a lot, and its a US-centric view. If you travel overseas, especially to the emerging market countries, there are a large number of people who think dollars are substantially better than their local currency.
This includes pretty much anyone in the eurozone periphery when things start to get bad and there are increased rumors of a eurozone breakup. The euro plunges, dollars get bought, and they materialize in the US as bank deposits.
The demand for USD is significant. The subculture that imagines the USD is decaying trash is just that – its a subculture. Big Money does not have that attitude. If it did, USD would have broken below 72 and would be dropping right now. Its one of those proofs-by-existence.
Most certainly 1970-2008 was inflationary – it was the massive increase in debt-money that caused this. But that's not happening anymore. The debt-money bubble has popped.
And as for FDC being a "local only" currency – the US is the largest market in the world. I think the Fed would be ok with a "local only" success. However I believe FDC would be internationally popular too.
Online retailers would most certainly love it. A zero-volatility way for them to accept non-repudiatable transactions with no banker skim? That is free money with no risk, an instant addition to their bottom line. For most retailers, it would be better than BTC.
The key question for me is, would the Fed do this? It would mean releasing control over the ability to easily trace money flows – moving cash is difficult, and banks act as a choke-point for electronic transfers. Our Minister of Internal Security – uh I mean our defense cartel that "keeps us all safe" would probably have something to say about that.