Is it time to buy Bitcoin?

by philg

The Bitcoin into which I placed my life savings at $64,000 is down a bit. With stocks, the best time to buy is usually right after a big slide. Is it time to buy more Bitcoin?

Stress tends to reduce a large field of competitors. From Wikipedia:

Starting with Duryea in 1895, at least 1900 different [auto manufacturing] companies were formed, producing over 3,000 makes of American automobiles. World War I (1917–1918) and the Great Depression in the United States (1929–1939) combined to drastically reduce the number of both major and minor producers.

There are some use cases for crypto, e.g., Hunter Biden transferring painting sales revenue to hookers and drug dealers, but why do we need currencies in addition to Bitcoin? If all of the money and faith that people have put into 19,000 digital currencies went into Bitcoin, it could go back up to $64,000, no? (Another way that Bitcoin could get to $64,000 is via continued U.S. government money-printing… $64,000 could be the price of a Diet Coke.)

25 thoughts on “Is it time to buy Bitcoin?”

  2. I think the only people who know are the whales — there is so much manipulation. Rumor has it that large miners have been sitting on coins already for a long time before the crash in order to keep the price up. Much of the trading volume is whales buying and selling to each other.

    Whales are defending the $20,000 line. Support from the public cannot be increased, since everyone knows about bitcoin already. The supply of greater fools has dried up.

    Bitcoin cannot be made more energy friendly. Pressure will mount against it rather than go down.

    Perhaps the ruble is the safest investment right now. Predictable Russia is selling to China at reduced prices and the ruble is doing great.

    • Respectfully, gold and the petrodollar cannot be made more energy friendly as proof of work/war anchors these monies.
      The central bank digital currencies (CBDCs) waiting in the wings will be more energy friendly and help usher the world into the final stage of this credit cycle.

    • I hear that miners are in countries with dirty energy. Sometimes they are well connected enough to steal that energy.

      I agree that CDBCs would be a catastrophe. Keep using cash!

    • Weren’t the sanctions supposed to kill the Russian economy and ruble ?
      Ironically ruble is now the best performing currency in the world – so not a bad idea!

    • AnonX: Yes, another great success of Biden and the “young”, “dynamic” world leaders Macron, Scholz, Trudeau etc.

      The war (or escalation of the 2014 conflict) would not have happened with Trump/Merkel in the first place.

      For the West, at least the war temporarily stopped the increasing domestic tyranny of the left. It seems that (sadly) the West needs some form of a Soviet Union to keep itself honest.

  3. > but why do we need currencies in addition to Bitcoin?

    Well, I suppose one answer is that you have to follow the money that gets transferred when a new one is invented, and who uses it. I’m sure there are lots of Bad People doing Bad Things in the world who want to keep “storing their value” and moving it around between various kinds of Obscurium – and with 19,000+ of them, who can possibly keep track of them all?

    What’s the day-to-day churn on just the new cryptos being “minted” and the old ones being “destroyed?” What’s stopping you from setting up “CripplerCoin” for example? As long as someone can put “real money” in one side and get “real money” back out somewhere else with total anonymity, what’s not to like?

    It’s a kind of funny aside: when I was a kid, there was a Chinese restaurant in my home town that was sandwiched between a convenience store, a laundromat and a bar in a little strip mall. When you walked in, the first thing you saw was a big sign on the register that said: “TERM: CASH.” They didn’t take credit cards, checks, money orders, IOUs, barters – nothing but cash. Over the years my father (who tells kinda-sorta funny jokes and stories) developed some rapport with the (female) owner: she always drove a Mercedes. She basically telegraphed to him during their conversations that thid very busy restaurant actually reported few sales! Like a few dozen egg rolls and a couple gallons of pork fried rice a week.

    She also told him that all three of her children had been born courtesy of the various welfare systems in New Jersey and the US that existed at the time. She used to cruise around in a gorgeous Mercedes but she was, she assured him, “poor.” I suspect a lot of the 19,000+ cryptocurrencies are like that.

  5. philg asked “… why do we need currencies in addition to Bitcoin? ”
    Bitcoin median transaction confirmation time seems to be around 6-7 minutes recently:
    https://data.nasdaq.com/data/BCHAIN/ATRCT-bitcoin-median-transaction-confirmation-time
    and the average transaction fee is around $1.35 recently:
    https://ycharts.com/indicators/bitcoin_average_transaction_fee
    That level of service is perhaps inconvenient and inferior to currency for some purposes.

    • Money/value moves in layers. Nation states ad large entities transact via SWIFT and other networks, stores value in gold and sovereign bonds. Individuals transact in currencies, credit and other derivatives and store value in assets such as housing and financial instruments. Bitcoin will likely be used as base layer digital money with payments operating on other layers such as lightning network and or credit/apps (e.g. Strike and CashApp).

  6. The bullishness of the middle aged millennials now pouring into bitcoin is pretty impressive. The lion kingdom still thinks $5000 is a fair market price. The only reason to be in it now is to get rich quick, which we all know has a 1 in million chance of happening.

    • Just curious, how you arrived at that number ? What’s your valuation model other than gut feel?

  7. BTC is dumb cryptocurrency. ETH is smart cryptocurrency. Overtime ETH will take over. (Not investment advice) right now is a good time to rebalance from BTC to ETH.

    Also Ethereum is transitioning away from intensive mining. Once it happens, it will shed current eco-stigma.

  8. All cryptocurrencies share the same fundamental problem: it is way too easy to create new cryptocurrencies. The total supply is unlimited, while supply of physical goods is limited.

    The basic law of supply and demand says all cryptocurrencies will go all the way to 0 value in the long term.

    That’s why I prefer to keep my insurance fund in a quantum protected store of value which is only created in supernova explosions.

  9. Patrick – did you get the reference to the no-cloning theorem and Fermi statistics, too? 🙂

  10. It might be interesting for some to review one history of currency in the United States:

    https://www.uscurrency.gov/history

    “The phrase ‘not worth a Continental’ is coined after the Continental Congress issues paper currency to finance the Revolutionary War, currency that quickly loses its value because of a lack of solid backing and the rise of counterfeiting.”

    • Maybe interesting to people who celebrate Juneteenth:

      “1861 – ‘Greenbacks'”

      “In order to finance the Civil War, Congress authorizes the U.S. Department of the Treasury to issue non-interest-bearing Demand Notes. These notes earn the nickname “greenbacks” because of the green ink on the back. All U.S. currency issued since 1861 remains valid and redeemable at full face value.”

      Imagine having a stash of authentic 1861 “Greenbacks” crammed into in a dusty old box, wrapped in tissue paper and old rubber bands, stuffed between a couple of studs in an attic somewhere. They would still be redeemable at face value, they’re legal tender, but what would they be worth to collectors?

    • A propos (history of currency): The best (and rather concise – 130 pages) explanation of money and monetary systems is “What Has Government Done to Our Money?” by Murray N. Rothbard. Everyone should read it, it’s both very accessible and is completely devoid of pseudo-intellectual bullshit. The book is half monetary theory and half history.

      Here’s an electronic copy: https://mises.org/library/what-has-government-done-our-money

  11. I always figured BTC should be worth about 10% of gold (40k). But recently I have 3 bullish items for BTC

    1) The growth of bitcoin lightning should slowly take BTC out of circulation. Bitcoin “Channels” are punished that go off line
    2) A US Spot BTC ETF may finally come
    3) Swift and USD with Russia was weaponized. Leading a need for a backup payment method

    • 3) Russia actually has a functional SWIFT clone (it’s called SPFS) it now deploys (and links to other national financial messaging systems) around the world.

      At the core SWIFT is merely a crappy slow (30 minutes to send a payment is typical!!) framework for sending messages in a closed network with authenticated and pre-approved end-nodes. The functional part of the network is totally dwarfed by the massive surveillance infrastructure US spooks have built around it.

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