nrd525 Market Tracker

I'm kicking off a market tracker and advice thread here. Just to be clear, I don’t claim to be an investment pro, especially not in cryptos or anything else. Here’s a bit about my background: -I’ve got a degree in economics. -I started investing in the stock market back in high school and did pretty well, although I could’ve hit it big if Nortel Networks hadn’t tanked. -I’ve been into statistics for 25 years now. -Back in 2012, I bought a house right near the bottom of the local housing market, snagged it for about 20k less than what my neighbors paid. -I’ve been in the crypto game since June 2011. -Wrote my first blog post just days after learning about it on June 3, 2011, titled Bitcoin Libertarians, Techies and the Coming Bubble when the price was $18.45. It dipped a few days later. -I shorted bitcoin from $7 down to $2 back in 2011. -Ended up losing $450 on bitcoinica because of that hack and liquidation. -I was an early critic of the Pirate ponzi scheme. -Bought some bitcoins in 2013 for around $120, sold them at $700 while it was climbing to $1150. -Earned quite a bit on Bitfinex swaps in 2013, possibly around 100% APR. -In December 2013, I ramped up my lending out of Bitfinex swaps. -In 2014, I lost a bit on Dogecoin. Thought the community's creativity was a plus for its value, but I was off the mark there. Thankfully, I only risked a couple hundred bucks. -In 2014, I went long on Bitcoin at an average price of $540. -Made about $25/BTC by arbitraging between Coinbase and Bitfinex in 2014. -Still raking it in from Bitfinex swaps in 2014, mainly using the Flash Return Rate. My overall approach is pretty cautious given the volatility in bitcoin.

Current recommendations 1) Medium risk - loan swap USD at Bitfinex at the flash return rate.  Expected 20-40% APR.  The current APR is much higher (0.14%/day after the fee - is 66% APR).  But I expect the APR to fall to 20% (or less) unless there are price shocks.  There is a chance you will lose all the money - but the chance is worth it.  My risk assessment of Bitfinex is that they are more reliable than most other bitcoin corporations. 2) High risk - go long on Bitcoin.  Hold for a year or more.  Do not day trade. Negative Recommendations Do not loan BTC at Bitfinex.   2% APR is not worth the risk. Do not invest in altcoins.  Bitcoin is 90% of the market and shows signs of a natural monopoly due to the network effect. Do not invest in mining. I'm very unqualified to evaluate this - but by all accounts difficulty is skyrocketing (up 20% each period) and miners are likely to lose money. Do not invest in any business that offers shares for bitcoins.

Not sure about Icbit.se - you can buy a bitcoin now ($640), and sell it for 20% more in December ($769).  For the past month or so their October contract has been trading for 8-10% above market value, and the December one for 15-20%. This seems great - it's a guaranteed return of 40% APR (minus any fees).  However I'm not sure I trust icbit.se.  I've got no experience dealing with them. They have been around for a year - so they might be worthy of trust.  Does anyone know? I've been sticking with Bitfinex as they offer a roughly similar service and rate of return.

Normally I don't buy into technical analysis.  But I think that something is going on at around 666.

Dogecoin continues its fall.  Earlier I thought it might succeed due to the size, enthusiasm, and positivity of the community.  But the fact that it has fallen from 150 (or more) to as low as 31 satoshis is a good example of how difficult it is for alt-coins to succeed.

The litecoin dump that recently happened was a little surprising. With all the scrypt miners that recently came out (as well as kncs litecoin miner coming in a few months) I thought scrypts might get more support (and higher price)

a good deal of the appeal of these coins was that it was "ASIC resistant", not anymore...

Dogecoin has been mostly mined out.  Something like 85% mined.  So between the declining block reward and the ASICs, it is game over for what used to be very profitable mining.  I even mined a few Dogecoin with my GPU back in Jan/Feb. A year or two ago, before they existed, I was worried that ASICs could cause havoc in Bitcoin by drastically decreasing the number of miners and by causing almost everyone mining to lose money.  I figured that a product with a high capital investment that had low marginal cost of production would cause the ASIC miners to get cheaper and cheaper.  Miners would continue to mine so long as the revenue was greater than the cost of electricity - but they wouldn't recuperate their investment.  Since miners were such a critical part of early Bitcoin, I thought that the economic loss to miners (and ASIC producers) could seriously impact the bitcoin economy. Of course Bitcoin price went up by a factor of 50 to 100 and this wasn't a problem. The early predictions of ASICs being 1000 times more efficient than GPUs are proving to be true.

It's a pity they don't allow altcoin speculation in this subforums. I sold 70% of my Litecoins yesterday and bought Peercoins. LTC has nothing to offer and is suffering from stagnation while Peercoin has some really promising projects under development (PeerShares and PeerUnity).

If those are contracts, then there is the chance the when you sell in December (for what seems like a profitable trade now), the price is higher than the contract price and you are selling way under spot then. Something to consider.

Right, but it's a guaranteed profit if you invest money now and hold.   So from a diversification point of view, if you are bullish it would make sense to put some of your money in BTC and some of the money in BTC but which will be redeemed by an icbit contract in December with a guaranteed profit (whether or not Bitcoin goes up or down).  So long as you trust Icbit.se...

Bullish news Dell accepts bitcoin.  Biggest business to do so by a factor of ten.  Some people think that businesses accepting bitcoin will not have an impact or even cause the price to decline as people use the opportunity to sell their bitcoins.  They are totally wrong.  I believe the value of bitcoin is based on the size of the bitcoin economy (money supply * velocity  + holders). Coinsetter launches. First US exchange. Coinbase isn't a real exchange (no bids and asks).  Coinsetter also has lower fees (0.25% vs 1%). OkCoin launches international service with US dollars. Hard to know the size of the impact. Bearish news: proposed NY state regulations are tedious.  Though they are not final. General trends: altcoins down. Bitcoin slightly down, but mostly very stable which is good for the longterm as stability promotes adoption. Random: I joined the bitmixer signature campaign. I find it hilarious that my signature is worth 0.01 BTC/week. Scams: URO alt coin continues to drop (thread is hilarious).  PBMiner is probably also a scam.

Doesn't a higher velocity decrease the price? For example, a hypothetical currency that has instant velocity needs much fewer units to provide the same amount of value transfer as a currency with a sluggish velocity. The less units you need to keep the flow going, the less demand there is for that purpose. I'm no professional economist, but that is my amateur understanding. I also agree though, that large companies accepting bitcoin are critical to its success and valuation.

Higher velocity does mean lower valuation, by my understanding of the quantity theory of money. Basically, what you said. I think the question of the velocity of money in a bitcoin world is a vitally important one. The technology allows for a high maximum velocity, which is one thing that makes it more useful than the current system (e.g. no need to wait until tomorrow for a check to clear), although in practice, bitcoin's actual velocity will probably not be anywhere near the technologically-imposed limit. Unless you have cash flow problems, there's simply no incentive to move bitcoins around that fast. This is especially true for anyone who uses bitcoin as a currency and an investment. So: - higher max velocity will increase the value of bitcoin because it makes bitcoin a better system, attracts users, and thereby increases demand but - higher actual velocity will decrease the value of bitcoin because it effectively makes bitcoin less scarce (quantity theory of money)

Good ideas. The impact on velocity could go either way.  And I agree that the velocity in bitcoin could technically be very high, but in practice isn't anywhere near what it could be - with the major exception of gambling (and notably people who do dice gambling with bots - where people can spend the same money 10 times in a day).  Does dice gambling count towards velocity if it is done off the chain? I was primarily thinking about the Size of the Economy = Money Supply * Velocity * BTC price.  So I was commenting on how Dell's acceptance of bitcoin increases the size of the economy - and if the money supply and velocity are constant then this will increase the BTC price.

My understanding is that even if it is done off chain, it still holds the same consideration regardless of how the transaction was processed. And Dell's acceptance and advocation (giving 10% discounts and making video clips of how to pay with BTC) certainly increases the supply of the economy!

I thought Coinsetter had setup ACH transfer for the US. But apparently they have either not done it or have only done it in some states. So in this case it isn't as useful.  You can still put money into Coinbase via ACH and then get fees refunded at Coinsetter - but it is a bit of bother.

Without a major market move up, I expect Bitfinex USD swap rates to plummet to 0.08% or lower.  It is very puzzling why this isn't happening give that there is an excess of supply of $6 million (and a total swaps of $29 million).  Normally it would take only 1/6th of that excess supply (as a fraction of total swaps) to crash the rate. It should be falling by 0.01%/day or more - but it is only falling by 0.002%/day. Maybe there are lenders who expect that they can get a 0.14-0.15% flash return rate and aren't prepared to settle for less.  And they might be hoping that a bubble will return the flash return rate to 0.20%/day.  After not lending out their money for a week, you think they'd realize that rates are on a long-term downward trend. The Bitfinex swaps are slowly declining (probably due to a reduction in the effective leverage ratio and BTC price stability).  Lower flash return rates will reduce swap supply (or the speed at which it was increasing - it is hard to actually reverse the trend) and thus limit the impact of Bitfinex on the next bubble (if there is one).  This is slightly bearish for the next bubble - though it could reduce its wide-swings (and flash crashes).

Very interesting thread, thank you for sharing some of your experience.

It's down a good bit (currently $562 at Bitstamp and Bitfinex) and I'm considering buying. There doesn't appear to be much serious negative news other than the NY state Bitlicense rules which are only proposed and may change or be very different in other states (or maybe NY is a model for other states as they do have Wall Street and might have the most expertise when it comes to financial regulation).