
Bitcoin Drops Back Below $6,000 as 2018 Loss Approaches 60% - everdev
https://www.bloomberg.com/news/articles/2018-06-27/bitcoin-drops-back-below-6-000-as-2018-loss-approaches-60
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Blackstone4
How do you value BTC? What is a fair price? $1m? $2m? $5bn? $10tn? Do you have
a valuation methodology?

My biggest issue with BTC is that it's subject to how the market feels about
it. There's no cash flow. When I buy USD, I can by 2yr treasuries yielding
~2.5%.

~~~
charlesdm
It's been said many times before, but as digital gold. Gold is worth about
$8tn. That puts it at about an 80x multiple from where it is today. But let's
be "conservative" and put a 20 to 40x estimate on it, from where it is.

It's obviously an assumption, not a sure thing. But the only thing that needs
to happen is people sharing the belief that it is and/or can become digital
gold, which is quite peculiar.

If large stable investors buy in (pension funds, endowments, etc) that will
help massively to support price levels, after a period of value growth.

~~~
Blackstone4
The same arguments I used above can also be applied to gold. Gold is
intrinsically hard to value. So pricing BTC off gold feels tenuous to me.

Gold also has non-monetary use (i.e. jewellery) which I imagine is a
substantial portion of demand.

5+ years ago, I used to be really into gold when I used to read Zerohedge. I
feel like I'm hearing similar arguments for crypto currencies vs. fiat as back
then when I read up on gold vs. fiat. People were fanatical about gold (me
included) and weren't objective.

I owned shares in gold miners. I got burnt and lost a whole bunch of money. So
personally I'm sticking to investments which produce cash flow.

As they say, "History doesn't repeat itself, but it does rhyme." I had better
learn from my mistakes.

~~~
krageon
If you owned shares in gold mines and got burned, it had nothing to do with
the value of the gold itself. The price of gold has seen a steady upward trend
over the past ~17 years at least (that's how long I've been looking at it,
anyway).

~~~
BugsJustFindMe
Adjust for inflation and look at the trend starting from the 17 years before
that.

~~~
krageon
"adjust for inflation" on a 300% increase? Are you looking at a different
graph than I am? Perhaps I don't understand what I'm looking at. Could you
walk me through your reasoning?

~~~
BugsJustFindMe
Sure. Google "inflation adjusted price of gold since 1980". Or view
[https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22....](https://b-i.forbesimg.com/rickferri/files/2013/04/GoldFig22.jpg)

The giant saddle does seem to support the idea that gold is hard to value.

Then the next search phrase to look up is "inflation adjusted price of gold
since 2011". It's not a pretty chart. I would not use the words "steady upward
trend" to describe it. "Steady downward trend", maybe.

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ninedays
I bought BTC when it was 15$. I bought again at 17k and bought at 6k and
really don't care what the price of btc is today tomorrow or next week. I
understand how easy it can be to call someone an idiot in restrospect when
everything is down, but you have to know too that some people don't really
care where it is _now_ and is just interested in where it go few years from
now.

It is like calling people idiot because they bought btc @ 1000$ and then it
dropped @ 360$. I really don't think those who bought at 1k are idiots but
that's just my opinion and it's OK if other people have different opinion than
mine.

Warm vibes.

~~~
Blackstone4
How do you value BTC? What is a fair price? $1m? $2m? $5bn? $10tn?

Do you have a valuation methodology?

My biggest issue with BTC is that it's subject to how the market feels about
it. There's no cash flow. When I buy USD, I can by 2yr treasuries yielding
~2.5%.

~~~
Blackstone4
Ouch - I was downvoted when i felt like I made some reasonable arguments
without attacking anyone. Why was I downvoted?

~~~
nathanaldensr
You're challenging the conventional wisdom about how valuable Bitcoin is.

The way I see it, cryptocurrency gets a lot of its "value" from emotion--it
signifies what people _want_ to be true. Cryptocurrency is, in some ways, a
dream incarnate. It's backed by nothing except the dreams of those who believe
in it--and energy expenditure (if one believes that).

It's like a religion: Challenge the faith and you will be burned as a heretic,
so-to-speak. I think that has a lot to do with why rational comments are down-
voted so much on HN. You're assuming the discourse is rational when it is
actually quite emotional. Cognitive dissonance abounds.

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dpc_pw
Don't buy Bitcoin. It's going to crash:
[https://www.youtube.com/watch?v=XbZ8zDpX2Mg](https://www.youtube.com/watch?v=XbZ8zDpX2Mg)

~~~
Biba89
I don't always buy bitcoin but when I buy it crashes

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panoply
Just for a second give thought to those who purchased bitcoin when it was at
18k.

~~~
weregiraffe
Okay. The thought is "bloody morons".

~~~
coderdude
That's cold blooded. I'm sure a lot of good people were financially devastated
by that poor decision. A hopelessly bleak existence can do a lot to your
capacity for rational thought. A few people I know asked me if I thought they
should invest in Bitcoin at the time. I'm thankful my answer was consistently
'nope'!

~~~
phs318u
> That’s cold blooded.

Maybe, maybe not. For those that have never experienced a financial “lesson in
violence” before, investing in Bitcoin is the equivalent of touching some
strange shiny object that fell from the sky only to find out that the reason
it’s glowing is because it’s bloody hot. Sometimes it takes the burnt flesh
hanging off a bloodied stump to learn that maybe strange new objects that fall
from the sky are to be avoided in the first instance, no matter how shiny they
look.

To be honest, given the world we live in, and the knowledge that exists around
basic investing principles I’m surprised that some people are surprised at how
much they’ve lost.

For me, this just proves (yet again) that the human desire to get rich quickly
is incredibly powerful and easily trumps logic and rational thought.

For the record, and just so people don’t think I’m heartless, I lost $20K of
savings back in 1989 In an institution whose interest rates were (on
hindsight) obviously too good to be true. I was 23. The company was called
Pyramid (yes, really. Australian)

------
toss1
The BTC chart since last year looks very much like a classic bubble / burst
sequence. Build up, running up to a hyperbolic frenzy, then precipitous drop,
followed by long decline of lower highs and lower lows. This seems to be only
punctuated by significant buys just around psychologically important 'support
levels', which correspond with the several credible articles I've read about
Tether coin being used to manipulate the currency.

The chatter is always about the next 'support level', and it always gets
broken. I'm expecting it to slide down well into three digits (<= USD$ 999)
before any real recovery, if there is one. The real use cases are
materializing much slower than expected as the scaling issues and transaction
times increase.

Edit: (& BTW, I'm a generally enthusiastic supporter of the cryptocoin
concepts, just noticing that it is apparently much harder to really get there
than originally thought)

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m-i-l
There's fairly strong evidence that the rise from $6K to $18K was primarily
the result of market manipulation [0], so in some senses it isn't a crash more
like returning to normality. Although there is so much market manipulation
going on it is hard to tell what normality is, e.g. the rise from $150 to $1K
between Sep to Nov 2013 was due to the markus and willy bots [1]. That's one
of the problems with a completely unregulated market where almost all the
wealth has become concentrated in the hands of a few largely anonymous
players.

[0]
[https://news.ycombinator.com/item?id=17302054](https://news.ycombinator.com/item?id=17302054)

[1] [http://uk.businessinsider.com/one-or-two-traders-may-have-
ca...](http://uk.businessinsider.com/one-or-two-traders-may-have-caused-the-
price-of-bitcoin-to-rise-700-2018-1)

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Finnucane
Markets for speculative assets and commodities are generally down, and the
dollar is up. So what do you expect?

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lucidlive
So everyone thinks that cause Bitcoin is down from its high that it was a bad
investment? The top has been reached and it's all downhill from here?

Nobody who invested 1+ years ago is down so save your judgements for the
future.

~~~
tapoxi
I just don't understand what the purpose of Bitcoin is. Everyone seems to be
treating it as an investment, but its use as a currency doesn't seem to have
obvious advantages over cash. Its value fluctuates wildly, transaction
processing takes forever, every purchase you make is public record, the price
is easily manipulated, and it takes a ton of electricity to operate.

What's the end goal of Bitcoin? What makes it worth investing in?

~~~
rsynnott
Greater fool theory; "I'm buying this thing early, so that when it hits the
mainstream a load of naive people will buy it and boost my value". That has
probably largely passed now, though; I see train station ads to buy bitcoin
all the time.

I'd be somewhat surprised if it ever goes back to its beginning-of-year
heights.

~~~
singularity2001
There might come one last hype cycle when/if the rest of the world (EU) enters
a mainstream BTC hype. The last one was mostly US.

Or the network could collapse to 0 before.

~~~
Vrixam
Bitcoin was quite a hype in the EU around December last year, with it being
talked about in bars, at the hairdresser etc. And people putting all their
money in of course.

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tonyedgecombe
If I'm honest I'm a surprised it hasn't fallen further, the only practical use
seems to be buying drugs and it's not ideal for that.

~~~
herbst
This is a very one sided view on things. I regularly use BTC as alternative
for international payments. It's cheaper, faster, more secure and honestly it
feels nice to not pay into the hands of visa and master.

Namecheap and FastTech.com being 2 big examples, as well as 2 of 3 of the
hosting companies I use accept it.

Not to mention that alternative chains like Eth very well have a practical
real world use outside if monetary value.

Edit:// I also order pizza and Chinese with Bitcoin like once a week. Saved me
plenty of fees compared to other prepayment methods.

~~~
rsynnott
So, current average fee is about a dollar. Plus you have to pay probably at
least 1% to buy it, and the vendor has to pay similar to sell it again, and
accept significant exchange risk. I struggle to see how this works out cheaper
than, say, paying namecheap with a credit card...

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nikolay
Bitcoin is a pathetic way to boost Global Warming so that a bunch of Chinese
miners can separate Westerners from their wealth!

