Bitcoin in a hyperbolic bubble

[Sunny]

@Sunny - Disagree on what? I offered up this information as recognition of a milestone in the industry. I acknowledged the scale of that growth via the market cap comparison with Goldman Sachs. That's where it ends. I made no suggestion as to whether anyone should invest in Coinbase.
Lastly, I don't feel in any way insulted by your post or point of view. However, if you're going to have an issue with my responses, I'd suggest you have a look at the sarcastic twist you've put on that post starting with the opening sentence. Next maybe you should read the posts of others a couple more times before responding because i wasn't offering any recommendation as regards the suitability or otherwise of Coinbase as an investment.

I never said you did recommend it. Did I? My sarcastic comment as you put it was in your response to your completely over the top comparison between Coinbase and Goldman Sachs. Why even pick Goldman Sachs? They are not even remotely similar companies. So Coinbase might have a market cap similar to Goldman Sachs? So what?? It could still be as worthless as plenty of other companies with absurd valuations before going public. It is a completely irrelevant comparison unless you somehow believe you can compare the two?

You are just coming across like a cult member taking personal offence at anyone who dares question anything around the crypto market. Nobody who holds an opposite opinion to you is insulting you, they are not calling into question your reputation, your intelligence, your beliefs, your religion. They just disagree with you. I am allowed to say that any company who announces Q1 earnings greater than then the whole of the previous year is operating in a crazy market without being referred to as 'Sherlock'. At the end this, you could be a billionaire and the rest of us will still be here on AAM asking where we do exchange our old fashioned worthless notes and coins so relax....

Your many valid points on this topic are just going to get lost because you have actually replied to every single post on AAM that has dared question anything about the Crypto market...We know your view on this by now.

 

[tecate]

I never said you did recommend it. Did I?

Really? Then why respond to my post as if you did - with the 'everyone pile into this IPO' comment?

My sarcastic comment as you put it

As I put it? There's no question - it's there for everyone to see - you don't get to throw your toys out of the pram re. my response and not take responsibility for the sarcastic nature of your own post.

to your completely over the top comparison between Coinbase and Goldman Sachs. Why even pick Goldman Sachs? They are not even remotely similar companies. So Coinbase might have a market cap similar to Goldman Sachs? So what?? It could still be as worthless as plenty of other companies with absurd valuations before going public. It is a completely irrelevant comparison unless you somehow believe you can compare the two?

Explain to me how its inappropriate? Once again, I have to point out to you that I wasn't offering up Coinbase as a suggested investment. The comparison was made to give an indication of how Coinbase has grown substantially as a company. Nothing more and nothing less. You want to contrive to suggest otherwise - but the comparison never went beyond that.

You are just coming across like a cult member

Firstly, I don't give a fiddlers about your wayward interpretation. But wayward it is. I can cite a whole host of critique I've made on bitcoin and crypto. If I asked you to do the same thing re positive commentary, you'd come up with nothing. So who's the real cultist?

taking personal offence at anyone who dares question anything around the crypto market.

You were corrected on that but you persist. I haven't taken 'personal offence' at any such thing - but keep going with that if it suits your narrative.

Nobody who holds an opposite opinion to you is insulting you, they are not calling into question your reputation, your intelligence, your beliefs, your religion. They just disagree with you.

Provide a link where I've ever suggested that you have insulted me personally? Opinions are a given on a discussion board...as is disagreement. None of this is news.

I am allowed to say that any company who announces Q1 earnings greater than then the whole of the previous year is operating in a crazy market without being referred to as 'Sherlock'.

Hang on a second - you don't get to put a sarcastic edge on things (and claim disagreement when you went on a solo run on something completely different) and then throw your toys out of the pram afterwards.

Your many valid points on this topic are just going to get lost because you have actually replied to every single post on AAM that has dared question anything about the Crypto market...We know your view on this by now.

I have the nerve to hold a differing opinion so I should be quietened? I get where you're coming from entirely. If you post on a public discussion board, you can very much guarantee that said post will be open to critique. That's something that for the most part should be welcomed. For the most part, I welcome it - albeit in your case I didn't much take to the sarcastic undertones and measured my response accordingly.

 

[Duke of Marmalade]

@tecate why are you not engaging with @Dublinbay12 on his liquidity point? He seems to know his cryptonions. Has he got you on a sore point?

I was thinking about the remarkable surge in price since Muskie made his disclosure. And I was thinking what would happen to the price if Muskie or even Saylor announced they had got out as they thought it was over priced. The price would surely collapse. Is any other asset class so dependent on the goodwill a couple of egotists?

 

[tecate]

@tecate why are you not engaging with @Dublinbay12 on his liquidity point? He seems to know his cryptonions. Has he got you on a sore point?

I have been told off by @Sunny for daring to question things...so I better be more selective in my postings going forward Duke.
I'll leave that discussion to yourself and @DazedInPontoon .

I was thinking about the remarkable surge in price since Muskie made his disclosure. And I was thinking what would happen to the price if Muskie or even Saylor announced they had got out as they thought it was over priced. The price would surely collapse. Is any other asset class so dependent on the goodwill a couple of egotists?

I'm sure that there would be a certain drop for sure. You have to bear in mind that this is still a market that is a number of years away from maturity. Within it, there are all manner of stakeholders. At the end of the day, people have to determine in their own minds if there's something tangible in this or not. I'm sure the very same people that got in (and would get out) on the basis of Musk or Saylor's actions would be the same that would respond similarly to the various types of FUD that does the rounds eg. Bitcoin is boiling the oceans, the bitcoin market is being manipulated and Tether will be its undoing, etc.

 

[Duke of Marmalade]

I'll leave that discussion to yourself and @DazedInPontoon .

Hmmm! I would have thought the liquidity point was a bull indicator as was suggested by @Dublinbay12's link and also confirmed by myself and @DazedInPontoon. I would have thought you would warm to it, but I sense you see a vulnerability,

 

[tecate]

I would have thought you would warm to it, but I sense you see a vulnerability,

With a couple of exceptions I agree with your post on the subject so like you i fail to see any vulnerability in this instance.

 

[DublinHead54]

I have been told off by @Sunny for daring to question things...so I better be more selective in my postings going forward Duke.
I'll leave that discussion to yourself and @DazedInPontoon .

This is a good summary of Tecates approach, the sources I used are the same sources he often posts from so he couldn't claim 'FUD'. There was no sarcasm or anything else controversial that he/she could use to turn the conversation away from the topic at hand like the interchanged with Sunny over the last few posts.

So instead of discussing a topic that should be at the top of the list for a finite cryptocurrency that is seeing more and more institutional adoption, they chose to ignore it.

Ironically the IPO of Coinbase is only going to further increase the uptake of BTC making the liquidity issue an even more prevalent question. Coinbase holds roughly 1m BTC.

I will assume any response (if there is one) to this post will try and further take away from the topic of liquidity and probably focus on how they are not required to engage when they don't want to etc etc

 

[WolfeTone]

they chose to ignore it.

Who are 'they'?

I understand your point, but I don't necessarily agree. I do not think it is the number one issue, or anywhere close to it.
If I'm part of 'they' I choose not to engage for that reason.

 

[RedOnion]

I will assume any response (if there is one) to this post will try and further take away from the topic of liquidity

Coinbase isn't an IPO. It's a direct listing.

Just to get that distraction out of the way.

 

[Brendan Burgess]

Coinbase isn't an IPO. It's a direct listing.

Just to get that distraction out of the way.

Stop trying to take the thread off topic with facts!

 

[DublinHead54]

Coinbase isn't an IPO. It's a direct listing.

Just to get that distraction out of the way.

Yes, I used the wrong terminology, should have just said going public. Coinbase was a side conversation. I have been trying to engage on the liquidity of bitcoin as adoption as a store of value (buy and hold) by corporates / institutions.

I maintain that it is a good debate to have and is certainly a less treaded topic in this thread.

 

[DublinHead54]

Who are 'they'?

I understand your point, but I don't necessarily agree. I do not think it is the number one issue, or anywhere close to it.
If I'm part of 'they' I choose not to engage for that reason.

What did you disagree with? I haven't really stated any opinion on liquidity. Liquidity is a market dynamic and I have posted research that raises a point on potential liquidity issues at the current rate of adoption vs mining rate with BTC being used as a store of value / treasury asset.

I wanted to engage with a discussion, not just to be told you disagree with the research. I mentioned that I was trying to understand if this could develop into a real issue or what the solution is. I was hoping that either you or @tecate could provide some further insight rather than just disagreeing.

I am not trying to disprove BTC or anything, I am simply trying to discuss the liquidity issue with others that understand BTC and may be closer to the market than I am.

Can you help?

 

[WolfeTone]

Is there enough BTC for every Balance sheet to have bitcoin on it?

Yes. As has been mentioned there will be 21 trillion satoshis in existence.
With 4.2m bitcoin circulating, that is currently 4.2 trillion satoshis.
More than enough for every Balance sheet and individual to hold some bitcoin on their balance sheet.

There will of course be an issue with trying to obtain the desired amount of bitcoin. I set out in my own way to obtain one full bitcoin. Alas, I am not even close to that. But because I have funds available, a smart phone and the Internet, I can add more to my holding as I see fit and that I can afford.

 

[Sunny]

Coinbase isn't an IPO. It's a direct listing.

Just to get that distraction out of the way.

To be fair the distinction between Direct Listing and IPO isn't really that important. All a direct listing does is reduce the need for underwriters and means new stock is not created. It creates liquidity for existing shareholders and will allow the founders and employees make a lot of money. The logic of coinbase doing it while bitcoin is in this hyperbolic bubble as the title of the thread suggests is clear to see. At the end of the day, it doesn't matter if new investors are going to buy new stock or existing stock. What matters is the price they are going to buy the stock at and without underwriters, the price range and the volatility will be interesting to see. And the valuations of coinbase are simply ridiculous.

Coinbase could be the greatest idea of all time but I can guarantee you thing. The days of exchanges like Coinbase operating under a different regulatory regime to other exchanges will end. They are currently regulated as a Money Services Business and yet are carrying out trading activities and indeed take positions to 'provide liquidity' in their exchange. No other exchange in regulated financial services is allowed to do this. You get an argument that exchanges like coinbase are becoming increasingly relevant to mainstream financial services. Well then, they should be ready to play by the same rules as other exchanges. To be fair to Coinbase, I do believe they have listed regulatory changes as one of the risks of the direct listing.

 

[WolfeTone]

So instead of discussing a topic that should be at the top of the list for a finite cryptocurrency that is seeing more and more institutional adoption, they chose to ignore it.

What did you disagree with?

The above comment. I don't it should be top of the list for discussion.

 

[RedOnion]

To be fair the distinction between Direct Listing and IPO isn't really that important.

Oh I know, but the technicality will be used as a distraction if it's not addressed.

 

[DazedInPontoon]

I feel like I'm probably just repeating what myself and Duke have already said in recent posts, but here's goes anyway.

People involved generally care about liquidity as defined by (number of coins) x (price per coin). This has generally being going up, I expect bitcoin exchanges have never been as liquid in terms of dollar value as they are now.

When Tesla and MicroStrategy were buying they weren't approaching it as "I want to buy x number of coins" it was "I want to buy x dollars worth of bitcoin" - for Tesla this was 1.5b for MS it was basically all of their treasury dollars.

If the number of bitcoin on exchanges continues to dwindle, but the demand for bitcoin (measured in dollars) does not decrease, then the price of bitcoin will rise.

Additionally a rising price will bring more coins to exchanges, as bitcoin reaches prices high enough that some long term holders feel happy to sell some/all of their coins at. If BTC hits 100k, 200k, 500k, I'd surely be diversifying a bit.

I don't see any liquidity issues, except perhaps for those who are short bitcoin.

 

[DublinHead54]

I feel like I'm probably just repeating what myself and Duke have already said in recent posts, but here's goes anyway.

People involved generally care about liquidity as defined by (number of coins) x (price per coin). This has generally being going up, I expect bitcoin exchanges have never been as liquid in terms of dollar value as they are now.

When Tesla and MicroStrategy were buying they weren't approaching it as "I want to buy x number of coins" it was "I want to buy x dollars worth of bitcoin" - for Tesla this was 1.5b for MS it was basically all of their treasury dollars.

If the number of bitcoin on exchanges continues to dwindle, but the demand for bitcoin (measured in dollars) does not decrease, then the price of bitcoin will rise.

I don't see any liquidity issues, except perhaps for those who are short bitcoin.

Isn't this fundamentally the opposite of what BTC is aiming to do? i.e. Replace the current fiat system?

I am thinking of liquidity in terms of whole BTC rather than the $ equivalent, but I see your point in terms of liqudity from a $ perspective. The challenge I have is that Brokers track their liquidity in amount of coins held in BTC terms in their cold wallets, not the $ value.

However, given there are only 8m coins available at a market cap of roughly ~500m or so the entire supply could be easily purchased by a handful of companies today.

 

[DublinHead54]

There will of course be an issue with trying to obtain the desired amount of bitcoin.

This is the definition of a liquidity issue.

Do you have any thoughts on a solution?

 

[DublinHead54]

To be fair the distinction between Direct Listing and IPO isn't really that important. All a direct listing does is reduce the need for underwriters and means new stock is not created. It creates liquidity for existing shareholders and will allow the founders and employees make a lot of money. The logic of coinbase doing it while bitcoin is in this hyperbolic bubble as the title of the thread suggests is clear to see. At the end of the day, it doesn't matter if new investors are going to buy new stock or existing stock. What matters is the price they are going to buy the stock at and without underwriters, the price range and the volatility will be interesting to see. And the valuations of coinbase are simply ridiculous.

Coinbase could be the greatest idea of all time but I can guarantee you thing. The days of exchanges like Coinbase operating under a different regulatory regime to other exchanges will end. They are currently regulated as a Money Services Business and yet are carrying out trading activities and indeed take positions to 'provide liquidity' in their exchange. No other exchange in regulated financial services is allowed to do this. You get an argument that exchanges like coinbase are becoming increasingly relevant to mainstream financial services. Well then, they should be ready to play by the same rules as other exchanges. To be fair to Coinbase, I do believe they have listed regulatory changes as one of the risks of the direct listing.

Sunny, one thing to note as well....Coinbase is not the darling of the Crypto world, most experienced users do not use them because of the fees involved. I agree with your points, and if anything this is just a brokerage that will suffer from price competition like any other.

It is a much better comparison to compare coinbase to Robinhood rather than Goldman sachs. At the end of the day its priced because of its revenue not because of what it is selling.