Comments of the Day
09 March 2021
Video commentary for March 8th 2021
A link to today's video commentary is posted in the Subcsriber's Area.
Some of the topics discussed include: Renminbi breaks down, Euro tests MA, Brazilian Real breaking down, DAX breaks out, Nasdaq leads on the downside because of interest rate sensitivity, bonds yields remains high, commodities weak,
Email of the dayb on my ignorance from a bitcoin Holdr
I suggest though that you ignore Eoin Treacy on matters relating to Bitcoin and Cryptocurrency as he clearly has no idea what he is talking about. This became obvious to me the more of his videos that you have sent to me.
He talks about Bitcoin as if it a stock or currency and clearly doesn't understand the real value proposition here and why it actually has value. This is very obvious when he says things like you can hold gold in your hand but you can't hold Bitcoin.. This is completely ignorant of what Bitcoin is and how it works, yes it is digital but because of the encryption and the way the system works with mining/proof of work, each Bitcoin is a unique piece of information so when you have a key to a wallet it's just like you have the key to something physical. No one has access to it except you and it cannot be copied or duplicated or stolen or anything in any way, Eoin seems to misunderstand this, he is also forgetting that most gold in the world is not held in your hand it's stored in a vault somewhere subject to seizure or it's a digital representation of gold not the actual underlying that you can hold.
He then continues this faulty thinking and misunderstanding by concluding with completely ludicrous fear mongering ideas like what if the power grid goes down it will destroy a lot of Bitcoins. No, it won't you ignorant buffoon, first there is no way to "destroy Bitcoins" they are stored in the Blockchain and never leave it, that is all they do and were meant to do, store value and move around. You could lose access to your coins by losing the keys but technically the coins are still there sitting securely in your wallet it would be entirely your fault for losing your keys. In the situation of the power going down the Bitcoin network would continue running in other countries and then it would catch up when the power comes back on, nothing would be lost except the mining revenue of the miners who had no power.
If there was a worldwide situation like what he mentions an EMP or a Solar flare then we would have much bigger problems then Bitcoin going down. It would take down all communications all banking services all vehicles all important infrastructure like water cleaning and pumping etc, anything electronic which in the modern world is practically everything, it would be chaos. But yea it would get Bitcoin! so don't risk any money on it! It actually wouldn't as if everyone lost power at the same time all miners would go offline and then as power was slowly restored worldwide miners would rush to go back mining since the network would have ground to a halt, there would be easy money to be made mining without competition for as long as you can. The network would be back online and functioning properly in a matter of hours after the internet is back on and if someone like a bank or government tried to deliberately mess with the blockchain while most miners etc are offline then when the rest of the world comes back online, we would immediately backdate to the last known block before the power down and discount the manipulation that occurred while everyone was offline.
Eoin’s technical analysis style is odd as well as I said before he seems to think Bitcoin is a stock or trades like a stock, his technical analysis is basically, look at this moving average we may go down and hit it or we may not. It is useless and cannot predict what is going to happen to prices. In fact, I believe nearly all standard indicators are useless as they are all lagging behind price, the only way to get an edge in technical analysis in my opinion is to use PA, price action methods.
He's also forgetting (or doesn't know) the fact that Bitcoin is even harder money than gold because of the mathematical hard cap on total amount of coins and that it's also a naturally deflationary asset as coins get lost or go out of circulation over time. Gold is still inflationary as more is mined every day and we have no idea how much actually exists on earth or on asteroids etc. Taking this in mind we shouldn't be surprised to see Bitcoin going higher and higher every cycle, how could it not? especially considering the current macro environment of unlimited QE and worldwide uncertainty.
Anyway, there's my rant for this week,
I was not smart enough to buy bitcoin when I first heard about it in 2013. There is no getting around that fact. Even if I did buy at $100, I am too much of a sceptic to have held all this time; particularly during the 90% drawdowns. Anyone who has held through these traumas is unlikely to ever sell. That’s why supply is so concentrated in the hands of a very small number of players despite the international hoopla about bitcoin.
I would point out though that I have traded cryptocurrencies successfully over the years. In fact, I’ve never lost money trading crypto, which is a testament to just how big the bull market is. However, just because it is a big bull does not mean it has been divorced from crowd psychology. In fact, that means it is more tightly intertwined with the emotions and actions of the crowd. Afterall it is still people buying bitcoin and the other cryptocurrencies.
Email of the day on Non Fungible Tokens (NFTs):
Are you going to add NFTs to your coverage(half-joking)?
Thanks for this article which may be of interest to the Collective. Here is a section:
The Twitter CEO shared a link Friday afternoon to a platform called “Valuables,” where his March 21, 2006 tweet “just setting up my twttr” was up for bidding. The highest offer is from Sina Estavi, CEO of Bridge Oracle, for $2.5 million as of Saturday afternoon, according to the website.
Ownership of these assets is recorded on a blockchain — a digital ledger similar to the networks that underpin bitcoin and other cryptocurrencies. However, unlike most currencies, a person canʼt exchange one NFT for another as they would with dollars or other assets. Each NFT is unique and acts as a collectorʼs item that canʼt be duplicated, making them rare by design.
Crypto collectibles have exploded in popularity lately, with anyone from artists to rock bands minting their content. A digital rendition of the Nyan Cat meme from 2011, for example, sold for nearly $600,000 in an online auction last month.
Some people who are buying NFTs believe it can help them prove ownership of a virtual item thanks to blockchain.
Dorsey has also been an advocate of digital currencies, displaying ”#bitcoin” in his Twitter bio, so jumping into NFTs seems to be a natural extension. His digital payments company Square also purchased approximately 3,318 bitcoins in late February, expanding on its October 2020 buy of 4,709.
A friend of mine was exploring the sector ahead of the pandemic. He morphed into an art consultant by happenstance and began offering consultancy on how to create fractional ownership as a way of raising money for art collectors and museums. Creating a liquid market for illiquid assets is a significant innovation which will thrive as long as M2 is accelerating higher.
Email of the day - on gold ETF holdings
On gold, I notice there is now significant weakness in the chart for Total known holdings of gold ETF. Will we need to see this stabilize and turn up before any rise is likely in spot gold prices?
There is undoubtedly some liquidation of gold longs going on at present as investors price in the potential for outsized swift economic recovery. That’s also the main rationale for selling bonds since there is less need for a safe haven.
From Spotify to Hello Fresh: lockdown Brits give subscription economy an adrenaline boost
Thanks to a subscriber for this article from The Times which may be of interest. Here is a section:
Hamish Grierson, chief executive of Thriva, a home blood-testing company that helps users monitor their health, said founders were now eyeing subscription models instead of the Facebook approach of chasing huge growth with no immediate revenue stream. He said the “growth at all costs” model worked for only a handful of companies and meant that most failed.
“As a consequence of that, there is a little bit more sympathy for more pragmatic, more resilient business models — and subscription tends to be a good version of that story,” Grierson added.
Investors want a piece of the action, too. Last week, Deliveroo, which charges £11.49 a month for free deliveries of restaurant meals, confirmed plans to float in London.
Thematics Asset Management launched its Subscription Economy Fund in 2019 to let investors cash in on the trend. The first of its kind, the $230 million (£165 million) fund is invested in about 50 companies with subscription models. It is up 50 per cent already.
Nolan Hoffmeyer, who runs the fund, said: “Last spring, when many companies didn’t have visibility over the next 30 days, subscription-based companies still had a lot of visibility over the next 12 months [because of recurring revenues]. They’ve been able to continue to invest and innovate. It’s a competitive advantage.”
Having the ability to predict revenue growth over a 12-month horizon is a particular benefit where interest rates are low and asset prices are high. That visibility commands a higher valuation because cashflows are so easily modellable. In other words, these kinds of companies can carry more leverage because they have less risk on the revenue side.