Bought Bitcoin and can't stop !!!

[Complete_newbie]

I personally know a physician who is doing really well because of this frenzy because he had coins in 2013/2014 and not just Bitcoin but dogecoin, litecoin etc etc

He is also a great programmer and possibly contributed to some public forum blockchain code (will ask when I meet him next week)

Asking for trading advice , and in cryptoasset no less, on this forum is [insert favorite antithesis meme]

[Zaphod]

Complete_newbie wrote:

I personally know a physician who is doing really well because of this frenzy because he had coins in 2013/2014 and not just Bitcoin but dogecoin, litecoin etc etc

He is also a great programmer and possibly contributed to some public forum blockchain code (will ask when I meet him next week)

Asking for trading advice , and in cryptoasset no less, on this forum is [insert favorite antithesis meme]

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Though a couple good comments already. Crypto is interesting given the volatility and the arb opps (that you cant really take advantage of), but its just not a currently safe space to act. We'll see when a lot of other people get on board in the coming months. It is however one of the most interesting things to have happened. A bonafide bubble, thats pretty awesome.

I like that it trades 24h and that most trading have no idea about simple things like how markets work, let alone order/position management. Problem is the exchanges cant be trusted and some wont even allow full liquidation which is nuts. When these externalities are removed we'll get to see what a mature market looks like, until then its kind of buggered. I mean its totally abnormal for an asset to be trading at a +/-75% price. Also that they arent allowing shorting (since you cant adaquately hedge it, and certainly not directly), things are still distorted. As people get more comfy these things may relax, then it gets really interesting.

[Doc Spouse]

Complete_newbie wrote:

 

Asking for trading advice , and in cryptoasset no less, on this forum is [insert favorite antithesis meme]

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I've seen some really good advice on trading, here.  That being said, I agree completely on the crypto part.

Fun story - A personal friend found an old hard drive today with a wallet containing 230'sh litecoins.  He's been into btc and altcoins for years and has cashed out a few million already.  I asked him what he thought about the current market and he said it's all hype right now.  This coming from a guy who firmly believes in the technology and has profited greatly from it.

On the upside, xrp doubled yesterday; so my magical internet money is doing well.  It's fun, but so is the lottery.  That doesn't make it a good investment.

[Doc Spouse]

Zaphod wrote:

some wont even allow full liquidation which is nuts

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This is a huge deal.  There are a number of exchanges that are straight up shady.  Others 'only' allow 500k withdrawn a month.  Regulation is starting to make itself felt, but it's still very much the Wild West in a number of areas.

[bravotwozero]

Zaphod wrote:

 

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Also that they arent allowing shorting (since you cant adaquately hedge it, and certainly not directly), things are still distorted.

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Can someone please explain in plain english what the ************************ a 'short' is? I looked this up on wikipedia, and I still don't understand the concept. I feel like the more complicated a financial transaction, the shadier it gets....

[Dont_know_mind]

bravotwozero wrote:

Zaphod wrote:

 

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Also that they arent allowing shorting (since you cant adaquately hedge it, and certainly not directly), things are still distorted.

Click to expand…

Can someone please explain in plain english what the ************************ a ‘short’ is? I looked this up on wikipedia, and I still don’t understand the concept. I feel like the more complicated a financial transaction, the shadier it gets….

Click to expand...

A short is selling something you don't own, i.e the opposite of being long (or owning 1 bitcoin) is being short 1 bitcoin. Say you sold 1 bitcoin now at 16,000 and it went to zero, you would profit 16,000. However, it might go to 500,000 in the interim and you would need to stump up the margin or be stopped out.

Watching bitcoin is fascinating. Like watching Mike Tyson in his prime. But you know he's probably going to end up in jail at some stage, but when ? Shorting Bitcoin is tempting but at the moment it would be like going toe to toe with Tyson when he was at his best. Best to wait until he is in jail and after he's been beaten up by 10 other inmates.

For the original question in the thread - there is a grey area between gambling and speculating. The best book I've found to help me understand this was a novel by Dostoyevski called "the gambler", written by Dostoyevski in 4 weeks to pay off gambling debts (!).

Other than being a great plot - his inferiority complex is a barrier to him loving anyone and his perceptions of Polina cannot be reliable.

It is a great description of the insanity of gambling (when he gambles on there not being 14 consecutive reds and loses). It also outlines the key features of a gambling frenzy in society (read bubble) - i.e the city of Roulettenberg - fortunes come and go very quickly, the speed of change to me is an essential element of a gambling tendency and frenzy, the way this sweeps everyone up irresistably (even the old grandmother who is a control freak), the manner in which people and things are not what they seem. It is the best description I have seen of the cognitive distortions that happen during a mania and the similarities with this and gambling addiction.

I read it after I got suckered in the the resources semi-bubble in 2008 (after I thought I learnt something in the tech bubble in late 90's). I'm not sure if you can get the same insight if you read it before you've lost in a bubble, but hopefully you can avoid that !

It is also on audiobook on youtube for free if you like listening to things in the car :

https://www.youtube.com/watch?v=14ZRQPSOgaY

http://tomconoboy.blogspot.com.au/2011/03/gambler-by-fyodor-dostoevsky.html "Alexei Ivanovich, in his devotion to the roulette (? bitcoin) table, believes in the truth of chance. And, through that belief, he is revealed to believe in nothing. He is a lost soul who loses all: love, status, wealth, self. His unrequited love of something becomes, instead, a requited love of nothingness."

 

[Zaphod]

bravotwozero wrote:

Zaphod wrote:

 

Click to expand…

Also that they arent allowing shorting (since you cant adaquately hedge it, and certainly not directly), things are still distorted.

Click to expand…

Can someone please explain in plain english what the ************************ a ‘short’ is? I looked this up on wikipedia, and I still don’t understand the concept. I feel like the more complicated a financial transaction, the shadier it gets….

Click to expand...

Its easiest to think of it as being on the other side of a transaction since borrowing sounds so odd (though there is that aspect). In zero sum transactions, a seller has to be the counter party to the buyer or the transaction will never take place. The price of this transaction occurs at a point where the buyer thinks it still has room to go, and the seller thinks is high enough to take on the unbounded risk of being short (in the simplest manner) over some agreed time frame.

Lots of times you dont think about the short side of many of these types of things since they are market makers and brokers, who then turn around and hedge their risk away. This is currently impossible to do in an acceptable manner with Bitcoin as the exchanges just dont have access to an instrument that could adequately hedge away bitcoins risk, and why most arent allowing shorting (selling) right now.

If you bought some index put or call and the market maker was your counterparty, they would hedge away their risk by buying/selling the associated futures/futures options and delta hedge every so often to collect premium all the while keeping their risk near zero from buying/selling said option. For bitcoin, these things dont exist and there isnt even a known correlated asset you could use that would capture the massive beta bitcoin has (more than volatility index itself), let alone consistently. So it makes sense they want nothing to do with being a part of it, and is interesting that brokers and market makers are super super risk averse and wont participate in a trade with any risk that cant be hedged away.

[NaOH]

.

[Zaphod]

NaOH wrote:

I’ve learned a lot about myself in the last few days. One, I’m really pretty terrible at this – I’ve put real money into Bitcoin/Litecoin (well, real to me – still less than $1000) and despite some insane gains in that time I’ve still somehow managed to be almost exactly where I started. My instincts for knowing when to buy or sell are just as faulty as anyone else’s. And yes, I’ve spent far too much time staring at Coinbase/scouring message boards for bits of info. It’s a humbling experience, but a good lesson to learn. Slow and steady is the way to go. We’ve all pretty much won the lottery already – why take on such crazy risks?

 

As someone else said, I’m about ready to toss my 2.3 Litecoins into the closet and come back to check on them this time next year. Maybe they’ll have sprouted.  

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You arent going to find anything on message boards. Price is king. These exchanges are so opaque the reasoning behind moves could be anything, and is often technical like last week where the site went down for a second and it lost 20%! Good times.

[Dont_know_mind]

Zaphod wrote:

bravotwozero wrote:

Zaphod wrote:

 

Click to expand…

Also that they arent allowing shorting (since you cant adaquately hedge it, and certainly not directly), things are still distorted.

Click to expand…

Can someone please explain in plain english what the ************************ a ‘short’ is? I looked this up on wikipedia, and I still don’t understand the concept. I feel like the more complicated a financial transaction, the shadier it gets….

Click to expand…

Its easiest to think of it as being on the other side of a transaction since borrowing sounds so odd (though there is that aspect). In zero sum transactions, a seller has to be the counter party to the buyer or the transaction will never take place. The price of this transaction occurs at a point where the buyer thinks it still has room to go, and the seller thinks is high enough to take on the unbounded risk of being short (in the simplest manner) over some agreed time frame.

Lots of times you dont think about the short side of many of these types of things since they are market makers and brokers, who then turn around and hedge their risk away. This is currently impossible to do in an acceptable manner with Bitcoin as the exchanges just dont have access to an instrument that could adequately hedge away bitcoins risk, and why most arent allowing shorting (selling) right now.

If you bought some index put or call and the market maker was your counterparty, they would hedge away their risk by buying/selling the associated futures/futures options and delta hedge every so often to collect premium all the while keeping their risk near zero from buying/selling said option. For bitcoin, these things dont exist and there isnt even a known correlated asset you could use that would capture the massive beta bitcoin has (more than volatility index itself), let alone consistently. So it makes sense they want nothing to do with being a part of it, and is interesting that brokers and market makers are super super risk averse and wont participate in a trade with any risk that cant be hedged away.

Click to expand...

I think until last week you could short bitcoin through CFD brokers that were non-US domiciled.

Bitcoin could be a good proxy for liquidity or at least a canary in the coalmine. Maybe the death of Bitcoin is a necessary but not sufficient condition for risk off move.

My favorite story about the internet bubble was Barbara Streisand :

http://archive.fortune.com/magazines/fortune/fortune_archive/1999/06/21/261690/index.htm

 

 

[Jaqen Haghar MD]

This week I was doing some driving, so I put on an old audiobook to pass the time, "Reminiscences of a Stock Operator".  It's a great story, that many investors have read, from the days of the early 1900s, about a stock speculator.  Entertaining with many bits of trading wisdom sprinkled throughout.

Made me think of Bitcoin, and how fun it is to watch a parabolic publicized run-up, the froth and sputtering at the top, and the enevitable blow-up of a speculative investment.  It's all very entertaining and interesting.  So hard to make the right trading decisions at the right time when your emotions betray you.

That sputting and jagged peak, the drop where you swear to yourself if you could just get back a few points, you'd cash out, and the brutal bottom, where you throw in the towel and the thing languishes for the next 10 years, until it becomes irrelevant.

I think for a proper education, you have to throw in at least $100k+ of savings so you can really experience and savor all the little feelings that come with each movement of the ticker.

I'm content to watch Bitcoin from the sidelines right now, and looking forward to quite a show. But who knows what will really happen?

 

 

 

[Jaqen Haghar MD]

 

bravotwozero wrote:

Can someone please explain in plain english what the ************************ a ‘short’ is? I looked this up on wikipedia, and I still don’t understand the concept. I feel like the more complicated a financial transaction, the shadier it ...

It works kind of like this.....

I want to short IBM and it is selling at $100. I think the price will fall.

So I borrow a share from you/an owner of the stock and sell it for $100. I now owe you 1 share of IBM.

If the price falls to $10, I can "cover/buy it back" for $10 from the market and give you your share back, and keep the $90 difference from where I sold it.

But if it goes up to $200, and I still have to give you your share back, I'll have to buy it for $200 from the market, and will therefore have to spend an extra $100 to get it back to you. I lose the $100 difference it takes to buy it back.

And if it goes up to 1 million dollars.... I'm really screwed! I'll have to spend an extra $999,900 to get your share back to you!

[triad]

bravotwozero wrote:

hatton1 wrote:

OK.  Sell enough to cover your original investment plus STCG and fees.  Then your investment is pure profit.  Do not look at it for one year.  Then you can decide whether to take or LTCG or let it ride.

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I second this. I did precisely that. My initial investment quadrupled in value, after which I sold my initial investment amount, and am leaving the rest alone. I’m way more comfortable risking the profit, since it didn’t come out of my income or savings, i.e. money that I didn’t have to work for.

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do you have to pay capital gains on cryptos?  Do you have to pay capital gains when you convert USD to euro?

[Doc Spouse]

Jaqen Haghar, MD wrote:

 

I think for a proper education, you have to throw in at least $100k+ of savings so you can really experience and savor all the little feelings that come with each movement of the ticker.

Click to expand...

I always think of Bismark when it comes to this - "Only a fool learns from his own mistakes.  The wise man learns from the mistakes of others."

If only it was that easy!

I "invested" in an OTC many years ago.  Huge pump and dump, but one of those suicidal ones in which the CEO was just over the top open with everything but the books.  Surely someone this open wouldn't be part of a scam?  I was young and foolish.

I bought at half a cent and over the course of a few months, it went over $4.  Heady days, but I held on for the $20 target that everyone was saying it'd hit.  Inevitably, the SEC halted trading on the stock.  When they opened it back up a few months later, it dropped to less than a cent in the first hour of trading.  My "hundreds of thousands" went poof almost immediately.  Thankfully my initial investment was much, much less.

I learned a few important lessons from that experience.  I'd have loved to learn them at someone else's expense, but that's not the way it often works.  Looking at cryptocurrency, I see much of the same manic desire to trade.  I feel much of the same manic desire to trade.  That, more than anything, is what warns me to be careful.  This fool has learned from his own mistakes.

[bravotwozero]

triad wrote:

bravotwozero wrote:

hatton1 wrote:

OK.  Sell enough to cover your original investment plus STCG and fees.  Then your investment is pure profit.  Do not look at it for one year.  Then you can decide whether to take or LTCG or let it ride.

Click to expand…

I second this. I did precisely that. My initial investment quadrupled in value, after which I sold my initial investment amount, and am leaving the rest alone. I’m way more comfortable risking the profit, since it didn’t come out of my income or savings, i.e. money that I didn’t have to work for.

Click to expand…

do you have to pay capital gains on cryptos?  Do you have to pay capital gains when you convert USD to euro?

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The IRS says you do have to declare crypto investments, and declare capital gains. HOWEVER, one of the biggest online wallets, coinbase, has refused to issue 1099s. The IRS has been trying to get coinbase to fork over records of all transactions, and they took them to court. However, coinbase won. So, legally you're supposed to declare it, but the IRS, as of right now, has no clue about what you or anyone else is doing with crypto purchases.