Monitoring the Crypto Bubble

[mmm....shiney!]

BTC price putting in a red candle on the weekly, looking like it's holding support at around the 106K mark. Some pundits are arguing for a short term cyclical pull back.

Next indicator to watch for me is the 100 DMA crossing over the 50.

 

[overwatch]

If you want to where the crypto prices are going look no further than the US stock market index. They are correlated and crypto follows it like a lapdog. Considering BTC, because the others aren't worth mentioning.

The DOW had it's last inter-peak low in Sep 2022 @ 28,700.
The major last BTC low was back in Nov 2022 @ $15,700
That followed the peak for both in Nov 2021, Dow 36,000 and $67,000.
Dow top this year, Jan 30th @ 44,000
BTC Topped , Jan 22 @ $106,000

Just compare the charts side by side, they mirror each other.
https://au.finance.yahoo.com/quote/^DJI/
https://www.coingecko.com/en/coins/bitcoin
Go back and compare them for march 2020 even, and before.

This is the only faithful "fundamental" that BTC has. Why is it so? Because it was captured by wall street long ago no doubt, it's totally manipulated now just as the DOW is through the big funds. Another pump and dump scheme if you like. That's a hard pill for many to swallow, but you can't deny the correlation between the two, it's statistically off the charts for it to be random, ergo it's not random. The funny thing is this was not ever supposed to happen according to the early marketing of bitcoin. It's supposed to be independent, and in times of trouble, like a stock collapse, shine and bring big gains. But what's really funny? No one talks about it. it's as though the correlation doesn't even exist.

Since the May 19th intermediate top in the DOW the US index has been trading sideways, same for BTC, the top was may 23rd @ US$111,800

 

[mmm....shiney!]

^ BS

 

[overwatch]

^ BS

You don't see the correlation?
PS. I was reading this forum years ago, where did everybody go?

 

[mmm....shiney!]

You don't see the correlation?

Pearson 30D correlation.

https://www.theblock.co/data/crypto-markets/prices/btc-pearson-correlation-30d

There's periods of positive correlation and periods of negative correlation.

And your assumptions about the design and function of BTC are false.

 

[overwatch]

Pearson 30D correlation.

https://www.theblock.co/data/crypto-markets/prices/btc-pearson-correlation-30d

The graph you posted shows the correlation between the S@P and the Nasdaq, and how Gold doesn't correlate. I don't know what this has to do with my post, or BTC? As for the design and function of btc, it was designed as a global community currency to allow buying and selling. And once it did, but now it's simply horded by hodlers in the hope of striking it rich. Every assumption in the original white paper has proved to be false.

It served one purpose though, the young millennials, addicted to gaming and mobile phones, had incomes, and they willingly invested in the crypto since it appealed to that mindset. They couldn't afford homes and even the stock market was pricey but they could grab a few tokens on payday and believe they were saving. They were already entrained for this behavior by the gaming industry and the constant daily checking of the app also appealed to their social media mindset. It was tailor made for them. Even the recurrent losses had an appeal as is evident in studies of chronic gamblers. There is a perverse satisfaction in losing. It's why they keep going back to the pokies and the races. So the fortuitous purpose? It took pressure off the stock markets which had already been driven well past rational PE ratios by the hundreds of billions pouring into them from private pension funds globally. 50% of Aussie Super is invested in the stock market and 50% of that in the US markets. Companies like Tesla are bid up for no other reason than this money looking for a home, a return. If the millennials had have poured there savings into these the markets would be even more distorted.

 

[overwatch]

Hey don't bother replying, I just realized this forum is DEAD! Friday night and I'm the only poster lol lol.
I visited years ago, back when that Gulf war veteran told the world about the 100k of gold in his bunnings safe and had it all stolen. It was a thriving forum then. Wonder where everyone went?

Bye.

 

[mmm....shiney!]

I'm going to break my reply down for the benefit of readers so as it doesn't appear as a wall of text.

The graph you posted shows the correlation between the S@P and the Nasdaq, and how Gold doesn't correlate. I don't know what this has to do with my post, or BTC?

The graph shows the correlation between BTC and the Nasdaq, S+P and gold. It shows that there are periods of positive correlation, periods of neutral correlation and periods of negative correlation. You can filter the data to display only one of the alternative investments to BTC. This is the correlation between BTC and gold, as you can see there's a high degree of variability in the correlation between the two asset classes.




Likewise, if we filter just the results for the Nasdaq and the S+P we see periods in time where the 3 asset classes are highly correlated ieearly 2020, late 2020, Q2 and Q3 2022, and most recently Q3 2024 until now. But in between are periods where there is either a neutral correlation or a negative correlation as the markets adjust to economic and political events/expectations which makes absolute sense to anyone following the macro space.

 

[mmm....shiney!]

As for the design and function of btc, it was designed as a global community currency to allow buying and selling.

You've omitted the key distinction between BTC and other forms of money used to buy and sell goods and services and its most important fundamental - the trustless nature of blockchain technology.

And once it did, but now it's simply horded by hodlers in the hope of striking it rich.

@overwatch's thesis rests upon the premise that assigned value must remain static rather than evolve. If we extrapolate that position we can only arrive at the conclusion that gold should simply be a form of money and that there is no place for it to be hoarded as a means to protect purchasing power or as a wealth generating asset? This position naturally is untenable as all systems and human endeavour are dynamic by nature.

 

[mmm....shiney!]

Every assumption in the original white paper has proved to be false.

The "assumptions" that Nakamoto and his peers sought to provide as a solution can be found in the first two sentences from the Abstract of the Whitepaper.

Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.

https://bitcoin.org/bitcoin.pdf

Whichever assumptions @overwatch is referring to in the white paper, none have been falsified.

 

[mmm....shiney!]

It served one purpose though, the young millennials, addicted to gaming and mobile phones, had incomes, and they willingly invested in the crypto since it appealed to that mindset. They couldn't afford homes and even the stock market was pricey but they could grab a few tokens on payday and believe they were saving. They were already entrained for this behavior by the gaming industry and the constant daily checking of the app also appealed to their social media mindset. It was tailor made for them. Even the recurrent losses had an appeal as is evident in studies of chronic gamblers. There is a perverse satisfaction in losing. It's why they keep going back to the pokies and the races. So the fortuitous purpose? It took pressure off the stock markets which had already been driven well past rational PE ratios by the hundreds of billions pouring into them from private pension funds globally. 50% of Aussie Super is invested in the stock market and 50% of that in the US markets. Companies like Tesla are bid up for no other reason than this money looking for a home, a return. If the millennials had have poured there savings into these the markets would be even more distorted.

Now @overwatch is sounding like a crusty old boomer.

His bitch about PE ratios is the same as his bitch about BTC being HODLd, the stock market like all human constructs is dynamic, they evolve. Whereas in the past it was dominated by industries that had to maintain vast inventories and continually invest in capital goods to maintain a competitive edge, it's now dominated by companies servicing different demands without the need for factory spaces and stockpiles of machinery parts or primary resources. That's why applying historical PE ratios are next to useless when trying to arrive at current company or market valuations.

The world moves on and the crusty ones get left behind.

Bye @overwatch.

 

[mmm....shiney!]

On the topic of payment systems, IMO DOGE would make a better currency substitute than BTC:

1. it isn't as popular to hoard
2. it's supply is infinite
3. it's quicker than BTC
4. it has established "cultural capital"

 

[betterinvestmentthanshare]

Hey don't bother replying, I just realized this forum is DEAD! Friday night and I'm the only poster lol lol.
I visited years ago, back when that Gulf war veteran told the world about the 100k of gold in his bunnings safe and had it all stolen. It was a thriving forum then. Wonder where everyone went?

Bye.

What a shame.
Mate, Shiney doesn’t agree with some of what I post and I don’t agree with some of what he posts….so what….it doesn’t make us enemies, just different. We are all entitled to our own opinions on here, including you and shiney.
Take a chill pill and hope to see you back here some day.

 

[mmm....shiney!]

BTC price failed to hold around the $111K mark as I was hoping, support zone providing some comfort to those long. This dip may slow momentum and my $130K guess by the end of June may take a little longer to play out.

 

[mmm....shiney!]

ETF flows generally in the red lately:

 

[Brendio]

On the topic of payment systems, IMO DOGE would make a better currency substitute than BTC:

1. it isn't as popular to hoard
2. it's supply is infinite
3. it's quicker than BTC
4. it has established "cultural capital"

It sounds like you haven't used Lightning.

Point 1 is probably the result of 2, meanly purchasing power is eroded over time. On point 3, the Lightning payment layer gives bitcoin instantaneous settlement and private advantages versus on-chain transactions. On point 4, I do like the meme culture and origin story of DOGE, and I think it filled a niche for micropayments and tipping when BTC payment fees rose around 2017, but with the maturity of bitcoin payment layers like Lightning and e-cash, DOGE stands no chance of substituting bitcoin as a currency. Being the first instance of digital scarcity, bitcoin has enormous cultural capital and network effects that are now insurmountable by any substitute.

 

[mmm....shiney!]

It sounds like you haven't used Lightning.

Point 1 is probably the result of 2, meanly purchasing power is eroded over time. On point 3, the Lightning payment layer gives bitcoin instantaneous settlement and private advantages versus on-chain transactions. On point 4, I do like the meme culture and origin story of DOGE, and I think it filled a niche for micropayments and tipping when BTC payment fees rose around 2017, but with the maturity of bitcoin payment layers like Lightning and e-cash, DOGE stands no chance of substituting bitcoin as a currency. Being the first instance of digital scarcity, bitcoin has enormous cultural capital and network effects that are now insurmountable by any substitute.

I don't remember using Lightning at all, mainly because I don't want to buy anything with my BTC because it's a finite and scarce asset that appreciates in value over time so I would rather hoard it than exchange it for goods and services. The exact reasons why it makes a poor substitute as a currency and why something like DOGE makes a good substitute.

I guess it comes down to what qualities someone most desires from a currency and I don't see any reason why various options can't co-exist eg currencies that maintain purchasing power and those that don't each have their place in an effectively functioning market.

 

[Brendio]

I don't remember using Lightning at all, mainly because I don't want to buy anything with my BTC because it's a finite and scarce asset that appreciates in value over time so I would rather hoard it than exchange it for goods and services. The exact reasons why it makes a poor substitute as a currency and why something like DOGE makes a good substitute.

I guess it comes down to what qualities someone most desires from a currency and I don't see any reason why various options can't co-exist eg currencies that maintain purchasing power and those that don't each have their place in an effectively functioning market.

I can totally understand an individual preference to hoard a hard currency like BTC and spend a currency that is losing its purchasing power. But how does that make the currency losing its purchasing power a better currency? Why not stick with fiat in this case?

But consider when the roles are reversed: you are selling something. What would you prefer to receive, assuming your goal is to preserve value over time? AUD, DOGE, gold or BTC?

 

[Stoic Phoenix]

I can totally understand an individual preference to hoard a hard currency like BTC and spend a currency that is losing its purchasing power. But how does that make the currency losing its purchasing power a better currency? Why not stick with fiat in this case?

But consider when the roles are reversed: you are selling something. What would you prefer to receive, assuming your goal is to preserve value over time? AUD, DOGE, gold or BTC?


I think its important to look at BTC as an asset, not a currency..... btc is an asset that (historically) increases in price as opposed to "currency" which loses value over time due to inflationary causes.
If you are looking to preserve value over time as per your question ....any fiat currency fails at this.
Therefore I would look at an ASSET that increases or at a minimum preserves value over time.
Real time inflation is closer to 7% (CPI is gay) year on year so you need an asset to increase by that same amount to merely preserve your value.

 

[mmm....shiney!]

But how does that make the currency losing its purchasing power a better currency?

If it's hoarded then it may lead to shortages of available currency for transactions. Currency is really just a scorecard where "points" are just added ie "deposits" or deleted ie "withdrawals" from a column in a balance sheet.

The "valuable" stuff are the assets/goods/services that those withdrawals and deposits are exchanged for.