Is Bitcoin the Next Big Thing?

[ian]

So I tried to acquire more currency at $5,900 but my credit card was declined. HSBC were unwilling to tell me why, so I guess they are next to announce a block. Just for the record, I use a credit card solely to avoid sharing a physical debit/bank account online, the money is immediately transferred from my bank afterwards, but obviously I respect banks taking measures to protect themselves from those using credit cards to gamble on the success of crypto.

 

[dee]

It seems this carnage is across the markets aswell (although I suspect for different reasons than crypto ie FED likely to raise interest rates) The DOW had its single biggest day loss in history yesterday apparently.

 

[Edwin]

Single day POINT loss. Not even in the top 10 percentage wise. Though it was still a huge drop. And it might have been one of the highest for actual value gone from the market, not sure...

 

[dee]

Single day POINT loss. Not even in the top 10 percentage wise. Though it was still a huge drop. And it might have been one of the highest for actual value gone from the market, not sure...

aaah ok..... biggest percentage drop since August 2011

 

[ausername]

So I tried to acquire more currency at $5,900 but my credit card was declined.

Did you a favour, this isn't going to stop anytime soon. You'll be grateful to HSBC soon!

It seems this carnage is across the markets aswell (although I suspect for different reasons than crypto ie FED likely to raise interest rates) The DOW had its single biggest day loss in history yesterday apparently.

Only the biggest loss in terms of points, not in terms of percentage which would be the more relevant metric.

In previous bad weeks on the stock market though.... the bitcoin price has increased? This should alarm Bitcoin investors.

This is the time to buy gold.

 

[ausername]

 

[Edwin]

aaah ok..... biggest percentage drop since August 2011

Mind you, although it’s the metric news reports focus on least, one could argue the most important thing is the value lost, because that’s what’s gone from portfolios and pensions.

 

[Edwin]

That’s also the part of the picture those defending the Bitcoin price drop purely on the basis that it has suffered even greater percentage drops in the past are missing: 93% of not a lot matters very little, but 60% of something huge is a massive deal.

 

[Edwin]

Put another way: if you have 50p and I take 50% of your money, you’re out 25p.

If you have £20 and I take 25% of your money, you’re out £5.

So if you cared about the actual money, the 25% drop is twenty times worse than the 50% one!

 

[ausername]

Not sure your analogy is really relevant to be honest... a pension fund doesn't get 25% of its units confiscated, they still own the shares/bonds/property. When you own shares you also get dividends, which for some stocks can be quite impressive. If a stock price falls due to wider market pressure rather than a companies revenue or bottom line, then you actually see yields rise.

A 50p dividend on a share worth £10 is 5%.

A 50p dividend on a share worth £5 is 10%.

A correction like this could be good news in the longer term for 'high income funds' which target dividend paying companies... they now get a higher % yield for their purchases, they were probably waiting for this day to come to invest capital.

 

[Edwin]

That's interesting about the high income fund side of things.

However, if you're nearing retirement age then the value of your pension matters enormously because you no longer have years or decades to wait for the value of your own pension to rise again. Of course, if you can tough it out and not cash it in that's fine. But many people will simply not be able to wait, so any market correction that lasts more than a few weeks will start to really hurt.

 

[ausername]

Annuity rates also important...

6% per annum of £90000 is better than 5% per annum of £100,000.

Those are highly reliant on Gilt and Bond yields, which I believe are on the up.

Annuity rates have been terrible in recent years.

A lot of Baby Boomers got really high annuity rates, like 9% or 10%... and that's part of the reason why they are seen as being well off.

 

[Edwin]

Incidentally, all this turmoil is creating victims in new and different ways...
https://www.reddit.com/r/tradeXIV/comments/7vi6oa/xiv_after_hours/

(seems relatively "real" given the screenshot, though I suppose it could be faked - what would be the point, though?)

That loss was incurred on a special financial product designed to bet against volatility i.e. when the markets are calmer the product pays off. But volatility has spiked enormously, higher than in years, and has done so very very suddenly. Can't imagine that's the only person to have lost a bucketload...

More about the underlying financial product...
https://www.cnbc.com/2018/02/05/xiv...linked-to-volatility-plummets-80-percent.html
http://www.forexlive.com/news/!/the...nd-credit-suisse-is-getting-hit-hard-20180206

For a bit more background, the product may or may not be liquidated (possibly at $4.22) when each ETF was worth $99 at close of trade the previous day. If it does get liquidated, that will be a loss of over $1.4 billion. The decision to liquidate the fund or not is expected to come later today.

The key point being, if liquidation occurs, that's a real loss because there's no way to wait it out for the market to recover even if investors wanted to.

 

[ausername]

Friendly Bet

Does anybody want a little bet with me? (Paypal account required)

I bet that Bitcoin will go below $1500 in 2018, and if it does you give me a fiver.

If Bitcoin goes above $15000 again in 2018 then I give you a fiver.

And if both of those things happen we both give a fiver to charity (with a screenshot to prove).

Anybody game on those terms?

I'd be prepared to drop mine to below $1000 against your $20000.

 

[dee]

Im game at 1500 & 15k.

 

[ausername]

Cool.

By the way, wouldn't surprise me in the slightest if we are both donating a fiver to charity on 1st January 2019.

(ps. this was a one time offer, for one person, limit to how many spare fivers I'm going to have after I've moved home, doubling the mortgage!)

 

[RobM]

Didn't you buy your house for bitcoins?

 

[ausername]

Didn't you buy your house for bitcoins?

I once had enough Bitcoins to buy a pretty decent Doll's House... and enough Litecoin to furnish it

 

[ausername]

This would be a really sh*t time for us to have a financial crisis by the way, and it feels like we may be on the cusp of one with the market volatility + Carrilion + Capita + Brexit limbo.

It was bad enough that I graduated from a Real Estate related degree at the height of the last financial crisis.... would be just my luck to be taking a £170k mortgage on the eve of the next one.

That said.... I'd be happy never to move again and haven't enjoyed the experience of selling and buying a home at all.... so if a decade of negative equity is what it takes to persuade my wife of the same then I'll take that

 

[ian]

I contribute monthly to both a S&S ISA and SIPP; this is the first month I debating whether I should wait and see what the market does. Everything is going down.