So in light of the recent viral post by Balaji about his $1million bitcion prediciton, I see lots of people saying there are 2 million bitcoin on exchanges. But what does this exactly mean? Does this mean that known addresses to be crypto exchanges have a combined balance of 2 million? Big deal.... most of those are probably a liability of the exchange because they actually belong to customers. Of course if customers don't withdraw, then too bad for them. But there is no way exchanges have this many bitcoin as assets of the exchange without matches liabilities. (Its kind of like the banks. SVB had assets of maybe 210 billion, but liabilities of 190 billion that was the depositors' cash. Of course the MTM value of those assets was less than even the 190 billion, but that's a whole other story) So how much is on an exchange to purchase, which isn't already spoken for, and when does an exchange have to buy more so they can resell it? I see lots of smart people going against this $1M prediciton, and of course its outlandish, but the more I think about it, the more plausible it becomes. First of all, there isn't going to be 7% up or down halt with bitcoin like there would be if you're trading equity futures. This would give the market 15 minutes to pause. At 13% I believe, the market shuts down for the day. Not so with bitcoin of course. So when people think about the types of moves possible if they are coming from the equity markets, the rules won't exactly transfer over. Second, as I point out above, what is the status of actual supply? I saw people calculating how much money needs to come into bitcoin in order to push the price up this high. But how on earth can you calculate this? Lets say you have 10 bitcoin on offer to sell at 30k and that gets taken out. So you need $300k in order to take out this price level. But what if after seeing this there isn't a single offer until the 35k price, and even that is for only 1 bitcoin. This means that to get to $35k bitcoin price, you will only need US$35k dollars. If there are no other transactions, hypothetically of course, then it won't take much for all bitcoins to be prices much higher. All you have to do is run out of sellers. In the traditional financial markets, you have all these rules about the dealers which have to always post bids and offers and banks have to always be willing to buy or you have the FED that will come in and buy up bonds or god knows what else. But with bitcoin, where are the rules about who will sell you bitcoin if the seller knows that they will need to produce it because you will instantly want to take it to cold storage? At some point, all the employees of the exchanges will hoard whatever is available and not even offer it to the public except for some insane premium. Furthermore, everyone keeps saying that funds won't enter bitcoin until they can move 5 or 10 billion worth of dollars without moving the price much. At a $500B market cap, this might not be easy, but at a $5T market cap, much easier. So bitcoin goes to $270k, and then even more funds get involved! Lastly, until a week ago, there really was no reason to not hold money in a bank. But now clearly, the tune has changed. And sure, you can say just put it in a big bank that the FED will protect, but I think people are starting to realize that if its so easy to change the rules in order to make people happy, its also very easy to selectively make them unhappy. So we have a catalyst, and once this rally really gets going, I don't understand how it doesn't go parabolic and not come down. This might not retrace like everyone expects since this type of price action comes from traditional finance. Lets not forget that adoption curves of technology that go parabolic don't retrace. In conclusion, to assume that this bet cannot win only uses thinking from how things worked before. Now I don't think its probable, because for something to be probable it maybe has to have a 30% or higher chance, but this playing out in 90 days is also not within the realm of impossible, and there is no technical reason for why this couldn't happen. There will be no governing body that steps in and shuts the market down if it goes up too high. Its a totally different type of market than what we are used to.
Yup, bitcoin trades 24/7/365 and exchanges are not under one jurisdiction. I think the interesting part to the Balaji bet is that he thinks the banking crisis will not get solved and get worse There is a precedent on what happens to the bitcoin price during a banking crisis i.e. Cyprus, but this is much bigger and it involves the US and European banks
I think it doesn't even need to be a banking crisis. I think you got it exactly right when you suggested that he might have inside info on money flowing into bitcoin. Imagine most of the money flowing out of those small regional banks goes into the big 4, but just 5% is diverted into bitcoin. We already see that those banks who lose deposits can just take their bonds with current lower values and get the Fed to give them 100 cents on the dollar. So no bank will become insolvent. The money leaving the banking sector as a whole is backstopped by the Fed, but it flows into bitcoin. There were countless amazing posts trying to summarize what happened with this last crash. Banks bought the safest asset in the world! So if this leads to a crash, my god, what is wrong with this system? So if all you do is just diversity ever so slightly, the billions of dollars flowing into bitcoin would be all that is needed. Then when people learn what is happening, they will of course jump on board. And now we see why operation chokepoint had to happen. I think the government has already run this scenario as well and tried to close the exits.
Didn't you say that you haven't invested in BTC yet. Fear is keeping you out. You are pretty close to what every other investor thinks.
No... you're thinking of the wrong person. I started to invest at the worst possible time, and my average price is much higher than the current price. But I did manage to get a few buys around the 17k level and some more on this rise higher. These coins are in cold storage. I also have a bit of the Canadian bitcoin ETF, as well as some ETH in also an ETF, and also some shitcoins as well that have done incredibly badly. Overall, I'm heavily down on price, but fully believe that I will wake up one day and be happy with what I have. I would of course have done many things differently had I known what I now know, but at least I am very much up to speed now, and hence ahead of 99% of the population. I do believe that things will move very quickly going forward, and although its not like USD will stop working, I don't see how any response to the crisis by officials will in any way work. I just saw a post arguing against the 1 million dollar BTC bet. The last point that was made was about how long hyperinflation took back in the 20's. Its a dumb argument because of how quickly things move now given the internet. In fact, every argument against this bet uses an example from the past that may not apply now. All of these smart people who are saying how ridiculous this bet is could have also told us about the banking crisis that just happened, but nobody had a clue going into it. How can they be so sure that bitcoin can't go on a parabolic rally in the next 90 days but not have seen the huge crisis that was about to take down a 200 billion dollar bank? I'm not saying the chance of it happening is high, but what I am saying is that I easily see a path to how it can happen.
Balaji's hyperinflation premise and the technical documents (links) to support it Here's the Twitter spaces recording (fireside chat) last night on the Balaji $1M per bitcoin in 90 days bet
I think there are 2 more important/interesting questions instead of the "Will BTC reach X price?": 1. How long would it stay there? 2. If you are holding it, will you sell it at that price or let it drop back? Look at the last 2 sharp peaks. In the first price only spent 10 weeks above 50K, in the second it was only 6-7 weeks. And the 3rd more important question is: 3. If you didn't sell above 50K in the last time, what is the guarantee you can time and sell at the next peak? And those short periods are dangerous for those who want to invest in the industry by mining. They get funding, get the machines and by the time they set it up, price is back to half.
I did listen to this video and the shitty thing is that he never really got around to explaining more about his thesis. That idiot Breedlove kept interrupting and also wasn't really paying attention. Honestly, I've never seen him in a podcast, just saw his posts, but listening to his voice now makes me not like him too much. I really like Gladstein, but here, he is as well attacking him almost. This podcast sadly was meant as more of a reason to take him down to be honest. I wanted Balaji to explain more so about why now and how he sees it playing out. But all he was able to do was discuss the charts and things like this, but not really get into it.