Bitcoin

[Halitosis]

It raises a interesting question, if people are holding Bitcoin etc, are they legally counted as assets for tax purposes? If they are then it sort of legitimises them at a Government level doesn’t it?

Crypto assets would be considered the same as any other investment (be it shares, oil paintings, wine or whatever)

[Raffe]

I defer to your superior knowledge on all things financial Raffe, but the term 'legal tender' surely has minimal real world benefit? In the UK only sterling is considered legal tender, suggesting USD, EUR and other currencies cannot claim such a benefit over BTC (never mind the Venezuelan bolívar). And how would one make a claim against a government in the event of the currency being devalued (e.g. through printing more money)?

I will never understand why printing money by the government would give anyone the right to make a claim against the government? Inflation is as old as mankind, it is a derivative of charging interest for financial transactions.

Oh, and what is the effect of a finite number of 'currency' units in circulation against a backdrop of infinite growth of mankind and goods? It is a guarantee of price hyperinflation in years to come.

This argument of money debasing is such utter b/s that my head hurts.

[Kingstepper]

The difference being that normal currencies are legal tender.

But go on.

Scottish ones aren’t of course, they seem to manage w/o.

[Halitosis]

I will never understand why printing money by the government would give anyone the right to make a claim against the government? Inflation is as old as mankind, it is a derivative of charging interest for financial transactions.

Oh, and what is the effect of a finite number of 'currency' units in circulation against a backdrop of infinite growth of mankind and goods? It is a guarantee of price hyperinflation in years to come.

This argument of money debasing is such utter b/s that my head hurts.

Apologies and point accepted on the inflation/money printing, so I'll repeat my question without that element:

I defer to your superior knowledge on all things financial Raffe, but the term 'legal tender' surely has minimal real world benefit? In the UK only sterling is considered legal tender, suggesting USD, EUR and other currencies cannot claim such a benefit over BTC (never mind the Venezuelan bolívar). What would cause an individual to claim against a government and how does one go about it?

[Passenger]

Well in a way the first 70,000 pounds of savings covered by the FSCS in the event of a Bank collapse, is an indemnity offered by Government, so in a sense a legitimate claim in specific circumstances... although goodness knows how it would play out if it happened at scale and significant numbers were clamouring for the return of their funds, I suppose they could always just print/ cntrl P, more.

[Montello]

£85,000 or £170,000 on a joint account per institution.

So if your bank fails you get your money back from the Government.

How much do you get back is Coinbase or Binance fail whilst holding your crypto?

[Passenger]

Oops, yup I had the FSCS numbers incorrect. Thanks M.

[Dave+63]

£85,000 or £170,000 on a joint account per institution.

So if your bank fails you get your money back from the Government.

How much do you get back is Coinbase or Binance fail whilst holding your crypto?

True but to be fair, the FSCS guarantee is a relatively recent thing.

This crypto malarkey and paying for something that’s intangible (game extras etc) is a foreign idea to many of us old school thinkers who like to buy something solid. I’m still not 100% with music downloads rather than dvds or vinyl.

[mangoosian]

£85,000 or £170,000 on a joint account per institution.

So if your bank fails you get your money back from the Government.

How much do you get back is Coinbase or Binance fail whilst holding your crypto?

Spread the holdings across exchanges and cold wallets.
Spread across real coins, coin instruments and crypto stocks. The latter protected under FSCS if held by a covered provider.
Spread across different methods for both spreading the risk and tax reasons.
I have friends who are maximilist coiners, but I don't get that approach. Come December 2021 I'll sell some positions without a CGT hit. They won't be able to do that.

[Montello]

Spread the holdings across exchanges and cold wallets.
Spread across real coins, coin instruments and crypto stocks. The latter protected under FSCS if held by a covered provider.
Spread across different methods for both spreading the risk and tax reasons.
I have friends who are maximilist coiners, but I don't get that approach. Come December 2021 I'll sell some positions without a CGT hit. They won't be able to do that.

Of course you can mitigate your risk through spreading it around but still none are FSCS guaranteed.

[mr noble]

Grayscale ETFs (ETCs?) are probably the “safest” way to get bought into crypto, if your investment platform allows it.

Annoyingly HL does not, so it’s MicroStrategy or the Bitcoin miners only.

Grayscale have funds for Etherium and a few other mainstream coins too.

https://grayscale.co/


I’d be interested to know if GBTC is investable on your platforms?

It is on the IBKR platform but was not available on Interactive Investor.

[mangoosian]

Of course you can mitigate your risk through spreading it around but still none are FSCS guaranteed.

I think the facts are otherwise.

https://www.ig.com/uk/client-funds
https://www.hl.co.uk/security-centre...our-investment
https://faq.eqi.co.uk/help/legal-and...ssets/eqi-FSCS

Plenty of others.

Are you saying owning Riot Blockchain in an ISA or SIPP is not covered but owning Apple is?

[Raffe]

I think the facts are otherwise.

https://www.ig.com/uk/client-funds
https://www.hl.co.uk/security-centre...our-investment
https://faq.eqi.co.uk/help/legal-and...ssets/eqi-FSCS

Plenty of others.

Are you saying owning Riot Blockchain in an ISA or SIPP is not covered but owning Apple is?

Sorry but you don't understand what the FSCS is and how it works.

It only covers cash, neither AAPL nor bitcoin are within the scope of its protection. It is a protection against your bank going bankrupt, nothing more and nothing less.

Banks are keeping your assets (shares, funds and crypto) in segregated custody, but that doesn't help you if the asset itself becomes worthless. In case your bank goes bankrupt, you still own these assets and they will be handed over to you for deposit into another bank account. Your cash, however, is a claim against the bank and that is why it's protected by the FSCS.

[mangoosian]

Sorry but you don't understand what the FSCS is and how it works.

It only covers cash, neither AAPL nor bitcoin are within the scope of its protection. It is a protection against your bank going bankrupt, nothing more and nothing less.

Banks are keeping your assets (shares, funds and crypto) in segregated custody, but that doesn't help you if the asset itself becomes worthless. In case your bank goes bankrupt, you still own these assets and they will be handed over to you for deposit into another bank account. Your cash, however, is a claim against the bank and that is why it's protected by the FSCS.

Thanks for clarifying the cash aspect. I also have cash in those accounts so that is covered.

My comparison was to call out that whether invested in AAPL or a crypto related stock, the cover is the same. In this case cash covered, stock not.

[demonloop]

Sell order for a chunk of my btc @ 52,100

[Montello]

Thanks for clarifying the cash aspect. I also have cash in those accounts so that is covered.

My comparison was to call out that whether invested in AAPL or a crypto related stock, the cover is the same. In this case cash covered, stock not.

FSCS guarantee is against the bank collapsing and getting your cash back, if BTC collapses the FSCS will not be bailing you out

Client accounts are there to ring fence assets, they don’t protect you against the asset failing.

[Raffe]

The world is coming to en end. Possibly today, latest tomorrow.

[petethegeek]

The world is coming to en end. Possibly today, latest tomorrow.

Oh I don't know. I thought she made quite a persuasive case. Seems to be something of a wis as well.

[demonloop]

Bitcoin 49,998 overnight on Binance

Close, but no cigar

[KingKitega]

Bitcoin 49,998 overnight on Binance

Close, but no cigar

Think it was 50k on some exchanges. But it was a sign to sell.

Sent from my EVR-L29 using Tapatalk

[Raffe]

Bitcoin 49,998 overnight on Binance

Close, but no cigar

What is the effect that Binance trades BTC against BUSD rather than real Dollars?

Coinbase had no higher than $49,900 for BTC - is that about the discount which the market applies to BUSD?

[demonloop]

What is the effect that Binance trades BTC against BUSD rather than real Dollars?

Coinbase had no higher than $49,900 for BTC - is that about the discount which the market applies to BUSD?

I use the BTC/USDT (Tether) market, so not sure about BUSD

I assume it's linked to the dollar rate in the same way as Tether.

You will find differences across the exchanges though, so arbing should be possible, but the damned thing is so volatile it's very difficult/impossible in practice

I sold a chunk at ~49,000 which is most of my investment back into 'real' money

[petethegeek]

Close, but no cigar

Christmas is still some way off. I would hate to see you peak too soon.



Given that I know even less about financial charting than I do about investment matters generally, I'd be grateful if anyone 'with a clue'(tm) could just check my attempt at adding a rebased S&P 500 line for comparison purposes looks roughly correct.

[tertius]

Christmas is still some way off. I would hate to see you peak too soon.



Given that I know even less about financial charting than I do about investment matters generally, I'd be grateful if anyone 'with a clue'(tm) could just check my attempt at adding a rebased S&P 500 line for comparison purposes looks roughly correct.

What are the terms of this bet? Does it just need to hit $50k before NYE or does it need to be at/above $50k on NYE?

[Raffe]

What are the terms of this bet? Does it just need to hit $50k before NYE or does it need to be at/above $50k on NYE?

What counts is where BTC trades on NYE - anything before is just noise.

You can look at it as an optionality: how much have the odds that BTC will trade >$50k on NYE been increased by the fact that it trades at $50k today versus at $20k in November? I would say the odds are higher today, but not by all that much. I would expect that time left to expiry is the single biggest input for the calculation of that probability given the super-high volatility.

[demonloop]

What counts is where BTC trades on NYE - anything before is just noise.

You can look at it as an optionality: how much have the odds that BTC will trade >$50k on NYE been increased by the fact that it trades at $50k today versus at $20k in November? I would say the odds are higher today, but not by all that much. I would expect that time left to expiry is the single biggest input for the calculation of that probability given the super-high volatility.

I agree with all of this, and for the same reasons

I actually expect bitcoin to go beyond 75k in 2021, but factored in a draw back in my offer price of 50k

I'd say the bet is still very much neck and neck

[Raffe]

I agree with all of this, and for the same reasons

I actually expect bitcoin to go beyond 75k in 2021, but factored in a draw back in my offer price of 50k

I'd say the bet is still very much neck and neck

I'd say the bet benefits the fundraiser no matter what. The rest is just a little fun.

[KingKitega]

MicroStrategy raises $600m to buy more bitcoin. Crazy!

Sent from my EVR-L29 using Tapatalk

[Raffe]

MicroStrategy raises $600m to buy more bitcoin. Crazy!

Sent from my EVR-L29 using Tapatalk

That would be the second time.

They now have borrowed more money to buy bitcoin than the whole company was worth six months ago. If BTC goes down they will go bankrupt.

I do not understand how the buyers of the convertible notes are pricing risk. Much easier to just buy bitcoin if I want that sort of risk profile rather then lending money to a company doing it for you, with the prospect to be repaid in worthless shares of the company if the bet goes wrong. Well, this is 2021 in a nutshell for you.

[petethegeek]

Official press release from MicroStrategy.

[Passenger]

That would be the second time.

They now have borrowed more money to buy bitcoin than the whole company was worth six months ago. If BTC goes down they will go bankrupt.

I do not understand how the buyers of the convertible notes are pricing risk. Much easier to just buy bitcoin if I want that sort of risk profile rather then lending money to a company doing it for you, with the prospect to be repaid in worthless shares of the company if the bet goes wrong. Well, this is 2021 in a nutshell for you.

Like the glory days of the dot com boom.

[demonloop]

I do not understand how the buyers of the convertible notes are pricing risk. Much easier to just buy bitcoin if I want that sort of risk profile rather then lending money to a company doing it for you, with the prospect to be repaid in worthless shares of the company if the bet goes wrong. Well, this is 2021 in a nutshell for you.

Makes no sense whatsoever.

Regardless of your thoughts on bitcoin, you must be increasing your overall risk by buying these notes surely?

They could get into financial difficulties for any number of reasons beyond the price of bitcoin.

At least when you buy bitcoin you're only* exposed to the price of bitcoin.





*I know

[Raffe]

Makes no sense whatsoever.

Regardless of your thoughts on bitcoin, you must be increasing your overall risk by buying these notes surely?

They could get into financial difficulties for any number of reasons beyond the price of bitcoin.

At least when you buy bitcoin you're only* exposed to the price of bitcoin.





*I know

Microstrategy was a business in decline for years. No growth, losing revenue every year since 2014 (down 20% since). If bitcoin goes down, they will go bust.

[petethegeek]

Borrowing heavily on Raffe's analysis in a previous post he made on the "When stocks..." thread as the basis, here's a q&d chart to help visualise MJS's virtual value component in the share price - or what Raffe chose to call 'hot air'.

• The solid green at the bottom is the price MicroStrategy shares would currently be expected to trade at if they had (optimistically) performed at exactly the same level as the S&P 500 since 10/08/2020, the day before purchasing the first tranche of bitcoin.
• The yellow layer is the value of their bitcoin holding calculated on a daily basis.
• The red line is their daily closing price up until last Friday.
• Vertical dashed lines mark bitcoin purchases.

All this assumes my (casual) understanding and (unchecked) calculations are correct of course.

[Montello]

Borrowing heavily on Raffe's analysis in a previous post he made on the "When stocks..." thread as the basis, here's a q&d chart to help visualise MJS's virtual value component in the share price - or what Raffe chose to call 'hot air'.

• The solid green at the bottom is the price MicroStrategy shares would currently be expected to trade at if they had (optimistically) performed at exactly the same level as the S&P 500 since 10/08/2020, the day before purchasing the first tranche of bitcoin.
• The yellow layer is the value of their bitcoin holding calculated on a daily basis.
• The red line is their daily closing price up until last Friday.
• Vertical dashed lines mark bitcoin purchases.

All this assumes my (casual) understanding and (unchecked) calculations are correct of course.

Nice bit of analysis ... not an investment for me.

If you want BTC I’d just buy that.

[Raffe]

Borrowing heavily on Raffe's analysis in a previous post he made on the "When stocks..." thread as the basis, here's a q&d chart to help visualise MJS's virtual value component in the share price - or what Raffe chose to call 'hot air'.

• The solid green at the bottom is the price MicroStrategy shares would currently be expected to trade at if they had (optimistically) performed at exactly the same level as the S&P 500 since 10/08/2020, the day before purchasing the first tranche of bitcoin.
• The yellow layer is the value of their bitcoin holding calculated on a daily basis.
• The red line is their daily closing price up until last Friday.
• Vertical dashed lines mark bitcoin purchases.

All this assumes my (casual) understanding and (unchecked) calculations are correct of course.

It's actually much worse than that:

• the movement in MSTR's price already started when they announced the change in accounting policy to allow BTC purchases in July, by the time when your chart starts the price had already run up by about 50% - hence the fair value as expressed by the green field is actually much lower (about $115 per share)
• it is also fair to argue that they should not have performed in line with the SP500 as their operational performance during the past years was very poor
• and you are obviously not showing the $1.1 billion which MSTR has borrowed from the capital markets in November and today to finance the purchase of BTC, which further diminishes the tangible value of the company

[petethegeek]

It's actually much worse than that:

• the movement in MSTR's price already started when they announced the change in accounting policy to allow BTC purchases in July, by the time when your chart starts the price had already run up by about 50% - hence the fair value as expressed by the green field is actually much lower (about $115 per share)
• it is also fair to argue that they should not have performed in line with the SP500 as their operational performance during the past years was very poor
• and you are obviously not showing the $1.1 billion which MSTR has borrowed from the capital markets in November and today to finance the purchase of BTC, which further diminishes the tangible value of the company

I had already given some thought to your first two points and to some extent agree with both. The initial starting value will always be somewhat subjective but I have adjusted it to your suggestion. However I have left the 'core' value tracking the S&P 500 as I can see no better way of offering a view of the future should they not have taken the radical path they have done. If this were a serious model I presume both these parameters would be user adjustable anyway.

As to your third point I freely admit I had sloppily passed over this issue. As I understand it though the amount of debt we are discussing currently 'only' stands at $650 mio, the recently announced $600 mio is yet to be taken up. (And indeed may never be.) The easiest way I can see to incorporate its affect is to simply deduct it from the daily bitcoin value from 21/12/2021 onward. This equates to a drop of $86.67. (I'm beginning to better understand the remarks you made a couple of posts previously concerning the pricing of risk.)

Taking all this into account the v0.2 chart now looks like this:

• The solid green at the bottom is the price MicroStrategy shares would currently be expected to trade at if they had (optimistically) tracked the S&P 500 since 10/08/2020, the day before purchasing the first tranche of bitcoin. An initial valuation of $115 on 10/08/2020 is used.
• The yellow layer is the value of their bitcoin holding calculated on a daily basis minus the $650 million debt taken on to purchase Bitcoin (closed 21/12/2020).
• The red line is their daily closing price up until 16/02/2021.
• Vertical dashed lines mark bitcoin purchases.

As you correctly predicted, quite a difference.

[Raffe]

I had already given some thought to your first two points and to some extent agree with both. The initial starting value will always be somewhat subjective but I have adjusted it to your suggestion. However I have left the 'core' value tracking the S&P 500 as I can see no better way of offering a view of the future should they not have taken the radical path they have done. If this were a serious model I presume both these parameters would be user adjustable anyway.

As to your third point I freely admit I had sloppily passed over this issue. As I understand it though the amount of debt we are discussing currently 'only' stands at $650 mio, the recently announced $600 mio is yet to be taken up. (And indeed may never be.) The easiest way I can see to incorporate its affect is to simply deduct it from the daily bitcoin value from 21/12/2021 onward. This equates to a drop of $86.67. (I'm beginning to better understand the remarks you made a couple of posts previously concerning the pricing of risk.)

Taking all this into account the v0.2 chart now looks like this:

• The solid green at the bottom is the price MicroStrategy shares would currently be expected to trade at if they had (optimistically) tracked the S&P 500 since 10/08/2020, the day before purchasing the first tranche of bitcoin. An initial valuation of $115 on 10/08/2020 is used.
• The yellow layer is the value of their bitcoin holding calculated on a daily basis minus the $650 million debt taken on to purchase Bitcoin (closed 21/12/2020).
• The red line is their daily closing price up until 16/02/2021.
• Vertical dashed lines mark bitcoin purchases.

As you correctly predicted, quite a difference.

I agree with the model, OK to keep using SP500 as we simply don't have a better proxy (and it's rather irrelevant in terms of the result). The new tranche of loan has in fact been taken out already, but one would expect that it is still sitting as cash in the company's accounts and as such is neutral. Only when they have bought BTC for the money and you are tracking that value, will it need to be deducted.

And now do Argo Blockchain PLC. A much more complicated model as it requires you to take assumptions about future price of BTC and future profit margins, but given yesterday's message from their BoD I expect a comparable if not higher amount of hot air.

Even the most irrational valuation premiums are sometimes very sticky (see Tesla), so no need to panic from the outset - but these air pockets have the habit to deflate rather quickly if and when the underlying trend (either investor heard mentatility or valuation of the investment theme, here BTC) changes. You better ne aware of that when investing into these hot stocks. Just saying.

[Montello]

I had already given some thought to your first two points and to some extent agree with both. The initial starting value will always be somewhat subjective but I have adjusted it to your suggestion. However I have left the 'core' value tracking the S&P 500 as I can see no better way of offering a view of the future should they not have taken the radical path they have done. If this were a serious model I presume both these parameters would be user adjustable anyway.

As to your third point I freely admit I had sloppily passed over this issue. As I understand it though the amount of debt we are discussing currently 'only' stands at $650 mio, the recently announced $600 mio is yet to be taken up. (And indeed may never be.) The easiest way I can see to incorporate its affect is to simply deduct it from the daily bitcoin value from 21/12/2021 onward. This equates to a drop of $86.67. (I'm beginning to better understand the remarks you made a couple of posts previously concerning the pricing of risk.)

Taking all this into account the v0.2 chart now looks like this:

• The solid green at the bottom is the price MicroStrategy shares would currently be expected to trade at if they had (optimistically) tracked the S&P 500 since 10/08/2020, the day before purchasing the first tranche of bitcoin. An initial valuation of $115 on 10/08/2020 is used.
• The yellow layer is the value of their bitcoin holding calculated on a daily basis minus the $650 million debt taken on to purchase Bitcoin (closed 21/12/2020).
• The red line is their daily closing price up until 16/02/2021.
• Vertical dashed lines mark bitcoin purchases.

As you correctly predicted, quite a difference.

Mind boggling.

[petethegeek]

I agree with the model...

Thanks for the sanity check and clarification on the loan status Raffe, it's appreciated. It might be of interest to you that it was all done on a Raspberry Pi 400 by the way.

[Raffe]

Thanks for the sanity check and clarification on the loan status Raffe, it's appreciated. It might be of interest to you that it was all done on a Raspberry Pi 400 by the way.

Is that your desktop?

[petethegeek]

One of them :-). I often find myself using it if I'm playing around with old unix software. It seems to fit in well with the general feel somehow.

[Devonian]

Knowing absolutely nothing about cryptocurrency, one of my colleagues has been dealing with some IT guys on a project and they seem to have numerous holdings in various ones (not Bitcoin though apparently). They advised him to buy some Telcoin a while back and he’s done well in that. He only bought 2k as a total punt, but apparently have made serious money already, but see it as havIng far more upside yet. He then started how it was on a certain platform and could only be bought a certain way and . . . . I hadn’t a clue what he was trying to explain - neither did he either!!

Just curious if anyone here has it.

[Raffe]

Knowing absolutely nothing about cryptocurrency, one of my colleagues has been dealing with some IT guys on a project and they seem to have numerous holdings in various ones (not Bitcoin though apparently). They advised him to buy some Telcoin a while back and he’s done well in that. He only bought 2k as a total punt, but apparently have made serious money already, but see it as havIng far more upside yet. He then started how it was on a certain platform and could only be bought a certain way and . . . . I hadn’t a clue what he was trying to explain - neither did he either!!

Just curious if anyone here has it.

https://trade.kucoin.com/TEL-USDT

[bootneck]

Knowing absolutely nothing about cryptocurrency, one of my colleagues has been dealing with some IT guys on a project and they seem to have numerous holdings in various ones (not Bitcoin though apparently). They advised him to buy some Telcoin a while back and he’s done well in that. He only bought 2k as a total punt, but apparently have made serious money already, but see it as havIng far more upside yet. He then started how it was on a certain platform and could only be bought a certain way and . . . . I hadn’t a clue what he was trying to explain - neither did he either!!

Just curious if anyone here has it.

I’ve not seen anything massive with TEL maybe I’ve missed something

Turns out I’d missed quite a bit wow

[Raffe]

I’ve not seen anything massive with TEL maybe I’ve missed something

Closed 31/12/2020:	$0.0001760
Today:	$0.003322
Performance:	1,788%

[mangoosian]

Knowing absolutely nothing about cryptocurrency, one of my colleagues has been dealing with some IT guys on a project and they seem to have numerous holdings in various ones (not Bitcoin though apparently). They advised him to buy some Telcoin a while back and he’s done well in that. He only bought 2k as a total punt, but apparently have made serious money already, but see it as havIng far more upside yet. He then started how it was on a certain platform and could only be bought a certain way and . . . . I hadn’t a clue what he was trying to explain - neither did he either!!

Just curious if anyone here has it.

Don't have Tel myself, but crypto twitter has mentioned it a bit. Well done to your friend.

[bootneck]

Closed 31/12/2020:	$0.0001760
Today:	$0.003322
Performance:	1,788%

Yeah just beat you with my edit, unreal but there’s that many coins hard to keep up lol

[jwillans]

Knowing absolutely nothing about cryptocurrency, one of my colleagues has been dealing with some IT guys on a project and they seem to have numerous holdings in various ones (not Bitcoin though apparently). They advised him to buy some Telcoin a while back and he’s done well in that. He only bought 2k as a total punt, but apparently have made serious money already, but see it as havIng far more upside yet. He then started how it was on a certain platform and could only be bought a certain way and . . . . I hadn’t a clue what he was trying to explain - neither did he either!!

Just curious if anyone here has it.

It is available on Kucoin. I have a reasonable amount, however I bought just after it was released and it has sunk significantly since then. That said, there has been a recent price surge and, more importantly, the Telcoin team seen to be getting their act together with a credible roadmap and phone network partnership agreements in place.

[Devonian]

Don't have Tel myself, but crypto twitter has mentioned it a bit. Well done to your friend.

Yep he’s done okay but not as much as what the last month would imply. Bought some of it ages ago and it went down from what he implied.

https://trade.kucoin.com/TEL-USDT

Cheers I’ll take a look.