MB Fund Podcast: How high can Bitcoin go?

In today’s investment webinar, MB Fund’s Head of Investments Damien Klassen, and Head of Operations Shelley George investigate how high Bitcoin can go.
We give a background on the technology used in Bitcoin, a breakdown of what private money (like Cryptocurrency) is, how and why Bitcoin is valued, and analysis of what this means for Bitcoin in times of crisis and in the longer term

 

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Tim Fuller is Head of Advice at the MacroBusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Tim Fuller is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

Tim Fuller

Comments

  1. Central banks can always buy it out. Even if they have to print a trillion to buy out the players. Institutions are easy enough to strongarm.

    Or, a coordinated global effort to disrupt the network would destroy its utility and plunge prices.

        • unless they wipe out gold, silver and any other alternate wealth storage means it really doesn’t gain much power or control though.

          • Gold and silver are easily confiscated at borders.

            You can walk through any airport in the world with 12 words in your head and no one would ever know.

          • “Gold and silver are easily confiscated at borders.”
            The complete failure of the “war on drugs” begs to differ with this assertion.

          • Just a heads up …. there is and has never been an animal called a permanent store of wealth[?????] … aka labour value or single asset that can magically transcend time and space. You might want to inform yourself about the Cambridge Capital Controversy and what it portends – https://en.wikipedia.org/wiki/Cambridge_capital_controversy

            Next is the matter of legal rights to any one investment E.g. equity has no rights and first to get the chop where as sovereign paper has the highest legal rights, physical assets in possession of the owner is a close second but still subject to taking price and as always environmental and psychological conditions dictate the seller and buyer market.

            Seems heaps of people have bought [tm] the sell side PR …. chortle

    • Interesting conversation with a former colleague the other day, he started buying at $9k and stopped at $11k. He believes it could hit $100k by the end of this year, though he thinks we only have five good months ahead of us.

      His rationale was there are 14m millionaires globally, and there is not enough tradable Bitcoins for each of them to buy one each.

      He and I had a major disagreement about Bitcoin a year ago, and I still hate it, and think it a con. But his logic is sound.

      In a bubble, things go for longer and far higher than anyone expects…

    • My gut feel based on the previous bubbles is max around $AU100,000 before dropping back to the $10,000 level for a minimum before the next cycle. Not confident enough in that opinion to hold everything until the predicted peak though.

    • Here is the chart for you. Based on the curve flattening its still got about 100% from now.
      https://invst.ly/tdbh-
      The RSI on the bottom confirm this as it only has a bit more room to move up.
      Its going to do this is one month and then fall.

      Others are not taking flattening into account and project from the last peak.
      https://invst.ly/tdbj8
      That means a 500% approx increase.
      However to do this it needs a few retracements as RSI will be too high.

      Why is the curve flattening? I think its just getting to expensive for people to buy and unless there is a huge amount of interest or institutional money flooding in then its going to find a place where its simply reached its full cycle.

    • The designers clearly thought so, based on the decisions made in it’s development.
      They were also smart enough to know that it would have little chance of success as a store of value until it had achieved acceptance so “marketed” it as a currency for settling internet transactions.
      The low transaction capacity as well as the inherent deflationary nature of a fixed number of coins, along with an exponential decay in the generation of the coins favouring early adopters show they had put considerable thought into the whole process and were definitely smart cookies intending it be used as a store of value long term.
      This early adopter advantage strongly encouraged people who could see the potential to get actively involved and help propel it to a point that it has become a viable store of value at this point, albeit a very volatile one no doubt due to the fact it is still presumably a tiny market in comparison with gold or other alternatives.

    • Haywood Jablome

      Unlikely, but who knows? There is no longer much that surprises me. At the very least it is a somewhat ingenious scam, and a fascinating study in the exploitation of human psychology. Damian outlining the ever changing story supporting bitcoin cleared it up a bit for me. Won’t pretend it doesn’t sting to have missed the ride entirely though..

      • Personally I’m finding it hard to invest these days. With all the money printing going on, and governments intervening when things go bad anything “real” about an asset just doesn’t matter these days. Doesn’t matter about currency flows from the investment itself (income), nor actual utility – all that matters is the herd. In other words – anything can happen and usual market rules just don’t apply anymore, but sometimes they do which makes it all the more harder.

        Investing is more about picking social trends and being in the loop to me vs anything objective at least to me; but what do I know? Tesla worth more than all the other car companies combined, BitCoin rallying like this, the local housing market. Even with the local cabbie/tradie talking about BitCoin (usually a sign of the top) seems like it may still have even more to go.

        There’s a lot of excess money out there which is making usual risk/return judgements invalid.

        • Haywood Jablome

          While profitable investing is never meant to be easy, it is difficult to invest rationally when there is no sound reference point. When the price of money is zero or negative even, who can say what anything is worth? It becomes a guessing game which can leave largely ignorant punters looking like geniuses.

  2. I’m trying to get a handle on how big Bitcoin is.
    If all the bitcoins every mined were put on hard disks and stacked on top of each other, how many Olympic-sized swimming pools would be filled?

    • Trying to resist taking bait but will answer anyway.
      The 21 million bitcoins that will be all that ever exist is a fraction of the number of gold oz’s in existence at 2.5 billion
      ” there are about 2.5 billion ounces of gold bullion above ground today in the world. Again more than half of it is currently owned by governments and their central bank partners.”
      So 1% of the size of gold? and Only going to decrease from there as more gold is mined.
      Choose to make of that fact what you like.

  3. I gave up listening to these – too time consuming. Nice to see its on youtube where I can get a transcript.

  4. Tulips did well due to the libations offered to the pub patron investors for free [tm] and becoming a class status symbol, seems it sucked money out of socially productive enterprise and was a bad allocation of farm land to feed people, hence the need for government to step in and sort it out.

    Then there is the ever present issue of how much energy this activity requires which does not produce anything other than a classic case of mania with a side of control frauds that would make Wells Fargo blush …

    Best bit is the sorts that bang on about RE inflation and then simultaneously stampede into crypto for some fast inflation [unearned] of a bit of code that only exists as electrons in a machine …. day trader opium ….

    • Please explain how it “Sucks money out of socially productive enterprise”.
      The money is merely transferred from one persons hands into those of another. Speculating on tulips didn;t make it vanish into thin air. For everyone who lost money, someone made money, a trade has 2 sides and all that.

      • What – ????? – are you suggesting in today’s markets its a binary sell – buy affair … seriously and that constitutes what Capitalism is ….

        Sigh … seriously … are you suggesting that some antiquarian notion based on a village setting where sellers and buyers set and take price in a modern computational market place where you can bet more than two ways, read Hudson.

        PS. have you ever considered your computational device you trade on makes you stoopid … like FB and Google does …

        • Have you ever considered my level of ignorance is high enough that the only trading I have ever done in sharemarkets has been done on my behalf by SuperAnnuation or my employee share program.
          Although it does seem many of the people trading don’t actually know what they don’t know.

      • Please explain how it “Sucks money out of socially productive enterprise”.

        Well I guess there’s the obvious point that land which could have been growing something useful, like food, was growing tulips…

        But maybe the implication is that people creaming money out of bubble speculation are somewhat unlikely to spend that money on anything productive.

        • But still possibly more likely to put it to productive use than those losing the money speculating.
          Skippy has a lot of words there but ultimately computer trading, derivatives, futures and everything else all have a buyer and a seller, a profit taker and a loss taker, and don’t actually destroy “money” merely redistribute it. I’m not an expert on economics but noone has managed to explain in any sensible and logical way how that statement is not correct.
          Re diverting to producing tulips, isn’t the point that tulips weren’t actually being traded but futures and derivative type instruments? I’m a little hazy on the details.

          • Again …. that you think markets are binary in reality just shows your ignorance and as such anything that is an extension of that is some heavy duty ideological fkwittry … aka its not even a reasonable notion of how reality functions and anything extenuated from it is the opposite of fact.

            LMMAO …. trade on that … rational agent theory … fkmd

          • Skippy, try english, grade school english, simple words and actually explain what you mean or I will continue to assume you are mostly talking garbage. Every single transaction has two participants, ie binary. That is the definition of a transaction.

          • So you admit your knowledge of markets is just ideological in construct and not representative of what actually occurs in reality. I could suggest you read Black or Hudson, but you would not because that might mean you be confronted with spewing rubbish you consumed.

            Hint money is not a evolution of barter with a side of says law …

          • “Hint money is not a evolution of barter with a side of says law …”
            Actually it straight out is, with extras added and extended on top. There is no logical historical argument you can make otherwise.

        • Oh don’t tell them the BSD take the big slice of that action and they are just the churn that makes the whole thing work ….

    • It does take away from productive investment (BTC) via two aspects:
      – It increases energy demand due to BitCoins Proof Of Work algorithm. This is a very real cost on our environment, and electricity demand, and therefore energy prices that could be used for other productive capacity.
      – It allocates funds away from other investments, just like all bubbles due to the promise of short term high returns vs long term hard work but long term benefit real world investments.

      It is this link to an actual real world concept (energy) that makes it hard to mine and therefore gives it “scarcity”.

      • “– It allocates funds away from other investments, just like all bubbles ”
        People say this all the time, but HOW does it do it? Logically it can’t. Money is not eaten when buying a bitcoin, it is merely transferred to it’s previous owner, where it remains available for investment, same as a share market bubble, or a RE or gold bubble.

        – It increases energy demand due to BitCoins Proof Of Work algorithm
        The amount of energy used is independent of price or demand, as per below.

        “It is this link to an actual real world concept (energy) that makes it hard to mine and therefore gives it “scarcity””
        Actually no, what gives it it’s scarcity is it’s design and implementation. Bitcoin was just as scarce when being mined on a single machine. The same amount of btc is mined no matter how much is demanded, or how high the price is. In the not to distant future no more new btc will be mined at all. Think about the implications of that for future value.

        • It’s an interesting question. I see it more as a balance sheet thing as opposed to a monetary thing. The more I buy bitcoin the more my balance sheet is taken, and I can’t invest in other things. You are right that the seller makes a profit and therefore has more cash. Some will be spent, some will be invested into other things maybe – but the next person looking to invest that cash will still preference the bubble. Meanwhile that productive investment can’t attract funds to start building X product while the more profitable bubble exists as an alternate investment promising a higher rate of return much quicker with less effort. The same funds consume balance sheets as the money goes around and around. It’s all leveraged after all; just like houses. As the price of the bubble asset rises it takes more debt to buy the same asset consuming balance sheet capacity – more debt, same assets.

          • This reasoning shows a fundamental flaw of thinking that an individual has invested their money “In” something. From an accounting perspective of the investor this may be true. In a broader sense money has no possible way to be “in” bitcoin. Even if every person on earth wanted to put all their money into bitcoin, the only way they can is to give that money to someone else, who can also only get it by giving it to someone else.

          • This is true bjw. However that doesn’t mean your capacity to continue the merry go-round can continue. It is somewhat limited by balance sheets, and liquidity on both sides of the market (willing participants to buy and sell). If what you say actually occurs people would need to constantly be buying and selling BTC in a merry-go-round, however even then eventually most BTC will accrue to miners in transaction fees.

            Sure there is a re-distribution but that’s the point – just like the local housing market the price rising due to more demand than supply causes more debt in the other pair asset (money). Long BTC, short AUD which means balance sheets become under pressure. I think the flaw in your reasoning is you assume people won’t borrow to buy BTC (in a bubble market that’s a bad assumption) and that people will distribute the money from sales evenly – in the end it mainly accrues to early adopters who have a lower propensity to do anything with it. At that point the debt can’t be serviced, and we have a lot of debt for no productive utility. Often that debt is secured against actual productive assets with a lower return than the bubble market the debt was used to purchase – calling that debt in causes a bust in those industries too. There’s a reason why bubble markets, and misallocation of funds, cause financial crisis’ and depressions.

            In the end your analysis forget’s that we live in a debt based currency system. If we didn’t then what you say is true, but the redistribution effects still mean lower investment overall. We can’t take unlimited risk (very high balance sheets) and while a better easier money option (a bubble) presents itself balance sheets will mostly be distributed towards that asset.

        • Even StevenMEMBER

          Bitcoin is a distraction from solid investment of funds that does something productive. Whilst you are right that money is not destroyed, a segment of the population will be thinking, holding back, trading, wanting to own… Bitcoin. Instead of making a loan to a small business that would have grown from strength to strength. There is a real cost to these speculative bubbles. Even if that cost is simply time and opportunities foregone to do something more meaningful.

          • I really doubt anyone is sitting their holding cash thinking, should I buy bitcoin, or make a loan to a small business. Maybe should I buy bitcoin or shares, but transferring shares around is exactly the same dynamic as transferring bitcoins, or gold, or real estate or any other asset.

  5. the people who have made a profit will want to pull their money out, then the people who are losing will want to cut losses. add in all the ticket clipping in the on and off ramps… this could plunge faster than it went up. Also, I believe the holdings are too centralised for btc to be a good store of value for the masses. it’s just a few whales getting super wealthy.