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Wednesday, Dec 16, 2020 - 23:10 SGT
Posted By: Gilbert

SitRep: Bitcoin

It's been an action-packed ten days or so - got my first (non-cousin-once-removed) nephew, who in turn already has his bank and library accounts set up; no time to waste, I suppose. Then there was attending the NeurIPS conference online (free of charge, the perks of them liking one's reviewing), which deserves a post or three on its own. America's Greatest Drama didn't disappoint either, with Texas marshalling one-third of the states on challenging unconstitutional electoral rule changes with SCOTUS. While the court has punted for now due to lack of standing, despite the material facts seemingly beyond doubt, I'd say that the pacing for the series has been excellent thus far, arguably comparable to The West Wing and House of Cards at their best. A solid 4.5/5 stars from me.

The scriptwriters have kept the direction enticingly open, and though Texas leading a secession movement might be a little far out, the duelling electors angle from 1876 is fresh and imaginative - though I'm not sure if it's technically viable. It's hard to pull a good twist with audiences getting increasingly savvy about the obvious hooks nowadays, but Arizona issuing subpoenas for a full forensic audit, the Wisconsin Supreme Court ruling against mail ballots cast due to invalid indefinite confinement status, and a quite damning unsealed forensic audit from Michigan on Dominion machines, all appear plausible subplots for development. Whatever happens, here's to hoping the protagonist gets back into the mix, I don't know, by pardoning Assange and declassifying everything so we the people can finally know whether we've made contact with extra-terrestrials, and also who killed JFK.


Against The Flow

Beginning with the local research climate, the government's Research, Innovation and Enterprise (RIE) 2025 Plan has earmarked S$25 billion over the next five years, of which one-third will be towards basic research, that last addressing a concern pointed out last year. Credit due where it's earned, they've never shied from throwing cash around on hot areas that they've set sights on. A.I., 5G and cyber security were mentioned as key focuses, with quantum computing and blockchain earning additional call-outs. About blockchain, an innovation program has just been launched with nearly S$9 million in funding, and DBS Bank is looking to start their own exchange, about concurrent with the S&P's announcement - a far cry from when the entire Bitcoin enterprise was seen as the domain of dodgy nerds, hackers and ne'er do wells.

Fair disclosure: I have just divested myself of (nearly) the last of my BTC holdings at US$18.7k, following some relatively indifferent trading over the past half a year. This, of course, comes as Bitcoin has just smashed its all-time high of US$20k, but I'm not into second-guessing after this long journey. Recall, Bitcoin had first been covered here way back in August 2011, with investing in earnest beyond hobbyist mining coming after the predicted crash in 2013. Annual analyses on the nature and potential of cryptocommodities followed over the next few years, with accompanying price projections (usually accurate) supplied by my helpful hamsters. I might as well disclose the stakes too: everything. 从一开始, 我赌的是一切.

Not to say that it was all that courageous or anything - my graduate student stipends then weren't that high at all, and if the worst came to pass, there's always the CPF. It was merely a rational asymmetric bet on crypto, given one's undergraduate education in both computer science and economics. It wasn't that little, but it wasn't that much either in the bigger picture, and I supposed I could always sell out and seek employment as a quant or similar, if the bet went bad. Well, it didn't, and while a few mistakes were made, some additional experiments in swing trading resulted in roughly a hundred-bagger.

Given this, it's fair to question as to why the pulling out now, and while the in-depth discussion will be left to the hams, there are two main factors. Firstly, the broader market looks, for lack of a better word, crazy; despite a full-blown pandemic, U.S. markets - and tech particularly - have ballooned thanks to the Fed's unprecedented support, to the point where some are wondering whether it's even possible for these markets to crash. Some of these valuations honestly make no sense to me at all, but it's a paradigm shift and this time it's different, amiright? On one hand, the Fed has committed to keeping rates near-zero until 2023, which would seem to encourage holding assets. Indeed, more-traditional investors didn't even have to delve into crypto to see huge gains this year - Tesla, for example, has appreciated almost seven-fold, and if one had chosen the right small-cap, it could have been rather more.

Whether a big crash is in crypto's - and the wider stock market's - future might be seen, and the second reason is more that Bitcoin's upside appears relatively limited, going forward. While most of the conclusions drawn from previous years' analyses still stand, and frankly there's not been much original theory that's not already been covered on the bitcointalk forum and other old-timer venues since maybe 2013, it's also true that its energy consumption requirements likely impose a hard cap on its value, bar fiat hyperinflation. Some estimates have Bitcoin already using over 0.2% of global energy supply, and since price induces mining effort proportionally, another 100-fold increase in value would seem to imply 20% of global energy being burnt towards Bitcoin, whether from a renewable source or not.

Long story short, I'm near-wholly out for now, and if the markets go down over the next year or two, it might be time to start poking around again; if not, I'll just have to admit that I don't know economics as well as I thought I did, and stick with my default arbitrage strat in greenbacks. Even US$100k from this point is just a five-fold increase - which, as we've seen, is more than accessible with normal stocks - and one supposes that dogged adherence to a single asset class can sap one's drive for discovery. Personally, about US$6k seems a good target to watch out for, and if it doesn't happen, it's on to the next big thing...



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