A lot of people, some of them extremely smart and knowledgeable in fields other than finance, believe that there isn’t much difference between Bitcoin and stocks or any other financial asset as an investment because “you need someone to buy it from you” in both cases. A thread.
When you buy a stock, the reasoning goes, you do it because you expect you’ll sell it to someone else at a higher price. It’s exactly the same as for Bitcoin. Hence, it’s the same game, right?
Obviously not.
A stock is a share of ownership of a company. This company has assets.
This company has people working hard to generate profits that compound to its assets. Think of your stocks as a claim on a percentage of a bag in which the company’s employees are putting the money they earned for the company every quarter. The bag gets bigger and more valuable.
You can’t easily claim your share of the bag of money in exchange of your stocks because it’s not that simple - the assets of the company are usually not that liquid and divisible, like factories, brands, agreements with suppliers and distributors. They are nonetheless valuable.
The fact that YOU can’t cash out easily doesn’t mean that OTHERS can’t cash out. Think of competitors that could buy the company if they deemed its shares cheap enough. Or someone who could get a big loan and buy out the company, then pay back the loan out of future profits.
By buying stock, you are betting that the value of the company as a whole will increase. The share price is only a reflection of that. You don’t need to find a “greater fool” to buy your stocks at a higher price - if no greater fools come up, someone will buy the whole company.
Stocks have value regardless of people buying them or not. That’s the difference with Bitcoin. If nobody bought Bitcoin, it would go to zero. If nobody bought $AAPL, Microsoft or Amazon or Google would buy Apple and you’d still be able to cash out your $AAPL bags.
When you buy a stock, you’re basically front-running the big guys who would like to buy the whole company but can’t pull the trigger yet. You’re holding the stock and watch it go up in price because the whole company becomes more valuable as its employees work their asses off.
Of course people point out to short term moves in stock prices and say “see? It’s all unfounded speculation just like Bitcoin”. Let them gamble their money away. Short term volatility is just a rope for suckers to hang themselves with. Long term, fundamental value prevails.
“But look at $GME the market is a joke” - well it’s your choice to look at the 0.01% of the equity market that’s currently the most volatile and claim that it’s representative of the remaining 99.99% that nobody’s talking about because it’s too boring.
Long term. Or get screwed.
Bitcoin, in this aspect, is utterly worthless. Nobody’s going to buy it all because because of its assets or profits. It’s just suckers hoping to sell to other suckers without any rationale or logic other that “it has gone up for so long so why not a couple more months”. Suckers.

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More from @Tr0llyTr0llFace

9 Mar
I woke up early this morning & stumbled upon Seetee's "letter to shareholders" and oh boy is it an alphabet soup of nonsensical Bitcoin memes.
To quote Wolfgang Pauli, "it's not even wrong"
I guess Nic Carter must have had a strong influence over whoever wrote it.
Let's dive in.
TL;DR: "I've watched Bitcoin go up tenfold in a year and that gave me confidence that it's very valuable so I jumped in".
Of the 19 advisors that were consulted, only one, Mike Green, is a critic, and also the only one who understands finance and doesn't have a vested interest.
Let's start with the "Bitcoin is like the early Internet" meme. The letter references Tim Berners Lee - maybe they should have talked to him. Since Tim said 6 years ago that Bitcoin was getting ahead of itself, the number of daily transactions has barely gone up threefold.
Read 20 tweets
8 Mar
The meme of Bitcoin as a hedge against inflation and central bank money printing is stupid and perfectly tailored to stick in the brains of financially illiterate bagholders.
First, it seems intuitive that inflation should push Bitcoin up, as everything goes up with inflation.
Except Bitcoin isn't bacon or milk, it's a financial construct. Not all assets go up with inflation. Bonds go down with inflation as interest rates rise. Stocks can go down with inflation if input costs exceed the company's pricing power.
Bitcoin's input costs would rise.
Bitcoin costs money to exist - it needs ASICs and electricity, and those will definitely go up with inflation. Of course miners are free to reduce the hash power to counter-balance that, but then the security of the network will decline, so how is that good for the price?
Read 8 tweets
7 Mar
Remember when Paul Tudor Jones invested in Bitcoin, in May 2020? In his letter to investors, he explained that Bitcoin would be a good "hedge against inflation and money printing", without going into much specifics.
But he did one very weird thing. He didn't buy Bitcoin.
Instead, he bought Bitcoin futures. That's very, very weird for one reason - Bitcoin futures have a very negative carry as their term structure is in contango. A Bitcoin future a few months out costs much more than Bitcoin spot, and PTJ was willing to give up that spread. Why?
Some said that it was "easier than buying Bitcoin", but come on - a multibillion dollar hedge fund can figure out how to buy Bitcoin and store it in a wallet.
I can tell you that in funds like those, an army of PhDs spends their days figuring out the best way to make every bet.
Read 11 tweets
6 Mar
Nic Carter still tries to spin Bitcoin's mind-numbingly stupid energy and cash burn as a "debate". It's not a debate: Bitcoin's energy energy and cash burn is mind-numbingly stupid.
Let's dissect the desperation of a hypocrite who's backed into a corner.
The opening salvo sets the tone.
Nobody's debating if it's worth to spend "any" energy on Bitcoin. Sane people are simply saying that it's stupid to spend 100+ TWh/year because it's an insanely large amount and much more efficient systems could be set up to the same effect.
Then there's the assumption that Bitcoin is, or enables, "a non-state monetary system" and "sound money". It's not, and it doesn't. Bitcoin, in itself, is just a database - a distributed ledger, like tens of thousands of other databases, only much slower and more expensive.
Read 16 tweets
5 Mar
Michael Saylor's stated strategy to load up $MSTR with debt to buy Bitcoin is a mathematical guarantee of bankruptcy.
Remember $XIV, the "short volatility" ETF that went bust when the VIX jumped 100%? HSBC had written in the prospectus of the fund that was going to happen.
In the case of $XIV, you knew that an event where the VIX goes up by 100% in a single day is very unlikely, however, over a very long period of time, it's a certainty. Let's say the probability of that happening on any given day was only 0.1%. This means that the probability...
of it NOT happening is 99.9%, on any single day. But if you intend to hold your ETF for longer periods, the probability of the ETF not going bust over 10 days is down to 99% (99.9% ^ 10), over 100 days - down to 90.5% (99.9% ^ 100), and over 1000 days - down to 37%.
Read 5 tweets
5 Mar
I've been ranting about this for almost 2 months now.
To answer all those who are asking "how can I arbitrage this", the answer is, you can't.
Because the SEC doesn't want a Bitcoin ETF, it only allowed $GBTC to exist with one huge caveat: it's a closed-end fund.
A consequence of that is that $GBTC can't redeem shares. They never got that "exemptive relief" from the SEC (excerpt from their IPO prospectus below). Which means that you can buy $GBTC at a discount to NAV feeling smug, but what are you going to do if the discount goes to -30%?
The only way to milk a discount is to buy a very large stake in $GBTC, and then vote to liquidate the trust in the next shareholder GA - you'll then get your bags of Bitcoin. But then the market will know that you got a crapload of Bitcoin that you probably intend to sell.
Read 5 tweets

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