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COLATERAL EFFECTS OF BTC LOANS ON YIELD EXPANSION

Discussion in 'The Kruse Longevity Center' started by Jack Kruse, Feb 9, 2021.

  1. Jack Kruse

    Jack Kruse Administrator

    In 1980 I remember my grandparents loving their bank CDs. The interest rates on those assets got as high at 20% during that time and far outpaced any assets.

    Today, I see something developing now before our eyes that too few might see. As interest rates drop like a rock no one wants to hold bonds because bonds only make money as interest drops. Right now they cannot drop any lower.

    In the BTC market, people are scooping up BTC at record rates and HODLing and levering up. This means that their coins get pushed to cold storage of the lending institution as collateral.

    I'll use simple numbers to make the case.

    As you the investor put two BTC in.......BlockFI sends one of the coins you deposited for a loan back into the market to make an arbitrage play. What happens to the BTC market when two coins go into the cold storage of a shadow bank and one comes out?

    We call this supply suffocation. And for HODLers this is great news. It mimics what we see in a 4-year halving event.

    But what makes this different is the one coin is thrown back into the derivatives market (UNI/Aave etc) and this creates a desire for traders to capture the spread in the derivatives market for an easy profit. The volatility is also sought by traders. The higher the price of BTC goes the more traders want to get in on this trade. BTC is currently there now.

    This creates the situation that my grandparents got on CDs in the 1980s.

    This chronic derivative arbitrage on the long and short side of BTC will create a yield curve for BTC. BTC demand will rise and BTC supply will be shrunk because of the 2:1 ratio.

    This means a wise BTC investor will never cold storage their BTC because we should see interest rates on BTC to rise from 4% now all the way up to 20-30% soon. As BTC rises in price like equity, one can also capture the BTC yield of your total supply in the right place. What will expand the yields on BTC accounts? A RISING PRICE OF BTC.

    Now how does Metcalfe law fuel this?

    What happens when bond investors realize when they have trillions parked in 1% yield ten yr bonds that they are missing out on 15-20% yields possible in the BTC market?

    Right now 100 Trillion dollars are locked up at 1% and 20 Trillion is at negative yields or interest rates. What happens went the bond market realizes that the yields being developed in the BTC free decentralized market are the real price of inflation and where interest rates should be. Do you not think this situation deflates the bond market and people begin to run into the BTC market place?

    If so, with the limited supply driving this..........where will the price likely go of BTC?

    Higher. Equity investors will realize immediately they need to dump their APPL, AMAN, FB, and GOOGLE to hedge against the real inflation rate of 15-20%. This will make Wall Street understand just how overvalued the S&P 500 or the Nasdaq is now. Tesla buying BTC might have just hedged his own demise with 1.5 billion BTC.

    I just described to you the supercycle brewing in BTC I see coming in 2021.

    This is how we get to the 300K-1 million price per BTC sooner than anyone thinks.
     
  2. Jack Kruse

    Jack Kruse Administrator

    ^^^^^^This is what Avanti, Protege, Anchorage banks are all going to do. They are the catalyst to wake up the bond and equity market.

    Today, USD deposits in Ledn at getting 12.5 % interest already.

    That tells you the real inflation rate is higher than 12.5%
     
    Theka, John Schumacher and JanSz like this.
  3. Awainer1

    Awainer1 New Member

    So no cold storage huh? Damn.
     
  4. Jack Kruse

    Jack Kruse Administrator

    The US presently holds 70,000 BTC which is now worth north of $3 billion worth of Bitcoin on the Treasury balance sheet.
     
    John Schumacher likes this.
  5. Jack Kruse

    Jack Kruse Administrator

    Kruse Longevity is getting into the DeFi space. FYI. It was inevitable.
     
    DebraGM likes this.
  6. Jack Kruse

    Jack Kruse Administrator

    Today's PSA: the $1,200 stimulus check would now be worth $8,270 if it was invested in #Bitcoin ~6x return
     
  7. When you say no cold storage, do you mean it’s more wise to hold on blockfi or ledn for interest?
     
    Martin D., JanSz and Martina like this.
  8. Martin D.

    Martin D. New Member

    Will it then be convenient to remove my btc from trezor and put it in blockFi Jack?
     
  9. Jack Kruse

    Jack Kruse Administrator

    Depends on your context. These are the things I am covering in my crypto brainstorming sessions for members now.
     
  10. Jack Kruse

    Jack Kruse Administrator

    Humans do not understand logarithmic math linked to fractal geometry. BTC price movements for the last 12 years show a fractal pattern using Mandelbrot's geometry. Let’s say you bought $100 worth of bitcoins back when the price was $1. You would have ₿100. If you sold them at $18, you would have ₿1,800 (and you would be very sad today). Now let’s fast forward and the price is $1,000. Again you buy $100 worth, but this time you end up with only ₿0.1. If you sold this at $18,000, you would again have $1,800.

    So the move from $1 to $18 is just as significant as the move from $1,000 to $18,000 because an investor can make the same amount of money from it. On a log chart, these two moves are the exact same size vertically. On a linear chart, the $18 move would be dwarfed by the $18,000 move. You wouldn’t even see it. With the enormous price ranges, Bitcoin has been through over the years, linear charts are practically useless for our purposes. So the move from 18K to 36K was the same. 36K to 72K will follow the same log path. The 5 waves up to three waves down are the ECG of BTC market moves.
    A wave is just a sustained movement in price, either up or down. The basic pattern is five waves up three waves down. (See Fig. 1)

    This pattern is not arbitrary. It is the minimum number of waves necessary to allow for both cycles (ups and downs) and trends (sustained moves) within a fractal progression of prices.


    [​IMG]


    There are a number of rules and guidelines governing how to correctly count these waves in actual markets. There is plenty of literature online and books covering Elliot Wave progression you can look up for yourself. Mandelbrot's geometry is how Nature operates and there are a few that I have found to be most important.

    Rule 1: The end of wave 2 in an impulse can never extend beyond the beginning of wave 1.

    Rule 2: The end of wave 4 in an impulse can never extend beyond the beginning of wave 2.

    Rule 3: Wave 3 is never the smallest wave in an impulse.

    Guideline 1: Corrections tend to be choppy, overlapping, and hard to count.

    Guideline 2: Impulses tend to be clear, dramatic, and easier to identify than corrections.

    When you use fractal geometry You begin to understand the next 120 days for BTC could be beyond your belief.
     
  11. JanSz

    JanSz Gold

    upload_2021-2-10_12-30-49.png
     
    Last edited: Feb 10, 2021
  12. Bitcoin Crypto Index Technical Analysis Elliott Wave 10 Feb 2021

     
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  13. Jack Kruse

    Jack Kruse Administrator

    What is another collateral effect to expect with BTC? Crypto could become the biggest revolution to impact states in the USA as well as developing states globally (Africa/Nigeria) since decolonization. This likely will be the answer to imperialism for the working public in those regions. It hits squarely at the role of the state to citizens and is a brutal report card on a state’s fiscal foundations.
     
  14. JanSz

    JanSz Gold

    https://twitter.com/i/redirect?url=...d9c1&uid=975718715613380608&nid=244+272830466


    https://cointelegraph.com/news/amaz...-digital-payments-project-to-launch-in-mexico
    upload_2021-2-12_9-58-59.png
     
    Martina likes this.
  15. Janek

    Janek Gold

    [​IMG]

    or it could go this way. Eliot wave chartists are only good to recognize past patterns and never predicted anything meaningful that you could use to trade in short-mid term so I would stay away from it. It helps to understand nature of moves and how ridiculously high asset may go in parabolic moves but it's completely useless to trade with it.
     
  16. JanSz

    JanSz Gold

    chartists are only good to recognize past patterns
    it's completely useless to trade with it.
    .............................................................
    I was surprised that @Jack Kruse quoted that.
    upload_2021-2-13_6-38-52.png
    ..........
     
  17. Jack Kruse

    Jack Kruse Administrator

    Michael Saylor is doing today (with bitcoin and the US dollar) what Hugo Stinnes did (with gold and the Papiermark) before the collapse of the Weimar Republic. https://twitter.com/anilsaidso/status/1361720879927889921/photo/1

    BTC Current Price = $48,590 BTC May 2021 Futures Price = $50,975 Annualized "Risk Free" Return = ~21% This arbitrage is only going to force Bitcoin's price higher.

    More coins getting locked-up in derivative contracts for people trying to capture "risk-free" spreads. Here's my question: who's going to step in front of this Bitcoinfreight-train & go net-short without first bidding the underlying to write the 100% escrowed contracts?!

    Yield farming on BTC is more fuel driving this bull run. Glassnode is showing 17 billion BTC locked up in Yield farming. That $17B is locked up as collateral/margin, i.e. one side of these futures markets has essentially become HODLER for BTC owners. Add to that the options markets. IMO as long as leveraged longs maintain a 20+% basis rate for carry trades, bitcoin will go higher.


    Derivative-forced hodling. A completely underrated facet of the Bitcoin revolution

    MicroStrategy’s Bitcoin
    position can already produce more free cash flows via interest payments than all the work being performed by its employees. This next purchase will only make that reality more profound.
     
    John Schumacher, JanSz and caroline like this.
  18. JanSz

    JanSz Gold

    Please explain.

    ...
     
  19. Jack Kruse

    Jack Kruse Administrator

    People buy and hold BTC and want a yield or interest rate on their investment. To do this they put their coins on ice. Others lever up to the 50% margin position and this puts coins in cold storage. As the coin price goes up the loan to value ratio shrinks and the loans become heavily over collateralized. when this happens there are $$$ benefits to the lender. It also lowers supply which increases the price in a supercycle fashion.
     
    DebraGM, John Schumacher and JanSz like this.
  20. Jack Kruse

    Jack Kruse Administrator

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