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21

James,

Thank you for your $500 contribution. I don't see how this could harm P123's marketing or their bottom-line if members are paying for a large portion of the costs. P123 attracting new customers is to everyone's benefit. While a polarizing issue in the forum, it is clear than even JPMorgan has a plan for benefiting from it. Whether they believe in it or not and whether it might conflict with the profits from my credit cards at some time in the future. Maybe they will benefit when the FED has a cryptocurrency and have a hand in the regulations written. Which is not meant to imply regulations are not needed or that JPMorgan might not be a be a good resource for instituting some to those policies:

"As with any investment, if you are considering investing in Bitcoin, we encourage you to understand the risks and rewards that can come with it. Contact your J.P. Morgan team for more information."

Link to above quote: If you are exploring Bitcoin—5 things you need to know

Jim

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22

So, I don't really care what P123 does with this other than hope it is a rational business decision. I am not a paid business advisor, BTW.

Here is a thoughtful and nuanced discussion by Lyn Alden who is always wonky while managing to be articulate at the same time. She is complex enough (and probably intelligent enough) that you may have other descriptions--both good and bad--that are true at the same time. Anyway, her ideas are interesting sometimes. I don't get paid to judge her as a person..

Still it may be worth noting that she does not like government control of much of anything, it seems—especially "Nigerian, Vietnamese, Argentinian, Lebanese, Russian, or Turkish" control but also the United States. The limits of control over Bitcoin in the United States, because it is open-source, may be interesting to those concerned about eventual regulations by the US regarding Bitcoin, as a practical concern.

From a social justice perspective, criminals are indeed using Bitcoin, as well as citizens in totalitarian regimes—which she focuses on in this article. I am not interested in weighing in on this but it expands on an issue @WERNER touched on already.

Rhetorical question (pertinent, I believe): How do you feel about this. US immigrants still use Western Union a lot, I understand. For transferring $200 thru Western Union, the cost ranges from 4% to 10% for international transfers (based on my limited research). Should there be more regulation of these transfers or more competition thru technological developments (or both)? I'm not going to opine but it could be part of a comprehensive discussion about the technologies enabling the transfer of money.

Assessing the Health of Bitcoin by Lyn Alden

Also, Marco points out there are other Cryptocurrencies. Some of them may be better. Lyn Alden may agree on that or at least be able to point out some of the problems with Bitcoin. Here is just one additional discussion on her site of the second largest digital asset (Ethereum) for example. Generally, Ethereum uses "stable coins" which may address some of the legitimate issues with Bitcoin including the volatility and the currency exchange:

An Economic Analysis of Ethereum

Linked by Lyn Alden in the above article about Stable Coins: Federally Chartered Banks and Thrifts May Participate in Independent Node Verification Networks and Use Stablecoins for Payment Activities

Excerpt from this Office of the Comptroller of Currency letter: "Our letter removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers who are increasingly demanding the speed, efficiency, interoperability, and low cost associated with these products.”

TL;DR: Banks can and do use Stablecoins and Blockchain for reasons that include reduced transaction costs.

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23

For nearly a decade, I held the belief that cryptocurrencies were worthless. But I've since changed my mind.

The tulip mania famously lasted just four years. By contrast, the cryptocurrency market has persisted for over a decade—approaching 15 years—and continues to grow. Adoption is expanding steadily, and so is the price trajectory.

Even derivatives like options, whose utility some reasonable people question, have proven their value by creating billionaires for those who trade them successfully.

So why not apply systematic trading strategies, like trend-following or sentiment-based systems, to cryptocurrencies? The potential seems significant. In fact, I’m starting to believe that using these systems in crypto could outperform similar strategies in commodities or futures—markets where trend-following has already been widely and successfully adopted by even conservative investors.

I pledged $1k to this project.

If others are willing to help build systems, I'm interested in working with them. I think there's more retail in crypto than stocks and therefore the opportunities are akin to decades ago using systems to trade against retails in stocks.

24

Now Marco have no Bitcoins so probably no chances for this project :slight_smile:

25

Still hodling :slight_smile:

Still not seeing the ROI in adding crypto data + backtests. So you can backtest with only technicals? And EOD technicals at that? A lot of work and cost and nothing particularly unique. Just hodl ...

26

I'm surprised by this remark. Stocks are one of the most picked over assets to invest in - we are competing with retail, institutional, market markets, and prop desks. Just take a look at Vanguards AUM and the fees for equity products. ROIs keep falling.

In hopes you can re-engage with thinking about this - I believe this project could be an exciting opportunity to expand P123’s capabilities by incorporating both technical and fundamental metrics, similar to how equity analysis evolved over time.

  1. Just as stock analysis matured with the introduction of metrics like P/E ratios and dividends, crypto is undergoing a similar evolution with on-chain data. Metrics like active addresses, transaction volume, and staking rates provide valuable insights akin to early stock fundamentals.

  2. Combining technicals with on-chain fundamentals (and AI now) would set P123, offering users a comprehensive platform that goes beyond price trends. Many platforms focus solely on technicals, but adding fundamental metrics would make P123 a go-to tool for growing crypto investors.

  3. Cryptos, likes stocks, require sentiment analysis and there are many novel ways to gauge crypto sentiment. This can very very fertile ground.

  4. We don't need to necessarily focus only on EOD. Just how high risk adjusted equity strategy are largely intraday, P123 can get an early leg in the crypto space to cater to these clients.

This market has too much retail relative to the overall mix of participants - and is too large - to ignore. Participants shouldn't be OK holding for dear life with crypto anymore than we are with stocks.

27

Wanta buy some tulip bulbs?

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I'm happy to have an open and informative discussion about this topic. However, dismissing it as merely comparable to tulip bulbs isn't just inaccurate—it overlooks the larger picture. If you can draw parallels between the two and explain how BlackRock and other major players are engaging in something akin to a "tulip bulb frenzy," I'd genuinely like to hear your perspective.

I understand that skepticism is natural—I held similar views for nearly a decade. But the growing evidence is making it clear that this space likely has continued staying power and significant potential.

29

I think the tulip bulb analogy is appropriate as I believe there is no real value in bitcoin as Marco, Buffet and others have written. It's just my opinion and not really trying to change anyone's mind.
I have been extorted for Bitcoin by criminals who hacked our computer system, so there is that use. Fortunately we had systems in place to recover our data.

30

I don't think it's worthless anymore. Few years back I just found it to be very unsophisticated, an insult to intelligence and hard working people, with silly rules like: mining is just guessing numbers (like a lottery), halving, and a 21M cap. But perhaps simplicity, or KISS, is it's strength.

I also follow Lyn Alden who's made a case for bitcoin for many years. Just google her or check out her book Broken Money. She's also held MicroStrategy for many years, another stock I dismissed too quickly bc of the relatively simple strategy of issuing 0% convertible bonds to buy bitcoin. Many are now trying to copy this simple strategy.

In any case, probably the strongest case is as a gold replacement. So long way to go, with enormous moat.

However, for P123 to spend time, money and effort w/o a clear innovation or expertise in the space? Not seeing it.

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31

Let me give this a shot: 0 to 10 trillion in value in about 10 years

  1. Crypto is Global: A quick search reveals the major players driving markets, with early investors now managing billions in AUM or personal wealth (Pantera has about $5bn in AUM). The total cryptocurrency market capitalization is approximately $1.8 trillion as of late 2024, with Bitcoin alone accounting for over $1.2 trillion and Ethereum around $400 billion. Volume is in the billions per day. The SEC's approval of Bitcoin ETFs and the U.S. recognition of Ethereum's utility underscores this.

  2. Allocation Gap: Very few investors have meaningful allocations to crypto today—but as the market matures, they will likely be forced to adapt. Despite its size, crypto represents only 1-2% of global investable assets, leaving tremendous room for institutional and retail adoption.

  3. Investment Challenges: How does one effectively invest in this space? Expertise is scarce, and there are almost no robust tools to help navigate the complexities of the market. With about 10,000 cryptocurrencies in circulation and a rapidly evolving ecosystem, investors need advanced tools to make informed decisions.

  4. Innovative Potential: By applying the P123 framework (and AI), integrating time series and cross-sectional analysis with crypto fundamentals and technicals would be inherently more innovative than what's currently available for equities or ETFs. Given the 24/7 nature of crypto trading and the availability of on-chain data, the analytical possibilities are broad.

  5. P123’s Opportunity: I think P123 must embrace the role of a leader, expert, and innovator in this space—moving beyond its current positioning as an accessible and cost-effective alternative to competitors. With the crypto market projected to surpass $10 trillion in total value in the coming years as tokenized assets and smart contracts scale, entering now positions P123 at the forefront.

32

TL;DR: With my AUM, my stock strategy may achieve a 30% CAGR for a while, but the amount of money already in Bitcoin strictly limits its long-term potential.

Backtesting only works if the future is somewhat like the past.
Moreover, it is a fundamental principle in finance that, over the long term, an asset's growth must align with the growth of the economy (GDP).

Bitcoin’s historical growth has been extraordinary, with a 5-year compound annual growth rate (CAGR) of approximately 29.4% (2018–2023). If this growth rate were to continue, Bitcoin’s market capitalization would exceed the current GLOBAL GDP of $100 trillion in approximately 21 years.

This calculation assumes:

  1. A steady 29.4% annual growth rate in Bitcoin's market cap.
  2. Global GDP remains constant (an unrealistic assumption, as GLOBAL GDP typically grows over time).

At some point, the future will diverge from the past, and backtests based solely on historical data will fail—possibly spectacularly in some scenarios. It is a proven fact, based on established financial theory, that Bitcoin's future will differ from its past. I believe it is overly optimistic to assume it will take as long as 21 years for this divergence to occur. While no one can predict exactly how this change will happen, and no one can backtest it reliably using current data, the long-term limits on Bitcoin’s growth rate are certain.

33

As @korr123 there's easily around 10y of 30% growth to reach 10T , which is still a lot less than gold's current market cap of 17T.

That's a long time.

To truly innovate using our tools (multi factor ranking, backtesting, and AI factors) we need more than just prices. Something like this library of "on-chain" metrics Metric Catalog | Glassnode Docs would give you multitudes of features that can be used for training.

Their prices are $50/mo for individuals and $800/mo for professionals (btw, that's a huge difference, ours is only ~2x). And redistribution right (w/o downloading of course) are going to be expensive. I'll inquire just for fun. Maybe they know us and will do a rev sharing agreement.

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35

Heard from Glassnode, provider of blockchain metrics

They might be open to provide us with Basic Metrics (T1+T2) for backtesting on P123 for rev-sharing. That's about 66 T1 metrics and 250 T2 metrics

We would have to charge $100/mo for this to make sense.

I will make the following changes to the Sponsored Project terms:

  • Goal remains at $25,000
  • Minimum pledge of $1,200
  • 50% of your crypto data add-on will come from your pledge

So for example: if you pledge $1,200 your monthly cost for crypto metrics would be $50 with other $50 deducted from the pledge. After two years it would be $100/mo.

The data is EOD and we would make it available to ranks, screens, AI factor, etc.

Thoughts?

36

I have reset the terms, and created a new poll that you can use to pledge.

Thanks!

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37

Made I mistake, it would be T1+T2 metrics. Around 330 metrics.

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38

Dear all,

JUST IN: Ethereum (ETH) rises 23% in one day, surpassing $2,300.

Calvin Tsai (my wife's crypto tutor) did even better with his algo trading via API. He is up 32.7% yesterday.

Pls keep in mind that there are opportunities and risk involved with cryptos. If you trade perpetual futures like Calvin, it is basically a zero sum game and my guess is that the top 10% makes all the money from the rest.

Regards
James

Calvin
Calvin1342×789 41.4 KB

39

Dear all,

I understand from Korr that he has offered to pick up the whole price tag for this project but Marco thinks there are not enough potential users to justify going ahead. The reason I am writing this message is to try and convince more P123 members to support this initiative.

It is obvious that the existing crypto market is less efficient than the stock market which also means that there is a lot of more money which could be made for being in the top 10% traders/investors in crypto than the same top 10% level in the stock market.

I have seen and witness first-hand expert traders and investors like Calvin (pls see the performance of his account in Binance above - he also maintain similar accounts at Bybit and OKX) made over USD 30 mio+ from USD 1 mio in capital just a few years ago. If one can become and maintain in the top 10% level, the crypto market is definitely more profitable and provides good diversification from traditional asset classes like equities/fixed income and with a higher Sharpe.

My personal view is that it is possible to become the top 10% traders/investors in crypto with the help of P123 AI (including Glassnode data) and mayve even the top 1%-2% (if intraday Glassnode and Price data are used later with further enhancements in the future).

Thanks again for Korr and other potential users and pls show support for this project.

Regards
James

1 Like