Bitcoin Forum

http://s3.postimage.org/mb4jclmg3/chart6.png

the Detrended Price Oscillator suggests that this move up is an important breakout. bubble or bulltrap?

The weekend dip was the worst ever - someone tried hard to start it but failed.  This means two things first is that person will be buying, second people are again conditioned not to sell.  The first might result in a bull trap - the second is longer term.

this oscillator indicates the same thing as the OP, but could also mean either a bubble or a bulltrap.

oscilators shmoscilators...

Bitcoin is in a bullish trend, it will continue until it stops. This could last very long time (markets are known to be stubborn and irrational for longer than many can remain solvent).

bubble or bulltrap? that was quite a loaded question. Why discount a possibility of it simply being a trending market? Wishful thinking much?

the assumption is that is has been a trending market, but that it just broke out of that pattern (see the OP).

you disagree?

I don't have access to my marked up chart at the moment, but even the most recent high of 25.7 was at the top of the trend channel, and it has slightly corrected since then with possibly more on the way. Based on that, I don't think there was a breakout, but the oscillator is possibly showing the increased exhaustion of moving higher at this point which worries me. I think we've got a short term correction to the bottom of the trend channel before anything else. My answer to your question is dependent on whether or not that small correction happens.

I do disagree. All I see on the chart in OP is a line which starts in bottom left corner and stops in top right corner. This is basically definition of a trending bullish market, the rest is noise.

The Bitcoin market can remain stubborn and irrational (nonsensical term!) indefinitely because it is an equity based play where, currently, there is very little in the way of leverage instruments. That means holders of bitcoins can remain solvent indefinitely; there is no debt to service and no margin calls.

uh, that's not how oscillators work. unless you're talking about the price data?

'a line' doing anything means wildly different things depending on what that line represents. there are indicators which when trending up indicate downward pressure...

The real test for bitcoin's enthusiastic investors and speculators is the previous highest mark, which briefly touched $32 before plummeting down to barely more than $2. 

FTFY. It was $1.99998

There is nothing really significant about that high mark, since the supply has increased substantially since then. The valuation of all bitcoins is already higher than when the price was $32 per BTC:
https://blockchain.info/nl/charts/market-cap?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

My guess is that Pirate finally ran out of coins, or stopped selling :)

Heh... is it true that you've stopped beating your wife? Sometimes, it's all in how you pose the question, isn't it?  ;D

Maybe the market is correcting as we speak... it's just correcting upwards.

you're assuming speculators haven't gone out and borrowed a bunch of fiat and dumped it into Bitcoin.  nor are you considering how leveraged other aspects of their lives might be.

for instance, if someone bought Bitcoins with cash but also leveraged up to speculate on 10 houses, their Bitcoin stash may be very vulnerable to liquidation due to a downturn in the housing market as the speculator scrambles to raise cash for mortgages gone bad.

Did you just say long squeeze?

Well, the argument from "imponderables" applies to pretty much any kind of investment (gold, silver, shares of Microsoft in 1987). There are a few other unknowns in the Bitcoin environment:

- How many ultra-early adopters own wallets with upwards of 100K BTC?
- How much does any one of them really want to buy a house?
- How likely is it that the hard drive in the laptop on which they originally mined those coins never went tits up?

And so on and so forth...

However, on the "ponderables" side, Bitcoin, as an investment mechanism, is on the face of it an equity based play.

None? At least none with 100k wallets except for this one here: http://blockchain.info/address/1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a

Could be split of course for the rest of the early adopters. But generally, I tend to believe in simpler versions. So - few or none.

no, i'm just pointing out a fact.  but sure, if ppl get too overleveraged to the long side and we top out with a prolonged down swing, then of course they might be forced to liquidate.

what i'm saying is that Bitcoin doesn't live in its own little world.  its directly hinged at the hip with fiat and politics.  this is one of the main purposes of my newsletter; to tie in real world economics with what's happening in Bitcoin and to help us understand how one affects the other.

I am quite confident there are many more suckers out there who will be happy to buy bitcoins at an even higher price.
I will patiently wait until they blow their load.

matt, I like how you stay bearish for what, 3rd year now, even though history is trying hard to teach you a lesson, but you just would not listen would you? :)

what history? you mean where bitcoin was created and worth nothing...
then it ran up to 32...
then it fell down to 2...
and now it appears to be running up again...
and if history repeats...

He's a miner.  He can make a pretty nice profit with much lower risk by being bearish.  Not my style, but I imagine my life is very different from his.

Sometimes being familiar with cryptos works against us.

The competing digital currencies are fiat, BTC, and LTC. Everybody thinks Litecoins are beaten down to death because they look atrocious next to BTC, but they've actually held their own or gained vs the worst of the bunch...USDs. It doesn't matter how overvalued we BTC old hands think they are currently, people just finding out about them look at the all time high and think they're getting a bargain...even at $25.75.

I know this happens because I was recently contacted by an old friend, who wanted to ask me if I was into those "bitcoin thingies" he recently heard about and obtained. My response was WTF! I TOLD YOU TO BUY BTCs OVER  A YEAR AGO!

Please post that marked up chart when it becomes available.

It fell to 2 because gox was hacked. The hacking was very serious because "fake coins" were sold on the exchange. There was no way to know how many of these fake coins were sold for fiat. So the value of the price ON GOX was untrustable. Of course this was NOT a weakness of the bitcoin network itself, but because gox was the market pricing mech the price HAD to be reset. 

Yes, the history which says "if you wait for a year, you bitcoin is guaranteed to be worth at least twice as much". But you keep selling them whenever you get them. It is good to see people hold on to their beliefs, even when market steadily goes into another direction. I'm a permabull, I was buying at $20, then at $10, then at $5 etc all the way down, now buying the way up, and I don't plan to stop soon, so I hope there are more permabears who don't stop to sell to me. That's all :)

No, it was $1.994.

https://i.imgur.com/tw19L1T.png

We have two finalists for the most anal point of the year award! Congratulations.

Hey, value had here == "long term, bitcoin remains bullish as long as prices stay above ... 1.994 $."  S0352 said so  :D

eh, I'm still buying, and will continu to buy all the way to 100$ !

- aBTCsucker ;)

Here you go, it's actually fared even better than I thought it had earlier. Price has so far perfectly adhered to the channel:

https://i.imgur.com/ZaSZasE.png?1

As you can see, we established support and resistance between 1/24/13 and 1/26/13. An ascending price channel with support and resistance was confirmed between 1/31/13 and 2/2/13, and today we tested (and so far kept) the upper channel resistance around 25.75.

I had more stuff on here earlier, but my chart got reset. Regardless, this is the point I was making.

You have three tops here - you choose to draw the line through the current top and the middle one - but miss a bit the bottom one, if you draw it through the bottom one and the middle one - then you'd see that there was a break out, however small.  If you always draw the line through the current top then you'll never have a breakout by definition.

Nice theory, but no, that line was actually drawn BEFORE the current top existed. In fact that "line" was drawn when price was still around 24.30 or something like that. the "miss a bit of the bottom one" is 90% wick that is exposed above the line. These "lines" are drawn as parallel rays, not free-floating lines so there isn't any way I could have just chosen whether or not to change the angle of one of them to fit the chart.

Furthermore, the top resistance is based off of the bottom channel, as I use a parallel ray tool to draw the bottom support, which then duplicated the bottom ray's angle and I moved that up top so as best to fit the bottom and middle resistance. This is the best fit, and it has applied perfectly. Go ahead, check my logic.

REGARDLESS, I wouldn't be worried about a five pip "breakout" anyway. That's not a breakout, that's a cocktease waste of breath. Especially since I purposely included the top channel resistance from before the current one, so you can see how there was a little breakout there that didn't matter even the slightest bit because it tanked shortly thereafter.

And, seeing as how price has adhered to my price channel, while "breaking out" of your top resistance, I'd say of the two of us that I have the more accurate markup at the moment.

You're entirely reading into it too much. Markets don't perfectly adhere to lines most of the time. They over and under-shoot. There's no reason to make sure you draw your lines from perfect top to perfect top and perfect bottom to perfect bottom, etc. Because markets just don't to that. If markets worked off of pure technicals, bitcoin itself would drop down to 0.01 and 100.00 multiple times a day. The markups are to show general trends, they are to show ideas and hive-mind mentality in markets. A difference of a few cents from where you thought support and resistance are and where price actually reversed is not significant most of the time.

What does "worry" me about my resistance level on this chart is that it looks like we might have another loose inverse (bullish) head and shoulders forming with the neck line which would significantly break out above my resistance level. Alternatively, it could be a gartley in which case it would tank down and confirm my resistance. Image:
https://i.imgur.com/m72BfF6.png

BingGO!, most people didn't realize the difference of bitcoin market (as of now) vs. stock market, even bond market.
Those market sare highly leveraged and also depend on credit to function.
bit coin is not!

(But note Chinese stock market is not leverageable in the past but still volatile)

Lol. Similar experience ;)

The smartest thing to do is to tread BTC as a savings account. Only cash out when you need to cover bills. No intelligence required.

wow, just wow.

Some could actually argue that some intelligence is required to be able to make a conscious decision to not daytrade Bitcoin.

News flash: In fact, 2011-2012 was just one big beartrap :D


This means I'm practically a genius!

Let's not forget that there's a difference between day trading and tactical (re)allocation once a week or so. Just because I follow the charts daily doesn't mean I react to them as a day trader would. Some could argue that some intelligence is required to realize that you should periodically re-position your savings vehicle so that it has the least likelihood of losing value and a greater likelihood of greater return.

"tactical (r)eallocation once a week or so" is effectively daytrading just on a bit longer timeframe. Some intelligence is required, lol, to realize that if one uses euphemisms it does not change the reality.

Also claimed likehood of a greater return is a very arguable, could as well be an illusion. With greater rewards there are usually greater risks.

Day trading isn't day trading if it isn't day trading, sorry to tell you.

Also, tell that to the people who now have an annual return of ~2% over the past decade because they just never paid attention to their portfolio as compared to the people that had certain targets and reallocated periodically based on analyzing their situation that are +8% or more over the past decade on an annual basis -even some of those who are long only-.

The buy-and-hold forever strategy might -sometimes- work with stocks/bonds/cash because you have inflows from dividends & interest payments that add to your total return. To think that you can be long-only on a zero-payment coupon and consistently outperform someone who actively, periodically (not constantly, mind you), positions themselves against statistically significant risk is a joke.

-> Finance/Investment major. I can throw the math up for you if I have time later. But I guarantee you that I've done more research into the subject and have more evidence behind my claims than you do.

Ohh vigor of youth...

Tell me that you have traded options, for example, for 10 years or so. I might be impressed then.

Eh, options for about two years, currencies for 3-4, stocks for 5-6.

Relevant: Oh hey, this is the kind of strategy I'm talking about. Though they weren't around for the full decade, but they were here for 2008, and pay special attention to that number, as well as the annualized return for the past five years. Tactical Allocation, my friend. And a very simple one at that. They reallocate once a month.
https://i.imgur.com/k05DikP.png

You call that math?

"Past performance does not guarantee future results" Did they teach you that in your Finance major? I can give you virtually infinite number of investing strategies that were successful in the past. Once that WILL BE succesful in the future are rather very different animal.

Now show me the math describing human emotions, fear and greed specifically. Why do you think that you will be able to pick tops and bottoms consistently when there are real money on the line. Theory and practice are two very different things.

Explain how come wast majority of investment funds with all their smarts and financial majors are unable to outperform S&P.

http://www.dailyprincetonian.com/2002/05/08/5144/

I would think that a monkey throwing dart into calendar would do better than to pick tops and bottoms, on whatever time frame, than wast majority of Bitcoiners (those not extremely lucky ones).

1. Yes, I know that full well. But past performance informs future decisions as best as it can. I hope you know that, because we AREN'T monkeys throwing darts. Any moron that goes into investing without looking at the historical nature of it is just that, a moron. I hope you've been taught THAT much.

2. I said I would put the math up later IF I HAD TIME. That requires a significant investment of my time which I can't do right now. Pictures are quick.


You, like other greedy and then fearful investors think it's about picking tops and bottoms, which it is not. It's about catching more of the upside than you catch of the downside. Which requires a whole different set of theories, models, and ideologies which you are obviously not familiar with.


2. That's because you have no idea what actual long-term investing is about. Go invest 100% in the S&P, please. I'll be waiting for you to commit suicide the next time it crashes because of how great the risk is. The biggest part of investment management is RISK MANAGEMENT. Those managers aren't just there to earn you the greatest return over time, but to help make sure that you can still afford a bowl of oatmeal the next time the market crashes. Those managers may not earn a greater total return than the S&P, but a good manager will damn sure not lose as much as the S&P when it goes down.

You make too many incorrect assumptions about other people my friend. Remember there is an ass in assumption. I think I'll postpone this conversation now ... get back to me in a decade or two.

here's the best long term hedged pair trade for you guys:  long Bitcoin:short S&P.

edit:  there's a very good chance you'll win on both ends of this trade.

I like this guy he has a brain. It is easier for people to be mentally lazy. So just saying BTC will always go up and that you can have a financial plan that no intellegence is required for is popular. When BTC hit 20 or so. I took all of my money out of it and put it into inventory for my business. I get a 300-400% return with nearly zero risk. So you take advantage of wealth cycles. When the price stabilizes I will get back in.   

:D Your business is gambling or drug smuggling? Since you are saying "zero risk", I can safely deduce that you are a king of some small african country, smuggling drugs using submarines. 

Congratulations, you really don't need bitcoins then!

 :) No that is very high risk. You are right I dont need BTC with or without it I will be fine. My business is salvaging pleasure boats. I buy them with bad transoms or engines or out drives then strip them down for parts.  

Not if you are a king - you can just make it legal in your jurisdiction.

youareanidiot.org (http://youareanidiot.org)

I'm with you on this one Cypher, although I'm leveraged short on the S&P (as I suspect you might be too) so it's not really a perfect hedge for me.  I'm hoping to win on both sides of the trade but we'll see, haven't quit my day job.... yet.

great minds think alike.

and the verdict: bulltrap

http://s12.postimage.org/syacyqba5/bulltrap.png

A classic sweep stop :D

so it's looking more like a beartrap now, huh? :-\

i'm referring here to a misleading bullish breakout of a price channel, which has the same psychological effect. bulls buy for renewed rally, but the price just needed the momentum to correct.

anyway, with the buying pressure so strong (we've already retraced 100% of the correction!), we may indeed get a bubble top after all.

I dunno .. that could be a one hell of a huge stilletto ... means we are heading higher, like much higher north of $40.

I was expecting correction to $20, but that might be all we get is what we saw today. Next stop $32 ... choo-choo.

One hell of a stiletto indeed. Very curious. We still have that upper resistance to deal with, though. Curious, curious. I definitely didn't expect that quick of a move back up.

Now we had a correction bears were longing for so much, sic. Biz as usual now.

not quite (https://bitcointalk.org/index.php?topic=143942.0)

It's obviously a bull trap.  But with the next downturn at around 100 USD.

i try to post my analysis publicly, free of charge, because i don't intend to be a shepherd of lemmings, but rather a purveyor of information. subscription-analyses suffer from numerous conflicts of interest.

as such, if anyone benefitted from my early warnings and profited from shorting the knife, or increased their btc holdings on the way back up, please contribute and i will continue to provide my analysis publicly on the forums. i do put a lot of work into it, and i've been getting a lot of backlash from the rampant bullish sentiments here. it would be nice to know that my voice is heard and appreciated.

--the bear bitcointalk deserves
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