Bitcoin Forum

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Please forgive my ignorance but could you define money flow for me, is this total capital coming into bitcoin in USD? It looks interesting though, I too think that bitcoin may be bubbling and have positioned myself for the time being into fiat, but my decision was based on search volumes being excessive compared with historic norms.

This is fascinating to look at, thank you for posting. So the price could potentially get to the $180-$190 range before reversing, eventually hit its bottom somewhere during the next arc, and then get to the $1270 during the next rally in the coming years? 

Daily?

I'd like to see how things go this time. It's dangerous to extrapolate from a single datapoint.

Is this MtGox data? Can you show me the actual equations? I'm having trouble understanding your definitions.

For sure its all ballpark speculation for those exact prices. But yeah the peaks of the arcs clearly don't match with the bottoms. Oct-Nov 2011 bottom was only a 1/4 into the second arc followed by a year long climb to connect with the arc again. Again this is all fascinating!  ;D :D

Sorry to be dense, but basically what you are saying is, that there is a serious resistance point at around $189 and another at $1274. What about support levels, though, or since there has only been one arc before is there not yet enough dips to draw any conclusions about that?

Well, thanks for the heads up chodpaba.

I see why you quit posting your analyses.  It will be very interesting to see what happens as we approach the 180s. sigh...

So TMF_n =  sum(i=1, n) |NMF_i| ?

Thanks, if I understand correctly then the ratio is a measure of the quantity of money moving in/out of bitcoin relative to the total amount ever moved to that date.

With diminishing supply due to people hoarding their coins, the price line is due to cross your money flow line. It does not mean the market will "crash" if the lines intersect.

Nice to see you posting interesting things again, chodpaba.

My personal analysis seems to converge with yours - though I'm reluctant to post a chart with the indicators I've been working on for the last ten years, for obvious reasons. Right now, we're in a bull phase that has some indications of continuing until at least May 1st. (Using my timing indicator, that is.)

Around that point, plus-or-minus a few days, we're likely to start a new bear phase. The only problem is - I can't estimate magnitude. So it may be your classic 'panic' decline, or a relatively soft correction that looks more like a sagging plateau. Its a very difficult problem to solve.

Keep us posted, it is fascinating to look at.

Intuitively, I'm leaning more toward a relatively soft correction. We have one data point (2011) showing that a massive/drastic drop following a parabolic move will not kill overall appetite for bitcoin in the long run. Even if you bought at the peak of $32, and held, you have made massive returns by now. I think that would add a lot to dampen  the emotional panic. Perhaps that may explain the major bounces yesterday.

I strongly appreciate this graph.  Thank you for posting this.

Can the same type of graph be made for the price of dollars in Bitcoins? Would the Money flow line be inverted? I would like to see this.

What is the physical meaning of "total money flow"?

No idea what it means:

http://i48.tinypic.com/28u46k4.png

typical price*bitcoin volume = an estimate of USD volume

If I plot USD volume it looks pretty much the same as net money flow. I think you are taking lag 1 differences and then adding them back when you do the integral (get the running cumulative "net money flow") so in the end it is a wash. Perhaps I am misunderstanding, but the charts are definitely very similar.

I still have no intuition for what total money flow means, at least the way I calculated it (and got similar charts to yours except using daily data rather than the 12 hr you must be using for so many data points). I did it as the cumulative sum of lag 1-day differences in USD volume magnitude. I think it may be interesting though.

And this represents the volume under the curve of the money flow?

Hmm. I think there is some miscommunication. If you posted some code or part of a table that would be great. I'm also unsure why the closing price gets so much attention. It is pretty arbitrary with respect to bitcoin. VWAP instead of typical price would make more sense I think. But even VWAP*BTC volume is just estimating the actual USD volume which seems to be the measure that includes the least compression... I dunno.

Way cool, what I see is lots of activity leading up to a peek when new demand (cryptocurrency converts) enter the Bitcoin economy.  Once in, it looks like they locking in and save. (an attitude of I have my Bitcoin's I'm going to hold tight and let deflation play out its course) then Activity / Demand decreases.

As demand decreases  the price falls, people start to use / sell their coins and activity increases, as activity increases the demand increases, and the price increases with demand activity starts to decrease (people start saving)


So it looks like to me, new cryptocurrency converts saving there coins, are the cause of the decrease in activity that causes the price to fall. The falling price of Bitcoin is akin to inflation in the Bitcoin economy and should spur innovation and growth, and disperse in bitcoin as a store of welth investment (and a decrease demand for Bitcoin.)

That will in turn drive activity and so we start the cycle again.

The graft can't make a prediction as it is driven by cryptocurrency converts, but it is cool it confirms that Bitcoin is distributing and the nature of its use / value.       

Sorry I don't get it, so the net money flow is essentially the derivative of money flow, right? Then you integrate it again? I am confused.

On the good side, I think this total money flow metric may be very interesting and should be investigated further. It seems to be some kind of bubble indicator (see my chart above).

Can you take the top graph an divide it by price*total_btc_minted?

Now what happens when this isn't flow but it actually "parks"?  Can we detect that?

I was actualy starting to understand the first graph haha, ok so if i have this correctly then after the first touch it seams that it should be a mirror image of each other as stocks move up or down so does the money flow in exact terms.  But then there is the money flow that alot is moving in and a lot is moving out so that would give it diffrent values, and the point is the interesting part at the end correct? where the money flow has gone down significantly yet the price has risen significantly stating that most all money has been for bulls or purchasing, so if this top line were to rise significantly and the lower (price) line were to stay flat or then would that be an indication of a drop off? obviously it would be a sign of volatility but in what direction does it indicate?

how im not dumbing up this intelligent thread. Thanks  :-\ 

I forgot charts can input for human emotion and news of global caliber,

i stopped trading solely on charts when i realized that i was only right about half the time and lost money,

seriously trying to use a chart and then tell people that this is a bubble or its going to correct is just a guess and a bad one at that there are at least 15k people waiting to get verified in gox,

does your chart/indicator know that? any one of them can be ready to pour in a cool milly. does your chart know that? no neither do I but it is probably naive to say that there isnt at least 1,

trade with both charts and News not just indicators considering most of the major ones are LAGGING meaning that they go off of what has already happened your guess is as good as flipping a coin

i also want to factor in that right now its very difficult to get bitcoins

Have you ever told a millionaire or billionaire that they cant have something?

this is just the start............

your obviously missing my points entirely from how you answered

an indicator has no emotion and can not think for itself, it merely transmits an image from the data it is given

an indicator cannot factor in the fact we have so many people wanting bitcoins

orly? I highly doubt you have contact to ANY billionaires but regardless of that you only are making my point

tell someone who has that much money that right now they cant have bitcoins, they are only going to want them even more

this is only the beginning as ive stated before,

these answers are so vague and horrendous id get better debate from a wall or rock

Im saying there is something charts cannot account for and that is why you shouldnt base all your trading on just that, why do you think some people make money in this game and some dont? because there are some people out there that just see things differently and can account for things that INDICATORS cant,

Whether you know it or not the people who are leaders of bitcoin are HEAVILY invested, and not only are these people working as hard as they can because of this but you are going to see a level of work that is unmeasured because they are working for their own benefit, since they hold bitcoins they want to see its success because in the end it is ultimately their success as well

Whether all indicators are pointing to overbought it probably doesnt understand what is going on right now with all the new money and news coming in, probably with any other financial asset or vehicle this would look insane but its just what happens when something limited in supply is being Overwhelmed by demand.

TLDR; sorry there isnt one

Let me take a stab at a TL;DR version of the chart:

TL;DR - The upward price movement is greater than the amount of money moving into the system can sustain (in terms of market depth, etc.).

Yes?  No?

please go jump off a bridge

Weeeeeeeeeeeeee!

http://i49.tinypic.com/2ym7nn6.gif

Ok, now what?

in real life and without water under it

this is true, though an incredible amount of data has to be inputed, for example that persons current emotional state, the history of that person from early childhood to the present morning, medications one takes, style of personal growth and the education level of that individual.

source- BS in Psychology  

What the OP graph really tells us for the recent days is that cash is flowing in much, much more than out. It doesn't really tell anything about being at a turning point or not. A whopping one preceding incident of money flow meeting price equaling crash doesn't establish a pattern. No matter how cool of an arc the data draws.

Disclaimer: this doesn't mean that it couldn't be a turning point. I'm not in the business of proving negatives.

I don't know what it means either, but thanks :).

sub

Not sure why... But I love this guy lol

What is the x axis? I think I read it was hours, is it? And are all calculations based on hourly price and volume bars?

The assuming this chart is based on essentially the most recent data, the date for the first convergence on the chart is then about Feb 10th. Yet, when looking at the price chart for bitcoin, there was no major pullback from a peak. What is the date range of the chart you are analyzing?
http://bitcoincharts.com/charts/mtgoxUSD#rg90zczsg2013-01-08zeg2013-03-10ztgSzm1g10zm2g25 (http://bitcoincharts.com/charts/mtgoxUSD#rg90zczsg2013-01-08zeg2013-03-10ztgSzm1g10zm2g25)

Good to see you back chodpaba, It's good to see a thread where I'll be learning something new.

Do you know where to find the data on how many wallet users were there were when it peaked about $32 in 2011?

That only goes back to April 2012.

Thanks. I was interested in that for reasons that might suggest a cause to any coincidence with your plotted ratio and price converging to a point.

On another thought. Not sure if it means anything. I noticed the wallets immediately spiked by a factor of about two to two and half times around the 2011 peak price. And when the bitcoin price was basing at about $10, prior to this recent uptrend, there were around 40,000 wallets. We are now about two time that value now. Maybe there's a possible clue to a near peak in that too?

For what it's worth. Based on simple technical reasons, I was already anticipating an at least short term top near around $181 to $189. This is one reason your thread caught my attention. My reasoning, however, has nothing to do with money flow. Just prior movements up to this point.

I've also guessed that if we will see at least a scaled up spike of 2011. The 2011 run was from $1 base to $32 peak. We will need to see it run or spike to $320 from our recent basing at ~$10 (mathematically convenient numbers :))

Our recent baseline at $10 also occurred with an average about 40 times more wallets than the 2011 base. Does that mean 40 times more interested bitcoin buyers as 2011 base time? Interesting coincidence that 40 x the $32 prior peak = $1280 is very near your next peak at $1274.

Oh, your right! I wonder if that could still be a roughly proportionate to unique wallet users. And unfortunately, the data for the number of my wallet users doesn't seem to start accumulating until near the end of 2011.

I've been thinking about this, and still can't think of any reason the number would or should converge. Well, at least your testing it. My hope is almost that it fails the test, simply because if it works, it will drive me crazy trying to figure it out despite the obvious potential benefit.  :P

Can you describe better how you calc/draw the ratio line?

Is this it:

initial raw data set:
{hour bar #1: O,H,L,C, Volume;
  hour bar #2: O,H,L,C, volume;
  hour bar #3: O,H,L,C, volume;
  hour bar #4: O,H,L,C, volume;
   ...etc...}

process the initial data to make this data set:
{hour bar #1: average(H+L+C)*volume;
  hour bar #2: average(H+L+C)*volume;
  hour bar #3: average(H+L+C)*volume;
  hour bar #4: average(H+L+C)*volume;
 ...etc...}

using that processed data set, is this then the final data set?:
{|(#1 - #2) divided by (#1 + #2)|;
  |(#2 - #3) divided by (#2 + #3)|;
  |(#3 - #4) divided by (#3 + #4)|;
  |(#4 - #5) divided by (#4 + #5)|;
 ...etc...}
where |term| properly => absolute value (term)

I see - moreso.

But since you intentionally modified the the volume quantile sizes to match the ratio minimum with price peak, why do you think the next major price peak should happen when it converges again with the ratio plot? Price could just blow past it. Or are you just being curious that it might.

Could you describe what you think the ratio might say in descriptive layman terms.

What about this simple interpretation: People trade less BTC when the price is high?

Do you have the same chart multiplied by price? That would be interesting to compare.

Feeling like doing a update? I want to see what it looks like right now.

this.

Nice, thread looks like A+. Gotta come back and read it today.

definitely a visible divergence downward in the more brightly colored lines

What exactly are you calculating now? I am not sure but I think you may be detecting that during "bubbles" there is a divergence between the rate of change in USD volume and the USD volume volatility.

Does that "DDoS" on Gox yesterday, and the associated dive in the price, fit on your model in any way?

Is it this one? https://bitcointalk.org/index.php?topic=173313.0

Hey chodpaba, you gotta admit this is an interesting one. Again, convergence correlated with decline but in this case with no fundamental reason other than market panic. To me this would suggest that your model at the least would suggest unsustainablity in a parabolic.

Have you thought of normalizing the values?  Say, per $1000?

Just from a lay persons perspective, a growth in Bitcoin's value  is equal to deflation in the BitCoin Economy, and that fact alone will cause people to save (less BTC activity), however when there is a large increase in Dollar value that will cause a greater imbalance (more BTC Activity) To me it seems that it is both that are important to model.   

say again please what is the x-axis here?

wow