Bitcoin Forum

very interesting.  ::)

Okay bears now is your chance to be creative on how $5 to $20 million incoming cash per day into bitcoin will send the price lower.....LAWL  :D :D :D

Easy - "MtGox is lying"
 8) 8) 8)

I guess two of the last three charts on the following site are also lying as well right? Bids total is the highest ever. lol. Fail much?

http://blockchained.com/

Doesn't matter, bears are in denial.

But of course it matters. I need my entertainment at the Bears' expense. Popcorn is ready and well stocked on my end. Entertain me bears LOL!  :D :D :D

Try to be creative, it's Mt.Gox moving their own money around over and over again! ;D

PS: Smoothie, what kind of refutation is this? Obviously all of these chart sites are also part of a conspiracy group, and they are lying as well! Everyone is cheating on you, you're being played, SELL!SELL! ;)

ROFL! CONSPIRACY!  :P

Inflows: Between $5 million and $20 million / day

Outflows: $300k to $1 million / day

That would mean that on average around 15M USD flow into MtGox per day,probably less.
If we discount the rougly 700k USD flowing out we are still at around a 14M USD surplus.

Given that MtGox EUR and USD markets account for around 70 % of the volume on all exchanges, that makes the total money flowing in to the Bitcoin economy roughly 20M USD/day.
http://bitcoincharts.com/charts/volumepie/

At a current market cap of 1400M USD that increases the total market capitalization around 1%/day. Price has been closely related to the market cap in the past, so we can assume that by this 1% increase of market cap a 1% increase in price is justified.
http://blockchain.info/de/charts/market-cap?timespan=30days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

What we have seen over the past 7 days, since the 50USD bottom, is a 23% increase per day. Lets assume we have found the new equilibrium at around 120 USD now, we could expect a 1% price increase per day to be backed and thus justified by the growth in market cap. Anything above that would be unsustainable and deemed to correct itself.

Thoughts?

Very nice analysis. Thank you

This assumes that buyers/sellers are "rational".

You're not factoring at all the off-exchange purchases, be them through person-to-person interactions (quite sizeable at times, if rpetilia is to be believed) or Tradehill dark pools. There could be a lot more fiat flowing into the ecosystem.

Correct. I expect price to detach from the "justified by market cap" levels soon, hence my closing phrase: "Anything above that would be unsustainable and deemed to correct itself."

Are there any bears left?

A week or two ago there were indications that it was going down, but right now the buying pressure seems immense.

Thats true, I just sticked to what we "know" and we can see. There is a market off the exchanges but no numbers have been verified so its everybodies guess what size this market has and whether more money enters or leaves the Bitcoin economy through it. I think the off exchanges market is about 1/10th of the volume size, the exchanges cover, so it wouldnt have too much of an influence on the outcome of my calculation, but again thats just ball park guessing.

Hey I am a bear for the next few months, and I have been looking over charts from other speculative financial bubbles for guidance - and comfort in the face of this very dramatic rally from $50 to over $134 as of this writing.

I believe this is a classic bear market rally (http://tradingsim.com/blog/bear-market-rally-definition-chart-example/). I expect to sell more into it later this week on the hopes it reaches $180.

Ever sold some of your BTC and didn't withdraw the USD because you wanted to make more of it?

That's the majority.

Man, the fact that that money's not going out means people are thinking about putting it back in.

I think we're on the verge of another bubble... already!

This time I'm betting we'll be going up, up, up, without the nasty crash of last time.

More money flows in = more confidence = price hike

The fact that there is so little delay between those bubbles makes me think that this time we will have higher highs and probably higher lows then during the last bubble but not that much difference in between. Maybe we'll top out at 350$/BTC or so but we wont go to 1000$ straight away because not much has changed during the last bubble. Infrastructure still has to be built, money has to flow in, people have to wrap their heads around it before they invest.
After the coming bubble's burst we shoud be able to see the big underlying trend and trend channel that all the coming bubbles will follow for some time.
I envision something like that:

http://img841.imageshack.us/img841/6519/unbenanntoppj.png (http://imageshack.us/photo/my-images/841/unbenanntoppj.png/)

Don't worry, I was 100% trolling. I'm more than a bull, I'm a bull moose:

http://www.mendosa.com/fitnessblog/wp-content/uploads/2010/08/bull-moose-1.jpg

I'll declare victory when asks goes below 100k

Bull > Moose > Bear

Yes that's exactly what will happen.

The funds will subside when the hype runs out.

Like many indicators, money at the exchange is also a lagging indicator.

There is little money needed at the exchange to bid up the price. All that is needed is that people on average are bullish. This will make buyers more impatient than sellers, who take their time, and the price goes up.

Inversely, a lot of money at the exchange may not avoid the price going down. All that is needed is that people on average are bearish. This will make sellers more impatient than buyers, who take their time, and the price goes down.


Just like google trends, media coverage, or hashrate, more money at the exchange is a result from the price going up. Not a cause.

Sure there is a strengthening feedback loop, more media coverage, higher hashrate, more money at the exchange pushes up the price even more, but what needs to happen first is the price going up, and then all the rest follows.

Inversely, when the price goes down, there is a weakening feedback loop, less media coverage, less hashrate, and less money will come to the exchange, driving the price even lower.

This +9000

Kind of - but when there is no money on MtGox then it will go down no matter how bullish people are - because there will be some bears and they'll push it down and vice versa when there is so much money then even if people just try out without really changing moods, but just checking the winds - even that can push the price up and I believe that this is what is just happening.

Amount of deposits in exchanges follows price rise: I agree
Positive feedback loop of price rise and deposit rise: I agree

Now pls mind the following:
When there is stagnating price or even falling price but still an increase of deposited amounts in exchanges, what does this entail?..
Correct, a powerful correction to the upside! Because all this fiat money only has one way to go once it is in the exchanges: -> ฿TC.

In other words, people don't tend to go through the trouble of sending money into MtGox if all they want to do is then pull that money out and buy bubble gum.  ;D

You can deposit as much as you want. But impossible to withdraw. :-)

- It is easy to deposit $1,000,000 => ( 7,500 BTC )
- if you want to withdraw then limit is 100 BTC/DAY (2 month to withdraw)

Withrdaw USD ?
- wait weeks to get verified
- wait another week until they change limit
- $50k USD is monthly limit (20 months if you want to withdraw $1,000,000) or ask  Foreign and Commonwealth Office for APOSTILE and mail them to Gox

Somehow I think if you have 1 million dollars, and are willing to wire 1 million dollars to a company in Japan, I think you've got all these other bases covered.

Yes i'm really pissed off with their arbitrary rules, why is it not necessary to verify with legal apostille documents when sending $1 million but is an obligation for withdrawals..

Because the way the law is written, it's their duty to "know their customer". They know who they are, so they are more then happy to take your money. That's the safe part. Letting anyone withdraw money is when it's important to prove to the government they didn't send a million dollars out into some phoney bank account where the mafia paid some homeless guy to set up a bank account with a fake name in some crazy country. They can't stop that from happening, but they need to show the government the homeless guys ID at leat.

Nope. This means only that Mark Karpeles bought coins at higher price and now wants to sell them. Proof? Look at the current flat graph, he obviously has no fiat to initiate new swings.

lol yes this is what i'm expecting as well.

its going to be a wild ride!

Thank you for explaining this.

My theory is not 'kind of', it is either right or wrong.

What does it entail?

Nothing about the future price. It's a lagging indicator. It says that there must have been a price rise in the past.  

I think you are letting your hopes speak over your ratio.

You forget that the Bitcoin marketcap is not really the "real" marketcap. Many coins are lost or in cold storage. At least half were lost last time i heard. Which means that the marketcap of the movable coins is alot smaller than 1400M USD and that is why the price moves faster than 1% per day.

Sure, many of them will buy bitcoin. But many will sell them bitcoin too. I think it does not say anything about where the price will go.

Nicely summarized :)

oh its just gettin started my friend. just cuz we have heard about "the bitcoin" doesnt mean 90% of people have, more like 1%.

It does not work like that. If you expect the price to grow 1 % per day, then everybody wants to join that market and they will do so even if they only get .5 or .1 % per day since this is higher than the so-called risk-free interest rate.

So the market participants will seek to find the equilibrium faster than you describe since this investment seems to beat most other investments.

And don't listen to Smoothie's analysis. He is obviously clueless about the most basic things in investments.

I see no reason for Mark to make this up. No sir, no reason at all. It's not like in the last two weeks mtgox made more money than in it's entire history. It's not like rapid appreciation and volatility is making him richer than Satoshi Nakamoto. Cmmon guys, is there was really a bubble that burst, would he be lying us ?

Let's not forget about the people trapped in MtGox waiting to be verified. Another one of mark's bedtime stories. People, you are grasping at straws and you are sheep. Regardless of this here dead cat and "return to normal", the bubble is done and price will succumb to less than 50$ in less then 3 months.

Are you willing to bet 1 BTC on this?

I've actually made an offer of 10.000$ for less than 100$ @3month, see my posting history.

Relevant XKCD:
http://imgs.xkcd.com/comics/wake_up_sheeple.png

Good point! I guess "half" is a bit much, but 30% of those coins could probably regarded a save guess on the lost or unmovable amount of coins. That would take the current market cap from 1400M USD down to 933M USD.

It's not really that big of a deal. I did it and my withdraw limit is now 40 000 BTC per day, didn't check the USD limit, but if you got that much cash you want to withdraw surely you can afford spending a couple of hours getting that apostile done.

If you want to withdraw fiat from Mt. Gox., you can buy bitcoins and sell them to a local dealer :)

New envelope calculation! ;D

April 10th 2013: The bubble has reached its highest peak of 266 USD at a nominal market cap of 2614M USD (2.6 Billion $$$). The ensueing consolidation around 120 USD suggests a "true market cap" of 933M USD during the last peak if we take into account that roughly 33% of all coins in existence are currently inaccessible (lost) or will not move till some time after the next bubble (cold storage or long time savings) [1400M USD (1.4 Billion $$$)*0.66= 933M USD]

Since April 10th 2013 around 20M USD daily have flown into the Bitcoin economy through the exchanges, adding up to 280M USD to date or 30% of the "true market cap" (933M USD) of the bubble's peak.

May 10th 2013: One month later and 600M USD will have grown the Bitcoin economy, raising the level of April 10th' "true market cap" by 64% to 1533M USD. If there would be another bubble rocket by then it would have 64% more fuel to fligh to the sky.
If this day would mark another peak, it would range at 437 USD/BTC (1.64*266USD/BTC=437USD/BTC)


Can we assume that the market cap during a consolidation period after a bubble has burst indicates it's "true market cap"?

Can we also assume that the size of this true market cap indicates the hight of the next bubble?

Only $10?

Please dont waste our time.

Quoted for future bump.

I would hope he meant 10,000 USD since he used 3 zero after the decimal point.A 10$ bet would be laughable.

There must be a lot of Fiat money then just sat in Gox accounts not being traded into bitcoins

Gox made more during the high volume days than during the low volume days, the last week when the crash was in full force should be their highest grossing week ever, whether you calculate by total bitcoin/fiat volume. So using your own logic, Gox should try to create as many crashes as possible, rather than pleading people to calm down.

Besides, even if Gox's plan were to accumulate as many bitcoins as possible, and betting on its rise in exchange rate, the only place to cash out such a huge amount of bitcoins would be their own exchange. So if I were Mark, the best strategy seems to be just charging fees in dollars so they make money regardless of the price movement.

Not to say that you have no fact at all to back up your accusation.

Please educate yourself before you talk.

(emphasis added is mine)

Interesting, especially considering the post-crash consolidated market cap you introduce in a later post - however, I think this all relies on what price is chosen for "equilibrium," and that cannot be defined outside of the current market derived price.

No matter how we spin it, the price of bitcoin currently represents a storm of emotion, speculation, hype, and lacking infrastructure. There is no fair way to determine the "true" value of a bitcoin, or any good, outside of a market. And the market at this time suffers from so many exterior extremes, that the price at any one moment can not reasonably be taken as a stable equilibrium.

Just my take on the situation. I hope you continue to expand this analysis!

I agree...further even if people have heard of it only a fraction will buy in at this stage

I remember some days ago a bear said that for the price to hold 100$ AND if all the miners sell their coins we need 360K USD of incoming funds a day. He meant that it was unsustainable. If there is 20 MILLIONS USD of incoming funds everyday you do the math yourself...

I am willing to believe Gox on these figures, I posted this in a different thread, but it applies here too: https://bitcointalk.org/index.php?topic=180439.msg1891053#msg1891053

There are way more people who want in than want out, now we know just how wide the gap is.

As an aside, if we take the net money flow reported here at face value, (an average of 11.85 million per day) and distributed it across all Bitcoins currently in existence the price would rise by about $1 per day. If we distributed it across every Bitcoin currently for sale in Gox's orderbook (98.9k according to bitcoinity's wall chart) then the price would rise by $120 per day.  

I don't know what to look for, but I feel like I would take the bet if I saw it. Could you PM me a link?

In another thread, rpietila seemed willing to make a bet that the price would not go below 115 $.
https://bitcointalk.org/index.php?topic=178336.msg1919858#msg1919858 (https://bitcointalk.org/index.php?topic=178336.msg1919858#msg1919858)

That's stupid, price will go below 115. The only interesting question is "when?"

Not the side of the bet I want to take.


rpietila is actually setting up a more complicated position than a bet that the price will never go below $115. Also, if you can prove that the price will at some point go below $115 then the market should immanentize this and cause the price per coin to be at or below $115 right now.

I would predict that after a period of this positive Gox imbalance, there will be a period of negative flow.  Unless you thing having money flowing into MtGox, and no money flowing out is somehow sustainable.

We'll see how it goes when there is 20 million going out, and 1 million going in.

1. Plenty of money is being minted to sustain this.

2. Not going to happen

11,000,000 BTC

VS.

1,500,000,000,000,000 USD (including derivatives)


yeah I think bitcoin is going to go up lol

Smoothie on trolling spree :D

You seem to confuse money flowing into MtGox with bitcoin economy.  Piling money on MtGOx does nothing.  If each day 20 million enters and 1 million leaves, after 100 days you will have $1.9 billion on MtGox.  Why?

There are only two things that can happen to that money:
-it can be withdrawn
-it can be lost to transaction fees

Notice that I did not put "it can enter the bitcoin economy" on that list, because if somebody buys $20 million of bitcoins, somebody sold $20 million (ok $20 minus 1% fee) bitcoins, and the amount of money on MtGox stays the same.

So, no, this $20 in $1 out situation on MtGox can not last for very long.  Why would it?

That's just bubble talk.

MagicTux looks at all that money and decides to take the Pattaya option?

The only reason why so much money came in, and so less out is:
https://bitcointalk.org/index.php?topic=180134.0
https://bitcointalk.org/index.php?topic=168843.0
(...)