Bitcoin Forum

I've been buying when under 3, and selling at over 3 for the past two weeks, and have been doing quite well while also helping to stabilize the market.

I suppose it's appropriate for a virtual currency to settle on an arbitrary whole-number barrier, but it looks to me like 3 is a stable price point: the majority of miners haven't abandoned mining, and speculators have the purchasing power to buy all of the coins sold on the exchanges.

My prediction: prices won't drop below $2 or go above $4 this year.  Instead, what I'd like to see is the bid & ask walls get steeper, so that the market is less volatile when there are large buys or sells.  But remember months ago when 10k-30k coins would often be dropped on the market by a single sell order, crashing the market?  It seemed like a weekly occurrence back then, but I can't remember the last time that happened.  But we still have 10k-30k bitcoin buys every week or so.  Now to see if we can get through the holidays without a big crash.

The same was said at $5 and $14.

It is looking pretty good!
Making it through the weekend without a serious crash was a very good indicator for me.
The total global hashrate also appears to be reaching a bottom (still needs a few more weeks to confirm).
The average cost to mine BTC is north of $3 if you take into account the hardware capital being paid off within two years (reasonable time for computing technology)
It gave me a lot of courage to throw up a nice bid wall around 3 (anyone wan'na sell?).

I agree, things are looking very good for some stability for the next several months with a price between $3 and $4(keeping fingers crossed for the holidays).
After that, the next crash will be in a positive direction - My speculation.

I guarantee you that in two weeks the price will be below $3

What percentage of your bitcoin money do you have riding on this speculation?

You could be right, but when your money is behind your statements then it means a lot more.

If it is below, I suspect it will not be by much.

My speculation/prediction and money is it will not dip much below $3 and maintain a price of $3+ for a while.

We'll see.

Well, they were wrong, and I'm right - this time it's different!  :)

Seriously, I think the big difference is that more miners are holding rather than selling, waiting for better prices, and marginal miners have stopped mining.  Volume has been dropping, and the combination of reduced price and reduced volume is allowing speculators like myself to keep up with production.

The price was between 4 and 6 between Sept. 9th and October 9th - about a month.  It only held in the $13 range for a couple of weeks.  And it's been between 2 and 4 for about a month, too, and is still in the middle of the range, so I think it's fair to say that we're in a period of unprecedented stability since the rise over $1.

Then again, I (along with many others) push the market with our speculation, so my "prediction" of $3 is at least a partially self-fulfilling prophecy.  I'm not "The Manipulator", but I do represent, oh, >1% but <10% of mt gox volume over the past 30 days.

$25,000 -> $250,000?

The sad thing is that these kinds of numbers are enough to do some damage.  Bring in a few buddies and let's get this thing rolling so I can stop pumping in funds and switch to more productive endeavors.

I've been doing the same thing all week, and I've noticed it's getting harder and harder to actually buy back...  I think I'm gonna quit while I'm ahead and sit on my bitcoins for a couple of weeks.

I mine and I would love to see the price to hold steady/rise while difficulty adjusts to it, but I'm afraid you are right about this as much as your weekend projection.

Unless we see a clear upward movement with high volume past at least $4 mark, we are only going to see small volume movements near $3 until we inevitably drop again like we have been. Because miners only have such small margin for profit, they are likely to sell right away if they are profitable to not go in negative teritory, or simply quit mining if they aren't profitable.  And longer we linger around same pricepoint, lower their confidence will be to hold. This slow loss of confidence by miners after first difficulty adjustment after a big dip is easily noticeable on the price charts represented by very low volume trading that continues for a week or maybe two which is followed by slowly accelerated selling starting the next wave down.


What you are pointing out is merely the cut off line for miners to be able to enter and be competitive not losing money doing it. Price can easily go down to drive away more miners as easily as price going up will entice more miners to return. If you say the "average" cost to mine btc is more than $3, it's just means those miners are better off not mining and not facing a loss and the market is offering the coins cheaper than he/she can mine them.

I can't say about average, but my electricity after tax and all the other fees at $.07 right now is still profitable by a very small margin which keeps me mining. Others aren't as lucky and have long been out of the mining game since the downtrend. The cost to mine bitcoin isn't a leading indicator to what the actualy value of bitcoin should be. I would love to see the price go up so that I won't have to sell everyday just to make sure I stay profitable. Holding and price dropping it's bottom on me will ruin the little margin I have right now. But it is what it is and I haven't been convinced that any long term trend shows a clear reversal.  

first break above 3 in a while

rabble rabble rabble

How with $0.07 do you have a small margin?  Are you using the electricity to arc weld the hashes into aluminum sheets?

At 2.0MH/W & $0.07 per kWh = $1.01 electrical cost per BTC (current difficulty).  66.7% gross margins is barely profitable?
At 2.5MH/W & $0.07 per kWh = $0.80 electrical cost per BTC.

Lets just say that .07 is just the rate. There are plenty of taxes in california on top of that and that is the lowest rate of the 3 tier system. I had to lower my mining output to remain low tier and whatnot.

Well you may want to fix your post:
"but my electricity after tax and all the other fees at $.07"

Hell I am surprise you even have a base rate of $0.07 in CA.  I got a friend in CA who complained his peak rate (TOU) was $0.22 per kWh.  Not sure if he was exaggerating or not. 

Yeah I'm living in live/work commercial zone loft and I can get decent rate from DWPLA. I'm definitely lucky to have low rate especially in cali.

Damage?  I'm damn sure that I've been helping the market, not hurting it.

It's funny that 'speculator' is considered a pejorative around here, but it shouldn't be, as it really depends on how the speculation is done.  I think we both agree that dumping thousands of coins to cause a panic sell, then buying back in later at a lower price, is a crap way to treat this fragile market.  I've never done that.  I leave up a number of small bids and sells up that eventually get fulfilled, and rarely put in orders that are immediately fulfilled.  Rather than being a market mover, I'm acting like friction on the price, reducing volatility, no matter which direction it's going.

I'd rather work on something more productive, too, but the bitcoin economy can't function well if there's huge amounts of hourly or daily volatility.  So, my self-selected role has been to try to reduce volatility.  So join me if you agree that reduced volatility is a good thing: put up a bid below $3, a sell above $3, and then we can all move on to the more interesting parts of building this economy.

I have about $200 in Mt Gox, none of it in Bitcoins at the moment. I'll buy if I see a panic sell, or some other opportunity, but I would only hold it for as long as the rebound.

My base rate in residential Los Angeles is $.0702, and FYI, there are no tiers from september to may, IIRC. What it actually comes out to is more like $.155 when you factor in taxes and delivery charges (which compose the lion's share of electrical costs here).

DeathAndTaxes: there are two utility companies serving Los Angeles. If you are on LADWP, you are getting the (more) subsidized shit. If you are on Southern California Edison, you are getting raped.

http://www.ladwp.com/ladwp/cms/ladwp004844.jsp
"High Peak" hours are 1:00 p.m. – 5:00 p.m., weekdays.
"Low Peak" hours are 10:00 a.m. – 1:00 p.m., and 5:00 p.m. – 8:00 p.m., weekdays.
The "Base" hours are 8:00 p.m. – 10:00 a.m. weekdays, and all day Saturday and Sunday.

They actually just changed this so that peak was 10 rather than 8 hours of the day. It's bullshit, cause I have a work order in to get a time-of-use meter installed from six months ago.

I used the term 'damage' completely figuratively and not at all pejoratively.  Just meaning that it is of a magnitude such that it could have a noticeable impact.  I'm a fairly serious speculator as well and concur that such a class of participants could end up having a positive impact on the monetary system if it survives.

I'm with here on all fronts I think (though I'm certainly not putting up 100's of grand) and appreciate your efforts.  By happenstance I did do a recent one at $3.00, but whoever has the 20k BTC on the block at Tradehill right now is calling the tune on that exchange.  I am dying of curiosity about the story behind that block, but there are losta things we will probably never know.

Three is a nice number, but I would say that it is the bitcoin number.

Try trading a different currency or exchange, then you'll find that while you are trading at three, others are not.  I hardly ever trade at that number, and am doing ok.  Good that you're adding to liquidity over at Gox.

You may be right that BTCUSD may hold below 4 $ for a bit more, but in the next 1-12 weeks (yes, I know it's a broad range) we will see a rise into the 6 (edit)-10 $ range.

What happened to the shortterm being down? Also, what is so convincing that bitcoin will increase 100% in value in the next twelve weeks, an average of over 0.8% a day?!

Ah, my misunderstanding.  It seems about time for things to settle down, and the ideal currency (in my mind) is a boring one that just works.

Hah, that's quite the wall over at tradehill, esp. given the size of that exchange.  But what I've found is that large walls are tempting targets, and tend to get chomped up wholesale, which doesn't help reduce volatility.  It's been better to place a number of smaller, staggered orders so that large buyers have to pay a premium for a big buy, and large sellers don't get the best possible price if they sell quickly.  Again, it's been all about reducing volatility.  For big orders, people should be using #bitcoin_otc anyway rather than an exchange.

And nor am I putting up $100k, I've just had a lot of turnover on small-ish trades, and have luckily caught the market a number of times on both sides in the past month, freeing me up to continue trading.  No single trade has been over 500 btc, and no bot, either - the market has been too volatile for me to trust one.

Looks like he moved what's left of it (which is lots) up 10 or 15 cents just now.  I'd only see him move it down, but suspected he may move it up which is why I took a bite this morning.

I think the guy could be dark at those volumes if he wanted to be, but I cannot remember (or never knew) if that was possible on Tradehill.  My hypothesis (probably wrong) is that this is some early adopter who just wants out with limited hassle.  It is my hope that those who are taking a decent position at these post-bubble times will be more rare, and also less likely to be shaken out.  Thus, the currency base will be undergoing a healthy re-distribution.

It doesn't look like you're actually disagreeing with me, seeing as how there are only 7 weeks left in the year. 

But more fundamentally, I think you're trying to analyze bitcoin as a stock, whereas I'm trying to look at it from the viewpoint of supply and demand.  If prices are higher, more miners will sell more of their mining proceeds, increasing the supply of coins on the exchanges.  Also, speculators like myself just won't participate in the market at a price above $3, reducing demand.  Finally, those speculators that do participate have less purchasing power at higher bitcoin prices.  These three effects combined effect will retard any rally.

Also, speaking for myself, if the price does approach $4, I'll liquidate my long position into the rally to dampen it.  Likewise, if the price nears $2, I'll send more cash to the exchanges to help soak up the excess coins on the market.

This looks more like the OPEC model of setting prices, not a free market price, and your graphs aren't meaningful when prices are subject to collusion.  Anyone else want to join the Organization of Bitcoin Purchasing Speculators (OBPS)?  Target price is $3 right now, and we could all agree to raise it at some point in the future, perhaps after the holidays, but I'm certainly not going to help with a run-up to $6-$10.

I can groove with $3 all day. I'm in. I already have an appointment to get OBPS tattooed on my neck in old english.

Does your prediction leaves room within 1-12 weeks to see new price lows before we get to said $6-10 range? Or are you predicting we won't be seeing prices below $3 anymore?  For speculators who will buy the dips and sell the spikes won't care about 12 week out prediction to $10 imo. That type of statement will only get the ones that are fearful of missing the leaving trains so to speak.

But really, if bitcoins were to rise again, and I believe it will, I personally don't mind waiting until the market is showing clear rally signs until I get back in. $3-$50 or $5-50 isn't gonna break me, but $3-1.5 or $3-2 drop is if I'm holding on bitcoins. For that I am patient for now.

I'm sure more advanced traders like old engineer will simply take their profit from dips and spikes and provide liquidity when then market settles in a trading range. For that bitcoins is doing just fine now and I would even argue bot traders prefer current low price and would only like having more volume added during the "stable" periods to improve their profits.

I would also like to make a prediction. Within 12 years bitcoin will be the world reserve currency.   ;D Oh I can only hope.

If the market wants to move in a certain direction, you and a couple of others will not be able to hold it up. Bitcoin is no different to other financial markets from a technical / charting perspective.

The short term picture offers two alternating views, one up and one down. you have to subscribe to find out more

It would be interesting to see if the largest holders would get together and form a pact.  Everyone will put up a large number of BTC or USD on MtGox and create huge walls.  The mutual promises from the buyers and sellers comes with the stipulation that the bids and offers cannot be withdrawn.

Initially, the spread might be very large, like a large buy order at $2.75 and sell at $3.25.  Someone could work up some kind of algorithm to adjust the spread as appropriate....  Who knows?

If many miners are stilling mining yet not selling their bitcoins to cover costs, that will create a massive overhang of bitcoins to sell off should the price move higher.  Anyone waiting for prices to be significantly higher than $3 will be very disappointed.

lol

Yesterday I was working on a piece about "orderly trading" and checking various regulatory functions from places like the UK FSA (market stability) and Australian ASIC for market integrity rules.  While we still have games like this, we continue to have disorderly markets.

I did note, in looking at the FSA handbook, that Bitcoin would not call under their definition of electronic money.

Clarify, please. There are plenty of 7-day periods where there was not a 100% swing.

I always wanted to see some of the major players out themselves. Pleased to read from you, old_engineer.

Your trading technique is almost disturbingly similar to mine. I'm not that big, <1% of volume the last 30 days. But I could quote you on so many things. Not using a bot, mostly placing small orders to be executed on price swings, heck, "friction on price" are words I use exactly!

The only thing we disagree on is the idea of setting the price to a round number. I think this is a systematic mistake, so when I have a hunch which way the price *should* be, I prefer pushing away from round numbers, even if it appears risky on the short term. It's nonsensical to expect real BTC price to just happen to be 3.00. Within 30 cent of it, well, could be, but not exactly the magic value. PatrickHarnett's proposal of setting it to a value nobody knows won't help against the fundamental problem: we don't know the real value, and it might change with time.

Note that this was time when lots of topics were stating that the magic number was 14.

any number is the magic number ;p

hardware is free?

Imagine if Apple were selling $370 million worth of shares (0.1% of their market cap) every day, including weekends - think that might affect the price significantly?  Of course it would.  That's about 1M new shares every day, and they average 12M shares traded every day.  So far as I know, there's no financial instrument analogue with such significant and continuous inflation & dilution - right?  If so, bitcoin is clearly different in this regard.

And yes, a few people actually can hold up a market this small, if desired, if the price drops to $2.  What a few people _can't_ do is keep the market from getting irrationally exuberant and running up the price temporarily.

Of course it is.  Sunk cost economics (either that, or I've been drinking and don't care about the thousands I've spent - mostly before I started mining)

I'm all out right now - $3.19 was the last sell I had up, which was funded with whomever fulfilled my order for 500 btc at $2.95 just minutes earlier (thanks, whoever that was).  I'm out until the price drops below $3 again, and if it never drops below $3, well, that's fine by me.

A secret handshake sounds great, but since when do virtual currency enthusiasts meet in person?  Maybe more apropos would be to share a secret key and have a challenge/response before you can get into an IRC channel (wait, this sounds a lot like #bitcoin_otc...)


Hmm... maybe something like $0.01/day?  I'd love to see the price rise as it makes the whole market less subject to manipulation, and it keeps speculators interested.  But I think it's even more important to keep the market from dropping because that turns off vendors.

Ideally, the daily price variability should be < 2%, at which point bitcoin price risk + exchange fees (~1%) would compare favorably to credit card processing fees (3%).  That's the point at which adoption might take off.  When daily variability is 10-50%, bitcoin is just a speculators playground, and useless for actual transactions.

You wouldn't happen to also be an engineer dabbling in a new crypto-currency, would you? :)  There's room for many players, and I'm not active every day even if I were a big player (I don't think I am, really, it just happens to be a big month for me).

Eh, it's all arbitrary, why not pick an easy to remember number?  Your strategy reminds me of avoiding the cracks when walking down a sidewalk - there seems no logical reason to me to avoid whole numbers, which people intrinsically like.

Ever hear of Benford's law? https://secure.wikimedia.org/wikipedia/en/wiki/Benford%27s_law
It's more likely for the price to end up in the $x.1y range instead of $x.9y range.  Strange but true.  And I guess this argues in favor of your desire to keep away from $3.00+-$0.06 (which would dip into the 2.9x range), and go for something like $3.06 +- $0.06.  Hmm....

Trading on volatility is all fine and good, until the market leaves you behind.

http://bitcoincharts.com/charts/chart.png?width=500&m=mtgoxUSD&k=&r=150&i=Weekly&c=0&s=&e=&Prev=&Next=&v=0&cv=0&ps=0&l=0&p=0&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&

In July, 14 might have been a good place to play volatility, until you bought at 13.5 with it never to return. In September, 5 could have been the new 14, until you bought in at 4.5 with the price never to return. At a certain point you have to "margin call" yourself and take a loss on a downturn to get liquid again if you still want a tenth of a point every day. Most people don't mind a position of being all-in dollars, but being all-in BTC (or any foreign currency market) doesn't help pay the rent.

Just something to think about:  as long as the price is at $3, we're paying $21,600 per day to miners.  Do the fundamentals support that price? (https://bitcointalk.org/index.php?topic=49396)  If not, the OBPS will have to shoulder a large portion of that $21,600/day in order to keep the price propped up.

Price manipulation takes more than collusion: it also requires money.

Not exactly.  When you're market-making you don't focus on where you bought in.  You keep repricing your orders to keep them at your preferred point above the spread, regardless of how much you originally paid for your BTCs.  My algorithm sells at more aggressive prices when the market's headed down to try to reduce my losses, but it never places market orders to liquidate my position.  That would be foolish!  I'd lose all my inventory and therefore my ability to capitalize on the next uptick.  (Note, right now I actually have liquidated and I'm not market-making, for unrelated reasons.)  Doing it right, the profits you're making on volatility outweigh your losses due to price shifts.

If conditions are too bearish (like now), hedge your positions!  Sell short to cover your average BTC inventory.  A faster SMA reduces currency risk; a slower one reduces your excess trades and improves your profits.  Pick the level of risk you enjoy and go back to trading the spread!

If the market wants to move up or down, but there is a wall put down that laughs at the exchanges volume then the market is stumped and any movement drowned.
It means that a single bid or ask can decide if the price changes or not.
In this respect bitcoin is very different from other, more liquid and voluminous markets.

But then your distribution of the pie is always going to shrink when the supply is fixed and others are spending thousands on mining rigs to out-compete each other. By them spending money it costs you money. No matter what you lose.

I'm more of a physicist, but I did think about a trust-based distributed payment system before Bitcoin came up. I stopped doing that, since I think it's better to unite on one crypto-currency than to fragment the market right now.


I don't really want to avoid round numbers, I only do it because it helps statistically when everybody else prefers them for no reason.

I believe there's a fundamental error in how your proposal treats likely prices. Just because the price is more likely to go to a certain position, it is not necessarily the best idea to bet this way. To give an extreme example, let's assume the price will drop by 0.10 USD with 80% probability, and rise by 0.90 USD with 20% probability. Both reach the same "magic value" behind the comma, whichever it is. But the expectation value of profit on holding a Bitcoin would be +0.10 USD! The correct decision would be to buy, which pushes away from the magic number.

Now, if you approach the magic number very closely, such a scenario becomes more and more likely. "Real price", as in the natural one, is decreasingly likely to be within a small corridor produced by people trying to enforce a certain number.

In short, just because something is likely or usually easy to maintain, it is not already a good speculation method. Speculators are there to determine the real price, not try to enforce their own.

Capital costs are not included in GROSS MARGINS.  Depreciation affects net margins. With 3 year (or even 2 year) depreciation electrical costs still make the lions share of operating costs.

Neither is NET PROFIT.


Really? What backwater math do you have to use to come to this conclusion? $0.07/kwh, let's say it's putting out 200Wh (5870 about 2.0mh/w). 144kWh/month = $10.08/month x 3 years = $362.88. $362.88 vs $350 is the lion's share? It isn't too fair to say that the value of the video card depreciates when the value of the electricity converted into bitcoins doesn't, so that is fricken moot. Assuming BTC value stays the same, your non-upgraded video card is going to be fighting for a smaller share of the payout as other people upgrade.

Well
1) $0.07 is extremely low and OP reported that his actual electrical consumption is higher.
2) At end of 3 years the card isn't worthless.  It still has some value so you can't consider it $350 in depreciation.
3) Including only the power consumption of the card and not total electrical costs (rest of system, PSU inefficiency, airconditioning, etc) is weak.

So lets say $0.10 per kWh. 
Card is worth $50 at end of 3 years ($300 depreciation). 
2.0MH/W card is actually pulling more like ~180kWh per month at the wall (including share of system power & PSU inefficiency).
1/3 of the year AC is needed at 30% electrical overhead so annual energy consumption is ~2400kWh per year.

So $300 in capital costs over 3 years vs $0.10 * 2400 * 3 = $720.  Operating costs are roughly $1000 over cards effective lifetime.  70% is electrical.   $0.10 per kWh is below national and global average so higher cost shifts electrical costs to an even larger %.  People in areas with higher summer time temps will have higher cooling costs and need AC for longer portion of the year.   Many miner are using dual purpose rigs (more powerful CPU, HDD, RAM, low efficiency PSU ,etc) leading to even higher electrical load per watt.

While we can't say exactly what % of Bitcoin production costs comes from electricity it likely is HIGHER than 70%.  So yeah the lions share of cost comes from electrical cost.

My best guess is that 1/3 of mined coins are immediately sold, which is down from 1/2 of coins it was back at $5.  The marginal miners that need to pay the power bill have been forced out of the market, and some miners are deciding to speculate with their mined coins (ie wait for a better price) rather than sell immediately.  My sold vs. mined ratios are made up, obviously, but whatever the actual numbers are, it seems clear that the supply of bitcoins is dependent on price.

Based on 1/3 of coins being sold, $21k/day becomes $7k/day, and $210k/month.  I'm bullish enough to pony up > 1% of that per month, and if the price nears $2, not only is my buying power increased by 50%, but I get more bullish and would be >3%.  I have yet to build up a long position, and these cheap coins will only last until the block size change in a year.

Also a factor is that there seems to be an occasional whale that comes through Mt. Gox weekly and buys up $10k-40k worth of bitcoins, and we're no longer seeing any matching bitcoin dump events, nor do these coins appear to be re-listed on the sell side of the exchange.  Yet another reason why I think the $2-$3 range will hold.

Looking at your formula, I think speculation volume is at least 10x the volume of goods and services purchased for BTC, so I don't think it will apply until there's a functioning economy (which there isn't).

That's funny - hash rates have fallen 30% to 40% since June and I'm doing better than before.  And at us$3/coin and my high local power rates, it's around breakeven, although I generally sell higher than that, and the extra coins provides me with some extra liquidity.

Also, if I chose to I could depreciate my computer equipment as I also use some in my work.  I have some specialist bits and pieces, including a $6000 scanner that will provide a $2k/year tax credit.  But I only have something like five computers that I claim tax credits for (and they are not miners).  if I sold my miners into a captive company, then I would be better off, but on less stable ground with the tax department :)

You made a fatal mistake with your graph there.  You should have used a log scale so that the drop from $18 to $3 doesn't look so scary  :D

All of you perpetual bears will look very foolish when the market leaves you behind.  Just today okpay began accepting btc and I wouldn't be surprised if more online payment processors follow.

Comrade, you take the words from my mouth. As well as OKPAY, I am currently in the loop and know that there are many of us working to bring Bitcoin to the island nation of Nauru.

Bceгдa впepeд!

-Jonathan

Isn't this a thing of beauty? The bars are getting shorter, the swings less pronounced, and very little panic selling happened when the price dropped $0.20.

http://bitcoincharts.com/charts/chart.png?width=1503&m=mtgoxUSD&k=&r=30&i=&c=1&s=2011-10-18&e=2011-11-10&Prev=&Next=&v=1&cv=0&ps=0&l=0&p=0&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw&

The last time the market was this stable was for five days in mid-to-late June. :)

http://bitcoincharts.com/charts/chart.png?width=1503&m=mtgoxUSD&k=&r=30&i=&c=1&s=2011-06-18&e=2011-06-28&Prev=&Next=&v=0&cv=0&ps=0&l=1&p=0&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&SubmitButton=Draw&

I picked up a bunch of coins in the $2.8-$2.9 range.  With all the coins available at $3 to $3.20 on both Mt. Gox and Tradehill, I don't see the price jumping up to $4 anytime soon.  To hedge and keep the price above $2, I took out a 4-digit short on the market early today.  Now, we wait, and I hope it's a long wait before anything of interest happens.

My hat is off to you and the more mature and responsible side of me is rooting for success here (the other side being stimulated by big action no matter which direction it is.)

I've got a nagging suspicion that some people want out and have not gotten their way yet.  Part of it is from the depth charts which have a sordid history of being manipulated, but another part is just a sense about how the pieces landed after the jar was shaken in the exchange divergence over the last few days.

If my sense is true, I hope that the people who want out are patient enough to sit tight for some time else I could see that big route that lots of people are purporting to suspect coming to pass.  I may re-load my cash position tomorrow just in case the long awaited opportunity to back up the truck for another load of BTC comes by.

This would be due to the Gox hack! ;)

Why thanks... it's not completely altruistic: whether the market goes up or down, I make money.  If the market drops, I'll likely liquidate the short and I keep the stranded long position, and come out even.  If it goes up enough, I'm Zhoutong'ed and lose the shorted position entirely, but the long coins will push me into profitable territory.

Here's a quick chart for 1000 btc long & 1000 btc short (at 5x leverage on bitcoinica), as well as a bonus of what it looks like with 1000 btc long and 1500 btc short (all assuming buy-in at 2.9).  X axis is USD btc price, Y axis is profit, in USD.
https://i.imgur.com/K4MAW.png

I didn't bother to factor in Bitcoinica's spread, which shifts the lines slightly, but the basic idea is clear: if long position is same size as short position, then you don't lose if the market goes down, but you share in the winnings if it goes up (albeit slightly less).  The only way you can "lose" is if the market doesn't go anywhere, and since I'm looking for market stability, I win there, too (though you could argue that I've lost because I've tied up my cash, but whatever, there are worse things to do with money).

Also, at long=1000 and short=1500 (which is closer to the ratio of my action position), it's a win for me if the market drops, a win if the market is stable (as that's my goal), and a win if it rises.  It's an elegant situation.  So, everyone, feel free to ignore me and drive up the price, or crash the market - I'll win no matter what happens. :)


You're may be right that there is a big player that wants to sell, there's no real way to tell if someone is just trying to discourage the market by piling up the sell orders at 3.x so they can buy cheap coins, or if they actually want to sell.

Either way, the lack of panic selling even with the disparity between the bid & sell sides is a sign of a healthier market.  I think sellers are seeing that being patient will likely be rewarded with a higher price when someone else decides they want to buy into this market.  This is the fourth time the market has moved past the $3 mark, and it helps that this is familiar territory.  Market patience that brings a stable price is also more likely to bring in more buyers, too.

Looks like bitcoin has reached a plateau of high stability.

Now, the market goes to 3.6, and then back down to 3. You are now at a 500 loss, even though you had your hedging…

not

Good point, I suppose I need to keep enough of a reserve to last to the breakeven point at 3.8 in order to be "foolproof", and even then I'd have to liquidate everything to be assured a break even.

I'd prefer to liquidate the short at 2.5, profit, wait until price rebounds to 3.5, then profit doubly.

Either way, the important bit is that the market can't run away from me.  If it magically jumps to $5, I'm not left out completely, assuaging my FOMO.

Yes, you have to liquidate everything to be assured a break even. But then you also have no investment anymore.
If you are holding equal amounts of shorts and longs, you might as well not have done any investment, and save yourself the spread fees.

Your current setup assumes that if the price hits 3.6, it will keep rising to much greater heights. But if you have that assumption, you can also just not have any positions, and set a stop buy order at 3.6. This would save you from paying spread.

Just want to say... even expecting a stable price in the short-term, 3 has been a very good guess so far, holding out for over two weeks now without any volume starving or the likes.

Good job on that. :)

Thanks - it's nice to be right most of the time. Yes, I can be a self-centered ass with a big ego, thanks for feeding it! :)

The stability at 2.8 unnerved me, and Revalin pointed out the folly in my holdings, so I liquidated my short position yesterday.  Just in time, it seems, and I just now I sold a couple thousand coins at 3.x to dampen the rally.  I don't feel too bad shitting on the rally party: I announced I was buying under $3 and selling over $3, and now I'm doing it.  There's also the 12k coins sitting at Tradehill for $3.10, so even if the bulls get past $3.10, they may not get too far before arbitrage kicks in.

Which reminds me, one even more unnerving thing happened at Bitcoinica: when I liquidated my short, there was no corresponding activity on Mt. Gox.  When I purchased the short, there were a number of bitcoins sold on Mt. Gox just seconds later, as expected.  But when I closed the position, there was no activity at all - zero , zilch, nada - on Mt. Gox for at least a minute, so I'm not sure if the activity was actually Bitcoinica's.  This means that there's a good chance Bitcoinica is a bucket shop, which defeats my goal of taking a short position in an attempt to stabilize the market.

From wikipedia on bucket shop (https://secure.wikimedia.org/wikipedia/en/wiki/Bucket_shop_%28stock_market%29):

The charitable possibility is that his trading bot was broken last night.  But I doubt it: more likely he's playing his speculators off against one another with a slush pool so he doesn't have to pay Mt. Gox purchase fees on every transaction.  Oh well, all I can do is highlight what I see, and let other decide what to do.

He has stated elsewhere on the forum thus is what he does.  He only goes to mtgox when the positions get too far out of balance.

Excuse me, that was BTCurious that pointed out my folly, credit where credit is due.

The last 22k of the rally volume got to my Bitcoins, so I did my part.

Why would you trade on MtGox if you can handle it yourself? A sell and rebuy puts 2% in MtGox's pockets.

Or 1.2% max (assuming price didn't change).

Depending on your monthly volume, they take .3% to .6% from the currency earned from both sides of the trade. So assuming first discount tier on average, your buy and your sell = .5% BTC buyer + .5% $ seller + .5% $ buyer + .5% BTC seller in fees, transferred directly from user accounts into mtgox accounts.

The short was for 1000 btc, which is why I expected a tick on Mt. Gox.

Plus he does not show the graph below 2, plus he assumes that when it goes down he'll liquidate the short at the exact moment it bounces back.  I've already seen before that strategy announced on this forum - the absurdity of it just boggles my mind - how on earth someone could think that selling borrowed bitcoins will be somehow more profitable then selling your own.

:) Thanks


I'm also considering buying below 3, selling above. Seems to be nice and stable investment… but it's hard to suppress the part of me that wants to be bull :D

BTCurious: It's actually a logical strategy to do a combination of both; just don't sell all of your coins in the 3-4 range.

Mixed strategies sometimes allow for bolder moves. That's just how risk management works. 8) (Though holding BTC is still risky either way.)

Oh look who got burned... and look at the second post :)

-Nov 7th

Call me a clairvoyant.

That would be some time on the 21st then?  Still a week to go.

i just realised Dan the Man is short for Dan the Manipulator... that's how come he always knows what's going to happen.

Hehe. We found him ! Bring the pitchforks.

If he is the mythical 'manipulator', all I've got for him is a big 'thank you' for making BTC more available to more people after those who are interested have had more time to get set up to obtain them.

Da'man has made some awfully good calls, I will give him that.  It will be difficult to ignore his prognostications going forward.  Or will for me at least.

Or look at the first post:


So far so good.  There $6 MILLION USD in volume yesterday, and the price still didn't drop below $2.  There's some measure in success in finding the floor of support.

I sold at 3.x, bought back in 2.5x, and am up >1000 coins from last week.  My guess is that Mr. Manipulator will buy up all orders below $2.5 sometime in the next 24 hours, and then I'll be back in the black.

or Mr. Manipulator just leaves.
I think both is good

Doubt that'll happen.  The so-called "manipulator" likely has an extremely vested interest in BTC and using BTC.

Why do you think that there is only a manipulator manipulating one side? To successfully manipulate, you have to be working both sides. Volume doesn't mean dick. If he thinks he can get you fools to panic and sell out so he can buy cheaper coins to rinse and repeat, you are falling for the manipulation. This person or persons is siphoning money off of the economy from early adopter "wealth." Obviously he is doing a very good job of it by the misclick $250k ask that was up there for all of 3 seconds. Sure, some of you may make a few dollars in the mean time, but tens of thousands of people have lost wealth due to this shit, and are going to start giving up on this whole thing real soon. I guarantee you he will be there to crash the market and get what he can before most anyone else will.

+1 for most of it

question is is s/he acutally in the green or has s/he himself lost in the bubble? I know that would be hard to find out - just wondering

.... and the magic number is now 2.2?

We are now on the low side of where the market belongs, unless we have another day with 350,000 Bitcoins sold..
This day of record sales still couldn't drop the exchange as much as the last big fire sale a month ago.

http://bitcoincharts.com/charts/chart.png?width=600&m=mtgoxUSD&k=&r=60&i=Daily&c=0&v=1&cv=0&ps=0&l=0&p=0&t=S&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&

Hooray for cheap bitcoins, I just turned the last of my $ into ฿ at 2.2. Now I need to sell some stuff for Bitcoins.

There is nothing wrong when people lose "wealth" in these times.  That is their own fault.  And props to the traders who can profit in those situations.  There are ways of making money on the way down if you know how to trade.  Also, if these people lose their BTC because of bad trades then it continues the fundamental change of ownership I talked about a few weeks ago.  Let these people quit, other people will be there to step in and take the reigns.

I'm in the 'big looser' camp having doubled down on several big dives and never having sold a single BTC.  At the end of the day, however, I made up my mind from a fundamental foundation that I wanted secret keys which represent a positive value in the Satoshi block chain and see nothing (yet) to change the reasons for desiring this.  So the fall in value has been a real benefit to me.

I've got nothing but admiration for people who have been clever enough to have made money on the way down...and nothing but distain for people who falsely claim to have done so knowing that nobody can cross-check.   I suspect that a majority of the loud mouths here are in the latter category.

It's the same dogshit as fiat currency. Lose wealth one way or another. Making money by siphoning it off from others for nothing productive. Yay greed, how we are slaves to thee.

... and we're back to $3 again after a big selloff.  Two (or perhaps even 3) big players were involved: the first one sold off down to $3.10, then presumably the same person added moved their askwall from $3.50 to $3.10:
https://i.imgur.com/9s5N8.png

* Next, someone added a huge bidwall at $3.01
* Then everything from $3.10 to $3.01 was sold into
* About two minutes later, 3k btc was sold at 3.00
* And now an even larger buy wall at 3.00 (now 3.02) was created, and the ask walls disappeared
* a small ask wall was left at $3.10

So... i think a big player wants to sell more at $3.10, and is not-so-subtly setting bids & asks to make it more likely.

Some great late-night action (well, for everyone else here in PST)!

I'm telling ya, $3.00 is a strange attractor, and I think it will be for at least a few more weeks, if not months.

Also, some Mt. Gox oddness: I put in a small order at $3.00 after the drop, and it sat there "In Queue" for over 2 minutes, and never got fulfilled.  :(

Actually, a bit more steps happened.
Here's all the fast moves larger than ฿1000:

10:30:58 mtgox   x15 1,218.1675 @     3.17102144 USD
10:31:41 mtgox   x50 2,507.3574 @     3.15338919 USD
10:33:06 mtgox   x28 1,010.5000 @     3.14034385 USD
10:35:41 mtgox  x100 2,176.2585 @     3.11423792 USD
10:36:27 mtgox   x21 1,149.9441 @     3.10       USD
10:44:06 mtgox  x100 2,520.7054 @     3.08362834 USD
10:45:17 mtgox   x99 1,559.5521 @     3.05077617 USD
10:46:22 mtgox   x69 5,919.6702 @     3.01727388 USD
10:54:10 mtgox  x100 4,044.2884 @     3.02022366 USD
10:54:50 mtgox   x46 3,501.7343 @     3.00       USD
10:59:11 mtgox    x8 1,100.4403 @     3.00       USD

(The x100 things are how many transactions were involved.)

Forced liquidations?

I've been seeing this quite frequently lately. I put blame on Gox's end. It always happens when a large movement happens with a lot of subsequent bid adjustments. Then there's the spam bot with thousands of .01BTC spot price buys/sells.

I think it is .01. Though, I have seen .00 tick on goxlive.

Wow, the magic number seems to be 3.2 now!  It's been here for days...

Not for long... going up a bit soon.. ;)

$4 by Christmas, we can do it!

Nice and boring, just the way people like their currencies. :)

Did you notice that the 30 day moving average just passed the inflection point, and is pointing up now?  This 60 day chart (the default on bitcoincharts) is entirely between $2 and $4, too, with that huge selloff day in mid-October having dropped off the chart:

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=60&i=&c=0&s=&e=&Prev=&Next=&t=S&b=&a1=SMA&m1=30&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=1&ps=0&l=1&p=0&

21 of last 27 days have been gains.  Everyone likes a winner... perhaps that's why the order book has been seeing such strong growth?

I'm all long again, having filled up on the way down to $3.00 a few days ago, but I don't have any sell orders placed yet.  I don't know where to put them.

Saw that :)  I pointed it out in the Nagle's Favorite Chart thread, because the chart you posted is indeed his favorite chart.  Or was... the leader of the bears seems to have disappeared ;)

Minor nitpick: inflection point means the second derivative, not the first, has changed signs.

I'm seeing this also, it's showing strength and resilience to the sells.

I'm having more faith every day, and I suspect a lot of others are too..

Doh, of course you're correct, inflection point is when graph changes from concave-up to concave-down (or vice versa).  This is simply a change from negative slope to positive slope.

*just tripled the amount of bitcoins he holds*

I get a sense that there is now inherent stability with the BTC price settled in the $3 range.

Looking at the 1 month hourly chart, one can see a steady stair-step increase in value, from $2.20 to $3.20. On that chart there are 1/2 dozen or so large spikes in volume with a .20 - .30 cent moves.

For speculators this apparent stability may not be optimal for day-trading, but for merchants and buyers it's nice to have a BTC base-price that we can rely on.

Here is a real-world example of why I like a stable bitcoin price:
The other day I was researching web sites that have online sports-betting, cause I like to bet on NFL Football. For these regular sports-book web sites, it's a real pain to sign up and get funds and they charge you outrageous fees to withdraw money. But lo and behold, there is now a bitcoin sports book. Last week it only took me 10 minutes to get setup with them, when I sent my BTC over from my trading account, and placed bets on last Sundays games. It's anonymous, there are virtually no fees to speak of, and it's instantaneous. Now having the BTC price stable in the $3 range makes worthwhile for me; but if the price is very volatile, I can't rely on that currency while I'm sports-betting. I would imagine most merchants would want a stable BTC currency before adopting it.

My 2 BTCs.