Bitcoin Forum

I am glad to see that, but

when you go here :
http://bitcoinstats.org/count.html

doesn't look it should be rising at all

mining difficulty is rising, but not that much...

do traders have some inside info or what ?
only thing that I can use to explain this is that people are less afraid

Hard for anyone to answer this question.   The volume of bitcoins is small about 8 million, being such a small niche market, it is not difficult for speculators to manipulate the prices.

People are also realizing it isn't dead and are holding their coins for higher prices.

People are buying bitcoins.... this is the only way price can rise =/

It's for the same reason that it started falling: sentiment changed.  IMO there hasn't been a change in fundamentals.  It's all psychological.

Someone with a good bit of money drew a line in the sand at $2.00, and successfully fought off all attempts to push lower.  Having achieved that, the wider market seems to have taken that as a sign that we've reached bottom.  The bottom was artificial, but hey, he convinced them, so now everyone's buying again.

People realized that Bitcoins are not dead, plus there is a strong support for Bitcoins at $2-3.

Insider info.
http://keepyourassets.net/2011/12/23/1551/

Because bitcoin is a brilliant idea who's time has come. The more people who are expose to it, the more demand will rise.

It's a strange notion to use words like "should" and "artificial" on a market controlled by a fairly diverse set of humans.

We have people in here who might move the price just because they feel the Euro is reaching critical instability. We may have people who made wild assumptions about Christmas or New Year's, for money spending or tax reactions respectively. There are miners, who might have sold with the intention of buying back later when the bust happened.

The Bitcoin goods market is small and plays little role for price right now. And the model of every user running a full node all the time is known to be outdated anyways. I couldn't really tell just what the graph of unique IPs measures, well, other than unique IPs running a Bitcoin Node.


YES! Multisig! YYEEEEESSSSSS! Thank you very much for informing me, I missed out on the news. That feature may be essential for a project I'm working on. Hopefully it will find its way into the lightweight clients ASAP. :)

That feature is useful for much more than just securing against theft. ;)

I think that the momentum is strong, hope that bitcoin will be able to be a good substitute to Paypal as a form of payment in the time ahead.  I do not know how long, but I do believe that bitcoin can play a part in transactions especially over the Internet at far cheaper rates than any of the current payment providers.

The more people buy bitcoins the higher the price goes, causing more people to be interested and buy even more.  It's how the bubble was built, and it works in the exact opposite way when people see the price heading down.

It's heading up now, so more people are buying.  It'll reach a certain point again (anyone's guess) and repeat.  We'll see all sorts of reasons and justifications given, 'this time it's different' rationalisations and quite well formed arguments, but the bubble and busts go back to basic human psychology and greed at their core.  Enjoy the rally while it lasts.  It looks rather juicy and there are easy profits to be made.

Many people think I'm a bitcoin bear, but I'm not.  I'm actually long bitcoins  :D

Confidence is building. That is, IMO, why the price is rising. I assume this is exactly how it will continue to go (over the long run), if the Bitcoin protocol (or any widely used implementation of it) stays uncompromised. Trust is building slowly, as trust can only do.

In my opinion you are missing the point. Bitcoin is a currency, there is no reason a currency should replace PayPal. If Bitcoin becomes popular, why wouldn't PayPal just allow payments in bitcoins? There is no opposition between PayPal and bitcoin (the currency). Bitcoin can, in some situations, be used as a substitute for PayPal (because bitcoins are inherently easily transferable over the internet). But PayPal provides a valuable service by protecting users via chargebacks. That service will still be valued no matter how popular Bitcoin becomes.

You are right that Bitcoin certainly has the power to disturb PayPal's virtual monopoly on easy online payments. But if PayPal plays its cards right, it need not be replaced by Bitcoin, because it still has something users value (chargebacks).

this is an interesting point.  how would you foresee they do this?

i mean, how can they recover btc's that have already been sent?  isn't that part critical to allowing chargebacks?

I don't see how paypal would be doing chargebacks (unless they'd desire to pay out of their pocket). There needs to be a trusted third party, of course, but chargebacks still seem unlikely, unless the funds are frozen at the escrow (paypal) until the operation is marked as completed by both parties.

Maybe upcoming double signatures will help on that?

No, the nature of chargeback is that it happens some (long) time after the money changed hands. In bitcoin world, when the seller gets coins there is no way you can have that back. So unless funds are frozen until transaction completes (weeks), I don't see how. And if the money are frozen for weeks, I doubt sellers would be very interested.

Maybe there is some promise in a central trust level verification, something that is used in BTC OTC trading now - if you are an untrusted trader, your limit is low, your transaction limit grows with reputation, and if you run with the money - you lose that trust level, and possibly the central trust authority will repay the stolen coins out of their transaction fee percentage.

When a seller on PayPal withdraws his balance to his bank account, there is no chargeback either. So as far as I can tell there is no difference between bitcoins and dollars in this regard.
If a seller withdraws the bitcoins from his PayPal account to his private wallet and runs with the money, PayPal takes the loss in case of chargebacks. Just as it does if the same were to happen with dollars, euros or Danish kroner.

The only difference would be the legal complications of bitcoins not being regarded as a currency/property by the legal system, thus limiting PayPal's ability to sue a seller in order to get back what PayPal thinks the seller owes them.

it really would depend on how much Paypal charges for tx's in btc.  if they try and maintain what they charge now, i don't think it'll survive.  they'd also have to increase their level of KYC on the seller side to limit abuse.

Tide goes in tide goes out.

This sums it up exactly.


The people who sold $500,000 worth of btc at $2, $3, and $4  now have $500,000 in their pocket.

When they see that btc isn't going to go down below $2,$3, $4, again, they're faced with the following decision:
Either
a) keep my money and leave the bitcoin for a verrrry long time hoping it'll fail again (unlikely)
or
b) reinvest my money on the faith that it's going up and up a lot more. (investing will put $500,000 back on the market driving up prices even more (awesome!)

Next thing you know, $5, $6, and $7 would be a dream.

Yes, better KYC procedures would be necessary.
The interesting thing is that when paying in bitcoins, customers have an alternative to PayPal. As far as I can tell, if PayPal were to adopt bitcoins as a currency, users would have no reason to use PayPal if they're paying someone they trust. Why would they pay a 1-2% fee if they know they won't get screwed? They would only need PayPal if they're not sure whether the service or good they're paying for will live up to the seller's description. This causes a larger share of the PayPal payments in bitcoins to be connected with fraud, thus raising the fee PayPal needs to charge in order to cover unrecoverable chargebacks, thus making it even more unattractive to use PayPal unless you might get screwed, which in turn raises the fees again, and so on and so forth until no one wants to use PayPal.

The real solution, IMO, is setting up an OTC insurance site of sorts, where someone who wishes to buy an item or service can buy an insurance in case the item or service doesn't live up to the description. An insurance exchange of sorts, where some people request insurance for a specific purchase, and others can make an offer on insuring this specific purchase.

Interesting. It's just like no one here has ever seen trading in a microcap security manipulated by a large player or two.

Certainly the timing of the recent price moves isn't tied to real world economic influences. Current conditions more resemble the sort of activity one sometimes sees when large portions of world security markets are closed for local holidays and such. Historically forex traders in Japan have been big on such opportunities.

Not that bitcoin has much in common with forex either. The bitcoin market is simply too tiny for principles of market behavior to be applied. To understand bitcoin trading, the best real world analogs are to be found in the perennially cheesy and fraudulent world of penny stocks.

So, in the spirit of the inane prattle and overblown hyperbole that is traditional in the world of pennies, let us turn to the standard phrasebook. I'll start but I'll leave a few just in case anyone else has any personal favorites they would like to add.

1. Time to back up the truck!
2. The train is leaving the station, better get on board now!
3. BUY BUY BUY BUY!
4. Anyone can see that this is a 1-D-10-T sub-wavelet formation marked by a Fibonacci target reversal pattern with bird entrail confirmations. It's time to BUY BUY BUY BUY!
5. This rocket is headed for the moon!
6. If God had not meant for them to be shorn, he would not have made them sheep.

Whoops, the last one is for internal use only  ;D

Feel free to add your own, there are plenty of examples to be found on this forum.

I don't know if you've noticed, but the trend has been moving upwards since nov 14.

That's Nov 14,15,16,17,18,19,20,21,22,23,24,25,26,27,28,29,30 Dec 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20,21,22,23,24,25,26,27,28,29,30,31

that it's been increasing.


This is definitely a group effort.

Oh yeah, never seen anything like it before except when someone rattles their keys to distract an infant. Not too bad a start for a neophyte, you can always score extra shill points by posting something like

"SHORTS ARE GETTING PWNED!"

LOL! :)
I'm skeptical of technical analysis as well. Has it ever been proven to work? I mean, wouldn't it be simple to compare guesses derived from technical analysis with random guesses, and see if there's a difference?

It seems to me that the information (time stamp, price and volume) on which technical analysis is performed, is such a tiny fraction of all the information that influences whether people buy or sell that predictions based on it are next to useless.

It is a self-fulfilling prophecy to a certain degree.  There is also a lot of psychology involved.  How does the chart make you feel?  That will play into how you trade.  Nothing is foolproof.

It'll be much easier to answer in a few days: There'll be press coverage because price is rising. Price is rising because there is press coverage.

My observation about technical analysis is that sometimes it works so well that the outcomes cannot be anything other than the results of a self fulfilling prophecy. This is nowhere clearer than when one observes price movements near values that conform to various ratios, famously the Golden Mean, long a favorite in all manner of numerological superstitions. Such magic numbers are easily incorporated in the algorithms of trading robots, meatbots included.

Elliot's ideas about patterns of rising and falling sentiment do seem to have some validity when applied to human behavior, but the baroque miasma he built can be used to assert anything at any time, which is a useful property of successful tools of financial advice: Always Have An Explanation, No Matter The Circumstances Or What You May Have Said Previously ;)

Magic is always a big hit with True Believers, the title of Elliot's last work on the subject should tell you everything you need to know about it's appeal: "Nature’s Laws: The Secret of the Universe".

Speaking of the Music Of The Spheres, here's a quote featured in the Wikipedia article "Elliot Wave Principle":

**
Technical analyst David Aronson wrote:

    The Elliott Wave Principle, as popularly practiced, is not a legitimate theory, but a story, and a compelling one that is eloquently told by Robert Prechter. The account is especially persuasive because EWP has the seemingly remarkable ability to fit any segment of market history down to its most minute fluctuations. I contend this is made possible by the method's loosely defined rules and the ability to postulate a large number of nested waves of varying magnitude. This gives the Elliott analyst the same freedom and flexibility that allowed pre-Copernican astronomers to explain all observed planet movements even though their underlying theory of an Earth-centered universe was wrong.
**

IMO, technical analysis has little to do with bitcoin, look at penny stocks if you want to understand the past year or so, bitcoin is a replay of a rigged game that's been around almost as long as the world's oldest confidence scheme, religion.

When shit-head groups like Anonymous and /b/ comes back to bitcoin "r3prez1nt1n", that will be the clear sign to exit.

It's very rare that I'll apply "artificial" to a free market, but in this case it was.  The way down was driven by a very diverse group of people, but the very bottom - the $2 that we bounced off off - was a single individual who threw down a lot of money to stop the fall, followed by spending quite a bit to pitch it back up again.  It was easily visible in the charts I posted at the time.

The price is back in the hands of the larger market now, but the bottom was not the action of a fairly diverse set of humans.

Thing is, it doesnt matter. The money was there. Next time there will be two or three times as many believing in it and as said earlier, If/when this hits the press...Means more interest, means even higer price, even more press and this time its really easy to buy much easier than any stock or gold. Anyone can buy with their creditcard...
Also together with them mentioned on the Good wife et...

For the worlds first ever cryptocurrency $5 appears to be a bargain.

It doesn't matter as long as people are willing to keep putting money down to back their belief / speculation.  The miners have to be paid or the price goes down.  People have to not panic or the price goes down fast.

Mr. M had the capital to prop it up at $2, but probably not at $20.  Thus it falls back to fundamentals and speculation.  The fundamentals say we're overvalued by 1-2 orders.  Speculation gets harder the more expensive it gets.

All the things you cite are great reasons for the price to run up, but I don't see how it's going to find support once it gets up there unless the fundamentals change, specifically a sustained increase in real commerce.

This strikes me as revisionism. 
The patterns of asks down at the $2 and $3 levels showed all indications of strong multiparty buying pressure.
'The manipulator' might be an interesting theory with regards to why certain sequences of abrupt movements occur - but you seem to be overreaching.

Do you think the current price of gold is explained by an increase of merchants that accept gold in exchange for their products?

Nope.  On Nov 14, just before we hit bottom, I called it out as unusual behavior by a single trader.  This post and chart says it all:

https://bitcointalk.org/index.php?topic=51784.msg617950#msg617950

No, I think it's partly an increased demand for a non-fiat value store (which can also increase the fundamental price of Bitcoins - it's part of my formula).  It's also an equal or larger dose of speculative bubble.

wow, you have a very active imagination.

I do, but I also have charts that show unprecedented bid depth created by a single person.  That was concretely an unusual and significant event, and the market did, in fact, suddenly change immediately thereafter.

Speculating on the motives and what will happen next is entirely my imagination, but hey, that's why they call it speculation, right? :)

I agree with Revalin's interpretation of what happened on Nov 14.  Two big market makers went head to head, one drew a line in the sand, and the other lost.

Again: Do you think the current price of gold is explained by an increase of merchants that accept gold in exchange for their products?

I think the gold bubble has not yet begun. But thank you - no further questions.

two words: Christmas gifts. 

many people bought bitcoins for friends and family over the holidays. i know i did.
kinda hard to giftwrap tho.

I'm really surprised no one mentioned this earlier. I'd like to see a poll.

Right now is a great time to show someone who may have been skeptical a few months ago how well bitcoin is doing. Despite all the hurdles, it's value is growing and the btc based economy is flourishing.

Wow, has no one pointed out the obvious?  The rise can be clearly attributed to two big buys in the past week, where about 1/3 million USD in bitcoin were purchased, which cleared out the sells walls and made room for a rise:

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=5&i=15-min&c=1&s=2011-12-26&e=2011-12-26&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=0&ps=0&l=0&p=0&

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=5&i=15-min&c=1&s=2012-01-01&e=2012-01-01&Prev=&Next=&t=S&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=0&ps=0&l=0&p=0&

I have a hard time believing that these are Christmas gifts to anyone besides bitcoin speculators.

How is this obvious? It looked more like a squeeze to me, plus a couple ppl who saw it coming.

Holy shit I am sold.

Because the number of Bitcoin clients has nothing to do with how people value Bitcoins.

EURO will fail.
Dollar will fail.
Real will fail.

Bitcoin will win!
Litecoin will win!
Namecoin will win!!

People are realizing that!!!

Best!
Thiago

I sold off, too good a price to ignore.  If it continues rising I will be crying :( , but it seems to continue to rise!!

Irrational exuberance much?

This, completely and utterly. I also believe it might hit $30 again in the second bubble, but expect it to fall again after that. This'll have to turn into a boiling water analogy at some point.

There is no reason I need bitcoins for day to day living. Nothing I can buy with BTC that I can't buy with something else (except drugs/illegal things?). Until this changes, I don't think there is any value in BTC except in wealth storage via speculation...maybe a tiny bit in being able to transfer money overseas cheaply (although you still have to convert in/out of BTC locally which may have added costs, so in any case this is probably a marginal incentive), and of course doing things outside of the government systems, which will probably cause problems here and there when it's large enough.

I wonder as well.  The revolutionary potential for cryptocurrency seems so obvious to me.  I wonder if people that genuinely do not see the value of cryptocurrency are just not thinking on a large enough scale?

Yes you're right...especially the way they can inflate the money supply via loans. Bitcoins just cannot be inflated in this way, so they certainly won't like this...although if governments can make cash legal tender, can they make cryptocurrency legal tender, and give banks the ability to back their loans by bitcoins or similar anyway?

Do you think it's only a matter of government embracing it, and therefore legitimizing it? Or is control too important?

Exactly.  I wonder where I'd be now if I didn't go spectacularly insane and quit my good-paying, respectable job back in 2004.  I might have a home of my own, and a car, and children, but I probably wouldn't know about cryptocurrency and if I did, I'd probably be too blinded by my mortgage and 2.3 children to give a shit.

Interesting...I agree, I believe there's a deeper fault on the government way of taxing which the repeating cycle doesn't seem to fix in each iteration. I personally think governments should be done with currency altogether as a means of taxation, and pursue other means, like time. This is a battle of the ages!

A fundamental feature of BTC and any cryptocurrency of this type is the ability for an INDIVIDUAL, to send money to another INDIVIDUAL, without anyone else finding out it happened (it would take a lot more work and resources than it would with our current monetary systems).
I can see government just becoming obsolete.  The Internet is making traditional methods of communication and obtaining goods and services more and more obsolete.  Cryptocurrency is just a further extension of this empowerment of the individual.
Of course, governments won't go down without a fight -- just like churches and religion didn't when governments took control.