Bitcoin Forum

Im tired of seeing all the usual panic caused by this and other price drops, so I decided to start a new thread to help counter those panicing a bit and try to keep some perspective. Ambitious I know:p  

I know how it feels to see investments and trades go against you and you sit and watch the charts plummet while your balance diminishes, its natural, but i remain bullish and id like to convey why in a simple way. keeping things simple is one of the cardinal rules in trading and investing, and is a great fear antidote.

First though, its important to understand something: IMO most people on here and elsewhere that are spreading doomsday 'it's dropping to $1' panic are simply perpetuating peoples fear and other emotions from the price drops to try to cause liquidity at even further lows so they can capitalize themselves: IE lows in which they can BUY and then PROFIT from the subsequent price rises. Dont forget, in order for you to sell low there must be a buyer on the other side of that transaction. If all the sellers would hold off for higher prices, the buyers need to then 'give in' and buy for higher prices and this will cause the price to then move up.
I know there will be some that actually believe btc is doomed and / or are actually hoping for a crash (to push an altcoin or something), but these ppl are in a minority imho and it doesnt change the fact they benefit from the low prices anyway, so can be treated equally.
This is obvious to many, but worth a mention as ppl seem to forget so easily.


I am bullish for fundamental reasons:
BTC is a strong new technology and will not 'crash' unless it is 1. completely stamped out and banned by authorities (we all know that is very unlikely as these institutions are very disorganised and if it did happen would just push it underground anyway, so it will still exist, until such a time as the ban is lifted). Think how far weve come on this front in 12 months.
2.some fundamental flaw in the technology is found and exploited (Im pretty sure thats even less likely)
3.everyone just abandons it for some other reason (so far BTC is growing in investment and adoption rates, so there is no sign of this any time soon).
Asides any major catastrophes (like an EMP from a solar flare where bigger problems than btc price is created anyway), BTC is sticking around and is still in the early growth years. These early growth years are turbulent, but it doesnt mean the longer term wont yield even greater heights (eg. the .com bubble caused big losses, but the fundamental tech survived and is now thriving better than ever).  

So whats causing the price to drop now in the face of all the good news?
This happens all the time in the fx markets (fiat ones), and doesnt really mean the positive fundamentals are wrong, and doesnt mean the fundamentals wont get reflected into the price later. These fx markets are mainly moved by, what i like to call, 'whales' (traders - not necs individuals - who have the capital to move markets) who throw their weight around by buying and selling in massive amounts to get the price to go where they want it to, not on a minute by minute basis necessarily but on a price 'target' basis. They do their thing and it causes a ripple effect of further smaller fish to act. The fiat fx market is quiiite a big bigger than btc though, so its far less simple in that world...
To a usual fx whale the btc market is like heaven, however: no regulation, move the market by double digit % with relatively little capital, very little competition and lots of nooby traders to take advantage of. Since the fx market is very quiet these last months, im betting (opinion reminder) a couple or more of these big players are working the btc market recently to make up their margins. So in my humble opinion, if there are a couple of whale sized players pushing the market around they only need 5~10 million each to do so. They'll want to get the price down as low as possible before things really take off for btc, and considering you can get the price to drop by 5~10$+ with 250k sell orders i think they will find it easy to manipulate it down even further than we are now - theyll want to get as much cheap liquidity as poss to then pump in larger buy orders later and get things moving upwards again.
With the wide scale panic going on it doesnt seem that hard to find sellers at these prices... and theres prob plenty more folk ready to dump at 350, 250 etc. But in the end, they have a vested interest in a higher btc price later. They wont want to short sell this golden goose to death (even if they could).

What will cause the price to rise again?
I believe adoption by new markets is the only substantial thing that will cause a fundamental shift upwards here. Even if amazon google etc adopt it, i think we still need more new buyers. Since BTC is only used by about 0.5% of the world, there is plenty of upside potential here. One of the big contributers to the last 2 rallys were new buyers coming in from new markets (not the sole factor but a catalyst).
New merchant adopters are good, but they also have an inherent 'sell' factor as many merchants will routinely sell into fiat after a transaction. New populations adopting btc however, means more buying than selling. Its only a matter of time before the next new market comes in, not if but when.
Since the 'market whales' know this, they want to get the price as low as possible while there is no 'new market rush'.A lower price before a new market moves in means they (whales and new/old markets) will buy even harder into a new rally. The whales will help to get that rally started when theyve exhausted the low sellers and itll hopefully coincide as near as possible to when a new wave of adoption is triggered (argentina next?).
 

Im also bullish for technical reasons:
tech analysis is a funny game, but one of the simplest concepts is 'higher highs with higher lows' usually = further bull trend to come and 'lower lows with lower highs' = bear trend. This is the basis of the most common tech tool: trend lines, but any seasoned trader will tell you these fail quickly but as long as you dont lose sight of the main highs and lows, then you can still identify the main trend. As far as BTC goes, its quite predictable in terms of using fibs, floating S&R with MAs etc but in the theme of keeping it simple, you just need to take a look at the last highs and lows to see what to expect:
since we are no doubt hitting a low period, in order to find out what low price is 'so low' that were bearish, just look at the low between the last two highs: it was about $50pBTC. So as long as the price doesnt 'break' this low, were still on the UP. To get an idea of what to expect for the next high point, check out the ratios of the lows to highs to lows to highs. While this is rarely exact, just dont lose sight of the big picture.
https://farm4.staticflickr.com/3900/14788509267_8c29675dba_c.jpg


So, in conclusion, even if im wrong about why the market is moving down and what will cause a new rally, as long as the tech analysis is intact (we dont go below $50) and the main fundamentals are true (adoption is growing and there are more new markets than saturated markets), then I believe we have plenty of reason not to panic and sell off into this down turn.
In terms of when, i have my ideas but i wouldnt take them seriously and in the end that shouldnt matter - at least for me as long as the above continues as is, then the 'targets' remain the same (higher lows,higher highs). Could be tomorrow could be 5 years.

Disclaimer: I have a vested interest in a higher btc price: I have long trades open and pending long trades to be filled at lower prices (Im not that confident ill calm the panic that much obviously lol).
Do not make investment / trading decisions based on my advice.
As a wiser trader than I says often: trade with the facts, trade with patience and conviction, and only trade it if you see it.
You should only trade/invest with what you can afford to LOSE (i.e. if you lose 100% of your investment, you will not be significantly affected). If you are adversely affected by the price drop (ie you cant 'afford' to let it drop to X) then you should reassess how much you invested and why and at what price you should exit.

Its late, hopefully that makes sense to someone, sorry if im not clear on some stuff, now im going to sleepzzz. for some further related entertainment, listen to this guy talk about buyers and sellers in the fx market:

http://youtu.be/S7H-MVPlGJw?t=7m

Thanks for sharing your thoughts! There is too much focus on the price instead of the ever growing fundamentals: just amazing all the new developments in Bitcoin land!

Can really imagine btw how this must be heaven for whales!

I'm planning to hold my bitcoins for at least 20 years. Really, the price now has zero concern for me. I'm just monitoring the fluctuation to try to get in at the bottom whenever I can to get as many bitcoins as I'm able to. Cos in 20 years time I know I would've killed to get my bitcoins at today's prices

20 years? Not smart. In 2040 or so we are getting AI. Guess where that leaves you and your coins?

Pray tell, sir, what has AI got to do with Bitcoin or anything for that matter?

Obviously the machines will conquer the earth once that happens! Sell your coins the terminator is coming!

Yeah, ok.  In a doomsday scenario, all money is worthless.  Fiat, Bitcoin, and Gold would all be worthless in favor of shelter, water, food, and ammo (in that order).

The all-time-high point is the real one that should be convincing...

I see an article every other week on the BBC about Bitcoin, people are aware of Bitcoin, although they are far from understanding it... its utility increases, its value changes from speculative to utile and then the price must at least match the speculative value.

lol come on raystonn I'm obviously clowning on the kid for saying AI would be here in 2040 and that would somehow change everything.

Sooner or later Wall Street will decide that the strong fundamentals of the past 6 months should no longer be ignored. Here's an illustration of how the mindset of a traditional investor can change:

http://www.nasdaq.com/article/recent-bitcoin-weakness-creates-an-opportunity-cm381412

Interesting to see such an article, thxfor sharing. I agree the business and finance world are losing a small amount of nay sayers on a daily basis.
I watch a few hours of cnbc most days for my sins and I couldnt believe the amount of negative spin around btc in the last 6 months, mainly from businessmen/bankers/economists (not so much investors). However its slowly dissipating now and all those commentators that were calling it the worst ponzi scheme ever etc are keeping more quiet recently(and of course never get 'called up' on previous comments). Anyway, in 85% of cases, if you hear a good idea on cnbc its already too late, so assuming the commentators are going to turn their frowns upside down soon, i guess the tide is turning behind the scenes.
However in terms of active traders, im sure there are a some of the big (and smaller) players already active and enjoying the easy ride with btc markets, as i already mentioned. Those are the guys that dont give a shit either way as long as they make their money.
https://www.youtube.com/watch?v=aC19fEqR5bA
Its the old school 'grey men in suits' that reflect 'business sentiment' are the ones slowly warming up to this/remaining skeptical and who have their ideals reflected in the press. Would love to hear how they talk to their banker friends about it, the ones that are coming round at least. Anyway, i get the feeling the nay sayers are only sticking to their guns out of stuborness or they have contrary investments. I think they know the tide is moving against them.

Very nice point of view on the situation.

I believe the hordes of people working in foreign countries and sending money home on a monthly basis (aka: the 'remittance industry') will be so much better off using bitcoin: they are currently raped by a few businesses and there was no alternative before bitcoin. That will be the next 'gradual' push, in my opinion.

Nice post. You are neglecting one important factor, supply and demand.

The price you see today gives you the signal of how much the market is willing to pay for 1 bitcoin. The supply cost based on difficulty today is way higher than what the market willing to pay.

So, based on this factor, bitcoin is still rather bearish since the price is still way below production cost.

Even if the smaller miners stop producing coins due to increased costs v lower BTC prices, the supply to the market should stay steady anyway (I thought) because the difficulty level will adjust.
So the people that are left mining are still finding it profitable anyway, even with the lower prices, because they will always have an edge on the (lower) difficulty rate, and so be able to produce more coins to compensate the lower price, right?
By my understanding the supply will stay steady unless the price drops to 0 and stays there, or everyone stops mining or the cap is reached because the difficulty rate will always adjust to the amount of Hash power on the network.

I must admit Im not an expert on this side, thats just my understanding of it. Maybe I got it totally wrong and making an ass of myself here lol. :P Im more focused on the market trading within itself, because supply was inherently steady (afaik)

agreed, this is a kind of transient market that could be huge (maybe even the biggest single 'non-national' market) and Id imagine these people would be a big reason the 'home' markets adopt BTC.

250 reached, interesting price point as it is the previous high on the current up-trend.

sadly no new territories on the radar to introduce new buying pressure. current market players still looking for the bottom. close inspection tech analysis puts bottom at~200. usd orderbooks clearly have buying pressure between 250 and 50. fundamentals still same (market reacted well to stamp hack) so not seeing certain reasoning for uptrend to break just yet (not looking so good on cny market orderbook though... lets see how market reacts to 250;).

Bitcoin has failed. Abandon ship!

Says the man with 56 posts!

I can only imagine the commentary had this person been a noob during 2011 like, "cut your losses and your wrists!"  ;D

you think your opinion is worth more because you spammed more?

160~220 support holding well. couple of tests in last month caused 10~30% bounce, which is promising.
plenty of sellers lurking below significant trend resistance of 300~330 however. so looks like were stuck in this range for a while before getting a breakout.

not much fundamental reasons to think previous uptrend low of $50 will break.
 mostly good fundis lately suggesting it will hold, therefore maintaining long term up trend channel. but lack of new territory fever adoption means new speedy rally unlikely any time soon (so resistance @ 300 might hold for ages..). with all the good fundis in the last few months and lack of rally suggests current markets are adopting slowly/saturated (and reinforcing point that new territories are slow to adopt).

I agree with your post, and that there is plenty of upside despite the current state of fear.... but I'm more concerned it may take 5-10 years for the demand to catch up with the supply where the next rally may happen. A lot of people thing the 2016 block halving will cause a rally but I highly doubt it

why so? a lot can happen in 2015 to be able to call 2016 already, nevermind 5~10 years a head.
the longer the time frame the more confident i personally am about a higher price, but in the btc world a year is an epoch! so i think its totally possible to see a big rally before too long. like a physical fire it can take a while to catch and get burning but once it started it spreads quick:p

anyway, even if it does take 5~10, is that so bad? gives us time to accumulate even more!

It's not a bad thing if it takes that long, but the reason I think it may is because bitcoin needs to be useful, accessible, and simple for it to catch on to any significant portion of the population. This technology isn't as useful or convenient out of the box by itself, it needs to be utilized by applications that are yet to be developed. And when those applications come, that utilize bitcoin as a digital programmable currency, and use it in a way that cannot be done with conventional currency or credit cards, that's when I think more will start using it. Like the internet, it could take a decade for that to happen

Not sure exactly what you mean but imo the usefulness is not really related to the price, it works fine regardless of it - assuming its mainly used as a payment/transmission system and we dont consider the mining reward side (which in theory could be compensated by other ways).
Im sure many new apps and techs will come along in the next year or so to make it even easier to use, and they wont be hindered by the price fluctuations.
For other uses Im not sure how price affects it really, apart from investment/trading/speculation - but thats not really a BTC specific function.

Usefulness of something with claims to "a good store of value" is related to price, sure.  Especially when said price has dropped by ~75% over the past year.
As a payment processor of any size, Bitcoin is a nonstarter--7 transactions per second limit is simply laughable.


New apps and tech can't fix the fundamental flaws of Bitcoin.  It's flawed at the conceptual level, with cludgy workarounds (hardforks] now being proposed to smear salve over old sores.

Usefulness = more people having the incentive to use/acquire bitcoin = more demand = less supply. If 100 million people (1.5% of the population) have the incentive to use bitcoin... how many of those people can own an entire bitcoin when there are only 21million in supply? That's what I meant

Why is your activity count and post count the same? I do not understand the activity formula. The help page does not explain it to me....

such confusion

7 per second.... oh dear... wasnt aware of that...

the store of value stuff, im not sure where it comes from but in my mind thats a relative concept with too many variables to be a generally good statement. same logic for anything that is considered to be a store of value though.

i dont know enough about the tech itself to comment on your last part, but it seems to me that a lot of people with much better understandings than i have a lot of faiht in the tech. im sure there are two sides to it all, but the weight seems to be on the positive side - i know 'people' better than the tech, so thats good enough for me :p

there is a post around here about it, its a merged value of posts + times logged in or something (im usually logged in on one device or another most of the day). if i find the link ill share.

ah, id agree with that. imo the usefulness of btc in increasing over time at the moment, so its a matter of waiting for the people to catch on after that. since most people arent aware or know enough about btc to buy in, im betting that part comes later after further increases in usefulness:)

"Oh dear" is right.  That's called a non-starter.
The tech?  Nothing wrong with the tech per se, just doesn't scale & costs 12% of Bitcoin's market cap per year to keep the network secure.  So if you don't mind the constantly tanking price, it's all good.

Far as smarter people than you having faith in this tech?  They have faith in [seemingly neverending supply of] greater fools, not tech.

http://s8.postimg.org/ic6cfddr9/building_blocks_of_hope_poster_rf85daef67ab947cc.jpg