Bitcoin Forum

This is purely a thoughts and speculation thread, i really dont care what the price of BTC is as i never hold too much for very long, usually as fast as i get it, it goes out to purchase wood from forum members (https://bitcointalk.org/index.php?topic=846852). I have done millions of dollars of business this way, and never lost a penny. Its the way bitcoin was intended to be used.

It occurred to me this morning that bitstamp, one of our leading exchanges needs to buy 19,000BTC to pass its next audit, it then occurred to me that about 70% of the "weak hands" who bought in above $600 have already panicked and sold months ago. so i had an Occam's Razor (http://en.wikipedia.org/wiki/Occam%27s_razor) moment, and i would like to hear some thoughts as i feel if this is the most likely explanation and it has some validity that now would be a good time for me to buy in bulk for the coming weeks purchase orders for wood. 

If bitstamp uses some of its cold storage to slowly drop the price of bitcoin, or even manipulates its algorithms to do so, then the price of BTC falls. Yes its a risky play, but from a business standpoint it makes sense to do so. If your on a sinking ship, almost anything seems better than doing nothing and drowning. As of about 20 minutes ago, that 5 million USD worth of bitcoin they lost would have only cost them about 2.7 million to buy back. If they can drive the price down to $145 a coin, then they have the cash liquidity in reserve by proof of their last audit to buy back the stolen coins and could pass an audit within a day. It is most likely that given the theft, customers are going to demand a solvency audit soon so it makes sense that they would crash bitcoin artificially to get their coins back. If BTC does not fall to $145 a coin, then Bitstamp does not have the cash liquidity to buy back the coins and become solvent again and they will surely collapse under the coming months.

I have always operated on the Occam's Razor side of bitcoin as 90% of the speculation i see in the media is nothing more than attempts at manipulation and misinformation. So please share your thoughts, am i way off base here? Even though it is the most logical explanation with the least variables, instead could it really be that there are hoards miners really willing to operate at a 30% loss just to be able to keep dumping coins for that 30% loss? Without going out on a limb on some crazy conspiracy theory rant is there really any other logical explanation besides Bitstamp is playing us like a heard of sheep?

Thanks for your thoughts  ;)

It's interesting you say this, I'm not sure if I agree with you on the methology they could have been using and I'm also not sure what that would be but... it's very odd to see a large spread between exchanges on high volumes of sales as occured today, if I remember correctly vast amounts of bitcoins were dumped on bitstamp to the point where stamp was around $160 whilst btc-e was around 188 (about 15%) in fact non of the other exchanges were tanking any where near as hard.

The reason I say it's odd is because it makes no sense for a large bitcoin holder to sell in such a way as it's trivial to move bitcoins to multiple exchanges and sell at the same time thus eliminating the need to lose anywhere near like 15% relative to market value on other exchanges.

A holder then only has to wait until they feel the market is going to settle for the next 20 minutes to convert the USD back into Bitcoin and send it back to the exchange they have bank accounts set up with.

Some say, for market reversal a capitulation event is needed. Before now, selloffs have looked a bit like that, but I think they have fallen short because too much bullish sentiment has prevented the full wash out.

Nobody (there are exceptions, I'm talking general sentiment) expected it to go below the prior bubble's ATH, and so it inevitably had to.

What happened in the last 48 hours looks much more like the capitulation bottom that people would say indicates a change in direction.

It looks like it satisfied the calls of the EW proponents. Its in the ballpark of what the most bearish (serious) forecasters were saying. It has decent volume this time, and the recent low was in the region of a 90% drop from the previous ATH.

It looks like standard human emotions driving market behaviour. I don't think a nefarious manipulator is needed to explain anything, as tempting as it is to believe such things.

Thats just my 2bits.

Human emotions about what?  Nothing happened. 100% of the people here and on Reddit were doing just fine 5 days ago.  Bitstamp back online, and all was well.  There was no horrible news.  All good news for the entire 2nd half of 2014 in fact.  There never is Horrible News when Bitcoin crashes.  Bitcoin is not a company, and the Bitcoin price is not a company stock.  Yet people *still* want to make Bitcoin Market a stock market, and apply to it all the psychological factors of a company stock.  There is no company.  And if the market was actually reacting emotionally to whats going on in the "company" of bitcoin, the price would be over $1,000 right now.  There has been nothing but good news, and growth in the infrastructure "out in the field".  So the claim that people are freaking out and bailing emotionally doesn't make sense to me at all.  This pool is very small, and very easily affected by large buys and sells.  When you see 1 entity repeatedly dumping $10,000 worth, knocking the price down a notch in 5 minutes, that says something.

There's a theory that this is BFS liquidating.  Or the alt coin hacker liquidating.  Or Bitstamp knocking the price down to get cheaper coins.

All of these are more feasible than some "traditional stock market" theory that down always means "loss of confidence".

Down almost never means loss of confidence with Bitcoin.  And up almost never means increased confidence either.

-B-

I think it is being played. But the end result is the same so it doesn't matter. Why? Because China led every single of this drops all the way down to the margin calls. I did not see BTCe, Finex, or Stamp lead any of them. It was always Huobi dropping $10 below every other exchange, with the rest then following.

To be fair thinking about the methodology they could use if they were in a scrape is fairly simple when I think back to MTGOX, I don't think mtgox were trying this and were way to far in the shit in anycase but... Bitstamp could make vast sums of cash by simply announcing banking delays causing customers to poo themselves, convert their cash into Bitcoin at a massive premium (that would essentially be theirs) so they could flee to other exchanges or wallets.

wow, this actually is a thread with some real discussion and brainwork going on. Thank you guys!

Back to the topic. Actually, I have the feeling that something really big is happening in the background and that the current price is heavily manipulated.
We'll probably know in a couple of weeks.

Human emotions about price, there doesn't need to be a company, the same patterns happen in forex as the do in equities.

The sell off yesterday created more fear - breaching the ATH of the previous bubble is a big thing. Capitulation is when people finally give in to fear.

Human tendency to set stops at round numbers, I bet there was a whole stack of stops at $200. Those get hit, waterfall effect.

On the chinese chart it was Y1000, same thing.

Reacting the fundamentals of a 'stock' or in this case bitcoin, I agree the price would be different, thats what investors to. The price day to day is driven by traders.

Buffet's "voting machine/weighing machine" phrase applies here. Thats why I hold, I'm not interested in what some trader wants to give me for my bitcoin today whilst its the world champion in the unpopularity contest. I'll wait a while. See how things pan out.

The Average Joe pro-bitcoin investor may be emotional and twitchy, but traders and early adopters are not.  The Average Joe holders out there, even if there are tens of thousands of them, do not collectively have the extremely high volume of coins that we are currently seeing being dumped on the exchanges.  Only deep pocket whale traders and large miners would.  Some over-leveraged longs have been wiped out.  Also, we could still be seeing thousands of stolen coins from Mt. Gox and Bitstamp being liquidated.

A wise man once said "be fearful when others are greedy and greedy when others are fearful"

there may be multiple things going on (deflation of commodities, china going to stocks, miners folding etc) but these dumps are primed and timed. lots of 5k, 10k in intervals. groups of traders who have thousands on margin sytematically dump. i dont know what to call these geezers, but they are pro plungers for want of a better phrase.

Let's assume you are being played. What you can do? Sue the bastard or what?

We traders/trollers never argue the legitimacy of a thing, we just follow it. If bitstamp want to play the market, just follow the direction it plays. Would it be a better way to deal with it?

I agree with you, that's why i asked the questions, if we are being played, then now would be a good time for me to play ball to save a little $ over the next few weeks for wood purchase orders.

"Buying the despair phase" works if fundamentals are good or if a big pump&dump scenario is possible/likely.

At this point in time, neither of them apply to BTC anymore.


Shit's going down like tulips.

I was thinking about this the other night, its really hard to know what others are thinking, because you only really know what you are thinking yourself.

I asked myself the question, am *I* fearful or greedy, and after thinking hard I realised it was really hard for me to tell. Throughout the last year, everyone's touted 'fear' as being prevalent. The idea that the selloff is through fear is probably a mistake (at first) because at the time we all knew it was a speculative bubble that had to burst at some point, and so if we know that then we know that although the selloff may create fear in time, it is not because of fear.

This for me adds some subtle distinction to the words above. It's not that you buy when people *are* afraid because thats been the case (increasingly as time has gone on) for the past year. You need to buy when people are selling because they are afraid.

Conversely, thats how you know when to sell the bubble top. People are always greedy, but you know its time to sell when they are only buying because they are greedy.

As it happens, I felt fear as the price continued to go down. I bought because, if i felt fear, then others must be afraid too. Now I realise that was too soon. I needed to wait until people were selling because of that fear. I've thought about selling before now, but on reflection I realise that was a 'greed' sell. Today when I went through the mental discussion of "maybe I should sell" I realised that today it was because I was afraid. Of course I will not, because it would be silly to deviate from the plan now.

As ever this is not advice to buy. This is just some thoughts on a famous WB quote.

I'm quite happy holding my own bags, thanks.

interesting 2 Warren Buffet quotes have been used on this page twisted to mean the exact opposite of their intention with the aid of confirmation bias!

https://www.youtube.com/watch?v=RK_g0H6Zs1M

so I should have waited till $1200 to buy? because that was what the real 'weight' is?

gotcha.

 ??? I don't think you have got me. I've got no idea what you think it means but it's this:

Voting machine = folly of the market: what's trending, who's popular, who's unpopular
Weight = The substance of a companies value determined by very real metrics such as revenue, profit, growth etc. not the public's silly opinion about its prospects in the short run (the voting machine).

Weight isn't applicable to Bitcoin so it's just a part of the voting machine

I agree with you OP. The manipulator is back! :) For what purpose is unclear.

It's possible that this could also be an attempt to wipe out some mining entities.  Clearly there are few players able to profit at the current difficulty assuming they're selling at near-market prices, and the hash rate should come crashing down shortly if the exchange rate does not spike back.

Weight isn't applicable? seriously?

The actual day to day usage of bitcoin as it was intended and not as a speculative vehicle for trading is exactly what bestows underlying value. The basic law of supply and demand means that the more people that want/need it to use it, the higher this underlying value is.

That's the weight. Thats why I bought, thats why I hold through all this bubble/pop nonsense. Nonsense that is entirely due to those people that bought because they thought it was a get rich scheme and it was 'popular'. Those same people that then bailed again because it turned out it wasn't, because it was 'unpopular'. They are the voters.

If you can't see any value in bitcoin, it doesn't mean there is none.

I expect many of these cycles before it ends (one way or another). Right now there is nothing to suggest it ends badly. Unless your whole premise is price.

First speculation thread I have read for more than a year with some actual substance in OP.
Thank you!

Thanks TookDk,

It wasnt so much of a speculation thread than it was a question or hope for some insight. It all played out in the end, Picked up just over 4,166BTC @ $168 average yesterday, and started placing orders with my wood sellers from the forum here about an hour ago. So it looks like in summary i got a $186,000 usd discount on next weeks wood orders  ;) Not saying that bitcoin has ever done me wrong, but this week it did me VERY well as a merchant, and frequent user. At this point i realize i dont care who, what, or why the price crashed. I'm just glad i followed my gut and put up a giant buy wall yesterday. I might even increase my wood order quantities since i got such a hell of a deal.

The basic law of supply and demand means you need increasing demand to sustain increasing price movements which is mathematically unsustainable. The speculative nature is a major flaw that can't be overcome, I used bitcoin for my business when it was around $5 fairly stable and generally moving upwards, was a bit of a gamble then but I wouldn't touch it with a bargepole now and nor would any serious business (just look at what happened to maidsafe from $10 million they tried to raise they lost 6.6 million in collecting worthless maidsafe tokens and now by holding bitcoin they've lost about a further $1.5 million of the $3.5 odd million the raised (clever guys).

There's value to bitcoin in terms of it being a very speedy payment gateway, there's value to checks in the same respect but I wouldn't speculate on the value of a check beyond the paper it's printed on especially if the balance of the underlying account went up and down like a yoyo because of gaping flaws in the concept.

I can't stand people that are invested but try and say "the price doesn't matter it's the technology" it's so full of shit, the techs free so if that's what your a fan of why are you gambling all your money on it!

You can't be far off a forest  8)

Yes, Fear was at it's peak and soon we can see higher prices when Greed finally has a turn.   :)

Can I help you please.
http://i62.tinypic.com/1h8m5j.png
Interesting is ah, that. Can we get some moons?

   That's the drawback for you, but there are very diverse individuals and businesses on this planet. Also, the check is the basis for the modern banking system and fiat currency, and the most powerful families and individuals in the world right now are the ones who invested heavily in it.

   It's not the check itself that has value- it's the trust that the institution backing it has. This trust, once established, presents a tremendous potential for abuse, and it has been very much abused. Bitcoin offers the potential to replace a large portion of the global financial system, without the need for this trust. Therein lies the value.

      There is still potential for some abuse, especially as the bitcoin consolidate in the hands of a new elite, but in the transition there is a lot of potential. Also, as has been pointed out on this forum before, the volatility will decrease as the size of the market increases, and the fact that people are still making money in the bitcoin market is the guarantee that it will continue to grow. Fiat is not really any less volatile than bitcoin, it's just that the size of the markets are so huge, movements take decades instead of days. Believe me, currency movements in the Euro sometimes have catastrophic results for businesses in Europe and China. This is just one more consideration when running an international business, and bitcoin, in principle, is not much different, just better.

to answer your question: yes, you are being played.
bitcoin is here to stay. it is here to take back the financial power that we as humans have given up.
this bear market is simply fuel for the next bull run.

1) You have no idea what the people on this forum do either for a living or their general wealth. You might be surprised.

2) The richest and most powerful people in the world got where they were by being ruthless and not playing by the rules.

3) Bitcoin is nothing like a cheque. Cheque's are not algorithmically limited by design, nor freely transmitted anywhere on the globe in an instant.

I deleted that post quite a while ago shortly after posting as thought it was overly and unnecessarily obnoxious. Yes we're in agreement Bitcoin would certainly be useful as a payment system if the price was stable as said previously I used to use it myself,  now I''m far safer using instant payment methods like alipay or paypal even wire transfers preferential. As you point out cheques are a bit out of date and slow and was merely used as an example of the lack of value proposition in a medium over which money is transmitted to highlight the same is true for bitcoin. I'm not sure why you see the algorithmic limit as meaningful as it's such a insanely huge number (100000000*13729850)

I noticed this and it was my thoughts exactly +1

+1

The btc-e price is usually lower than the other exchanges. It's very odd for it to be higher.

^
Tinfoil hut user spotted.

He also said "If after five minutes at the poker table you don't know who
the patsy is .. then you're the patsy" ..

In other words you need to fully understand the market you're playing in
and you'd better be among the most informed ..

Triff ..

       Just a little clarification and explanation of history as I understand it.

   The word check actually comes from either perSian or arabic, and was a technology that arrived in Europe either via traders in the mediterranean, the crusades, or both. It involved a network of goldsmiths or businessmen promising to honor deposits made at various locations. It may have been and may still be run by initiative secret societies. The Knights Templar is often cited as one of the first such organizations in Europe.

    By investing in checks, I mean they invested in the networks that honored the checks, which is where the real value of the check is. A tight knit sense of group iden tit would be very useful in this business- if you are very selective and rigorous about selecting initiates, a special ring, secret handshake, or special phrase can let a member of the organization in another city know you are a member, in the absence of any electronic communication, which could really facilitate trade financing and security. Having passed the initiatic examination of the fraternal society, you have certain duties, privileges, and rules you must abide by, and consequences if they are broken.

    I don't know why I bring this up. What I mean to say is that the check represents a network and a social movement. If people knew each other, or they knew the issuer of a check, then they would trade gold for a piece of paper, knowing the person who issued the piece of paper was good for it.

     In the same way, bitcoin is not simply a store of value and medium of value transfer, it is a network and social movement. The real value of bitcoin is the value of the bitcoin owners and traders, and thwir level of involvement with it. So people may be bearish about it, but ultimately it's value is a reflection of their own beliefs.

  Thanks for deleting the rude comment, I am a recent graduate just getting into business, and this is not the first time it has been suggested that my thinking is too heavy on theory and too light on practicality. Guess for some the best way to learn is by getting burned.

So you think merchants should only accept bitcoin for payment when the price is trending up, but avoid it completely when trending down?

How interesting... quite a businessman you must be there.   ::)

Are BULLS being played?



Short answer: Yes.
Long answer: Yeah.

Fair enough I suppose for merchants that cash out straight away with services like bitpay it doesn't really matter, if you're selling something at a 15% margin and the price is likely to drop on you by 20% before you sell them then of course it does matter!