Bitcoin Forum

If we take bid sum (the quantity of USD on the orderbooks waiting to buy BTC), ask sum (the amount of BTC on the orderbooks waiting to be sold), and bid/ask ratio in exchanges as an indicator of money sitting in exchanges, we can have an idea of the demand for BTC around the world.
Sure the two (bid sum and actual money sitting on exchanges) are not necessarily the same thing, but history shows that they can reliably predict uptrends.



Let's start with Chinese exchanges Huobi and BTC CHINA (since chinese exchanges move the market more than any other exchanges who just blindly follows them most of the time).


Huobi

https://pbs.twimg.com/media/B8H5vfEIcAAraPj.png:large



The picture speaks for itself, bid sum decreases over time.

https://pbs.twimg.com/media/B8IEJm3CAAAOliP.png:large


There something particularly interesting to note though.
Look at the decline that we have had that bottomed out at $275. Price was going down but the bid sum was slowly increasing.


https://pbs.twimg.com/media/B8H6Jv6IgAAgtj2.png:large



Chinese buyers were waiting for that target and in fact we saw a short term recovery that lasted quite a while with a ridiculous bulltrap that topped at $475 before resuming the crash.
The same is NOT happening right now.
Sure price is pumping right now. But could just be a bounce pump after a flash crash, classic stuff, exactly like we had all year.
No new fiat money to support a healthy and prolonged uptrend.

BTC CHINA:




https://pbs.twimg.com/media/B8H6MopIgAAGcHx.png:large



BTC CHINA shows a clear constant decline of demand.

The exchange is not really being abandoned, because there is a lot of coins to be dumped, but not fiat coming in.


https://pbs.twimg.com/media/B8H6VbqIcAAJPQW.png:large



Bitfinex doesn't show any particular difference over time, that is probably because of the fact that it is used mostly for margin trading and because of the maker-taker system. Still, we are not gonna observe any increase in demand here obviously.

https://pbs.twimg.com/media/B8H6pQVIAAA43Id.png:large



BTC-E shows the same picture of BTCCHINA, demand slowly drying up but the exchange has lots of coins to be dumped.

https://pbs.twimg.com/media/B8H8TdkIYAEb9fl.png:large

https://pbs.twimg.com/media/B8H_R4GCUAExaOg.png:large







Now Bitstamp. As you can see, the decline in bid sum is clear, but wait. What is that sudden increase we can see lately?

https://pbs.twimg.com/media/B8IAbpACIAETIrB.png:large


The bid/ask ratio has gone up, but that doesn't necessarily mean that the bid sum has gone up... Let's see more precisely what happened there.


https://pbs.twimg.com/media/B8IDCRSCUAAUJCo.png:large


As you can see, the bid/ask ratio has gone up, but the bid sum has stayed the same, no new money.
What happened is that the ask side has dried up right after the Bitstamp HACK.
My guess is that, because is a lot easier and quicker to withdraw BTC than it is to withdraw fiat, a lot of people have simply decided to GTFO of bitstamp after the hack.
Still, no new money, demand is not increasing.





Conclusions:

If we take bid sum and bid/ask ratio as indicators of new money flowing in exchanges, we can see that demand has been slowly and gradually decreasing in all exchanges since the peak of the bubble. Some exchanges show signs of 0 new money coming in but plenty of coins on sale on the orderbooks.

A healthy and sustainable uptrend needs constant fiat money being poured in exchanges, as we have seen with the previous bubbles.
Without real demand, any uptrend will be short lived. Price will not magically go up to $500-$1000 or in a new bubble as most are dreaming here.

How do you expect to reach new highs if there is no new fiat coming in guize?

Comments on the quick analysis are appreciated.

The idea is that a reduction in the supply side can attract an increase in demand, similarly to what happened back when the ASICs hit us: Profit margins increased dramatically and people suddenly were able to afford to hoard the daily mined coins.

What if that new fiat is waiting for a proven uptrend to start? Not much new money would invest now with the possibility to loose 50+%. Once we get a "yep this is a bull market" sentiment, we will see a rise in the market cap. Right now, there isn't, which your charts show.

Well, technically you don't need no FIAT in order to reach a new ATH. Coins get sold and bought over and over again and again! It's effectively a never ending cycle. Sure, new FIAT helps, but it's not necessary.
That being said, I don't think we won't see new FIAT hitting the exchanges very soon, i.e. next week.

You mean the decreased asks on Stamp? I'm pretty sure it's just because traders got their coins out of the exchange after the hack and moved their coins to other exchanges. That decrease in asks is not necessarily observed in other exchanges (some of them show an opposite picture like BTC-E and BTCChina), not in that magnitude anyway and not without a bigger decrease in bids.

Yes it's possible but if you look at the start of the $1000 bubble you can see that big injection of fiat actually came first while price was relatively stable, then after a while price was catching up. So basically the raise in bids preceded the price increase.

Sure, it's possible people are waiting. But still, demand constantly and gradually decreasing and not FOMOing after temporary bottoms is troubling news for the bulls. That means a lot of people are not convinced that the bottom is in and that a new bull market will follow.

If the rallies are not supported by a new injection of big money being sent to exchanges and volume is not big enough the uptrends are not sustainable and traders (whether you like it or not they mostly set the price and provide liquidity, not the permabulls  ;)) will dump because they will se lack of strength. Exactly as it happened with the rally that we had in 2014 that topped at $680 in the middle of the bear market. It was a "fake" recovery with mostly margin longs and low volume, no real actual money flowing in. That's why it failed and price crashed again.

Bid & ask sums can be easy manipulated. It is the worst indicator ever.

No.

They can be manipulated but you can see it in the big spikes that drop sharply in either the bid sum or ask sums graph. Manipulators don't just leave their walls forever. They put and pull their walls, so their influence on Bid sum and ask sum can be perfectly seen. If you ignore the noise and spikes you get a good picture of demand and supply on exchanges.

Bid and ask sums have been reliably used by traders in this forum since forever and they work as a very good predictor for uptrends and downtrends.

Every price crash started when ask sum was at minimum.
You do not see stop orders in order book. The less orders in order book the more hidden(stop) orders.

Again if you ignore the rapid fluctuations you get the picture. I guess a rapid decrease in asks as soon as a crash starts is due to traders panic cancelling their buy orders en masse, and then gradually putting them back up over time.

Still, my thread wants to point to the constant, relentless decrease in bid sum over time. And it's NOT getting better right now even if all the bulls here scream "capitulation, new bull market incoming!". That's what I am am mainly talking about here. How can you say this is "all manipulated"?

Visible order book is 1-5% of all trades. and > 50% of orders are fake.

Dude, do you know that traders here have been using bid/ask sum ratio but especially bid sum as an indicator of new money coming in exchanges that was able to reliably predict uptrends and starts of new rallies (or the end of fake ones)?

But the thing is that the bid amount can suddenly pile up within a short period of time and catching everybody by surprise and eventually force the price up. Don't underestimate

Orderbooks are meaningless. Especially on the Chinese exchanges. Actual fee based trades or borrowed or lent coins and dollars matter.

But I like your sense of desperation  :)

Borrowed or lent coins on bitfinex (who blindly follows china most of the time, if you were a trader you would probably know that) matters more than bid sum over time? I think I heard them all now.

Ask users that were actually trading or following the market in 2011-2013 before and during the bubbles if bid sum doesn't matter.

Have a look at the orderbooks on stamp and finex now. They look insanely bullish. Will the price go up? Possibly.

Rewind to when the price was 380. The orderbooks looked bullish. The price was smashed lower by heavy leveraged selling.

The orderbooks do not represent anything except potential.

That's not how you should look at the orderbooks, you shouldn't really compare bids and asks at a given time. What you should do is compare the bid side and the ask side over time, how much they change over time. But especially the bid side.

Simply put, if during more than a year you can see the bid side slowly drying up in all exchanges and not get particularly better, it's a good indication that not much money is flowing in exchanges (and the one that is already there is slowly being pulled, probably) There is no amount of manipulation that can explain that phenomenon except for simply a lack of demand. Don't you agree?

That's what my thread wanted to bring attention to.


Also, one of the most interesting things is this:

But at some point there will be a reversal. Even die-hard bears who short at every opportunity may become cautious at some point. You know, at some levels there's just too many people willing to buy the coins. The price can only go down so much.

I don't see how all those graphs show something that much different than the price chart. 2013 was awesome, 2014 sucked, seems we've hit the bottom now.

So the situation hasn't changed much so far, bid sum at bitstamp has been going down a little.
Still early to say though and not by much.


I will update from time to time.



Anybody knows where I can look at Coinbase bid and ask sum changes overtime?

Good thread. Thanks for posting.

Someone call the Winkiveii, they need to pump it together with Gavin, Bobsurplus, Elwar and the other 3 fanboys.

Put a bullbot on it like on zetacoin to maintain marketcap with no liquidity, else it looks bad.

UPDATE:




Overall, bid sum on all exchanges didn't change much, Huobi had a little increase lately to a little more than 20 million CNY but decreased soon after to return to the low levels seen in January. The final result is a slight increase in bids but accompanied by an increase in asks anyway, overall very low amounts of fiat sitting on Huobi compared to August 2014 for example.
BTCChina shows no particular difference in bids, the asks have seen a decrease but no new money hitting the exchange.
BTC-E shows a slight increase in bids lately but that is accompanied by an increase in asks too, the bid/ask ratio is very low.
Bitstamp bid sum has been decreasing lately and is now staying at low levels, for example compared to August, same situation as Huobi.
Bitfinex doesn't show any difference as already explained in my first post in this thread.

interestingly, COINBASE shows a slight increase in asks but very low amounts of money sitting on the exchange, and near the lowest levels since the regulated exchange has opened. Contrary to some expectations here, the exchange is not witnessing an influx of new money for now.

HOLY SHIT! I wonder how long triple digits will hold? This looks terrible.

UPDATE:






Huobi:
Bid sum almost halved since I last posted in this thread, from around 17-20M CNY to around 10M CNY. Generally, still very low levels compared to anything seen months ago as you can see by the pic.
Bid/ask ratio is around the lowest seen in ages.

BTCChina:
Generally still low levels, but to be fair it slightly increased. Not by much though.
From 6-7M CNY to 8M CNY.

Coinbase:
Bid sum is low in absolute terms, is stays around $1M-$1.5M range, increased a little and fluctuating but still in this low range.

Bitfinex:
Nothing interesting as always, see my first post for more info on why.

BTC-E:
Bid sum stayed around the same levels, it fluctuated a little but overall we don’t see any big increase or decrease.
Since the bottom it slightly increased but it still way below levels seen since January 2015.


Bitstamp:
Still very low bid sum, after the hack fuckery it stabilized at the lowest levels seen all throughout September-December 2014.


As a general trend, bid/ask ratio is stabilizing around the lowest levels ever compared to anything seen in 2014 in all exchanges.



Again, there is no indication that new money is flowing in exchanges. Demand seems to not pick up for now.





http://coinsight.org/graphs/huobi_btccny_depth.png

http://coinsight.org/graphs/coinbase_btcusd_depth.png

http://coinsight.org/graphs/bitstamp_btcusd_depth_6m.png

All other exchanges at various time frames:
http://coinsight.org/

From what i can see, the demand is flatlined for some time now, and there is no sane reason why the price should stay at this level, or increase. The only thing i think is that were diving down, atlease 15%.
Its bullish to say anything but..
I usually analyse bitcoin sites traffic, predicting prices that way, worked well for me so far, so ill stick to that.

cheers

I want to add one thing you should consider. The most flagrant difference in Bid Sum:


On Huobi, around the 10th of January (before the big crash) price was only around 15% higher than was it is now, yet the Bid Sum was 2.5 times higher than what it is now.
See for yourselves:




http://coinsight.org/graphs/huobi_btccny_depth.png

Which puts us in the area of 200-210 depending on the price fluxuations