Bitcoin Forum

Once again, BTC is moved by the Chinese exchanges, with OKCoin registering a whopping 750K BTC volume on the 4hr break out candle. However, lets zoom in a little:


http://i64.tinypic.com/fx3wo7.png


Seems that 93% of that volume, occurred with Bitcoin still in it's 'rangebound' state, between 2800 CNY and 2830 CNY. Note also, that market structure was bearish on the run up to the break out. Anyone who has traded on the CNY exchanges, will be familar with 500 or so CNY walls, lying +/- 10 CNY of spot, only for a handful of orders for several hundred of BTC to appear and be executed just as quickly, totalling perhaps 3K BTC in volume, but for spot price to stay within a 5 CNY range. When this happens, this is basically 'Front Running' trades, where some trader, or perhaps the exchange itself, sells large sums of Bitcoins to himself, so quickly, that normal traders don't get access to the trade orders. This is what basically happened here. It is called 'Painting the Tape, it is highly manipulative, and also highly illegal in regulated markets'. The charts give the impression of HUGE interest in BTC at the 2800-2830 CNY price range, and the 'bullish breakout' occurs, with around 6% of the total break out volume, accounting for over 75% of the move up.

This market, is basically a bitch to those who are behind the big Chinese exchanges. It is so obviously, manipulated and corrupt, but it don't matter, the USD exchanges follow suit everytime, and real fortunes are won and lost.

I cannot agree more! This is what my volume indicator caught
Disregard the rest of the fake volume and focus on the red indicator at the bottom. My indicator (BADV) goes positive when there is more buying at market than selling (There are some other calculations in there, but that is the gist). It goes negative when more selling. BADV plummets during the rise, which means there was net selling during that candle. The gray vertical line is just there to show that one bar earlier, BADV was making a peak.
https://i.imgur.com/YlmAcbp.png

Only in china can the price rise on sell volume.

China use fake Bitcoin?

Fake Volume.

If I have 500 BTC, and only 500 BTC, but have fast access to Huobi's servers, I can generate 100K BTC of volume within 5 mins by rapidly selling that 500 BTC back and forth, between different accounts that I control, and with 0% trading fees, this doesn't cost me anything except the energy in my finger to press the 'START' tab on my trading bot.

But this isn't some joker ramping volume just for fun. This is a calculated Paint the Tape and then ramp, on the back of some Shock Financial news in China....and you know what, hasn't it 100% fucking worked a treat?

All the USD exchanges have followed, naturally, we now have 'bullish' market structure which will suggest to many traders that Bitcoin is set to break out to new highs. Bitcoin could go up a fair bit from here, 'all on it's own', but when the organic buying pressure runs out of steam, perhaps then comes the dump?

Are their fake bitcoins

Yes. They are called bitcoin XT.

What he said...

It gives the appearance of a well supported price and increased demand. Since they know that people are oblivious to it, and blindly follow "the leader", they can fleece the sheep.
If you look closely at the chart I posted, most of the large spikes in volume produce little to no price movement. This should not be the case. Add to that their ability to turn over nearly 1/21 of all bitcoins that will ever be, every single day. If that doesn't raise flags then this market is worse off than I ever expected.

I had never had about them.

If history repeates itself we will likely see some more of these fast rises in the next week.

Will be interesting for sure. Especially since we are aware of what is likely happning, you are already 10 steps ahead of poor new investors.

Yeah me neither what's a fake bitcoin?

is a wannabe bitcoin, a supposed fork that want to overcome some consensus rules, by establishing a dictatorial regime

forget about XT, there is no XT, was a jimmick move to centralize bitcoin more toward some dev...

Is this an instance of (volume) tape painting on the CNY exchanges? Quite possibly. Does it matter? Depends on your perspective.

I'm pretty sure the MMM scam has been a factor in recent months - maybe not the only one, but at least one relevant factor. Did it matter for the trend to $500?

The nature of Willy has never been fully determined in my opinion, ranging somewhere between 'problematic' and 'outright scamm-y'. Didn't matter either for the $1200 ATH.

I'm not a big believer in the distinction between 'painted' and 'real' -- I'm not saying the difference doesn't exist, but it's just another factor to consider in interpreting the price/volume data.

And all that said, whether the current breakout is manufactured or not, we've had some pretty good signs for the likely depth of the retrace since late December, I'd say.

(EDIT) That said: solid post, OP. Appreciate it a lot, even if I perhaps draw different conclusions.

So you think that there is not a great distinction between volume that is generated by essentially just one, or a very few pairs of hands, working in cahoots, playing high frequency pass the parcel between accounts which they control, with bundles of BTC, in order to create a false impression of massive interest and/or support in BTC, at a certain level, and volume generated by a flood of interest in BTC; with a great number of individual seperate market players, coming rushing to the exchanges to buy BTC, where, it just so happens, there is also a glut of individuals looking to offload BTC, only for trhe bulls to win in dramatic fashion?

C'mon. Surely there is a massive difference between painted and real volume, and what each of those characteristics tell us about the condition of the market we are playing in? Sure, the interim result may be the same. Bitcoin jumped up $30 today, in a very short space of time. Had you bought 10 BTC today at $430, sell now, and you have made $250 profit! Awesome! But the difference between a bull market being driven by Tape Painters, and one being driven by organic volume, is that in the circumstances of the former, the whole market essentially relies upon the whims of what the Tape Painters want to do next, and that is a very precarious and dangerous situation, for all other market participants.

Did 'they' bring Bitcoin up into this zone, simply so that they could sell wholesale BTC to retail buyers, and then short the fuck out of it, relying on retail sellers to replenish 'them' with wholesale priced Bitcoin way back down below? Or do 'they' have the intention of now sending Bitcoin through it's previous high and up towards dizzying new heights? Can TA studies tell us anything about what 'they' intend to do next, when it is 'they' who have manipulated the condition of so many technical indicators in the first place and 'they' can have the market basically lie to us about what 'they' are going to do next with it?

I think the difference between a largely organic market, and one that his strung to relatively few powerful hands, is massive, and don't understand how anyone could fail to see an important distinction
here.

Smart money buys before everyone else, could be also an explanation....

And that is the game 'they' are playing.

For those that use Volume Profiling, 'they' have created a new Point of Control, right in that 2800-2830 region.

A naive technician, not savvy to the shenanigans of the Chinese Bitcoin Cowboys, would look at BTCs Volume Profile histogram for the recent session, and conclude that:

• 'Smart Money' bought BTC at this price range hand over fist
• there is huge support for Bitcoin at 2800-2830
• that 2800-2830 is fair value for Bitcoin
• that any price below this, is undervalued

But if 90% of the volume behind the newly established PoC, is nothing but a croc of shite, then so to are these conclusions. At best, the Chinese Bitcoin Cowboys are manipulating the market, in a way which honestly states their intentions on how they are going to take the market forward. But what happens if 'they' are quite intentionally, seeking to fool the market?

Please do not mention Bitcoin XT on bitcointalk.org. Promoting Bitcoin XT is considered (by the owner of bitcointalk.org) to be an endorsement of an altcoin, because XT implements large block size against the wishes of core devs, only considering the vote of 75% of miners, wallets, exchanges etc.

I see you bears are getting desperate  :D :D


 :D :D :D

@Mat

Please do me the favor of reading (and understanding) the argument I actually made - I did the same with yours.

When I say "not a big believer in the distinction...", I mean: for the purpose of trading, not that the two types are actually the same. I also gave more than one example of where I believe similar (non-organic, if you want) buying pressure led to pretty impressive trends as well.

I'll boil my argument down further: your observation is perhaps correct, but what do you make of it? Would you suggest to sell right now, expecting a complete trend reversal? Not very likely, right.

So, all I'm trying to get at is that you need a tradeable interpretation to go with your observation of painted volume, otherwise it's not that helpful.

Matt...

You're right about this sure but you know what it is?? Something called algorithms.  

This kind of thing happens in all forex markets not just in Bitcoin. Its high frequency trading related and its all done by computer algorithms. Since around 2014 it has been happening now in bitcoin. I can only guess it is the same algo traders have now added bitcoin to one of their markets but this is nothing specific to bitcoin. It's just computer algorithms manipulating the market with short term manipulations. I speculate that alot of these algo's have super short term holding periods of just a couple days, they will buy silently on the order book and when they see the market is ready to move they will execute massive pumps. Then sometimes they will dump almost immediately after.

All speculation but...... who knows? One things for sure it is an identical thing going on in the forex markets.  So its not anything related to the exchanges or the bitcoin ecosystem. If you do some research into the forex markets (and look on other trading forums specially algo trading) you will see exactly the same thing going on.

Here's a quick follow-up observation. OKC BTCCNY vs. BTCUSD weekly Futures, 5 minutes:

https://i.imgur.com/ri6WJNB.png

https://i.imgur.com/Kd3UK4E.png

Arguably, weekly futures on OKC is where most of the action is happening nowadays, by volume, and maybe by impact as well. And here, the volume pattern you noticed doesn't hold.

Which doesn't contradict your 'painting' hypothesis, but it does mean this isn't a case of "Chinese exchanges fleecing the West", but if at all, a particular operator fleecing everyone else, OKC Futures traders included.

I did read, and I did understand the argument that you were making. But my point remains, if this market is largely a fabricated or engineered market, then can traders view it the same as they can if the price action was largely organic? If this market is as highly manipulated as I suspect, then isn't it likely that the market will be made to tell lies to traders?

Regarding the difference between the Futures Market and the Cash market.....the Futures market is where a lot of hardcore traders play. And they play with leverage. Up to x40 leverage. I subscribe to a traders site where one of the traders had been reporting dazzling gains trading the Futures with leverage, but he was totally wiped out from his short on the break out. OKCoin never executed his Stop Order (happens all the time on OKCoin) and his entire position was margin called, and liquidated. The fact that Futures markets are alone in their volume pattern suggests to me a lot of liquidiations, hence the volume spike, and lets face it, leaveraged shorts getting squeezed won't do any harm to spot price either will it.

I think a lot of traders, even those who are primarily bullish on Bitcoin, were short Bitcoin when the break out occured. This is because the charts were bearish. Momemtum indicators were bearish, there was bear Divergence on Daily OBV, market structure was bearish. And this is my argument. If this was an organic market, then we probably would have broken down from $430 towards $400, as oppposed to up towards $450, as this is what the market structure was telling us.  The only thing that didn't support a short trade was Trade Location. We were in 'no-mans land'. We are now in the classic 'Short Reload Zone' as defined by Fib retracement levels. Bitcoin may go on and take out the highs, but studies show that there is around a 70% probability of the market correcting from here. Did 'they' bring the market up here, with the intent of offloading as much BTC at retail prices as they can, before taking her back down?

So to answer your question, would I sell Bitcoin right now? Well, actually, had I stuck to orginal targets from an earlier long trade I took at 410, this was exactly where I intended to sell bItcoin, based upon the 61.8% retracement pattern, but I got impatient/cold feet/whatever, and sold on the 38.2%.

Would I be a buyer of Bitcoin right now!?

Hell no!

I can't wait to see the point you become a buyer $475? $500? $550??......

I am guessing you will buy at $625

I was going to say that it doesn't matter why the price is what it is. Comment on the use of undefined emotionally laden terms. But then I realized, if it doesn't matter, then posting about how it doesn't matter would be pointless. And as erasing this would be extra work, the only logical option is to click the button with the least letters on it.

I bought my last BTC at €375......I planned to sell at €410, but turned bearish, and sold at just €390, and then hunted for a short position, which got stopped out on today's break out.

When I next go long is when market structure tells me that it might be a good trade to go long. Trading Bitcoin for fiat profit is all I am interested in. I don't believe in Bitcoin per se. I don't think it is going to make the world a better place (if anything Bitcoin being succesful will make the world a worse place, much worse). All I care about is trying to position myself on the right side of the market. It is a learning process and the more I learn, the more l realise that things are not as they seem, such as their being nothing but hot air followed by herd mentality driving this pump.

China Stocks have had a 2nd disastrous day in the space of one week. The CNY is set to further devalue against the USD. The main/only actual use for Bitcoin in China, is as a means of Capital Flight. The market is relatively tiny, but it remains a valid market nontheless. So with a fundamental event such as two days of 7% crashes and suspended trading in a row, the Chinese Bitcoin Cowboys who operate behind the big CNY exchanges, have seen the writing on the wall. Worsening Chinese economy surely means an increase in business for them, getting wealth out of China via Bitcoin. Thus, there thinking clearly is something along the lines off "If these suckers are going to come rushing to buy Bitcoin, we may as well make them pay as high prices as possible for it", and this is why Bitcoin pumped in the midst of an otherwise bearish looking market structure.

'They' pushed it higher, in anticipation of a pending surge into Bitcoin from Chinese trying to get their funds out of CNY. But that surge of 'organic' interest has not happened yet. All we have had so far is a manipulative ramp of the market, in anticipation of this surge of organic buying pressure. If that surge of interest doesn't come, then guess where Bitcoin is going? With the lack of any real fundamental drivers, this market, and any market, is just a case of the whales and the sharks swishing BTC around, buying low and selling high, via the medium of getting the public to buy high, and sell low.

If I were to buy right now, and the Chinese government manage to prop things up for the meantime, and the surge of fresh interest in Bitcoin doesnt materialise, then I would be the public, buying high, and perhaps somewhere down the line, even selling low. Done it plenty times before and eventually, the penny kind of drops and you make efforts not to be such a fucking n00b. So no, I just cannot be a BTC buyer right at this point in time.

so ....is this the butt-hurt room,lol lol, just joking, actually i agree with matt, spot on dude  :)

Reading this thread, I get the impression MTC that you sat down to play poker and now you're upset to find out that some of the other players -- gasp -- have the audacity to BLUFF from time to time.

Analogy:
trading is like playing poker
big fish pushing the market one way or another with their massive wealth in an attempt to fool other traders about future market direction is like bluffing.

What say you to my analogy?

In the OP top chart, his bottom indicator goes negative despite the price rising.  Or simply noticing the volume dropping off even as price velocity is increasing would seem to suggest a weak move.  Or an alternative more bullish point of view is that all good moves must be tested over time and repetition before a greater rise can occur

I see you are back to trolling around here again mat.  If the market doesn't go your way then it is manipulated.  Bear moves fail in bull markets and vice versa.  That's just how it works.  You will have to cite your 70% figure if you can because this is the most bullish I have seen this market in a while. 

Totally.

Except 'they' never used their immense buying power as such.

What 'they' done down in between 2800 and 2830, could have been done with say 500BTC in one account, and $200K in another account; front running access to exchange with 0% fees, and a good HFT bot.

So, it isn't like just being bluffed by sharks with great big deep pockets, it is being bluffed by sharks with great big deep pockets and extra cards up their sleeves.

and btw...doing, precisely what 'they' did, would be considered illegal in regulated markets......'Painting the Tape' (although it goes on all the time anyhow).

So anyhow, here we are, they have brought Bitcoin right back up the top of the range. Guess where we go from here depends on whether or not retail buyers want to bite at $450+ BTC in meaningful amounts (i.e. projected Capital Flight demand from China materialises).

But not illegal in these markets, right? iow they are still playing within the rules of the game that you agreed to play.

I'm going to change my analogy. You MTC are playing American football and complaining that the guys on the other team picked up the ball, which is against the rules ... in soccer.

Well yeah...it is what it is. But man, so many people are totally fucking deluded as to the nature of how this market is driven.

i.e.

Commonly understood Fundamental reason for todays ramp = China economy is in trouble, therefore Chinese investors are running to Bitcoin, therefore injecting buying pressure into market.

Reality of reason for todays ramp = China economy is in trouble. Perhaps sometime in the future, this will increase the amount of Chinese investors who are buying Bitcoin. In the meantime, whales will Paint the Tape on the CNY exchanges, to provide the illusion of a surge of buying interest coming into Bitcoin, right at the point of some rather dramatic economic news coming out of China, which the 'herd' will invariably misinterpret in terms of the Commonly Understoond Fundemantal Reason (as above).

Technicals are technicals, but when it comes to Fundamentals, so often, the driving force on the market comes from the perceived impact that the public think that an event should have, other than the effect that it actually does have. I can guarantee, that today, lots of Chinese investors were not fleeing stocks nor the CNY, and running into Bitcoin. But today, lots of investors thought that was what was happening, and in order to facilitate this illusion, 'they' turned on the HFT pass the parcel bots and RAMPED that volume to the heavens, 'proving' to the public the insatiable appetite for Bitcoin in China, and eventually the public bit, got onboard, and the rocket took off.

Yep...I am butthurt. I have sat in a fucking crappy short trade all week, hanging on from having my Stop Triggered by the skin of my teeth...and just when things looked like they were about to fall my way....BOOM! So, totally missed a whopping $35 move up, and now Bitcoin will go back into 'doing fk all mode', as it fakes up and down, drawing n00bs into trades and bleeding em dry until the range finally resolves itself. Aside from that, I am a little shell shocked as I have come to realise just how 'manufactured' or 'stage managed' this whole market is. My paradigms have been somewhat cracked apart, and I am need of new improved ones that I can accept and work with.

I have gone from a magical belief in the mystical workings of natural market forces, to basically seeing it all as 95% bullshit. Nothing more than a mirage. A theatrical stage trick with nothing of substance behind it except the audiences belief that it is real.


 

You're making me go back to my original analogy: You sat down at the poker table and are now expressing your moral outrage at all the bluffing going on and the fact that bluffing sometimes succeeds. The problem with your moral outrage is that you're not accomplishing anything except raising your blood pressure.

Here's a new paradigm: accept the fact that bluffing doesn't just happen in poker; bluffing IS poker. Likewise, trading is all about using psychology to predict where the herd is going to go before they go there. Since it's ALL psychology, some degree of bluffing is just gonna happen. If zero fees HFT is allowed within the rules of the game, then accept that it needs to be part of your model. If standard TA assumes zero fees HFT doesn't happen, then don't rely on standard TA all by itself to model the market, and don't pity anybody who does. If you don't like the game, don't play it. 

You could also play the game of investor rather than trader, which means you should buy and hodl if you believe in bitcoin, or don't buy if you don't. That's my suggestion.

I think of entering the market as being like being a member of a herd of gazelles crossing a field with tigers who are hunting the gazelles. You gotta decide what path to take to get across the field. Some of your decisions are based on where you think the tigers are, and some based on what you think the rest of the herd is doing, because you don't actually have to outrun the tigers, you just have to outrun the others in your herd.

Investors are the ones who think about where the tigers are. Traders are the ones who think about what the herd is doing. (With most probably following a combo of both strategies.) The best investors can save the entire herd by leading them away from tigers altogether. Do pure traders add value to the herd? Not really. If anything they probably increase the chance that the entire herd gets eaten.

So, MTC, I think you are disillusioned bc you thought that everyone was supposed to be focused solely on running away from tigers, but now you see 95% of them aren't thinking about tigers at all. Can't really blame them if they understand gazelle psychology but don't know shit about tigers. Question is, what you gonna do about it? Cry about it or just see the world as it is and live your life?

Lovely.

Nobody has ever lost money on bitcoin by holding long enough. I'm in the black since a while now, even with shitty decisions like buying part of my stash north of $1000. Eventually there will be another pump, and I will have enough to retire, while the Mats of the world will still be grinding their teeth, wondering how they managed to lose what could have been fortunes in the biggest bull market in history.

Mat, I know you don't like taking advice but here goes anyway. Again. Market buy some coins, and don't fucking touch them for a long time. Keep trading if you want, but put some aside. You really only have yourself to blame for anything that happens to you in this market.

PSA Bump to show what the real volume looks like

https://i.imgur.com/JW0hcUJ.png

The larger spikes (Spaced roughly evenly at about 25hrs apart) have little movement, as I stated before in this thread. But this current selling has a very small decline in the BADV indicator. That is what Chinese exchange volume actually is.

THis.

And why a short term interpretation and a medium term interpretation may be completely opposite and both still be correct.

Eventually, inorganic  growth caves and price corrects to normal ie DUMPS!

Credit where credit is due: taking the painting observation as a sell signal (~$450), which I figure is how you interpreted it, was justified.

Hearn+Cryptsy events added theirs, but the erosion started before that on purely technical grounds, so: you called it.

Nope. Didn't call it.

Just noticed that the ramp from $430 up to $465, was all bullshit and seen exactly 'why' it was all bullshit, and why all the Fundamental theories on places such as this, of Chinese investors fleeing into Bitcoin were nothing but the same old bunch of faerie stories tailored and timed to fit whale machinations. But I certainly I didn't know where Bitcoin was going from there.

I even went long at $445, speculating that Bitcoin was going to go after the liquidity zones, (Likely Stop Order zones) just above the series of tops dotted along the chart. It wasn't until I notice some rather 'conspicuous' selling first on Stamp, and then on Finex, that I scrapped my long and started hunting shorts. I got my short away, at $450, and my target was triggered at $430. I wasn't awake when the next confirmed short opportunity arose...and since then, I have sat bearish in market outlook, but fearing taking a short due to risk of a bounce and/or waiting on a good bounce in order that I could take my short, but of course, no such bounce has ever came. Even now, still no reasonable bounce that a trader can easily work with has registered (who knows, perhaps we aint going to get a reversal just yet, perhaps there is more blood to come?). So, from a total downside of just under $100, I managed to take advantage of $20 of it.

Not very good is it?

But it's worse than that. Thrown all the profits I made from that trade right back into market, trying to play 'pick the bottom'. Probably more or less 'got it' on the 2nd attempt, but see that snidey little Stop Farming extension of the 'bottom' at around 8am GMT, ($352) going into London Kill Zone? So Stop Order triggered, loss booked, 30 minutes later and BTC is back up above my buy-in level. Fucking rat bastards! Still. My own fault. Will be sure to wait for knife to stop falling/bouncing in future, even if it does mean getting my long in higher up the market.