Bitcoin Forum

Below is a chart of mtgox price and volume.
When looking at volume I usually use a time period of one week in order to smooth out noise.

this week the amount of BTC exchanged was close to 900k, the highest weekly volume ever.

http://bitcoincharts.com/charts/mtgoxUSD#igWeeklyztgSzm1g10zm2g25zvzl

http://bitcoincharts.com/charts/mtgoxUSD#igWeeklyztgSzm1g10zm2g25zvzl

So, does that mean, that the price will continue to rise with acceleration ?
Or it indicates the top (end) of the rally ?

Its quite clear what it means; the price will go up, and then down. And then up and then down again, before again going up until it goes down. Though Im not quite sure the  first move, it might go down before going up. Other than that, there is no doubt.

I think that we somewhere here...

http://i4.imageban.ru/out/2012/01/07/72b1ef41f7f7c7d6d26f2b104ddc7819.jpg

What's interesting on the weekly scale is that MACD has only begun a cross and RSI hasn't reached overbought territory yet.  With respect to RSI, I guess what's sort of odd about it is that on the same daily chart the RSI corresponds nicely to the weekly chart for the price increase beginning in January 2011 and the one beginning in April 2011.  In those two cases both the weekly and daily charts show RSI overbought during the same timeframe.  Or, they at least show RSI hitting 70 at very close to the same time (you can actually see that the weekly chart led by a tiny bit).  But right now, though the daily chart says we've been overbought since December 19th, the weekly chart has yet move out of the 50s.  I don't know what that means, if anything.

http://i42.tinypic.com/fuwhap.png

I can guess only, it because in those times growth has been caused by "injection" of money (In system), and now there are more than money "remain in system". People became more careful.

In my book, it means that the market is small enough to go wild despite the recent experience, just by people pushing volume up. If the rally stays on exponential track and no indicator seems to justify the hike, I classify this as an echo bubble and sell at certain price points. So far, I only sold small amounts, because I always expected higher prices than just 3 USD. But that doesn't mean I'm comfortable with a doubling every few weeks. ::)

I see myself as a speculator doing his proper job, namely stepping in when prices go absurd. I'm probably not the only such person. Whoever wants to push back to 20 right away should expect some resistance -- it just doesn't seem reasonable yet. The high volume shows this resistance.

Define absurd. If your reference is actual economic trade done using bitcoins, any price above $0.1 is absurd. If your reference is bitcoin mid- to longterm potential to become a mainstream currency, any price below at least $1000 is absurd. You seem to use last weeks or last months price as reference, thats perhaps even more absurd.

indeed. the higher volume shows there is more resistance. but it also shows there are more buyers

When will this meme die?  Bitcoin doesn't need to (and probably will not) become a "mainstream currency" that your grandma uses to do e-commerce.

Bitcoin is a "meta-currency", and all the "actual economic trade" using bitcoins is just as legitimate even if bitcoin is only traded for dollars/euros etc.

That's it.  I'm starting a "bitcoin is a meta-currency" club.  So far myself, chodpaba, and mobodick (https://bitcointalk.org/index.php?topic=56110.msg675422#msg675422) are the only three members (four if you count the author of the Wired article).

Tagline for the club is: Bitcoin: not your grandma's e-currency.

Though it may end up being my great niece's currency.

That's your interpretation, but not how I think and IMO not reasonable.

Trying to do just any economic trading platform, even just planning it, on a market worth less than 1M USD is such a strange idea, it should be apparent why I would call sub 0.1 prices absurd.

Prices above 1k USD in the future are based on the assumption that Bitcoin will become a real, large currency. First of all, this is a probabilistic statement, and today's value gets scaled down to a maximum of the inflation-corrected expected value times the probability of the scenario happening. Moreover, reaching the value assumes public acceptance of the scenario, or some other infinite supply to support the claim.

This is an assumption so bold, one might also call it absurd. Few people really understand the significance of Bitcoin, those are not necessarily able to buy in for large sums right away, and even those who are will probably not even remotely go all-in because of the risk involved. These effects are self-strengthening, since one speculator will not want to rely on the bubble-like state of being backed only by other speculators.

Surely, I use past prices as reference, so that I can roughly correlate indicators of market size with price, volume and whatever comes with the hype cycles. But the price of 7 is not an arbitrary value, and I'm fairly convinced it is currently closer to a healthy equilibrium than 2 USD or 20 USD.

Of course, a single indicator of change can massively affect what prices are reasonable. Surely, the numbers can jump by a factor 4 or so from a single event. If the Android market were to start officially accepting Bitcoin, I would consider 7 absurdly low the next moment. :P

Do you remember the times when internet was starting? It was a toy only for geeks. Today even grandmas are using it.

Same may be with bitcoin.

The origins of the Internet reach back to research of the 1960s,
these grandmas are internet's developers probably.

Bitcoin need 50 ((2012 - 1960) - 2) more years to achieve this state.

No, less due to exponential growth of technology.

What is your definition of "meta-currency" ? 

Just curious...

The origins of Bitcoin (Digital Money) reach back to research of the 1980s.


Yes, the log curve.

I'm not much for being in club-ee things, but I'm certainly on-board philosophically.

A popular theme for Bitcoin scaling is that it could become your grandma's e-currency and be 'as big a Visa' with some engineering.  My problems with this are 1) it's setting it the sights to low, and 2) the system would start to resemble Visa in some important ways that I would very much like to be away from...hence my interest in Bitcoin in the first place.

The nature of how money works suggests that if Bitcoin becomes successfully adopted for any purpose, its usage will continue to grow into areas where it provides increased efficiency. Given the nature of Bitcoin, it has the potential to provide vast increases in efficiency in almost every aspect of commerce and trade.

So, while I don't expect my grandma to use Bitcoins to buy dinner in the next couple years, it's reasonable to foresee a situation where Bitcoin permeates outward into more and more areas of life.

I don't think it's possible to remain a "niche currency." For if it works well as a niche currency, it will spill out into wider adoption. The snowball effect, when it comes to mediums of exchange, is very powerful. The largest obstacle for Bitcoin's widespread use will not be any character flaws, but will be the myriad laws governments attempt to impose upon it. Though I believe the saying is true - the largest army cannot stop an idea whose time has come.

Maybe you should read what I wrote, before replying. 
The assumption that bitcoin at some point will become as popular as paypal today has about the same likelyhood of materializing as the assumption bitcoin will never become anything more than it is today; an obscure way to transfer wealth for mostly illegal purposes. I never said either scenario is likely or what I believe in.

I'm no chartist and I am only learning the basics of tech analysis, but doesn't this "that on the same daily chart the RSI corresponds nicely to the weekly chart for the price increase beginning in January 2011 and the one beginning in April 2011" sort of suggest that upward movement is happening a lot more gradually and perhaps sanely than last summer?

Sure, because if bitcoin ends up working as a sound backing for other less technical, more user friendly methods of exchange, then grandma will be using it to pay for her dinner and not necessarily need to even know she is doing so.  I mean, come on, how many people using fiat today are completely clueless about how that money is generated / managed?

Your daily RSI means that relative to the last 14 days we are overbought.

Your weekly one means relative to the last 14 weeks we are neutral.

Your daily one covers the period starting with the christmas rally, your weekly one covers the market bottom.

So the recent rally makes things seem overbought, the market bottom makes it seem like we are about square again. IME RSI doesn't consistently have momentum. I've found can just as easily reverse as it can continue in a given direction.

I don't think it gives a clear signal. Daily says there should be a selloff, weekly says we could go either way. I think the biggest influencing factor would be how much leverage/margin there is in each direction on bitcoinica. I doubt we are going to find that out any time soon (at least not before it becomes apparent from the price action!).

Just ask Zhou!   ;D
Couldn't hurt to try, right?

Do a 50 BTC buy and a 50 BTC sell and see which is hedged on mtgox ;).

Well, that was the direction the ars technica and Wired articles suggested for Bitcoin.

Currency genesis and adoption happen on a very large time scale. Bitcoin will be a vehicle for currency exchange, but in the long term, I think Bitcoin will be seen as valuable on it's own. I would be surprised if mainstream adoption takes LESS than 10 years.

Anyway, just my 0.02 BTC.

Exactly. Grandma pays with her debit card at the store, yet has no idea that she's just causing zeroes and ones to move between hard drives. In her mind, she just paid $24.99  :)