Bitcoin Forum

I don't trade, so I don't do a lot of what folks would probably call TA, but I do think that past price can give you some information about market participants psychology.

In the past each run up has typically been followed by a period of bottom discovery. A process which seems to be unfolding again. This is my take on whats been going on.

1. Profit taking

The ATH is in, when panic buying is finally overtaken by profit taking. This first big move usually sets the ball park for where the bottom will eventually be and this time looks to be no exception. We had three ("dead cat") bounces in december, each making lower lows. The final one we settled into the long steady decline which seeks to discover base support. This looked to have been found mid april with a capitulation sell to mid 360s. Bottom fishers pushed the price back up but the major downtrend was not ready to resolve until mid may.

2. Attempted break out

The triangle resolved, and we broke out to the upside, there wasn't really enough volume to support this move though, and as it ran out of steam we resumed the downtrend.

3. Continuation

The unconvincing breakout says to me that there was still plenty of downside left unexplored. Although we had visited lows a few months prior, the euphoria of the previous ATH lingered and sentiment was never really that bad. There was nothing like the deluge of "bitcoin is doomed" posts we are seeing now. I think thing that niggled at people's minds was the big question mark over whether the April low was really the bottom?

4. Unconfirmed

The only way to surely know something is to test it, and the market demands answers. I think we have to revisit that low and test it conclusively. We need to do it whilst sentiment is at a low (unlike in april, where false hope may have terminated the capitulation early?) only then will the market have decided whether we need to test new lows, or whether it is happy that mid 360s is a bad is it will get.

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

OH it´s sgbett again tryin to spread doom & gloom and hopes to achieve getting even more cheap coins through it. FUD spreader!  >:(
Newbies be careful, he is a well known bear troll on BCT who wants you to sell even lower. We do NOT have to visit the april low, don´t believe a word.

The question is how relevant this is - if anyone who matters actually reads this forum. Even if - the "Bitcoin is doomed" meme should wear out. 9/2011 Bitcoin had "The rise and fall". 7/2013 - it was dead then. Now its dead again. I am pretty sure the Bitcoin story will end at least 3 times until 2020 if you listen to trolls.

Newsflash. We are visiting it now. Hence the title "crunch time". Do keep up!

If you pay attention you'll see I haven't said anything about what's going to happen just shared some speculation about what has happened.

Trolls are becoming so rabid that they don't even read before shouting you down  ::)

Nice analysis SG; I tend to agree with what you say.  The market demands answers and fiddling around sideways is not providing any, so it is indeed 'crunch' time. 

Someone's patience will snap and we either retest support in the 340's or we break out for real. For me, much of this will do with timing: the monthly cycle tends to suggest more positive moves at the beginning of the month but the concept of the weekend dip is also valid.  So, if we can maintain the 370 - 380 range until Monday/Tuesday next week I think something positive may happen.  CLearly that is a significant "if".

Funny that the market takes so long to find a bottom while we here already established long ago, empirically, that the bottom is right above the previous rally's ATH :) So I've known since January that we will bottom out above $260, and also known that we'll stop above $32 last April.

How much will be the gap between actual bottom and the previous ATH is an unknown in the equation, determined by how this reverse (also known as "dutch") auction for cheap coins will unroll and how low people with money will allow it to drop.

I think that last point is a lot more significant right now than one might think at first glance. Will be interesting to see how it unfolds!

Best time to buy now and hold until halving.

Methinks: if a certain market bottom (or top) is taken for granted by the majority, it likely isn't granted to happen at all.
In fairness I still see a likely bottom around 250 but I don't discount a quick dip below 200.
Not that I'm going to take any coin out of cold storage because of this.

Do you have an active short position eurotrash? I only ask because you remained extremely vocal and bearish during the paypal spurt back up to 450.

In agreement. Problem is there is a big price range from where we are now to a potential final capitulation bottom that falllling et al want to buy in at!

The way I look at it is: this isn't the end of bitcoin it is simply a transient bear market as part of a larger bull market. Buying here is therefore great value even if I cannot perfectly time the bottom, which will only become clear on a chart from the future.

No. Coins in cold storage. Stopped trading a couple of months ago. My coin count is unaffected since then.

Interesting. Were you around in 2011? Does this feel like that in terms of rock bottom sentiment/trolling etc?

Wow, that was the quickest ignore ever.

Says the asshole whose been spreading doom an gloom FUD for 5 months...

Lossing is not a word. You'd think with all the money you've made shorting bitcoin and getting paid to troll this forum everyday that you'd be able to afford a dictionary and learn English.

I think once we hit 299 a rally will start. There is zero confidence in the markets, price is dropping every day.

Minders dgaf and will sell at any price.

I totally agree with you. I haven't bought a bit coin in over a year. I used them for buying things though. After missing that great run last year I decided to keep an eye on it to see if the opportunity to get in on a run presented itself.  I would be buying right now it just so happens I have money tied up in other things. I know I probably don't qualify for any loans on here so I will be watching closely, hoping it holds off another week.

Fonzie is clearly being sarcastic here, he likes to imitate bulltards and bearturds for some reason.

As for the OP, I believe we'll either see a real capitulation into the $200s or a rounded bottom formation around $350-370. A break below the previous April low will almost certainly see a sharp drop towards the old ATH at $265. My fingers are already itching to buy at this point but I'm going to be patient and see if we go below $300 and then I will definitely buy some.

That's how it's always been so far.... I am willing to bet you this time around we may actually dip below the previous $260 ATH and this will bring REAL fear even to supporters like you.



I agree that $260 should be a hard bottom, but things have been different, bitcoin is unpredictable and sometimes the fear needs to run deep before the next few lucky people can become rich

You turned bearish all of a sudden! I think a drop that low will do bitcoin some serious damage in terms of adoption and will delay things by another year or possibly to the next halving.

I've always been bearish for 2014



But I'm bullish for bitcoin as a whole... I just don't know when the bulls will come out. I doubt it will be this year

I learnt about bitcoin on November 2011 (but invested much later) so I wasn't there to see the carnage and desolation of the time.
I have been through the April 2013 bubble and took out 100% profit in fiat (and some sanity back) in the aftermath. I have seller's remorse, just a tad. Then during this last bubble pop I have had more success trading, but the prolonged bear market has caught me off guard twice in a row. Then I stopped trading. I still have more coins than I had when the November bubble popped.
So far my reason for staying bearish lies in the coincidence between now and 2011 that I see in this chart I made below.

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

In a way I made my own cult. It's called "cult of the red line". I believe that when the red line will rise above the blue one, then the blue one will have to follow and bring BTCUSD up. For now my cult says that there still are too many coins around and not enough takers.

Anyone with a brain would not take you seriously. Not because you think bitcoin is going to $0 (lol) but you are not convincing at all.. you sound like a dumbass, an annoying one too

Bitcoin to zero? Nope.

Fascinating chart. Something seems to have happened around the start of the year causing a divergence which has persisted ever since. Could there have been a rise of off chain transactions through use of centralised wallet services or something to account for this? Newer services like circle work like this I think. Amazing correlation until this year though. It will be interesting to see how the chart goes forward and if there is a convergence in the future signalling another bull run. Thanks for posting.

Edit: it only really closely matched during 2012 and 2013, though seems to be correlated with price rises very well..definitely one to watch

OTC trades?

Speaking of crunch time, a diff chart subtracting the current daily price from a year ago would be interesting. If we don't take off pretty soon, it will begin to approach zero pretty rapidly here. We're about a month and a half away from going negative after 365 days.

No intention to censor, but extraordinary claims require extraordinary evidence. Everyone who claims BTC goes to zero owes this extraordinary evidence. Otherwise they should be ignored.

inca, are you seriously wondering what event happened at the beginning of the year that could have affected daily btc/usd transaction volumes in such a massive way?  how soon we forget...  >:(

Would box alter on chain transaction volume? :) I suppose indirectly yes!

Bitcoin doesn't have to go to 0 to be considered a failure. Going back to to below $200 would mean the same to most people as going to $10. It would mean the last year of development, among which we had investment funds, ATM's, regulations were worthless.

Don't forget that a very gigh percentage of bitcoin users bought their coins in the last 12 months (for $200+) and will bail out if the price goes lower, causing a massive dip.
I personally don't believe we'll even go below $300.

So, random drunk thought. How many hodlers counting from just after the last top are left by now? 1%?

The crash happened before Gox insolvency.
On-chain transaction volume lagged a few days behind the bubble pop.

My assumption is that the on-chain transaction volume (the red line in my chart) is the summation of 2 components:
1. Speculation
    - this includes transactions between personal wallets and exchanges
2. Economy:
    - mostly dark markets because they are the only place where non-cultists need to use bitcoin instead of fiat. These transactions are all definitely on-chain not through payment processors.
    - payment for digital goods (e.g. porn) is our next hope (because of insane chargeback ratios in that specific business)
    - remittances are insignificant atm because bitcoins are way too complicated for e.g. sending money to a wife in Nigeria
    - purchases at normal merchants, for cultists only because using fiat is honestly easier than using bitcoins

During price rises, the blue line leads the red line, because in the euphoria  of the moment, the red line is mostly made of speculation not true underlying economy. During bubble pops, the mania is over and many are reluctant to sell, a bit like real estate markets in some countries in Europe: prices are slowly declining because people are reluctant to sell at a loss and buyers are not interested at high prices, so the volume drops to a trickle. So the speculation component in the red line drops fast and the blue line lags a lot behind the red line. This will keep going until the supply can sustain the non-speculative economy, which as of today is still very slowly increasing in size, my guess mostly thanks to the dark markets.

So we will get there. According to the red line, a bitcoin today is worth 234$.

Not true. A bear market will not undo, destroy or negate the infrastructure (in terms of hash rate, merchant adoption, customer adoption, ATMs, etc) that has been built to date. I don't care how low it dips.

Amazing chart. One of a few which seems to make sense.
Thanks for sharing.

I was, it feels very similar, and that price just does not seem to want to go any lower... Something gonna give

Thanks for the perspective.

Do any of you peeps subscribe to metcalfes law? If BTC follows that law then it must rise (in correspondence to physical users); its more of a question of when.

You need to check out Risto's thread -- there's a lot of discussion referencing ML there.  But I'd check out AnonyMint's posts in that thread -- he proposes a number of theories which suggest there are other factors which will negate such an 'easy' assumption of adoption.  Thus far he is being proved correct.

Marginally more than estimated mining cost at the current diff. But, pricing in another 40% for hodl seems reasonable.

http://bitcoinrichlist.com/charts/number-bitcoins-owned-by-richest

Like contemporary art:

http://im.ft-static.com/content/images/3d5f72c0-f86a-11df-8b7b-00144feab49a.img

In a simple model, the on-chain transaction volume is proportional to the square of the number of participants, so yes I subscribe to the Meltcalfe's law. We are offering the same views from different angles and getting to the same conclusion that the network is growing.

But also in my opinion both the number of transactions and the number of unique bitcoin addresses used (which are the indicators cited by the Meltcalfe's law supporters in rpietila's threads) are probably getting inflated by more mixing going on now than in the past, so to me they are not as reliable indicators in order to size an economy as the estimated USD transaction volume is. The latter is calculated by blockchain.info with an algorithm that keeps change addresses into account. The algo can also be fooled with coinjoin, but fooling it is not guaranteed to inflate the numbers.

Nice list of addresses of actors who are too lazy to spread their coins over a lot of different wallets. Also surely coinbase, bitstamp and chinese exchanges have their addresses listed there, which in theory does not make them rich because they are not their coins but their users'.

A chart of large holders vs price would be useful (ideally excluding exchanges or businesses)

i agree. i also dont know what to make of these lists. personally, i spread my coins out earlier this year. i am no longer in one category, but rather now represent ~100 entries in lower categories. these lists are addresses that want to be known (ie, large aggregates of many peoples coins) or some big holders. but clearly, the numbers of large individual holders is bigger than we think.

I decided to just put the chart together myself. I got the data from the following page: https://www.quandl.com/BAVERAGE/USD-USD-BITCOIN-Weighted-Price
 I filled in occasional missing dates with the previous day's price.

Dates along the horizontal axis represent hypothetical past sell dates following a hold of exactly a year. The vertical axis shows the percentage gain or loss that you would have experienced had you decided to sell your bitcoins that you'd purchased exactly a year prior.

For context: For much of of May-August 2012, you would have taken a loss on year-old bitcoins. This is contrary to the idea going around that if one had simply bought and held for at least a year, he would have always profited. I will be watching to see if we continue to approach 0%, and hoping that we don't.

https://dde19c9eff451e7e0b7d819897f53dd506692a8f.googledrive.com/host/0B2Wm1faUufb7N3J5QkRFeHpRUkk/Bitcoin_price_365_day_percent_difference_bitcointalk.jpg