whether we hit 300 or 450, that would be a dramatic selloff indeed.
You missed the point of what I said. A vague enough statement always hits the mark. We go down to $530? "Dramatic selloff confirmed". We go down to $300? "Definitely dramatic selloff". We bounce back from $550? "Kind of a dramatic selloff". (For the record, $530 seems a good candidate imo). About the other point: I've said it often enough in this thread - masterluc has an amazing read on the market. I never dismiss his predictions thoughtlessly. I do however point out when they're not so much predictions but more 'vague, ominous sounding murmurs'. |
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With Metcalfe's law, bitcoin is indeed quite promising, as the users have been increasing and are expected to increase further.
This means the value of bitcoin is increasing. Could this argument be valid?
We do not know whether the number of "bitcoin users" is increasing.The sources that I know (such as blockchan.info) do not give that information. They give some quantities (such as wallet software downloads, transactions per day, total BTC volume per day) from which some people claim to be able to derive the number of users. However, those quantities include an unknown amount of operations that do not imply real additional use. Some of them (like total BTC volume) have been relatively constant for the last 6 months. Moreover, there is no information at all about people who stopped "using" bitcoin, e.g. after buying a bit just for curiosity. Yes, we actually do. blockchain.info stats aren't the only source saying so. Online wallet stats, number of vendors accepting Bitcoin... there's plenty of evidence of growth well above linear increase (cue: "doesn't mean it's long-term exponential"). Your argument runs down to: but all those stats could be faked/manipulated by entities high enough in the decision chain of exchanges or websites. While theoretically possible, you have to ask yourself it is the most likely explanation of the data. There's plenty of fraud and deception in the Bitcoin ecosystem, but what you seem to have in mind is a level of organized deception that you cannot simply "claim" to be the reason for the data. If you have solid proof for it, let us know. Otherwise, I could dismiss anthropogenic global warming by claiming that measuring stations world wide were manipulated by Jewish space lizards -- it's a possibility, y'know. tl;dr The most likely reason to generate data indicating exponential growth in usage is actual usage. Claiming otherwise requires evidence, which I have yet to see. |
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Bitcoin is on one step from long dramatic selloff imho.
Global stocks are about to crash. This monopoly game is almost over and all money and property will be returned back to the box.
Doom and gloom, baby. Doom and gloom. The problem with predictions like that is they're almost impossible to falsify... "dramatic selloff" implies a real crash. A new capitulation low. Say, going back to $300, maybe even lower. Or maybe not. Let's say price is going down another leg, hitting $500, maybe even high $400s. The prediction will "sound" right as well afterwards, or at least some will claim it does (while I would hardly call it "dramatic"). Same for the stock markets. "About to crash", or "entering a longer bear market"? The two are not the same, but a vague enough statement can afterwards be claimed to have "predicted" it. |
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Very nice write-up. Wholeheartedly agree with everything you say.
Except the last line: it's a technicality, but an important one... the goal isn't to be right (i.e. profitable) 51% of the time, which seems to imply that a majority of your trades need to be profitable. In fact, lots of traders incur (small, controlled) losses in a majority of their trades, and it is the few, highly profitable trades that generate their total profits. /nitpick
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Surprised by how well the Metcalfe's law price assumption works, for example when comparing the previous "plateau" phase (~100 USD) and the current one.
Looking at number of transactions (excluding 100 popular addresses), comparing the August 2013 average (25k) to the August 2013 average (60k), we get: ((60/25)^2)*100 = 576 USD.
Close enough, no?
Wow, really? So we'd need an increase in transactions now, right? (Aren't we already seeing one for a few weeks???) But what about the prediction that according to the transactions we should be at $2k already? I guess I've seen that around here somewhere... You should keep two things separate: how well the data is modeled, and how well the model predicts future data. For example, you'll note that the local peaks of the transactions (early 2013, late 2013) come well after the peak in price. And how to extrapolate from the transaction graph into the future is an entirely different question, imo. I picked the "plateau" phases on purpose. In my opinion, the price of around $100 last year was an important milestone. Took the market a while to understand that we won't go below it again for any substantial amount of time, but also that it takes some time to go above it. Feels similar now, with 500s instead of low 100s. (Subjective argumentation above, I know... Dismiss it freely  ) |
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Surprised by how well the Metcalfe's law price assumption works, for example when comparing the previous "plateau" phase (~100 USD) and the current one.
Looking at number of transactions (excluding 100 popular addresses), comparing the August 2013 average (25k) to the August 2013 average (60k), we get: ((60/25)^2)*100 = 576 USD.
Close enough, no?
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If Bitcoin doesn't go "to da moon" then it has no utility and the speculators will dump it down to zero. So no, the quote is meaningless to me.
I agree 100%, Bitcoin is useless until we reach $50,000 per coin. /s. To me the whole point of Bitcoin is that it's not controlled by one person, if people are using it as an investment then I have no problem with that. I'm sure most people who want the price to increase only want it to increase because they hold a huge amount but as long as Bitcoin has real life use and value it'll always be considered useful / valuable and to me that's more important than what the price is. Bitcoin will do the same job if it was at $1 than if it was at $1000. The only difference I can think of is people will be more likely to dump their coins to take advantage of the price. The same can be said about any altcoin as well. If you think that every altcoin is of equal value, then why not just make your own? Price and adoption go hand-in-hand. If someone tried to send a billion dollars worth right now and cash it out, it would crash the market. So it's not useful for those purchases yet. I don't think every altcoins is of equal value, you might have misunderstood me. I could create an altcoin but it would never be used for anything that holds value and also, what can my coin offer that other coins don't offer? I do agree that price and adoption go hand in hand, we can see from past results that as more and more merchants have adopted Bitcoin the price has gone up. The point I was trying to make was that as long as Bitcoin can be used to purchase something it will hold some kind of value I would add: at a valuation leading to a 7.7B USD market cap, Bitcoin is already quite useful (as a medium of exchange, for example). Maybe not 'changing the world' useful, but good enough for a bunch of nerds like us early adopters to make use of this currency prototype and show the world that it works. Fact is, we all (or at least most of us) hope for big price increases *now*, regardless of how much of it is speculative and how much of it is actually absorbed by increased usage. That's the mentality I had in mind with this topic. (and, yes, I include myself it the preceding critical remark) |
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Indeed, I keep coming back to that breakout because it is pretty much the only major event since last October for which I do not know of a cause that would justify the traders's sudden change of mood. (There was one other surge this year, Mar/03 IIRC, I never found a convincing explanantion for.)
I could perhaps believe that technical analysis can predict gradual changes, or rallies and crashes that start out gradually and then accelerate (like the mini-crash earlier today, at 00:15 UTC). ButI find it hard to believe that thousands of traders across the globe would suddenly change their minds and start a rally like on May 20. I know that there is strong feedback among traders, but it should take some time for them all to "syntonyze" on the new outlook. I still think that an unknown external cause is more lilkely than a colective epiphany...
Moreover, between the buying spurts after May 20, there were usually periods of gradual downtrend, as if most traders were still "unconverted" to the new price. Only after June 4 or so there seems to be a "new consensus" arooun 650$ -- which collapsed on Jun/10--12.
Who said anything about an "epiphany"? I take it you never traded yourself (not bitcoin, but any asset, I mean). There's only two things that really bother a trader: seeing the USD value of your account plummet (i.e. the danger of selling too late), and seeing your potential profits melt away (i.e. the danger of buying too late). The first point is why we had quite a bit of USD sitting on the sidelines in April/May (people sold, and they did so for a good reason), the second point is why traders jumped on board without much hesitation once the train started moving. I see nothing abnormal about the May 20 to June 1 rise other than a momentum driven explosion of "hidden" buying power. |
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Still not happy with the 'built up buying pressure from earlier sell-offs plus confidence from phase of relative stability plus naked eye evidence of buying support for mid-400 prices' explanation, huh?
You mean an 'it is raining because drops of water are falling from the sky' kind of explanation? Almost, prof. More like 'market price being a function of human cognitive process output, so it's futile to look for more "objective" causes'. Hm, ok, so why can't human cognitive process outputs be worth 10$ apiece tomorrow?  Seriously, you are right in that the current price is not supported by its utility but only by the traders' feelings about what the price will do in the near future. (Whether it succeeds or fails, bitcoin will be a valuable experiment for financial studies, as an instrument whose market price evolved for years on pure speculation, with no "contamination" by fundamentals.) Yet, most of the major price moves since last year have clear external causes, such as the seizure of Silk Road, the PBoC decrees and their workarounds, the "bug in bitcoin" announcement, etc.. Granted, most of these events were unpredictable, and acted through changing peoples' outlooks, so that the magnitude of the change would have been impossible to estimate. But one can imagine dozens of events like those that could happen an d bring the price down. Just as some predict a rally if the SEC approves COIN. As for the May/20--Jun/05 rally, in particular: for most of the time since then, the price has either wandered about or drifted down. The rise (and the support after it) came in a few sudden, concentrated buying spurts. So that rally cannot be explained as a general diffuse change of traders' outlook; it seems more likely that there was a series of discrete external events causing each spurt, Thus, I would rather believe that is was a few big traders getting some inside information, one at a time. But I can't figure out what the information could be, nor whether it was in China or in the "West". I could try to summarize the narrative that to my mind explains best the May 20 breakout and subsequent consolidation, but it's mostly technical, so I already know you won't buy it. Which is okay... Well, actually more 'stubborn' than 'okay', now that I think of it. Your desire to find the "fundamental" cause of this particular price change seems about as silly to me as if some trader/analyist would look at the October 2 2013 crash and would start explaining it in terms of waning buying pressure and market indecision etc., until someone points out to him that it was an entirely news driven event (Silk Road). In other words: there are times when it makes sense to look at the news/fundamentals mainly. You'd look silly if you would try to shoehorn an event like the Oct 2 crash into a technical explanation (although the following rise can be seen through that lense). Conversely, trying to "fundamentalize" the May 20 breakout seems silly to me. There was no strong fundamental reason in the vicinity of that date that is likely to have caused it. In fact, that you keep coming back to this date/price event shows how unsatisfactory any fundamental explanations of it so far have been. The way to look at this one is technical, but since you believe technical explanations are circular or uninformative, they're not available to you, so I predict you will come continue searching for an explanation in the future as well |
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Uh no. The price is mathematically guaranteed to go up as adoption goes up. It's not a delusion or hope of winning the lottery, its maff. And the 99.9% won't hear about it until the OMG MAD PRICE SPIKES make new headlines so its wrong from that end too. Another fail piece.
The math is based on the assumption that user adoption will continue to increase, that's not a given. And besides you don't know how much of current 'adopters' are just in it for the moonride and don't care about anything else. If that crowd finally leaves then we'll see just how many real adopters Bitcoin has, but the price could be easily cut in half from here. I would love to see that happen because the 'to the moon' crowd is getting too complacent and annoying lately. Let them endure some pain to sober them up. ;) Miz4r - Voice of reason since April 2013 :D |
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Hidden bearish MACD divergence on daily chart detected  Is there not also hidden bullish between bottom #1 ($380) and #2 ($400), and regular bullish between #2 and #3 ($340)  Maybe they counteract each other and we will go sideways forever More recent (hidden) bullish div on daily RSI, Fisher:  |
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Is there not also hidden bullish between bottom #1 ($380) and #2 ($400), and regular bullish between #2 and #3 ($340) Maybe they counteract each other and we will go sideways forever I think they already worked out Any downside targets you are willing to share, masterluc? It's looking pretty bearish. Are we in for the full 3-year bear market?  Still wondering if the multi year bear scenario is going to play out. Any thoughts on these from our charters? Depends on how you define 'bear scenario'. I can see us trading between 400 and 800 for another year (though I don't consider it very likely). That's "bearish" if you are part of the to da moon NOW crowd. On the other hand, I don't see much chance for a new correction low. Going back to low 500s: quite possible. High 400s: maybe. 300s: very unlikely imo, absent of some major news driven flash crash. |
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Still not happy with the 'built up buying pressure from earlier sell-offs plus confidence from phase of relative stability plus naked eye evidence of buying support for mid-400 prices' explanation, huh?
You mean an 'it is raining because drops of water are falling from the sky' kind of explanation? Almost, prof. More like 'market price being a function of human cognitive process output, so it's futile to look for more "objective" causes'. |
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I mean, I do NOT even know where Risto is getting this $470 from .. or even imaginging that $470 is possible...
If anyone would explain why it went up from 450$ to 650$ between May/20 and Jun/06, then we could begin to discuss what could cause it to drop back again. Or whether it is possible that it will do what it already did on Apr/11. Still not happy with the 'built up buying pressure from earlier sell-offs plus confidence from phase of relative stability plus naked eye evidence of buying support for mid-400 prices' explanation, huh? |
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There is a discussion in Risto's thread about 9/11. Threre is also a discussion about valitidy of TA, in other thread. So it is interesting to see, if there any corellation between belief in TA and belief in "USA did 9/11". Yeah... there's also a discussion in that thread about how an Ebola pandemic might take Bitcoin price to da moon. Just good people, y'know. |
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So SecondMarket hasn't bought shit for over 3 months now.
Looks like it. Should probably worry those who believe that the listing of an ETF automatically means new price surge. You may be right with that. But couldn't a real ETF be another investment vehicle serious investors want to use in order to get their Bitcoin? What are the advantages over SecondMarket in this case? (compared to e.g. the Winklevoss' COIN) The advantage of an ETF is that it is accessible not only to high-net worth individuals, at your regular broker. I think it'll help a lot, but it will depend a lot on the circumstances of when it is launched because the sentiment/price environment will dictate demand. Spot on (as usual). ETF listing will be a major chance, but it's just that: a chance. If demand doesn't match the offer at first, price will not do anything. The *prospect* of the ETF is long priced in, the actual effect of buying pressure coming from it remains a possibility - a good one though, I'll admit. With the current market cap...I have to disagree strongly Fair enough. But with price/market cap being what it is, it seems the majority (of capital) does consider the news "digested". Doesn't mean that, the moment an ETF actually starts buying beyond the markets expectations, that prospect won't be revised upwards. |
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So SecondMarket hasn't bought shit for over 3 months now.
Looks like it. Should probably worry those who believe that the listing of an ETF automatically means new price surge. You may be right with that. But couldn't a real ETF be another investment vehicle serious investors want to use in order to get their Bitcoin? What are the advantages over SecondMarket in this case? (compared to e.g. the Winklevoss' COIN) The advantage of an ETF is that it is accessible not only to high-net worth individuals, at your regular broker. I think it'll help a lot, but it will depend a lot on the circumstances of when it is launched because the sentiment/price environment will dictate demand. Spot on (as usual). ETF listing will be a major chance, but it's just that: a chance. If demand doesn't match the offer at first, price will not do anything. The *prospect* of the ETF is long priced in, the actual effect of buying pressure coming from it remains a possibility - a good one though, I'll admit. |
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So SecondMarket hasn't bought shit for over 3 months now.
Looks like it. Should probably worry those who believe that the listing of an ETF automatically means new price surge. |
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Or are there a lot of people still following technical indicators and such.
Of the people who still choose to follow technical analysis, what's popular in bitcoin? What are people using?
Depends on what you are using. There are pretty obscure and dubious indicators people use, but as far as I know, MACD has been a pretty stong and reliable indicator if you depend solely on it in order to buy or sell when a new trend emerges. MACD, daily, is probably the most "vanilla" indicator used among btc traders, at least that's my impression. And it actually performs reasonably well, most of the time... let_me_backtest_that has thread in here where he backtested a "pure" MACD strategy, and the results weren't half bad, _especially_ if one considers that it reduced the max drawdown of your USD account substantially. In other words, even if it doesn't greatly outperform buy and holdin profits, it could be used to "protect" the USD value of your trading account. (Note: I don't really recommend anyone uses a pure MACD strategy). |
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