I'm sitting this one out until the dust clears. Dammit!

No it's not, but that long upper tail doesn't fill me with confidence either.

Spiked to $4.75 and now has retraced over 50%.

Maybe it is a sign that more sophisticated traders are entering the market?

This is getting strenuous.

I posted these charts in another thread, but thought I might as well go ahead and create a new home for them. I have been collecting data on the order book depth on MtGox, in addition to actual trading activity, since around the 14th of December and I have created a few historical charts that might be of interest to some of the traders here. I am not trying to spread FUD, I am trying to provide data. Make of it what you will.



This graph shows the total bitcoin supply in red, adjusted to fit on the scale of the mtgox supply figures in blue. This chart shows a significant divergence between the total available supply, and the total actual supply visible on mtgox's order books. As you can see, the gap has just today started to close. What this indicates to me is that a significant amount of the mined coins have been held over the past few weeks, and a correction is overdue... but on it's way.



These charts show the historical total aggregate demand in dollars as well as the total mtgox supply.



These charts show the daily change in both supply (figures in btc) and demand (figures in $).

Trade volume activity (collected since the 21st):

21/12/2011 15:53 - Bid (buy) Volume: $92607, Ask (sell) Volume: $108854 => Net $16,247 sell
22/12/2011 23:58 - Bid (buy) Volume: $83754, Ask (sell) Volume:  $188171 => Net $104,417 sell
24/12/2011 11:52 - Bid (buy) Volume: $124414, Ask (sell) Volume: $159448 => Net $35,034 sell
25/12/2011 16:00 - Bid (buy) Volume: $116765, Ask (sell) Volume: $143122 => Net $26,357 sell
26/12/2011 13:30 - Bid (buy) Volume: $134398, Ask (sell) Volume: $188173 => Net $53,775 sell
27/12/2011 23:59 - Bid (buy) Volume: $166066, Ask (sell) Volume: $193020 => Net $26,954 sell
28/12/2011 05:45 - Bid (buy) Volume: $174779, Ask (sell) Volume: $198527 => Net $23,748 sell
29/12/2011 21:20 - Bid (buy) Volume: $203902, Ask (sell) Volume: $228877 => Net $24,975 sell
30/12/2011 23:59 - Bid (buy) Volume: $203871, Ask (sell) Volume: $334398 => Net $130,527 sell

From the data above, you can see that over the past 10 days there has been a net selling activity of $442,034, yet somehow the price has stayed at roughly the same level. There has not been one single day where the buy volume in dollars has exceeded the selling volume in dollars.

To me, this is a stark indication of profit taking. In addition, there is significant market manipulation going on keeping the price artificially afloat in order to take more and more money from buyers. Despite all the selling, it was all followed by low volume rebuys occurring right after the sales in order for the big players to 'cover their tracks' if you will.

This stinks of an impending fall back to lower price levels, because you can only mislead bulls for so long before they either run out of money or rationality kicks back in.

Take this data for what you will, but I think it speaks for itself. I have no idea what way the price is going to go right now, but considering the fact that the MCAD is showing 39 days of positive price divergence, and the RSI has been >70 for 12 days, I know which direction I am betting on.

Make sure you get yourself onto the right side of the market soon.

I am curious to why there is suddenly a spike of these "price is going down" threads. My main explanation is that some people are not happy that they missed the $2-$3 buying zone which might be never coming back. They are desperately trying to get the price lower to jump in. Not necessarily the agenda of the person who started this thread, but there is another new active poster in this forum area that is a rather obvious case.

To me the fundamentals are massively strong now and Bitcoin is going to way higher prices, on a sustainable basis. There are two important aspects to this, one is that the stronger the upswing looks like, the more traders will take a long position. I managed to take a long position a while ago actually but as it is with that type of position, I'm certainly not selling now. Nor am I selling at $5 etc. In fact I will only sell if I see a clear bubble situation, the ideal would be if I never needed to sell at all. I could simply have them as savings and use them when Bitcoin becomes more widely accepted.

The second aspect is that some people, most notably Revalin, seems to base Bitcoin fundamentals on its usage as a medium of exchange. That is a flawed approach in my opinion because Bitcoin will always be used more as a store of value so it's actually possible for bitcoins to reach quite a high value based on mostly speculation. It will require a higher sustained market cap of course so that the price is more stable and people start to keep long positions in a more patient way. But I see this happening because Bitcoin is the ultimate store of value and I'm personally very tempted to increase my Bitcoin investments even further. It simply beats everything.

The best thing about it is that it's not just a store of value, it's a very convenient money transfer mechanism as well. If it were possible, I would use bitcoins for everything. But the growth of such an economy is slow, it'll take many years even in the best case to reach that point. Before we reach a market cap high enough it's necessary to constantly look for bubbles but we're not in a bubble yet, we're in the process of recovering from a massively oversold market.

I think it's obvious, especially with the data provided by mjcmurphy.  Lots of people have sold in the past few weeks and they want the price to go down so they can buy back in.  Some of them are taking to the forum to try to nudge the price in the direction they want it to go.  Simple as that.

I print paper wallets from a saved offline copy of bitaddress.org.

Call me skeptical but I don't trust websites that offer browser side encryption. That's because they could be compromised and changed to disable such encryption anytime.   No one is going to "view source" and audit the page with each use, so the benefit is illusory.

The address generator at bitaddress.org is a single static html page needing no network.  It can be saved to a flash drive.  If you save a copy of bitaddress.org's homepage and it still works on a computer with no Internet connection, it's probably safe.

I believe it is primarily due to the halved fees at MTGox which I think are just great for increasing my BTC holdings. Speaking of which does anyone know when they officially come to an end? I think we will see something big happen right before this promotion expires.

I'm smiling at the few thousand BTC that were just dropped on Gox.

My prediction:  No bubble unless there is an exponential increase in new users.  I see no evidence of a rapid influx of new users right now.  I do think there will be other bubbles but you need a reason for a bubble, and right now there is no reason.

That being said, I do think there is higher demand nowadays in terms of the actual number of people wanting to buy (not in terms of the bid/ask amounts in the orderbook) and I think there is some renewed optimism that couldn't be found 2-3 months ago.  Bitcoin has had some nice media exposure lately which might continue when that Bitcoin episode thingy airs in the middle of January.  I think there's a good chance for modest value increases in the short term (2-4 weeks), but I wouldn't expect anything crazy.