Never
Why are we the only ones saying this... seriously. I can't believe people really think it'll go back to $2 after all that's happened. i truly think that Bitcoinica's short selling capabilities introduced in September caused an overshoot to the downside below the level of profitability for miners. we had a classic double bottom or triple bottom depending on how you read the charts. the strong rebound off $2 is telling you (or me at least) we will never go back there. This, and the fact that there weren't many bids. People didn't know when it would stop, so the $$$ in Gox just sat on the sidelines, which in turn allowed the price to fall farther. yes, a spiral down. question is; did all the short selling cause the bids to dry up? Here's the problem with the BTC value: it's driven mostly by geeks with a few large holders of BTC. If any of those get spooked and decide to start selling, it can result in a panic sell that leaves us back in the $2 range. I don't see $2 happening any time soon, but then I also didn't see $4+ coming again, certainly not before 2012. It happened once, and all it will take is a similar set of circumstances and it can (and probably will -- several times) happen again. People talk about fundamentals and such, but the people I know who are really into technology all think Bitcoin is a joke. "Okay, cool, a cryptocurrency" they say, "but what can I do with it?" As someone else pointed out in a different thread, the people putting money into Bitcoin are just transferring their money to the miners who are selling it off to pay for hardware/electricity. The idea that BTC is somehow going to become mainstream, or take over regular currencies, or whatever... no, I just don't see it. My feeling based on recent history is that BTC value is tied pretty closely to fiat values and the stock market. When those do well, BTC will trend up; if they do poorly, it goes down. Sure, there are exceptions, but I think there are people waiting for the new year before they do any serious investing -- they don't want to blow a bonus right at the end of the year, so they play it conservative, in stocks as well as in BTC. I expect one way or the other, things will get a little chaotic around Jan 2. Are we going up or down, that's the real question. I'm inclined to say down. But the great thing is that if you naysayers are right, I don't have to pay out! ;-) you hit it right on the head; its the tech guys who don't know anything about economics who think Bitcoin is a joke. they don't appreciate what they've invented. successful boomers like me who are non-tech who've studied Austrian economics for many years and bought gold and silver back in 2005 are the ones who are going to drive this rocket ship up as more widespread appreciation of the technology becomes apparent. it took me only one weekend to understand what i was looking at and i started selling my gold and silver in the Spring and top ticked the market perfectly. now you've got other pm guys like Max Keiser and Robert Prechter and his son, Elliott all over this thing. silver bull David Morgan follows my blog on Twitter and he is a long term silver bull analyst. this is slipping away from you right under your nose. |
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Some graphs and pesky facts to bring sense to this madness (data collected since the 14th):    Trade volume activity (collected since the 21st):
21/12/2011 15:53 - Bid (buy) Volume: $92607, Ask (sell) Volume: $108854 => Net $16,247 sell22/12/2011 23:58 - Bid (buy) Volume: $83754, Ask (sell) Volume: $188171 => Net $104,417 sell24/12/2011 11:52 - Bid (buy) Volume: $124414, Ask (sell) Volume: $159448 => Net $35,034 sell25/12/2011 16:00 - Bid (buy) Volume: $116765, Ask (sell) Volume: $143122 => Net $26,357 sell26/12/2011 13:30 - Bid (buy) Volume: $134398, Ask (sell) Volume: $188173 => Net $53,775 sell27/12/2011 23:59 - Bid (buy) Volume: $166066, Ask (sell) Volume: $193020 => Net $26,954 sell28/12/2011 05:45 - Bid (buy) Volume: $174779, Ask (sell) Volume: $198527 => Net $23,748 sell29/12/2011 21:20 - Bid (buy) Volume: $203902, Ask (sell) Volume: $228877 => Net $24,975 sell30/12/2011 23:59 - Bid (buy) Volume: $203871, Ask (sell) Volume: $334398 => Net $130,527 sellOver the past 10 days, there has been a net selling activity of $442,034, yet 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. This is profit taking, clear as day, with market manipulation artificially keeping the price afloat in order to take more and more money from clueless bulls. You would have to be MAD to buy in this market...  |
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fornit I've seen the charts but I honestly don't believe it. I see Apple everywhere when I walk around. When I look at the site statistics of people visiting my website from their mobile phone, here's exactly the stats we see:  yeah, but the types of ppl you walk around and visiting your website are all Hotties  they all use iPhones. |
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Never
Why are we the only ones saying this... seriously. I can't believe people really think it'll go back to $2 after all that's happened. i truly think that Bitcoinica's short selling capabilities introduced in September caused an overshoot to the downside below the level of profitability for miners. we had a classic double bottom or triple bottom depending on how you read the charts. the strong rebound off $2 is telling you (or me at least) we will never go back there. This, and the fact that there weren't many bids. People didn't know when it would stop, so the $$$ in Gox just sat on the sidelines, which in turn allowed the price to fall farther. yes, a spiral down. question is; did all the short selling cause the bids to dry up? |
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Never
Why are we the only ones saying this... seriously. I can't believe people really think it'll go back to $2 after all that's happened. i truly think that Bitcoinica's short selling capabilities introduced in September caused an overshoot to the downside below the level of profitability for miners. we had a classic double bottom or triple bottom depending on how you read the charts. the strong rebound off $2 is telling you (or me at least) we will never go back there. |
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yes, but i think we would have had to actually buy the bitcoins for the skeptics b/c we just couldn't have allowed them to fall behind despite the fact that they would have refused to spend the time and money to upkeep those same computers and pay the electricity bills. they would've then paid us back i'm sure when the price hit $32. come on, be fair.
Plus, anyone who sold Bitcoins for less than the current market value should be compensated for their loss. We should probably just lock in the price as well, so no one can be taken advantage of in the future. And uhh, all the fiat currency prices will have to be locked in too. We should probably have a police state, someone is going to have to enforce all of this. It's only fair. Now the only question is who is going to be the benevolent dictator, you or me? This is where my sense of fairness ends; ME. |
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Yeah I'm getting a bit tired of how 5 million coins were given out for one tenth of a cent and then the rest of us are expected to pay at least $4 for them.
Seriously. Satoshi should have emailed everyone in the world before mining the genesis block. I'm sure everyone would have jumped on the opportunity! I know all the early adopter haters would have. After all, it's obvious that the coins would one day be worth more than 1/10th of a cent. Of course, the people without email would have to be informed in other ways. Oh and people without computers would have to be given time to buy computers. And well, we would have to pool our resources and buy computers for the people who couldn't afford them. After all, it's not fair to not be able to mine Bitcoins for whatever reason. So, once everyone on the planet had a computer and knew about mining, we could start the genesis block! yes, but i think we would have had to actually buy the bitcoins for the skeptics b/c we just couldn't have allowed them to fall behind despite the fact that they would have refused to spend the time and money to upkeep those same computers and pay the electricity bills. they would've then paid us back i'm sure when the price hit $32. come on, be fair. |
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What if the price moved down but not enough to force any liquidations and the longs stood firm. At that point, he would not have enough reserves.
wouldn't this just be a "paper loss" since the shorts couldn't cover their positions despite being in a profitable position? |
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We have virtually no risk.
The market doesn't slip every 5 seconds. And during most of the violent moves previously, we received no or only a few orders. The high volume was always generated after the violent moves.
Now thankfully, Zhoutong, you seem to have the risks of slippage covered as explained above this quote, but your reasoning in this quote is flawed. Never _ever_ think something is not going to happen because it hasn't happened before. Always expect the worst and then some. This applies to anything, not just slippage risks. If you haven't made simulations in which there was heavy trading _during_ price movements, you should! Even though I don't have any practical experience to prove this (because it never happened before), I do have theoretical consideration. The main problem of any system with guaranteed liquidity is adverse selection. We are exposed to the systematic risk of customers trading only when they have opportunities to take advantage of price differences. A similar example is exchange quotation. TradeHill gives users 5 seconds to confirm a Instant trade quotation. But since there's no cost to get a quotation, theoretically there's one possibility: a user gets a quote every 5 seconds, and confirm only when there's huge slippage. What I have done here is to delay all order execution by 1-4 seconds. This makes sure that when you click Buy/Sell button exactly during the slippage, the actual execution will happen after the major price move. And this is still considered as "guaranteed liquidity" because we update prices globally, not just for individual pending orders. Mushoz: can u translate this? |
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That his customers were long was disclosed by Zhoutong last night after bitcoinica ran out of USD. I for one am boycotting Bitcoinica until they move away from fractional reserve and hold assets to back every position. Regarding disclosure, I would prefer the long vs. short balance updated in real time on the site, but I will not boycott for that if they solve the backing issue. With realtime long/short balance users would know if they were taking a position that had a large risk of being squeezed.
Why do you think they do fractional reserve? Zhoutong has denied this many times - is he lying? As to the USD shortage - this is easily explained without any conspiracy - when people want to go long on Bitcoinica, Bitcoinica needs to buy BTC on MtGox with their USD funds and those funds are not unlimited - so when they are drained they refuse to let people go long. This is a result of them not wanting to have uncovered positions - quite the opposite of what you are suggesting. By they way I hate Bitcoinica for the volatility it produces. Obviously the money has been used up to purchase Bitcoins for the longs.
You have money in Bitcoinica account doesn't mean it's 100% in reserves, it can be borrowed by someone else to buy/sell Bitcoins. At any point, Bitcoinica is a:
- Full reserve in BTC and fractional reserve in USD, or
- Full reserve in USD and fractional reserve in BTC.
(Yesterday, we had a full reserve in BTC, and a depleted reserve in USD. Users couldn't withdraw USD until the situation was resolved.)
This is how hedging exactly works to ensure that we ourselves and our customers are always having almost the same profits (or we call it internally, rate of change of asset value with respect to market price).
The problem is there were short positions that were uncovered because their USD was used to buy BTC for the longs. I don't think Zhou used the term "fractional reserve" properly here. He had full reserve of his users accounts, just not in USD. It would be fractional reserve if the value of the bitcoin he held + the value of USD he held were less than the stated amount of the sum of his users accounts. i think you're right. his English has caused alot of confusion. |
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I wouldn't be surprised at a correction down to $3 or even below in the next couple weeks, though I don't think it's likely.
Zhoutong has said that most of his users are long right now, and I presume this is on the order of tens of thousands of coins.
If there were a 30k btc dump down to $3.80, liquidation of 10-to-1 leveraged longs would start, which might drop the price to $3.50 - $3.60 range. There's very little support under $3.50, with only 5k btc between $3.21 and $3.49. If the price does managed to break $3.60 or so, the spread would start liquidating 5-to-1 leveraged longs taken at $4.20, and would certainly drive the price to $3.00-$3.10 given the shallow support below $3.50.
There's another 70k btc in bids between $3 and $2. If $2.50 is breached from panic selling, recently taken 2.5-to-1 long leveraged positions would start being liquidated, and would push the price close to $2. It would be an epic mess.
For whatever it's worth, I'm mostly in USD right now, and have bids in the $2-$3 range to catch the dagger on the offchance it falls. I hope it doesn't, but I really have no idea what's going to happen next.
I should add that if there were a 30k btc buy instead of a 30k btc sell, a short squeeze would drive the price straight to $5. Basically, any big move is amplified due to rampant leveraging combined with irrational exuberance and irrational bearishness (Nagleism?). I think it's worth keeping this fundamental in mind when placing your bet. How would you have a short squeeze when zhoutong's out of money? not a short squeeze per se but it would wipe out their accts by being Zhoutonged. |
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Centralized inspection ensures that the coins are mined at a pace determined in advance. The principle of mining ensures that the currency will never suffer from inflation. The quantity of coins is limited and supervised by a central agency. They certainly did their homework! LOL. perhaps deception is the best way to advance our cause? edit: Bitcoin is a centralized, closed source, inflationary fiat currency, designed to promote maximum leverage, manipulated by our glorious Fed for the purposes of enriching the 1%. did i get that right? |
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We have virtually no risk.
The market doesn't slip every 5 seconds. And during most of the violent moves previously, we received no or only a few orders. The high volume was always generated after the violent moves.
Now thankfully, Zhoutong, you seem to have the risks of slippage covered as explained above this quote, but your reasoning in this quote is flawed. Never _ever_ think something is not going to happen because it hasn't happened before. Always expect the worst and then some. This applies to anything, not just slippage risks. If you haven't made simulations in which there was heavy trading _during_ price movements, you should! Even though I don't have any practical experience to prove this (because it never happened before), I do have theoretical consideration. The main problem of any system with guaranteed liquidity is adverse selection. We are exposed to the systematic risk of customers trading only when they have opportunities to take advantage of price differences. A similar example is exchange quotation. TradeHill gives users 5 seconds to confirm a Instant trade quotation. But since there's no cost to get a quotation, theoretically there's one possibility: a user gets a quote every 5 seconds, and confirm only when there's huge slippage. What I have done here is to delay all order execution by 1-4 seconds. This makes sure that when you click Buy/Sell button exactly during the slippage, the actual execution will happen after the major price move. And this is still considered as "guaranteed liquidity" because we update prices globally, not just for individual pending orders. Zhou: i watch the stock mkt most days minute by minute and am able to witness most major moves. Mushoz is right; just b/c you haven't seen it happen before with Bitcoin doesn't mean it won't ever happen. its impossible to write the perfect algorithm. for example, i predict that as the market becomes larger and bigger players enter the scene with larger and more powerful bots or servers, they will intentionally examine your protocols and try to exploit it with surprise attacks. what would a 10 minute straight up move in the price do to your algorithm and your customers holding short? i have seen straight up moves (with a few red candles thrown in btwn) for hours on end clearly designed to destroy shorts as well as the vice versa. btw, remember 10 days ago when we broke out of the 3.20 range up to 3.70 and then started to drift back down to 3.50 as the sellers and shorts stepped back in? it was me who jammed the price to 3.99 knowing that it would cause all the other bots and shorts to climb on board and take it up and through 4.00 due to the intensity of the move and the "double ramp". i believe we topped just over 4.50 on gox with your algorithm spiking to 4.95 or something ridiculous wiping out "a lot, seriously" of leveraged traders (using your own words from the Zhoutonged thread). i understand that you had to reverse alot of these trades. now this wasn't a target against you or your shorts but it was a consideration given that i saw we were breaking out yet again and i was in the process of accumulating. and i'm just a guy with a laptop and some intuition. so in a sense, i do have experience trading on Bitcoinica via watching the effects of what i do on your algorithm. the lesson for you is, you will always be vulnerable to unpredictable situations. edit: no offense but you often come across as being so smart as to be able to write the perfect algorithm. perhaps its b/c of your young age which i admire more than anything. but think about it from an open source perspective. you are one guy trying to outsmart the "market" which is essentially the entire world expressing its opinion of the price. within that market are all sorts of smart competitors who will try to compete with you. they will study you and design even better more powerful algorithms. never take anything for granted. |
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i use Spinner on an Android. can i be confident you will push updates to me as they come out?
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with all the talk about how banks should be thrilled to eliminate chargebacks by using Bitcoin, it was quite a surprise to hear from one of the original Cypherpunks that banks LOVE chargebacks. you guessed it; the fees!
i heard this on a podcast from 2009 on Hiro's Coinbase website.
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i stopped reading after the 2nd paragraph in which you mention "digital drugs" preferentially over other more useful products to be bought with Bitcoin. why does everyone have to always first mention this usage?
"In April 2011, Forbes Magazine’s Andy Greenberg wrote an article describing the qualities of Bitcoin: it cannot be forged or double-spent, controlled or inflated by any government; it is not impeded by international boundaries, and some digital drug-dealers have started accepting it."
even Greenberg in the article cited mentions other uses before talking about drugs. in the paragraph immediately preceding the mention of drugs he says this:
"About $30,000 worth of Bitcoins change hands every day in electronic transactions, spent on Web-hosting, electronics, dog sweaters and alpaca socks."
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Two, steal money (BTC or USD) from the accounts of his customers to allow others to cover.
he just said that the USD accumulated in short sellers accts was already used to buy bitcoins. did i get that right, Zhou? so what do you call that Smickles? Well, we don't really have the second way. Unless Mt. Gox gives us line of credit like real-world exchanges do. But very unlikely. The other option is to have much larger reserves or trade much less. You could have reserves, and when a customer takes a position the funds they supposedly hold are not considered reserves as they are now. Once all the reserves are moved to positions there can be no new positions until you make profits to add to your reserve or some deleverages/closes their position. But for this to work you need X times customer funds, where X is the weighted average leverage factor of all accounts. As it stands now, if it had dipped when the shorts had their USD borrowed by the longs, but not enough to force a sale, and no one sold for whatever reason, bitcoinica would be looking at a loss. Of course it's doubtful all the longs would hold steady, but it is possible they would and you wouldn't have a profit from them accepting a loss to cover your loss due to the profits you owe the shorts you borrowed USD from. this is actually a good suggestion and helps me understand what Bitcoinica does much better than i did. phew, as much as i've short sold over the years, i've never had to bother with the mechanics of how brokerages provide the liquidity for me to perform this activity. its bad enough trying to predict the swings and directions of markets. thanks for helping me understand. having said that i still think there are some potential problems identified above but it sounds like Zhou is now aware of these and will try to make things better. |
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my bank has said they don't report those large amts to the gov't. i wonder if this is true?
I think it depends on the relationship you have with your banker. There are factors and elements that go into whether something rises to the level of 'suspicious' and is tied towards the 'reasonable suspicious' standard with regards to searches and seizures. If you have a good relationship and reputation along with plausible evidence then it is not really an issue. It is not uncommon for me to initiate wires oversees in connection with deals or clients I am working with and I always have some type of plausible story like buying foreign real estate, rent, buying a business, capital goods, consulting project, etc. and my banker gets regular financial statements from me in accordance with debt covenants. It does get fun when I ask for $10-15k of physical cash in $20s but with pictures and stories it is not much of a problem and I usually give him a few days to order it. For example, last time one of my buddies flew his plane to Santiago he landed in Ecuador for gas and they didn't have any avgas and it had to be trucked in and cost $10k cash. It is not uncommon to only be able to pay for gas with cash in the Caribbean, Latin America, etc. and would be unreasonably stupid to fly down there without a large amount of cash due to the normal conditions of business and environment. QUESTION: I am thinking of putting together a business deal where I need to be able to buy about $45k of bitcoins and send them to someone within a day or two. Anyone know if MtGox raises or removes the withdrawal limit, in bitcoins, if you have the met the KYC/AML standards? with KYC standards you can withdraw $45K in bitcoins all at once but in 1000 btc batches one right after another. |
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Sorry, my bad. I'm heading out to dinner so I'll be back later
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