And this, kids, is why there are no billionaire chartists.  Not to pick on you, Happy, I think your very short term TA is exactly right, and basic TA is the only thing applicable to bitcoin.  Hell, I haven't even found anything other than volume to be a reliable indicator to confirm or deny my own charting...  That aside, you also know that fundamentals trump technicals.  And here are the fundamentals.

If you look over the time period you've specified you'll see there are no big volume buys at those prices.  In other words, positions were accumulated very gradually by the small fry.  Those same small fry are NOT going to sell those gradually accumulated BTC in $40,000 and $50,000 blocks at once, all of a sudden at the slightest hint of weakness "hoping to break even."  That's not how the small investor mind works when dealing with numbers that big over a time period this small, and savvy investors are not subject to the same motivations.

In other words, I suspect what you're seeing on the chart is "chart art."  Or early adopters starting to edge closer to the exit.  I could be full of crap, but that's my gut feel -- and until proven otherwise, my right-on-btc-till-now gut is getting my attention.

Those are even more fake than the buy walls.  They'll evaporate in a millisecond at the first whiff of capitulation and reversal.  Someone or someones want to spook the market, and they're targeting 6pm eastern US to start doing it.  I'm not the only one thinking one more big panic and we're off to the races, and prevailing current sentiment is just negative enough to pull it off.

This is so exciting!  6 more bids to go until we see whether the 9.5k buy wall is real or illusionary.  Looking at the size of the bids looks like people set them up trusting other similar sized bids will not get yanked.  Wonder how many people are currently getting SMS messages on their phone telling them to check their order. =)

Well, you're almost right.  We need a vastly larger total market cap and a lot more liquidity (maybe even a couple of stable, known market makers) not just a gigantic per BTC price.  A sky high per BTC price in a completely illiquid market would be even worse than the current situation.

The exact same way you, as a solo miner, would aquire a bitcoin with a difficulty in the tens of millions.  By joining a pool.  You buy into a mutual fund, and the fund buys the shares.  Along with shares in other companies for good measure.


1,$s/1000/1/g is not the solution, it's a technical implementation.  Exchanges could also implement this with no changes to the client.  It would also be bad in the sense of "we're changing our currency to NEW bitcoins" sort of bad, even though it's a simple rename and decimal point shift.

The number of entities with the ability to short 10B worth of any currency is highly limited.  In fact, I could probably enumerate all of them without trying too hard.  They are statistical noise when talking trading population.

The number of entities with the ability to short $300k worth of bitcoins dwarfs the current ~6000 bitcoin traders.

Greenmail using government backed currencies tends to destabilize efforts of those governments, and they take a dim view of this.  Dim governments with a monopoly on force, courts and jails are why an even smaller % of the entities with the means to do so would.

Greenmail in the BTC market is absolutely risk free.

So, not the same thing.  Comparing BTC trading to currency trading is a stretched analogy at best.

Let's say I was just learning to trade currencies.  Would I want to

a) learn in a market where most others have roughly the same level of experience?
b) learn in a market with vastly more experienced people?

Let's say I was a rookie.  Would I want to

a) play somewhere where even my limited experience gives me a competitive advantage?
b) trade in a market where others are vastly more experienced?

Let's say I was an experienced trader.  Would I want to:

a) fleece the inexperienced armed with knowledge of what I did wrong when starting out?
b) compete in the cuthroat zero-sum-game world I know the professional markets to be?

Let's say I was a professional.  Would I want to:

a) trade in a market I could buy with my pocket lint, knowing full well my potential upside is a tiny fraction of my bonus check?
b) make my living the usual way

Understand these scenarios and you understand who is trading bitcoins and why comparing the bitcoin market to a real forex is like comparing apples and minivans.

Absolutely NOT.  This is intended to be a serious medium of exchange, not some sort of "point" system designed to obfuscate value. 

As a counter example I present Berkshire-Hathaway.  That stock has never had a split, never paid a dividend, was never gussied up to look pretty for the "common Joe."  Result?  $115,000 per share, and returns well above market.

People absolutely understand fractions.  And if they don't, well.  Too bad.

That was their theory.  In practice, once again, wisely mtgox used a weighed average over time to compute value.  So no, they only pulled out a few hundred coins.

Had the hackers known the limits precisely they'd have used a multiple account attack.  But they didn't, and that's why we still have an exchange site and a multi-dollar value for bitcoins.

Precisely.  This isn't the kiddie pool.  While tiny, this pool is FULL of seaweed, undertow, jellyfish and floating mines.  While the starry eyed talk about mass adoption this is hardly the place for Grandma to splash around with her floaties.

I realize I sound very negative, but I think occasional reality checks are needed.  Otherwise bitcoining starts sounding like a cult.  Newcomers are all like, "wait, what's this about my balls being lopped off?  I just came for the free Cool-Aid..."

Oh, and mtgox lost very little due to their wise policy of only allowing $1000 in withdrawals per day.  They simply reversed all the transactions and only a few hundred bitcoins were truly "lost."  Less than a day's worth of profit.

British pound went to less than 1/20th of 1% of its previous value relative to other currencies?  Really?  I missed that part.   Bitcoin recovered mostly because trading was halted for over a week with all assets frozen while people came to their senses but most importantly the actual trade was backed out.  Recovered is relative, it's still down 20% since then.

If someone were actually to sell 200k bitcoins on the market you would definitely see an impact.  Just pretending to have done so caused a pretty big haircut.

The One Exchange, mtgox, was storing their password data in unsalted MD5 hashes, which means any password < 11 characters long might as well have been in plaintext.   Script kiddies got ahold of the account name/email/password database and consequently mtgox's master wallet.  They sold.  One guy got 300k bitcoins at $.01, so in reality 200k bitcoins was enough to utterly wipe out all buy orders.  That's 200000/6800000 or 3% of the float, for those playing the home game.  Alternatively, roughly a third of a million dollars was enough to put the entire bitcoin market into a tailspin.

TL;DR -- a small fraction of a bonus check of a mediocre wall street trader is enough to play the fledgeling bitcoin market like a fiddle.  Which means anyone seriously playing this game is most likely a rank amateur ripe for plunder.

A large, truly free market perhaps.

Here we have essentially one web site, with fewer than 6000 people participating.  Well under 10% of all bit coins generated are on the market.  We know for a fact that 8% of existing coins were enough to drive the price from $17.5 to $01.  While it's a free market from a standpoint of "you can play or not", it's certainly not the ideal description of something trading for "true" value rational actors determine. 

I won't get into the whole existence of a rational actor in the first place, but there are many question marks and pieces of data only SOME of the trading parties have.  And the rest is pure guesswork.  What I'm saying is: the commodity may be fairly valued because we all agree on the value, but the agreement is based on invalid data.  Moreover, there are millions of people in the world with sufficient assets to dictate pricing in this tiny, illiquid market.  And yes, truly free markets do work exactly like that.

The longer I think about this the spookier all of this seems.  This action just isn't natural.  And whenever I see unnatural it doesn't end well for those not in the know (read: me).  If the intent was to get a bunch of cheap bit coins it worked, I've dumped the ones I've been generating & hoarding.  If someone understands investor psych this well and caused me to sell cheaply then they DESERVE the profits.

If I'm right there will be price movement soon enough, it'll be big, and I'll be able to get back in on the action.  If I'm wrong, this is natural and the currency keeps flatlining because demand and supply remain perfectly balanced forever I've lost nothing.

One crazy theory has the early adopters (who have LOTS of skin in the game) stabilizing bitcoin.  It's in their interest for this to become a currency, they're not trying to "cash out" quickly.  The theory has them targeting a roughly 100M market cap.

So when BTC prices spike they start selling from their vast stockpiles.  They then use the proceeds to prop up the price if it craters too low.  Three birds with one stone -- they make money, they stabilize the currency and they make bitcoins boring enough that short term "easy money" speculators leave.

It certainly makes sense, but I just don't buy it for some reason.

I agree with you re: .014 being hit first.  And at some point, sure, .05 could happen.  I just don't see it soon.  As in, within the next 3-4 bitcoin difficulties soon.

In another week or so we'll very briefly have NMC difficulty/BTC difficulty ratio of .0138.  Everyone with a calculator sees it coming, which is exactly why namecoin miners are currently happily giving away well over a third of their processing power.  The speculators buying at .025 right now could well be stumbling into one giant value trap.

Since I know NMC miners like to mine and sell at a significant discount to the NMC/BTC ratio .012 may happen in the next week.  After that -- we'll see.  I think people will clue in about NMC difficulty bouncing like a yo-yo and the willingness of NMC miners to give money away even if NMC difficulty rockets back up to 60k and a .04 NMC/BTC ratio.

You can buy the cables directly from china.  Just do an ebay search and you should locate them as low as $3 with free shipping.  You can probably do better.  Delivery is about 3 weeks.

That's roughly 1/4 the price on cablesaurus when bought in bulk -- the business model is obvious.  Buy in bulk, and sell at a 2-3x price multiple to the impatient.  If only monoprice would dogpile on this...

5870s and 5850s are gone.  ATI stopped making them a long time ago, and I doubt board makers stockpile previous generation chips.  Unless you can point me to a $190 58570 available to buy today I'd say the real price is $324 for the few still around at outrageous prices and ebay.

5830s are still available at $130 shipped (for now) because those cards are terrible for anything other than bitcoin mining and up to now manufacturers have had trouble selling those boards at any price.

It may be possible to use 5770/6770 if they get cheap enough (read: under $80).  There is no need to buy $140 gamer boards, plenty of boards exist with 3-6 pcie slots which cost significantly less.  I won't do your research for you but I will give you a hint: socket 775.  Also, PCIe extenders and PCI to PCIe adapters can be sourced from China much cheaper than you can get them at e.g. cablesaurus (about 70% cheaper).

Hard drives are not needed.  One ~1GB USB stick is needed for one machine (or if your router if it has a USB slot and can handle custom firmware), the rest can run completely diskless.

Incorrect.   I can accurately say whether or not mining is "worth it" for me, with my hardware, day by day.  I can't say whether *investing* in BTC, whether through purchasing more hardware or BTC directly is "worth it", but I can tell you within 10% at what price to difficulty it will no longer be "worth it" relative to selling the hardware.  Let's just say at $.046/kwh and an expected ETA of early 2012 for ATI 7 series that day looks to be far, far away (in bitcoin time, anyway).

"Who the hell is investing in GPU mining hardware in 2010?  It's a losing proposition, you'll never make back the price of those 5870s"

Hindsight is 20/20.  The people making the same arguments against early adopter GPU miners would likely give their left nut for a time machine to summer of 2010.

Basic technical analysis DOES work on bitcoin, so long as you use a short enough interval.  Any data older than a week is not useful for trading IMO.   As far as the weekend effect -- miners are learning.  Like you, they are adjusting their strategy.  They now hold their coins over the weekend to dump on Monday.   Being flexible, constantly re-evaluating and adjusting your trading strategy is mandatory here.

To answer your question: I look for support levels and bounces from them, then it's all steel balls and leaps of faith.   Win some, hopefully lose fewer some.  If it were easy everyone would be doing it.