I'd like to point out it didn't work so well for gox in the end.

Can you expand on that? I don't see how you could 100% guarantee an issuer has the ability and willingness to redeem the credits they issue.

As I understand it, the theory is that mtgox lost a lot of coins to one or several hacks way back, and kept it quiet. They then proceeded to "buy" BTC with fake usd on their platform, hoping to leverage that into sufficient arbitrage profits to recoup the coins they had lost.

Sublime5447: The abundance model sounds like a great way to create a cascading credit crisis to me. Kind of like Ripple. What am I missing?

I'm not sure that makes the conclusions to be made here any more pleasant.

Might explain a thing or two....

My take:

There are, roughly speaking, two broad factors influencing the BTC market price.

There's the supply and demand dynamic of inflation (3600 BTC added to the ecosystem daily, currently) and demand from people using BTC to transfer value (buying goods online, remittances, what have you.) You may think of this as a baseline for what a bitcoin "should" (huge scare quotes here) cost at any given time.

Then there's the dynamic of speculation, where traders look to capitalize on their ability to forecast the price movements. Mostly, people are not very good at this, but many act as if they were. There are long-term holders who, believing in the utility of Bitcoin, hoard their coins in anticipation of future profits as adoption grows. Then there are traders, who bet on the price going one way or the other and buy or sell accordingly. Also, although you might call these a subset of traders, there are people who buy (or short sell) well into an established trend, simply believing that since the price has gone up (or down) for a time it will surely keep doing the same. They tend to amplify large price spikes and, I expect, suffer bad losses in the process.

At any given time, the relation of these macro-scale factors in determining the price is unknown. The latter, speculative use, will tend to cause the price to fluctuate heavily around any larger trend that might, somehow absent speculation, be hypothetically determined.

TL;DR: No-one knows what a bitcoin should cost at any given time. People invest based on previous price action more than anything else. This creates feedback loops that lead to unsustainable spikes and crashes, but no-one can tell you when a fair price has been reached. Caveat emptor.

Only half? Wow, best news in a long time.

It did quite a bit more than just go from 15 to 1200 and back to the current 330's.

I've posted a similar thing a few times before, but I'll try to be a bit more concise here.

A look at bubble peak / correction bottom magnitudes in BTC. Numbers rough estimates:

2011: peak in the 30's, post-peak bottom: 6.25% of peak price.
2013: peak at 266, post-peak bottom: 15% of peak price.
2013-2014: peak at 1166. post-peak bottom: TBD

If the crash is as severe as in 2011, the bottom would be about 73 USD/BTC.
If the crash is as severe as in 2013, bubble 1, that would put the bottom at 175 USD.

If you assume bubble volatility is decreasing, you can do some  horrible overinterpretation of the two datapoints we have.

Assuming a linear decrease in volatility, comparing the known peak-to-bottom ratios, you would expect a bottom at 23.75% of peak. That's 277 USD.

Assuming the ratio itself changes as much this time as it did pefore, you'd expect a bottom at 36%, 420 USD. That expectation obviously has been invalidated.

Note: These are not predictions. Maybe interesting for post fact evaluation of overall market changes.
 

I did a little legwork to compare the recent spikes in BFX BTC swap taking (in terms of interest rate on loan) and price movement. I make no interpretation of the following, but this is what I found:

I list large changes in interest rate as "peaks", the timing, and any price action at the time. Times in UTC, data from bfxdata.com. Prices and times rough estimates.

1st peak: sat 25th 15:00, post drop, price moves 341 -> 349

2nd peak: sun 26th 01:30ish, prev price rise petering off, local bottom @ 342.

peaks of swap taken at high interest rate until finally dropping down around 8:00-9:00. here price goes from 346 -> 358 at the same time as interest rate on BTC swaps taken drops.

next peak at monday 4:30-5:00, price relatively flat around 350.

Last peak to 0.6% daily 15:30-16:00, volume of BTC swaps taken significantly higher than before (2x at a glance). No significant price action.

Btw, the BTC interest rate bumped up slightly late saturday UTC, then jumped to the current levels between 03:30-09:30 UTC, sunday.

You know what that means.

The swaps are being used to foil jonoiv's prediction of 377 USD/BTC by monday.

I wouldn't be so sure. "Active" to me seems like the counterpart to a swap offer not yet taken.

Well, we've been following a pattern of attempted breakouts to the upside followed by more downward movement for a while now. Since people seem to consider trend continuations more likely than reversals, shorting on upspikes must seem more and more tempting the longer that pattern continues.

You mean swaps taken? AFAIK you can't, as a liquidity provider, close an offer once it's been taken before the limit is up. Which seems to pretty much mean doesn't make sense to offer anything else than flash return rates on autorenew unless you like spending your time watching your offers...

Since we're talking about swaps, maybe someone can clarify how taking liquidity on bitfinex works? Let's say you offer funds for 30 days, and the funds you offered are automatically accepted to cover a position some trader takes. It's my understanding you do not have a guarantee of having locked in the interest rate you specified for 30 days - if the position is closed, so is the swap contract. Is this correct? But if someone explicitly takes your offer up, not directly related to a position they're taking, they are on the hook for 30 days worth of interest?

The current BTC interest rate is quite atypical, BTW. The average daily rate for the last 90 days is 0.0184% for BTC and 0.0768% for USD

I was able to verify "Esoteric Investments LLC" is registered in NJ. That's all the records show without paying, anyway. From what I can tell, using anonymous shell companies is pretty common in USA, and especially in New Jersey. And besides, Trendon Shavers' identity was well known early on, that didn't help much.

How does one tell the two apart?

What's the difference?

Btw your bifurcated rhetoric, first claiming outrage at being accused of something unseemly, then implying that a little bit of unethical activity isn't so bad since it's what everyone does, doesn't exactly engender much trust, either.