It's not clark moody that's looping.  MtGox is feeding the looped data to clark moody.  I know this because I am watching the data over the websocket directly from MtGox (EDIT: when it lets me connect).  MtGox's trading engine has a bug in it that is causing this.

Wow, it's like 2011 all over again...you'd think MtGox would fix bugs like this.  I remember seeing them having the occasional loop like this last year.


It's MtGox's websocket that's sending the same data over and over again, so it IS MtGox's problem.

So how's that trend busting upward rally going?...oh, it's not...  Overall decline continues.

If anyone is curious about which way bitcoin prices are probably going, look here: https://bitcointalk.org/index.php?topic=49389.msg588294#msg588294

I think $3 is near the top of the overall (apparently accelerating) downward trend right now...I don't anticipate it breaking this bigger trend to the upside, either.

Here's a (logarithmic) chart:

If you think in terms of the popular Bitcoin metaphors, such as buying, selling, sending, receiving, mining, losing, borrowing, etc., bitcoins, they do seem like a commodity.  But these are just metaphors and not the economic reality.  The reality is that there are no bitcoins.  There are numbers in the blockchain, and these numbers represent bitcoins, but the bitcoins that are being represented do not really exist.  It's all pretend (or delusion).

I think calling bitcoins a commodity is stretching the truth a bit (no pun intended).

This is what I see for the short term so far.  If the trend breaks to the upside, I'd guess that we would probably see a fairly quick rise to the mid 3s.  So far there seems to be a bit of resistance at the trend line, though, and I think it's more likely to start to go back to the low 2s and maybe less than $2 within a couple days.  Time will tell.

Did you bother to read down my post just a little bit further?

I've grown tired of this discussion and don't have as much time to put towards it at this point.  So here's the last few thoughts I intend to post for a while:

Two main factors that go into whether or not someone chooses to adopt Bitcoin long term are if it provides a direct service to the adopter (they will adopt for as long as that expected serviceableness is worth the expected cost to them), and how strong their expectation is of Bitcoin gaining widespread long term adoption (according to their own idea of widespread).  Their expectation of Bitcoin's widespread long term adoption is based on how strongly they trust their own understanding (regardless of correctness) of why others are or might adopt it long term.

I do not think most people will be very confident in their understanding of why others are willing to adopt Bitcoin long term:

First most people do not and will just never understand Bitcoin at all.  All they know is that some people keep telling them it is a crypto-currency, and that it's secure, and that it's p2p, etc., but these assertions are near meaningless to most people, as are the technical details of how it works.

Second, they see that hardly anyone uses it, and no major merchants use it, so they quickly realize that can't spend it anywhere in any practical sense without costly research and perhaps a costly change in their lifestyle.

Third, it's not easy to acquire Bitcoins.

Fourth, most people don't feel like they gain anything by using Bitcoins when they could much more easily just continue using their government's fiat currency and credit/debit cards for trade.

The last three points are potentially fixable with time and effort, but the first one almost certainly isn't (most people have "better things to do").

I think the quickest and easiest way to overcome all of this and increase Bitcoin's chances of widespread adoption is for bitcoin to provide some direct service that the mainstream actually cares about (and of course at a cost people are willing to pay).  If they don't value the bitcoins or the system, and they aren't really sure why anyone else does, they aren't going to adopt it.  Very, very few will bother going out of their way to try to understand, either.  However, if they confidently understand what it can do for them and others at a small enough cost, they might be interested.  People don't understand all of the technical details of how paypal does what it does, but they do understand how it can help them send and receive already established government fiat currency easily online...Paypal's service is a directly serviceable good.  People are told that when using Bitcoin you can easily send and receive bitcoins...but this is practically meaningless to almost everyone.

Unless you believe pure hype can sustain the "bitcoin economy" indefinitely (I'd point to the fall in prices since $32+ as evidence suggesting it can't), Bitcoin needs to provide something a significant portion of the population would actually care about, and it's not doing so, yet.  This is why I keep coming back to bitcoins needing to be a directly serviceable good, because without that, adoption will almost certainly continue to be very low as very few people will be confident in their understanding of why anyone else would adopt it, eliminating the only reason left to adopt it themselves.

In my opinion the only thing s3052 is saying is that the market could go up because it's not going down as fast as it was before.  A slower decline or sideways trend is really all the MACD and RSI show, and s3052 calls this a "bullish divergence", which I disagree with.  The market is currently in the second significant sideways trend since the peak in the $30s.  During a sideways trend, all 3 parts of the MACD (the two lines and the divergence between them) move towards the center line (0.0).  So if MACD was low because of a previous down trend, and then the market starts moving sideways, the MACD will start to move upwards, and the divergence between the two MACD lines will be positive.  The reverse is true if the trend was up before it starts going sideways.  I think a more relevant thing to consider is that sideways trends are typically followed by the previous trend again, which in bitcoin's case is a down trend.

Two more things that I would consider when interpreting the MACD:

First, the MACD is distorted near the beginning of s3052's "bullish divergence" line due to 6 days of no trade data from mtgox being shutdown after it got hacked.  If those 6 periods are taken out of the measurement, the divergence between the MACD lines would go into the negative more sharply, and come back up a little quicker as well, and in my opinion would be more accurate than pretending the market price was constant during that volatile time period.  This removes s3052's nice straight line across the bottoms of those MACD divergence lows.

Second, I don't think the big decline and recovery just over 2 months ago (which didn't even recover all the way back up to the previous sideways trend) is very relevant to the general trend and to current and future prices.  It's deviation from and return to the trend doesn't have much meaning for the short term or the medium and long term.  The context of the market was much different then than it is now.  The lack of that trend deviation's meaning today implies that the larger moves in the MACD during that time are not very meaningful today, either, when interpreting the larger trend that is more meaningful to us today.  My day trades don't take that period into consideration now, and neither do my long term expectations at this point (however, a few weeks or so ago it was much more relevant to me for both the short and long term...the market context my decisions were based in were much different back then as compared to now).  As far as I am concerned when looking at the last 4 months of the market declining, putting a lot of consideration into that big drop/recovery doesn't provide much more meaning than considering the 6 days of no price data at all.  s3052's line drawn from the the second MACD divergence low to the third seems to be almost meaningless in today's market.

I think it was just a convenient place to draw a line.

I focused on MACD in this post, but the RSI is obviously based on the same market data and likewise contains similar distorted effects that would likely affect s3052's line drawing.  This suggests, at least to me, that the idea of there being a "bullish divergence" isn't very well supported by the data.  I think this current sideways trend is just another consolidation before prices start to drop more (the end of the last sideways trend wasn't pretty, either...if that big drop a couple months ago is of any relevant meaning at all, it's that it suggests the possibility that the current sideways trend could end the same way before continue back on the normal slow decline).

Just sharing my opinion.

Dollars had the advantage that they were already a very widely accepted money before their commodity backing was removed.  Bitcoin is not a commodity and has no commodity backing to help in it's adoption.

Indirect exchange is only one of multiple reasons people buy gold.  There are many directly serviceable uses of gold and at least one of those reasons (ornamentation) were why people wanted to acquire gold before it was ever used for indirect exchange. 

There has only ever been one reason to buy bitcoins.  It is circular in that the only reason anyone buys them is to sell them to another buyer, who is only buying them to sell them to another buyer, etc., etc.  No one buys them to provide some direct service because they do not provide a direct service.  They are just a number in the "value" field of a bitcoin transaction.

Although I acknowledge that it is not 100% certain to collapse, I believe it's chances of success are very poor, especially when considering all of the misconceptions bitcoin users have about the system they are using.  This is why I say bitcoin prices do not reflect reality (this is the case with all bubbles), but rather reflects false beliefs that promote higher prices, and therefore is a bubble that is not done deflating.

netrin:

Imagine a new shipping company.  This shipping company only offers a free service to ship a special type of box that can only be used to hold a specific type of object, and that this type of object is worthless (it will not fulfill the ends of any person).  Their shipping service cannot ship any other types of boxes.  Their boxes cannot be used for anything else.

What it seems like you keep saying over and over again is that because the box can be used to send a worthless object to someone else, the worthless object that you put inside the box must be worth buying.  (To make sure the analogy is clear, the shipping company is like the current software implementation of the bitcoin rules and the resulting blockchain ledger, the boxes are like bitcoin transactions, and the worthless objects are like the numbers in the "value" field in a bitcoin transaction output.)

And since a bitcoin is not a directly serviceable good, that is the *only* reason to buy bitcoins.  It's commonly known as the "greater fool theory": http://en.wikipedia.org/wiki/Greater_fool_theory

Isn't it nice to know that the entire "bitcoin economy" is based on everyone expecting to find a greater fool to buy their bitcoins?

My point in referencing the chronology of assertions of bitcoins being money and the adoption of Bitcoin was how the initial adoption (and even it's creation) of Bitcoin was due to a misunderstanding of what money is.  The assertions that it was money combined with the rules of the system turned out to be more of a social contract where people agree to pretend it is money (though most adopters likely believed it actually was money, and weren't making a conscious decision to pretend it was, due to the lack of an explicitly stated agreement, and the lack of serious questioning of whether it really is money among most adopters).

I think that most people that adopted bitcoin more recently also did so because they also believed it was money.  Their introduction to bitcoin was a bunch of false information about what bitcoin really is.  Few adopters seemed to care that almost no one accepts the "money".  Few adopters seemed to care that it provides no direct service.  The only thing most adopters knew was that others called it "money" or "currency", and that it had a quickly increasing exchange value.  Almost all adopters did not realize that almost everything they knew about Bitcoin was merely a metaphor.  It was "catching on" and "becoming mainstream" and they were going to be rich...who cares about reality?

Believing this state of affairs leads one to suspect that it's not going to last, that Bitcoin is just a bubble.  Someone that's considering adopting bitcoin and understands these things would likely only acquire bitcoins for as long as they think they can sell them at a profit, if it's within their risk tolerance.  Those that already adopted under a false understanding of the system and later come to this realization would also likely change their strategy as far as accepting bitcoins.  And these adopters and potential adopters will likely realize that other adopters and potential adopters will eventually come to the same realizations.  This means we could end up with a larger and larger percentage of adopters anticipating the end of bitcoin, or at least a very serious decline in future bitcoin prices.  Some will decide they're done and cash out and leave.  Some will stick around and try to make some more money while it's still possible.  Many will remain in denial until it becomes so painfully obvious that it's over, and finally cash out losing almost everything they invested into it.  Many will be very vocal in claiming that bitcoin's future is bright and that those cashing out now will be sorry in a few years when they're worth thousands of dollars, not understanding (or worse, fully understanding) that's just speculation at the "wishful thinking" end of the spectrum of possibilities, and isn't even close to being supported by any facts or logic.  Some of these irrational attitudes towards bitcoin are very widespread in the community, and the degree of how widespread they are should be an additional hint at bitcoin being a bubble.

The market is doing it's thing, extracting money from those that perform poorly in their investing and giving it to those that perform better.  The bubble is going to end, and it's going to line the wallets of some, while the rest are left holding the bag.  I know this stuff isn't easy for many bitcoin holders to think about.  It would make me sick to my stomach if I were holding a lot of bitcoins bought a couple months ago when prices were much higher.

The Bitcoin developers have the power to change the software and allow bitcoins to possibly become a directly serviceable good.  That could give it potential to becoming a commodity and maybe a real money.  I wouldn't bet on them actually doing it, though.

You challenged my alleged belief that money can emerge only in one way.  So I provided you links to material that explains how money naturally emerges, and then I provided some simple explanations as to a couple of ways you could theoretically create an artificially determined money using the knowledge of how money emerges naturally, one way being through propaganda, and the other through impractical direct physical manipulation of the brains that you want to value your artificial money.

Knowledge of how money emerges is extremely important if you want people to adopt a specific money.  Having that knowledge helps you not waste your time on certain things, or make stupid mistakes.  And I have a hard time imagining someone that understands how money emerges would say that how it emerges doesn't matter that much when talking about the adoption of a supposed money, so the simplest explanation was that you lack some understanding of the topic.

I agree that type of object can be exchanged and have an exchange value prior to a discovery of a direct serviceableness (Bitcoin is an example of this).  However, I do not believe that such a type of item will, prior to it becoming a directly serviceable good, become more widely adopted than already existing directly serviceable commodities that have already been used as money for thousands of years.  I also do not believe it would gain any adoption at all in the first place without the first adopters either misunderstanding the concept of money, or intentionally deceiving others in order to acquire valuable goods from them in exchange for worthless items.

The value of the ledger service is dependent on whether the type of object the ledger is capable of keeping account of has a market value.

If a potential customer recognizes the type of object is not a directly serviceable good (a plain number that does not represent an actual good and has no other special meaning or interpretation) and no one else is willing to offer any goods for it, and they don't expect anyone to, they will have no reason to acquire any themselves, and the ledger service will have no customers as it is of no value to them (it is worthless, just like the numbers it keeps account of).

If a potential customer believes that they can benefit in some way by having a larger number in their account on the ledger, they may choose to offer goods to increase their number.  Because they believe they could benefit from having a larger number in their ledger account, they then value the ledger service.

What do you mean by "exchange of value"?  My understanding is that people exchange goods, not some abstract concept of value.

Bitcoin transactions have no value without "bitcoins" having an exchange value, as the only thing normal Bitcoin transactions can metaphorically be used for are to "send bitcoins to someone's address".  If no one was willing to exchange any goods for a "bitcoin", there would be no value in creating a Bitcoin transaction, and the whole Bitcoin system in it's current implementation would be worthless.

It's obvious to me that you do not have an adequate understanding of how money emerges.

This book, especially Chapters 1-3, will be a good start: http://mises.org/rothbard/mes.asp

If you really want dig deeper, you can read this book: http://mises.org/resources.aspx?Id=3250&html=1

It is an emergent social phenomenon that arises out of the subjective values of individuals in the economy.  To create an "artifical money" would require somehow manipulating the subjective valuations of a huge number of individuals in an economy so that they now value the worthless object enough for it to gain widespread adoption.  The only potentially practical way (as the impractical way is to physically alter the brains of people directly) is by communicating false information to them about this object (whether it be convincing them it has some direct serviceableness, or just directly asserting it is a money, or hyping it, or whatever), yet this will almost certainly work for only a short time since more and more people will learn the true nature of this object and realize it's worthlessness, and from then on be less willing to accept it in exchange for something of actual value.  Once you cannot convince anyone that a worthless object is valuable to anyone at all, no one will give up something they value for it.

I have found no reason to believe a currency can emerge when it's valuation is based on false information.

I believe this to be what has been happening with Bitcoin (false beliefs of what it is, unfounded assertions that it is a money, hype, communicating the expectation of future high prices, etc).  Whether or not Satoshi was intentionally communicating false information about Bitcoin (asserting that it is money) is anyone's guess at this point (I think he, like most people in this day of fiat money, had some misunderstandings of money).  Regardless of his intention, his assertion that Bitcoin was a currency back then was incorrect and remains so.  As more and more people begin to understand the nature of what bitcoins really are (or aren't) and how that will prevent it from becoming widely adopted and highly marketable, as people become aware of the realities of bitcoin rather than believing the metaphors to be the reality, their valuations of bitcoin will change, and with that change will be a shift in bitcoin prices, and the bubble will go away as bitcoin prices begin to reflect reality for the first time ever.

No one has created a decentralized digital system of highly marketable, directly serviceable goods, yet.  I suspect one will be created soon.

I'm willing to trade all kinds of umarketable, worthless shi...err, I mean "pure money" for your real money.

Money can only emerge in an economy if it is first a directly serviceable good.  If something provides no direct service to anyone (meaning it does not provide a direct means to anyone's desired ends, and is therefore not valued by anyone), why would anyone buy it?  If people realize that it provides no direct service to anyone, and therefore has no value to anyone, and no one is willing to give up something they do value in exchange for it, how could it ever emerge as a money?  What business would accept it?  What person would accept it as a salary?  Social contract based "pure money", metaphorical goods, etc., only have exchange value when there are people buying them that do not fully understand what it is that they are buying.

Bitcoin is, and always has been a bubble.  It's price is disconnected from the reality that it is not a directly serviceable good.

Dollars, like all other fiat money, originated as a commodity backed currency, either with direct backing of a commodity, or indirect backing of a commodity by being backed by another currency that originated as a commodity backed currency.  Bitcoin is not a commodity in itself (only directly serviceable goods can become a commodity), and has no direct or indirect commodity backing it.