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441  Economy / Speculation / Re: My last prediction of the year! This is a good one, I promise! on: December 30, 2013, 08:18:31 PM
I was responding to another thread somewhere and a thought entered my fertile mind:

next halving of bitcoin will take place by end of 2015.

If you don't already know what "halving" means, it means that around every 10 minutes, a block of bitcoins will be rewarded to a miner and the reward will be halved from current 25 to 12.5 bitcoins.

The exact date and time of the next halving is not quite certain, it just depends upon how many blocks will have been mined then. As we all know, the hashrate has been greatly accelerating and this acceleration is causing the date and time of halving to be earlier and earlier than expected.

This event, "halving of bitcoin reward for mining", will most likely result in overnight spike in, whatelse, bitcoin price. It should at least double:

so, if the prevailing bitcoin price on, say, October 15, 2015 is $50,000 (which admittedly is a conservative amount) and if the halving takes place at midnight on October 15, 2015, then the next morning, October 16, 2015, we will see an overnight doubling to $100,000.

This is a highly simplified version of what can happen in 2015. Many people will drive up the bitcoin price IN ANTICIPATION prior to the event and there will be many opportunities for panic buying and panic selling as well, as new entrants try to grab the dwindling supply of the new coins.

These are tumultuous times.

TL;DR -- lurk moar

this has been discussed ad nauseum from the beginning of bitcoin time, most recently around the last halving. here are a few things to consider:

1) while the bitcoin market is still grotesquely inefficient in many ways, protocol fundamentals like the reward halving are largely well-known in the bitcoin community, and it is likely that not only will the event be "priced in" far before it actually occurs, but also that every future reward halving is already priced in.

2) block reward halving is a far cry from a halving of supply, so even the most basic keynesian interpretation does not suggest that the price should double.

3) block reward halving is better modeled as a halving of the inflation rate, something that modern economists still can't agree on regarding its effect on markets, so good luck anticipating its effect on price.

--arepo
442  Economy / Speculation / Re: Analysis never ends on: December 29, 2013, 07:27:56 AM
Speculation: The top of the major bulltrap has been reached based on fib retracement levels and top/trap-top ratio of previous bubble crash applied to this one, and now we should enter a period of decline. The same method worked for me to estimate bottom with relative accuracy, so I don't see why it shouldn't for this.

Time for me to take profit, see you all when we reach floor again Grin

based on the shape of the last bubble, we've still got some ways up to go before another reversal..

the ratios are going to be different because of different market conditions (hint, investors were a little more rational this time around and formed a sensible double-top formation as opposed to bubble-top cusp). the shape of the pattern is scarily identical, however.

--arepo
443  Economy / Speculation / Re: Estimated inflection point ( from the last bubble ) on: December 29, 2013, 01:24:38 AM
arepo - Is this our bear signal crossing the RSI support?

https://www.tradingview.com/x/hg02ySmu/

Seems we got MACD cross hitting on the same timeframe as well. I'm still on the fence as to how things will work out, but watching closely.

that flash crash was strange. sort of like a long squeeze. heavy volume over a very short period and then a rapid recovery.

it is true that it caused the RSI to break below the moving support. however, this alone is still not necessarily bearish. on the other hand, the bullish picture is gone. we seem to have a strong moving support but low weekend volume butting the price against a significant resistance. i would expect sideways consolidation until we can get enough volume for the market to make a decision either way.

--arepo
444  Economy / Speculation / Re: I predict that btc will rise to $2000 by end of March 2014 on: December 28, 2013, 03:22:02 PM
This is NOT based on extrapolation, psychic power, statistical analysis, technical analysis or any other analysis or thought processes.

Great! so why did you feel the need to tell anyone at all?

hint: "speculative" doesn't mean "wild-ass guess"
445  Economy / Speculation / Re: watching bitcoin price and discussing it on this forum on: December 28, 2013, 03:06:23 PM
watching the price of bitcoin is like watching "how I met your mother", you get pissed because of not knowing the mother but at the same time you do not want to know who is the mother because simply the show will end Smiley

Read up on Schrödinger's Cat, it is a thought experiment in a similar vein, it will blow your mind Wink .


I am trying to understand the experiment but Quantum physic in general is one of the things that I want to spend more time to study ( try to understand ).... thank you for the link already bookmarked it to read the full article later.

this is a little off-topic, but physics is my thing, and i'd love to try to give a layman's interpretation of such a technical thought experiment Grin

the idea is that the classic notion of determinism, that one can use trajectory and velocity and momentum to determine the future state of a given system (similarly to how one judges and executes shots on a pool table), breaks down completely on small enough scales.

in pool each of the balls has a definite location. you can strike one, giving it a definite velocity in a definite direction and with practice pretty handily work backwards through the physics that governs the behavior of the balls and, remarkably consistently, make difficult shots.

if the pool table were the size of an atom, however, and the balls were subatomic particles, the game would be significantly harder. the early pioneers of quantum mechanics (quantum meaning "unit", like the indivisible subatomic particles) realized quickly that the smaller something is, the more strangely it behaved when they tried to "find" it -- that is, determine its location.

it turns out that nothing has a definite location, which is hard to wrap one's head around, but for small things at small scales it's very obvious and a whole new physics needed to be developed. when measuring an electron, for instance, its location seemed to correspond with the amplitude of a wave, with different probabilities of finding the particle in a certain location corresponding to the amplitude of the wave at different points. this, incidentally, is the basis of Schrodinger's Equation, which formalized de Broglie's work.

in the image i linked, the sharp and pointy distribution corresponds to a very massive thing, like a billiard-ball, whose location is much more definite than a very light thing, like an electron (lighter by about 30 orders of magnitude!), about which it isn't an exaggeration to say that it could be anywhere in the universe.

this brings us to the star of Schrodinger's thought experiment, a heavy atom undergoing radioactive decay. one of the insights that quantum mechanics gave us is an explanation of this strange phenomenon. some atoms, for reasons previously unknown, randomly and violently ejected bits of the nucleus from time to time. the strangest thing about this is that is is impossible to know exactly when this event would occur for a single atom, but groups of the same isotope always obey a half-life rule, such that after one half-life (a constant) for a given isotope has passed, exactly half of a given sample of isotope will have decayed.

sounds like quantum weirdness, doesn't it? that's because it is!

what's actually happening is that the particles in the nucleus suddenly find themselves outside of it and are ejected away by the electrostatic force that causes protons to repel each other. weird.

but this leaves us in a quagmire of conceptualization. is it really true that the deterministic world we perceive is really made up of unfathomable masses of fuzzy, random, indistinct processes?

Schrodinger tried to bridge the gap to demonstrate just how weird the implications of this are. if we arrange things so that the radioactive decay of an atom, for which it is literally impossible to know whether or not it has decayed after a certain time t, is tied to a mechanism that will kill a cat (why a cat? ask Schrodinger), then we end up in a situation in which the entire state of the box becomes quantumly uncertain. generally, we model this uncertainty on the subatomic scale as a superposition of every possibility, i.e. a probability curve, but it seems extremely counterintuitive to try to conceptualize the contents of the box as a superposition of live cat and dead cat (and if time t is the isotope's half-life, the chances are exactly 50-50!).

anyway, i hope you appreciated the explanation Wink i tried to give a complete picture of the conceptual underpinnings without going into too much detail. lots of good vocabulary to wiki for future inquiries, too!

--arepo
446  Economy / Speculation / Re: 28 December - Bearish signal on: December 28, 2013, 02:19:47 PM
Markets could easily drop to 634 to 645 in next 48 hours from now.



it is farthest from my wishes to hijack your thread, but i do believe that this kind of discussion between analyses is constructive for both parties, thank you.

if you would consider:



two possible moving supports on the 6-hour RSI, both robust with 3 points of contact. the most recent bounce off of BLACK corresponds with the price threatening to break out of its lower bollinger band in your figure. as a side note, it is always wonderful to see agreement between two technical measures as it is one of the few ways to show empirical consistency in this practice.

anyway, i do think it was a bit premature to call bear as the moving supports are quite robust -- as i mentioned in an earlier post, supporting this rally from $600. sure enough, we bounced and the picture still looks rather bullish to me if we factor in other indicators and the large volume corresponding with the bottom under $400.

unless we actually break under this support, there is no bear signal i can see.

--arepo



447  Economy / Speculation / Re: Moving Averages on: December 28, 2013, 02:04:26 PM
You can make fiat trading EMA but you'll probably have less and less coins with time.
IIRC, Goombo provided backtesting on his daily EMA trading system and it outperformed "buy and hold" (by what margin I do not recall). This suggests that, if fiat gains are reinvested, that you will have more and more coins with time.

I don't know the details, but it is likely that he tuned his parameters to maximize the backtesting results.

well maybe you should explore the details before advancing ad hoc refutations of an extremely diligent project? i was there during the course of goomboo's thread, and it was a valuable service he did for these forums. i don't know enough about the details to tell you whether or not he tuned the parameters, but then again i'm not the one making the claims. Tongue

And what happened after that thread? Every man and his dog built a bot that copied his EMA system. So now we have thousands of bots running the same "system". That's when systems stop working .... Wink

such is the nature of all systematic trading strategies -- they counteract the patterns which they utilise. this is no way invalidates them while the consistency they exploit is still exploitable.

surprise! the price function isn't a random walk! speculating is a better game than a simple coin toss! although i don't know why that is much of a surprise, seeing as you're trying your hand at it. all you naysayers make me laugh because your arguments tend to claim, reductio ad absurdum, that no trading strategy is viable, in which case i have no clue why you're even in this subforum, at all Tongue

--arepo
448  Economy / Speculation / Re: Moving Averages on: December 28, 2013, 03:07:25 AM
You can make fiat trading EMA but you'll probably have less and less coins with time.
IIRC, Goombo provided backtesting on his daily EMA trading system and it outperformed "buy and hold" (by what margin I do not recall). This suggests that, if fiat gains are reinvested, that you will have more and more coins with time.

I don't know the details, but it is likely that he tuned his parameters to maximize the backtesting results.

well maybe you should explore the details before advancing ad hoc refutations of an extremely diligent project? i was there during the course of goomboo's thread, and it was a valuable service he did for these forums. i don't know enough about the details to tell you whether or not he tuned the parameters, but then again i'm not the one making the claims. Tongue
449  Economy / Speculation / Re: 28 December - Bearish signal on: December 28, 2013, 02:03:59 AM
Markets could easily drop to 634 to 645 in next 48 hours from now.



care to explain what exactly is the bearish signal here? all i see is a divergent consolidation channel, at the end of which one would expect a resumption of the uptrend from $600.
450  Economy / Exchanges / Re: bitfinex on: December 28, 2013, 01:34:38 AM
I still have 4:1 leverage. It's based on account balance.

is there anyone from bitfinex who frequents the forums? i would appreciate some explanation in this regard. you're probably right, and i wonder if the tiers are set, and if they are public information, or if they are really determined according to the whims of the staff or some algorithm?

--arepo
451  Economy / Exchanges / bitfinex on: December 28, 2013, 12:12:59 AM
hello all, i have returned after some time away. it is nice to be back in the swing of things, though Tongue

anyway, i fired up the ol' bitfinex account and i noticed that they no longer offer 4:1 leverage -- the highest option is 2.5:1. anyone know the reason for this change, or when it occurred? does anyone know if there is a way to obtain more leverage on this platform?

also, general comments and criticism on bitfinex is welcome. anyone have any issues? anyone have no issues at all? any tips, caveats, or points of discussion?

thank you for your time.

--arepo
452  Economy / Speculation / Re: Moving Averages on: December 27, 2013, 11:39:23 PM
that being said -- and hopefully clearing up why it is almost always beneficial to "smooth" price data in some way -- i do believe you are missing the point of moving averages. you can change the size of the "window" to produce any kind of crossover you wish, and for traders who don't realize this and blindly trade using that one signal, you're not going to have a good time. however, this does not invalidate the fact that moving averages are an extremely useful graphical interpretation of the different rates of change hiding in the price function whose interactions mark tops, bottoms, and inflection points.

Moving averages are extremely useful at interpreting the past, but they contain no information about the future.


this is patently false because the price function is not a random walk. look for my future post about triangle consolidation patterns for an example of how autocorrelations in the price function can be surprisingly consistent, and how, because of market inefficiencies, past performance can sometimes predict future results.

--arepo

hint: the price function, on large scales, does not have many cusps. similarly to a continuous function, the rate of change of the price changes before the price itself changes.
453  Economy / Speculation / Re: Moving Averages on: December 27, 2013, 09:12:48 PM
this is nonsense. the smoother and more continuous the price function is, the better these kinds of indicators work. remember calculus? the slope of a curve at a point is very, very close to the slope of a small line segment defined by points close to that point. EMAs basically track the relative slopes of differently-sized line segments, attempting to quantify the instances in which the rate-of-change in the short-term diverges from the long-term, or average, rate-of-change. other indicators, like oscillators, do even more fancy tricks and can be used to predict reversals as well.

The price function is neither smooth nor continuous. You can make it smoother and more continuous by removing information. Removing information makes predictions worse, not better.

The truth is that these indicators do not work because they are flawed. The major flaw is this: a moving average introduces a lag that depends on the size of the window (this is why the moving average graphs always appear shifted to the right). When you compare two moving averages with two different lags you get noise that people misinterpret as signals. If you fix this by shifting the moving averages to remove the lag, then the best you can do is predict the past.


you're correct, the price function is stochastic, which is quite far indeed from the smooth functions standard calculus is used to deal with:



the further in you zoom, the more and more it resembles a random walk. however, contrarily, the further out you zoom, the less and less it resembles a random walk. this is not an accident, or an artifact of the "removal" of information.



case in point: the obvious uptrend is actually perturbed by the "noise" of market inefficiency. bubbles, selloffs (greed and fear, respectively), and other anomalies are affecting the price and masking an underlying trend. in this way, the main goal of the technical analyst is to strip away the noise to get at the information about the market that is hiding in price and volume data.

the trick, of course, is determining what is noise and what is data. this is the art and science of market analysis, the discussion of which must be saved for another time.

that being said -- and hopefully clearing up why it is almost always beneficial to "smooth" price data in some way -- i do believe you are missing the point of moving averages. you can change the size of the "window" to produce any kind of crossover you wish, and for traders who don't realize this and blindly trade using that one signal, you're not going to have a good time. however, this does not invalidate the fact that moving averages are an extremely useful graphical interpretation of the different rates of change hiding in the price function whose interactions mark tops, bottoms, and inflection points.

-- arepo

454  Economy / Speculation / Re: Moving Averages on: December 27, 2013, 06:47:36 AM
Technical analysis is astrology for speculators. It is all about confirmation bias. Moving averages tell you about what happened in the past, but they tell you nothing about the future. They can't even tell you about the present.

Its a sentiment-based market, technicals of any kind struggle to cope.

this is nonsense. the smoother and more continuous the price function is, the better these kinds of indicators work. remember calculus? the slope of a curve at a point is very, very close to the slope of a small line segment defined by points close to that point. EMAs basically track the relative slopes of differently-sized line segments, attempting to quantify the instances in which the rate-of-change in the short-term diverges from the long-term, or average, rate-of-change. other indicators, like oscillators, do even more fancy tricks and can be used to predict reversals as well.

--arepo
455  Economy / Speculation / Re: BTC diluted,possible scenario? on: November 26, 2013, 09:07:34 AM
I wonder what will happen when BTC will be around 1000USD.

Will the adoption of BTC continue? or will it be halted and people will start buying altcoins because they are basically the same and they are much cheaper.

Isn't it possible that instead of 100000USD worth of BTC, we will  remain in current price and we will have dozens of altcoins valued 100-1000USD each?

You need to go to do SERIOUS research and then come back and start trading.

Thank you for letting me know how much smarter you are than me. your answer was really helpful. I am lucky you saw my post.
So I assume you don't think this will happen. If you write here, why can't you just explain why this ain't possible?

you'll have to excuse him, the OP does seem rather misinformed. but maybe i can help you out.

what reason do you have to believe that this scenario is likely? there is one large difference between bitcoin and the altcoins, and that is that bitcoin, at this point, has far more inertia both in its existing infrastructure (its utility) and its memetic exposure (its ubiquity). due to this, the fact that they are basically the same is a terrible weakness for altcoins. it is my belief that unless a similar protocol with significantly greater utility is developed (say, in response to a 'fatal flaw' that emerges from the interaction between the Bitcoin Protocol and its actual incidence in the world), bitcoin will remain the primary altcoin in terms of market cap.

it seems almost ludicrous to suggest that suddenly capital will flow from anywhere into altcoins, and that capital will cease flowing into bitcoin, at the price-point of $1000 BTCUSD.

--arepo
456  Economy / Speculation / Re: how overbought is bitcoin? on: November 26, 2013, 08:53:08 AM
RSI and other oscillators work best when the market cap is stable. since this is entirely not the case, the best estimate would be the RSI data transformed by a factor related to the rate of change of the market cap. this type of indicator, however, needs calibration.

that being said, the raw RSI data is hard to interpret because there has been a massive influx of money going on since we launched from <$20 last year. while capital naturally enters and exits a market with the movement of the price, the exponential gains in the price of bitcoin are due to the fact that the influx is large in proportion to the market cap.

this will invariably cause the RSI to be biased in the direction of the market, hence the "overbought" interpretation. it is difficult to tell how overbought we are exactly, right now.

--arepo
457  Economy / Speculation / Re: $1000 Price on: November 26, 2013, 07:42:39 AM
Think if we hit $1000, the bias is gonna be clearly upward

More desperate buyers than liquidating early adopters

I'm not too sure about that, from my perspective it looks as though this is just another bubble. If it gets to 1k I'm gonna sell off half of what I have and wait for the market to crash.

funny thing is, if the price does "crash", market participants will anticipate such behavior and undercut you, stealing your profits.

as for a prediction, either way it goes, the efficiency mechanisms (i.e. profit-minimizing tendencies) of the market will likely ensure that no such inflection will occur precisely at $1k BTCUSD but somewhere in the vicinity thereof, determined by the the total set of price-points of market participants.

Since it's clear bitcoin will hit $1000 before the end of the year...

+ newbie sentiment lags sentiment

--arepo

458  Economy / Speculation / Re: Wall Observer - MtGoxUSD wall movement tracker - Hardcore on: May 06, 2013, 07:42:16 AM
But why aren't you taking the high of the $265 candle?
You can make many, many shapes if you can choose any length of candle.

that high is very obviously an outlier.

the process of drawing the 'correct' triangle is as follows: identify the possible top and bottom trendlines with the greatest number of points of contact, disregarding outliers. we can even disregard the highs that break robust (multi-point) trendlines because that itself is evidence that they are outliers, based on the theories of triangle consolidation patterns.

in the picture above, there are 4 possible robust lines, all with 2 points of contact (the minimum for a unique line). i've only drawn 3, can you see the other? hint: what if you assume that the lowest price points of the two recent green bottoms are outliers?

as you can see, there are many possible triangles. determining which is the best fit is a messy process that i'm still refining.

IOW: It doesn't fit the story? (Good question, frozenlock.)

these things are like magic Wink

Arepo: That does sound like magic. Wink

if that was difficult to parse, the idea is that the greater the number of points of contact, the more robust the trendline is. this is because, as frozen pointed out, any line at all can be drawn across one point, two points is enough to define an arbitrary unique line, but three points is a 'coincidence', or in statistics terms, a correlation.

i admit that the lines above only have 2 points of contact. the evidence for their robustness is in the price movement right now.
459  Economy / Speculation / Re: Wall Observer - MtGoxUSD wall movement tracker - Hardcore on: May 06, 2013, 07:25:29 AM
But why aren't you taking the high of the $265 candle?
You can make many, many shapes if you can choose any length of candle.

that high is very obviously an outlier.

the process of drawing the 'correct' triangle is as follows: identify the possible top and bottom trendlines with the greatest number of points of contact, disregarding outliers. we can even disregard the highs that break robust (multi-point) trendlines because that itself is evidence that they are outliers, based on the theories of triangle consolidation patterns.

in the picture above, there are 4 possible robust lines, all with 2 points of contact (the minimum for a unique line). i've only drawn 3, can you see the other? hint: what if you assume that the lowest price points of the two recent green bottoms are outliers?

as you can see, there are many possible triangles. determining which is the best fit is a messy process that i'm still refining.
460  Economy / Speculation / Re: Wall Observer - MtGoxUSD wall movement tracker - Hardcore on: May 06, 2013, 07:17:21 AM
Hmm..

I must practice my triangle-fu, I still don't see it.

it's easier to see on this scale: [taken approx. 12 hours ago]

-===-



-===-

we're just hitting that red line, the marked upper bound of the (yellow) triangle.

these things are like magic Wink
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