Chill out~

I'm perfectly calm and didn't say anything big has to happen within the next two years or something. I just want to make people aware of the difference between price and market volume, and how loosely these can be linked at times.

Do you mean they should not sell, but stay sitting on the coins? If so, is that really how you want it, a larger bubble over longer time? That's the only change you get if they simply wait longer.

We need people who spend in BTC. People who trade back to classical currencies play a zero-sum game, or worse. The only advantage they give to the system is hopefully backing the currency until more trades within the BitCoin users happen. Now if people would intend to spend the money as BTC, even if a little later, we face a healthy flow of BTC as soon as they do. This brings a kind of small inflation that encourages BTC traders. This is good inflation, it brings trade volume within the network. A great outcome compared to people just selling back, which could starve trade volume on all ends, and we might face again what we saw yesterday.

BitCoin requires new thinking. Effects like that are seldom seen on big markets, where people can't just stop spending. We're facing a situation that may be unique -- new currencies have developed in the past, but none did so being far spread across the globe, being a fragmented market from the start.

I strongly agree here.

People hoarded BTC and wanted to get rich fast selling them again, driving value far beyond anything the market can currently sustain. That was (and still is, though to a lesser extent) the driving force of BTC price. Remember that those people might not even intend to stay with BTC! Many just want to ride a bubble, burst it, trade back into USD, EUR or whatever and run off. That is not necessarily a support for BitCoin.

So they played a round of their game on top of the actual market foundation. Why do people care so much? Okay, everybody is sitting on some BTC, I guess, but this was well within expectations. Winning or loosing just happens, no reason to cry about it. Let some of them fall on their noses, maybe it'll cure some of the craziness from the market.

I've been given a good show for the value I lost, I have no regrets. And, well, the coins I already have lost value, but I might be able to buy some more cheaper. And who knows what the future brings? I came for the party, I'm getting one.

┐(￣ー￣)┌



PS: for all I know, the small demand is not caused by delayed transfers. They only make a small fraction of mtgox demand, and MagicalTux would probably manually process large transfers if he is nagged long enough.

Back in action. That was quite some day on the BitCoin market.

I'm not certain if your post is to be taken serious; I was about to check with my bank for possible transfers to Uruguay tosday.

However, there was a sale above 15k BTC, dropping market prices, and I am re-considering my options. Since my offer was not binding (and about EU transfers in the first place), it is now suspended for the time being.

Seriously. Guys... are you actually doing this? Everybody can go out of this in much better shape if we don't starve out the market and then go on a selling rampage!

inb4 "it is all a joke haha"... I'm at the verge of believing it's not.

Please keep me informed. The beans have been spilled anyways *if* this is serious, you might as well talk to a few more traders. I'm in #bitcoin-otc now as well.


Edit: consensus on the chan is now that this is just another scam to get prices to drop. Good job on the trolling. I should've known that a user who joined in March is unlikely to sit on 500k BTC right now.

I was persuaded after reading a little in here that ⓑ is a good option.

• It is better readable than the capital version.
• It stands for "bit" rather than "byte", being the correct letter terminology-wise.
• It is not frequently used for other purposes.
• It represents the expression "bitcoin" by having the symbol for bit surrounded by a circle, making it look like a coin.
• It is already present in Unicode.

If 1 ⓑ keeps current value or higher, symbols for the smaller fractions may be required. mⓑ, µⓑ etc. may be an option, but are not single symbols. Not that I would care much, I'd be fine with that.

I totally agree. This would have two desired effects: increase trade volume and solidify a minimum value. The best cure for the current situation. But making this happen on a larger scale is not easy at all.

An interesting question is how to measure when 1M BTC is equivalent to 1M USD. Right now, selling 1M BTC will deplete all demand at a fraction of the amount. Nobody has the slightest clue what the real value of a BitCoin is.

Ah. Sorry for the confusion; I will edit that post to prevent this wrong information from spreading. I should have read more carefully.


Thank you, I really appreciate that! It's very refreshing to talk with someone who can calmly discuss even when criticized. Possibly, our differences are subjective in nature; the question being how much expectation of a new large increase in price "shimmers through". I don't doubt your analysis or data on the past charts. The problem lies with what people think who currently possess BTC. In the end, this might be more of a psychological question, since nobody has given probabilities for any predicted outcomes. And I don't dare do that right now, the situation is just too unpredictable.




I, too, believe that this could happen again, but just like the first time, it needs an external effect and a certain market condition. I think the requirements on these are much harder now, but can be met if either BitCoin can reach a wider audience or someone throws money at it. I would very much prefer the first case, as I find it less dangerous.

As I see it, the first massive rise happened after BitCoin popularity rose very suddenly due to Slashdot reporting on it for the first time; this kind event even has it's own name, the Slashdot Effekt: http://en.wikipedia.org/wiki/Slashdot_effect My interpretation of the first rise is that the rise in popularity created a fast rise in demand, which sellers were slow to realize. At the time, the exchange market was still smaller in terms of non-BTC currencies. The first spike comes from people who want to jump on the new trend early; the following decline is caused by miners who noticed the price rise with a delay and decide to sell -- partially caused by most of them waiting whether the price might increase even more, only beginning to sell after some time passed.

My point of view is only slightly different from the one you take, it aims at the same events. In fact I just know too little about experienced effects on young markets to make statements from price charts. But this simple model of demand and effects of sudden changes therein is very powerful. Large-scale speculators will not accept a steady, predictable development for fear of concurring traders, and jump in as fast as they can to accelerate it until the predicted final state is reached. This is probably what you mean when you say "clear breakout", as opposed to the stagnation due to the current lack of another such event.

But, looking at it this way, the trouble of low trade volumes with constant creation of BTC should make the market nervous, because right now, large quantities of BTC remain unsold. The possible effects of trades by both big miners and rich investors grows large in such a situation, because the trading market is not accustomed to large trade quantities. This is bad because people are reluctant to raise prices at the risk of a sudden, steep drop. And, independent of who moves first, prices might bounce like a rubber ball if fear enters the game, and nobody knows who might end up winning or loosing after things settle again -- or where the real price would turn out to be.

Constant trade activity can serve as a buffer against such anomalies. That is why I think a higher trade volume is crucial for stability, and that holders of large amounts of BTC should consider the entire market depth rather than just a daily price that currently cannot be upheld for big sales. Of course, persuading buyers to accept the higher value demanded might serve the same purpose, as long as sellers don't just continue the game at the new price level.

@S3052:

Thank you for including my core statement and posting some clarifying words that distinguish forecast from technical analysis on past chart movements on your site. If there is a problematic effect, displaying the nature of the discussion alone should help.

(Though I kind of dislike how you try to then shake off the argument and my credibility using an a posteriori analysis of a correct trend forecast. But I guess that's the way such public discussions go.)

As to the -- admittedly not completely false -- accusation on my intentions for this thread:


Partially correct. I am considering buying, but my concern has little to do with marginal price changes. I want to see higher trade volume!

Whether I buy some newly created commodity at arbitrary price A or B within a small price range makes close to no difference. But if that commodity shows off an alarming market state, it's value goes down independent on some price people can still enforce "on paper", meaning on the few active trades. Large buyers do not believe in the current price; nor do large sellers! That I have not bought large amounts of BTC should be proof enough that I, too, am uncertain what I am looking at. I would be a fool to dance around a few cent in price if I expected a continuing rally to 5$ or 10$ realistic and probable; do your math on what chances I'd need to jump on.

I'm sharing this thought because I believe there exist miners who have such large amounts of BTC that lowering the risk of a breakdown by dealing at a lower-than-currently-expected profit margin might be profitable for them in a statistical sense. Think about it -- their expected profit is enormous right now. Loosing some of it, even risking bursting a bubble, may be worth it if some psychological effect of it raises trade volume, securing the future value of BTC. Of yourse this is in my own interest, but that does not mean it's bad for them. Remember that trade is not a zero-sum game, not by a long shot, and especially not on emerging markets.


I don't want the technical analysis to stop! All I want is a reminder to people: not all market movements are in scope of a chart analysis. We are dealing with many newcomers to financial trading. A wise man once said: a trend is a trend -- until it stops. My complaints are not about faults within the technical analysis page, but shifting attention away from the threat of what happens, even if this is rare, if it becomes wrong.

S3052, I hope you will remain right. It is not within hopeful fantasies of mine to jump around telling people "told you so" after seeing a crash. I want to trade in BTC, after all.


Finally: I don't make a mystery out of where I stand. I don't want anyone to feel that I twist my words for my own profit; please read anything I write with care if you expect I do so unconsciously. As I understand it, I shouldn't be able to profit from market shifts I cause by writing, unless they are temporary, so just think things through.

I have developed a certain fear of prices that de-couple from the actual market size.

There exists a well-known view and forecast on bitcoincharts.com "technical analysis", which now represents a wide-spread view on the future of the BitCoin economy -- though with some disagreement on the meaning of the expression "long-term".

Edit: I have noticed I should be more precise with my words. My criticism does not concern the technical plots and figures concerning past data, but the forecasting and some commenting on future goal prices. The author has shown to be more sensible than I first thought, and the differences mainly concern the psychological impact on a nonchalant reader. However, I still believe the effect this post covers should be given more attention. See the discussion below.

I'll be blunt. I don't like the forecast provided, and I believe the kind of thinking applied might be a problem for all of BitCoin at this moment: overconfident BTC owners, showing no fear of creating a bubble, meeting sceptical demand and low trade volumes. Now don't get me wrong, I love the bitcoincharts website. It is my favourite source to be up to date. Excellent data gathering and display! I hope the owner will not be offended to be used as the most prominent example of what I call a problem. But overconfidence has brought many crises in the history of economy, and it might be worth to avoid notions down that path. Let me explain.


What is wrong with the forecast? No rally after all?

I do not know future prices. If anybody would, he could get rich very quickly. What I can do, is telling when a forecast is implying a certainty it cannot really provide. Long time forecasts are generally highly profitable; when a big player actually believes one of them, it instantly becomes a self-fulfilling prophecy, because the first to move can reap most of the profit. Therefore, real forecasts of such kind are either kept secret, cannot be applied productively, leave out crucial risks, or don't differ from wild guesses.

Now, I would like the glorious RALLY to happen as much as many people here. But I must point out that the market itself has agreed that we do not know the future as a fact; more than that, even high-risk traders appear fairly sceptical. So why do people love claiming certainty? Because they want this to happen. Whoever believes in the forecasts helps raising prices, hopefully creating a feast for someone who intends to sell later. But this raise in price is speculative in nature, it's backed only by the forecast -- not the kind of rise everybody likes to see.


Why is this a problem?

We have a systematic bias in the kinds of people who buy and sell BTC right now, and what they see when they read a fairly well-known page that leans toward a bubble. Miners, from what I have seen, tend to believe this forecast -- or at least like it. Hey, everyone likes a forecast that brings him profit. The market depth on mtgox neatly shows the result: high expected prices.

The typical speculator, however, will read the text and think two things: The author tries to get rich by manipulating the market, and has no problem posting a kind of forecast that might be considered too optimistic. They fear a bubble. The outcome can be low trade volume, since demands fails to rise, yet sellers refuse to lower prices. What I currently see strengthens that fear; isn't the daily amount of generated coins higher than the volume traded for currencies? Young system or not, this is not a sign of healthy trading.


Please don't misunderstand. I think there is great potential in BitCoin, and I don't know the future either. But right now, this market is still fragile -- we should not risk starving it out. I would much prefer a slight drop in price now to a bubble-type deflation that bursts in a single sale that just overpowers demand and leaves everyone but a single seller dumbstruck. This scenario is in buyer's minds.

Maybe it's not good to live on the sole expectation of rising prices. Yes, it is a fast path to profit, but then again it might bring additional risk. Especially if everyone is systematically overconfident.

So I have the wish to the author: please moderate your tone, and stay with facts the market has agreed on. If you believe in a glorious future for BTC so much, start buying yourself, and back it with all your might -- but there is no reason to try to generate a hype, except if you don't truly believe your words and intend to be the one who profits on the downfall. Your blog is influential, read by many people right now. You may be driving them into dangerous territory.


Yes, this is a double-edged sword. The belief in the value of BTC is important, and confidence is important. I don't condemn hoarding BTC, I might keep some from my trades as a high-risk speculation myself, when I finished the thoughts that started this article. But the confidence from BitCoin users right now reached a point where people seem to have forgotten they're doing high-risk trading on a juvenile commodity. Miners, BTC-accepting businesses and early adopters alike share the expectation of an imminent rise in prices, and hold on to the coins as if they were gold already, while many speculators still stand aside and shake their heads.

BTC is not gold yet. Forgetting that may be more dangerous to its long-time value than admitting it.


My words included, please keep in mind that we don't know the future. We should remember the mistakes of large markets in the past, and keep in mind that the BTC community consists of many people who think alike, with many being from the technical and few from the financial sector. A systematic bias among the first adopters might generate problems that are not intrinsic of BitCoin, but of its current users.


Thanks for reading. I now have to finish thoughts for myself, and decide how to act. I hope that others, too, finish their thoughts before adopting an oversimplified model that might endanger not just their own outcome. I wish that I will soon see a market fluid enough to give the feeling of buying at market price -- right now, after seeing the discrepancy between trying to trade here in EUR and on mtgox, I wonder whether anybody even cares about a real market price, now that so many focus on the all-or-nothing "super-value versus breakdown" expectations.

Everybody trading here should have seen two bubbles burst on a global scale, both driven by rising prices and both having a counterproductive outcome for the vast majority participating. We should know better than repeating past mistakes.


In hope of many trades on a vivid BitCoin market,
Vandroiy

What do you mean by WU?

Sorry, I will not pay additional fees at this rate. That would raise my rate easily into an area where it's cheaper to change into USD and then trade at current USD market prices. (As a matter of fact, this offer might close when mtgox fixes its IT issues, which could happen any moment now according to the last thing I heard from MagicalTux.)

Today's update: I slightly raise the rate to 0.565 That corresponds to a 0.80465 USD rate.

I'm already above MtGox; even with their fees, if I raise any more, mtgox is the best option and this offer vanishes.

Please note that if you sell BTC on mtgox, you will have to pay transaction fee AND withdrawal fee, making my rate significantly better if you sell into EUR. It's more of a difference to a seller than to me, you know. ┐(￣ー￣)┌

Affirmative. I will pay in advance.

I like this very much, I wanted a bitcoin-otc web of trust rating anyways.

I'll appear on IRC to do the transaction within the next hour (I'm at the wrong computer right now), or tomorrow, if you want to go to sleep.

Probably, but I fear I would have to add additional fees to the price if the bank charges any.

Where do you live? Are you available on IRC? Maybe I can estimate how expensive shipping to you will be.

Also: how much do you want to sell?


@SmokeTooMuch: unless demand proves your price right, your rate is too expensive for me.

Any delays on incoming money?

I sent some to check the exact EUR conversion rate and how long a transfer takes.

Just BTW: the symbol '#' appears to not be allowed in SEPA transfers? MtGox asked me to add a message that includes the symbol. I used a space instead.

Hey, nice thread to measure traders' expectations.

Looks like people expect an inflation of BTCs in the near future. Almost everyone would rather have less than 100 BTC now than 100 BTC later.

Might be an indicator for traders to sell some BTC. Maybe I should have waited with my selling offer... on the other hand, maybe the traders only didn't appear because the amount is too low? Who knows~

@nanotube:

I like to trade at fair prices.

0.64 EUR, the lowest selling order I see, is equivalent to more than 0.9 USD. It's cheaper to convert the money in paypal at 2.5% charge and then send it to some US trader at 3.x% charge.

My goal is just to buy at fair market prices, or at least close to them. I offer a good deal, but not a ludicrous one, as some other people would like it. *shrugs*


@Blitzboom:

I am currently evaluating that. I will close my offer or lower the rate if mtgox EUR -> USD exchange rate is good.

Edit: just to make it clear, my offer is still unchanged. Also, I will not go back on transactions after I agreed on them, just because I got a better offer (e.g. mtgox).

Offer returned. For up-to-date information on my offers, visit #bitcoin-otc or the bitcoin-otc website.

Frequent updates here removed due to small demand in comparison to other places.

I pay using European bank transfer (SEPA). A trade is guaranteed only after I confirm it. As of this update, my bid lies within the central price corridor of low offers at mtgox.

I'm on #bitcoin-otc in the evenings (CEST) if you want to chat, bargain, ask about rate updates, have questions or anything else.