Volume in recent weeks has fallen off a cliff, what do you make of it?

[kokojie]

Volume in recent weeks has fallen off a cliff, while price has went up, what do you make of it?
My theory is that there are not much people selling, holding the coins back to see what happens
after the halving of block reward. So for the people that want to get coins, they have to put up
increasingly high bids to get coins.

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[chriswilmer]

Maybe because Mt Gox recently lost UK traders? Good question.

[lakeluke]

Ppl r in wait and see mode; the price has ran up well recently.

[mobodick]

I think we just reached the top of the next 'triangle' in series and will now slowly drop to around $9~$11 in about 2 months.
Then we will start a new rally/triangle.bubble.
If this particular triangle is slow in deflating then it might actually stay pretty straight or even go slightly up in this period.

[obisunk]

I feel that the reduced volume is caused by the increased barrier to entry in using the Dwolla->MtGox route.  My RL friend who who bought coins in 2011 said it was much easier than now.

[mobodick]

I feel that the reduced volume is caused by the increased barrier to entry in using the Dwolla->MtGox route.  My RL friend who who bought coins in 2011 said it was much easier than now.

So how does this experience from 2011 help explain the drop in volume of the past couple of weeks (which is the topic of this thread)?

[adamstgBit]

Price is high so, everything priced in bitcoin now takes half as many bitcoins to buy as it use to.

[obisunk]

I feel that the reduced volume is caused by the increased barrier to entry in using the Dwolla->MtGox route.  My RL friend who who bought coins in 2011 said it was much easier than now.

So how does this experience from 2011 help explain the drop in volume of the past couple of weeks (which is the topic of this thread)?

Ah, I focused on the wrong thing.

Maybe the recent lull is caused by people getting their fingers burned with bitcoins in Aug/Sept.

[chriswilmer]

Volume in USD doesn't show the cliff. Maybe that's all there is to this.

http://imgur.com/OvTZF



(apparently I don't know how to paste images in this forum)

[Spekulatius]

We saw the triangle form over the last 4 weeks, with price moving in between its boundaries, thus volatility decreased. Low volume during low volatility is normal. We just broke out of the triangle upwards, no big moves yet. Most indicators point UP. With the next surge in price volume should return. If it doesnt: crash! But thats rather unlikely.

[Vandroiy]

We saw the triangle form over the last 4 weeks, with price moving in between its boundaries, thus volatility decreased. Low volume during low volatility is normal. We just broke out of the triangle upwards, no big moves yet. Most indicators point UP. With the next surge in price volume should return. If it doesnt: crash! But thats rather unlikely.

But this is bad and possibly a mid-term bearish indicator. This is Bitcoin! Volume isn't supposed to go up because price goes up, that would make it the definition of a bubble, or wouldn't it? Last time it happened was right before the biggest bust/crash in Bitcoin history, so this shouldn't be taken lightly. Look at June 2011, it also had little changes in price and dropping volume -- until things went downhill. I'd not call the time around 5 comparable. Then, the volume and volatility dropped slowly, after price had been falling for two months. That looked like the market and its actors were adjusting to stability. June last year, and September now, price spiked down and inexplicably recovered, then volume quickly dropped a lot -- this time, price even continued rising at the same time. There is no set price, and volume is so low, the number Gox is showing need not mean much.

It should be the other way around; activity, which correlates with volume, should provide the stability to justify higher prices. BTC trade volume dropping like that is questionable.

The day is about to end, and Gox volume shows 7.7k. Remember that still, 7.2k coins get mined per day! Are we relying on speculating miners for price stability? It seems we are, or else there's almost nobody else trading coins for USD today.

TL;DR: I call it a bearish signal.

[Severian]

It indicates that a lot off-exchange sales are happening. People have had time to form the beginnings of decentralized exchanges and trading agreements with each other so that bitcoins are going elsewhere for sale/trade instead of just exchanges. The salad days of the exchanges are winding down as they won't be the only game in town anymore. Banks will also be making it harder and harder for exchanges to operate as the Bitcoin network grows. 

I'm long on bitcoin, short on central exchanges.

[fcmatt]

It indicates that a lot off-exchange sales are happening. People have had time to form the beginnings of decentralized exchanges and trading agreements with each other so that bitcoins are going elsewhere for sale/trade instead of just exchanges. The salad days of the exchanges are winding down as they won't be the only game in town anymore. Banks will also be making it harder and harder for exchanges to operate as the Bitcoin network grows. 

I'm long on bitcoin, short on central exchanges.

And just who sets the current price of btc? Oohh that is right.. The exchanges.

[kjj]

It indicates that a lot off-exchange sales are happening. People have had time to form the beginnings of decentralized exchanges and trading agreements with each other so that bitcoins are going elsewhere for sale/trade instead of just exchanges. The salad days of the exchanges are winding down as they won't be the only game in town anymore. Banks will also be making it harder and harder for exchanges to operate as the Bitcoin network grows. 

I'm long on bitcoin, short on central exchanges.

And just who sets the current price of btc? Oohh that is right.. The exchanges.

I think you might be confused about the role that an exchange plays in the market.

[Severian]

And just who sets the current price of btc? Oohh that is right.. The exchanges.

They're certainly the guide as they were the first in. That doesn't mean that they'll be the primary future source of trading. A large share of trading in the larger, traditional markets are being conducted off-exchange also. The exchange prices are similarly used for their trading.

As Bitcoin itself is decentralized, it seems to me that the natural environment of bitcoin trading would also be decentralized. The exchanges were necessary for bootstrapping the new economy but like booster rockets, they won't be necessary once critical velocity is achieved.

[fcmatt]

It indicates that a lot off-exchange sales are happening. People have had time to form the beginnings of decentralized exchanges and trading agreements with each other so that bitcoins are going elsewhere for sale/trade instead of just exchanges. The salad days of the exchanges are winding down as they won't be the only game in town anymore. Banks will also be making it harder and harder for exchanges to operate as the Bitcoin network grows. 

I'm long on bitcoin, short on central exchanges.

And just who sets the current price of btc? Oohh that is right.. The exchanges.

I think you might be confused about the role that an exchange plays in the market.

Who will sell me bitcoins for less then what the exchange will sell them to me for? I offer 9 usd per btc. Sound good? Why not?

Becuase u can sell them for more at an exchange.
Now why would i offer 14 usd per btc? I can buy for less at an exchange.

The exchange offers constant buy and asks which help determine what these eleet off exchange people buy and sell for in my mind.

[kjj]

Who will sell me bitcoins for less then what the exchange will sell them to me for? I offer 9 usd per btc. Sound good? Why not?

Becuase u can sell them for more at an exchange.
Now why would i offer 14 usd per btc? I can buy for less at an exchange.

The exchange offers constant buy and asks which help determine what these eleet off exchange people buy and sell for in my mind.

The exchange is not selling them to you.  They are facilitating a trade between you and another person.

[Severian]

Who will sell me bitcoins for less then what the exchange will sell them to me for?

An off-exchange trader with no fees:

https://bitcointalk.org/index.php?topic=87094.0

Exchanges are important because they provide speculators the means to trade quickly. Speculators are important because they add liquidity to the market. On the other hand, adding value to the market is part of the job of buy-and-holders, otherwise known as investors. I have no interest in the exchanges because I expect the value of bitcoin to rise and am not interested in risking my assets on still unproven platforms with high exit costs.

[fcmatt]

Who will sell me bitcoins for less then what the exchange will sell them to me for? I offer 9 usd per btc. Sound good? Why not?

Becuase u can sell them for more at an exchange.
Now why would i offer 14 usd per btc? I can buy for less at an exchange.

The exchange offers constant buy and asks which help determine what these eleet off exchange people buy and sell for in my mind.

The exchange is not selling them to you.  They are facilitating a trade between you and another person.

I am typing on a tablet. I have no need to type out extra words. U kniw exactly what i meant.

[fcmatt]

Who will sell me bitcoins for less then what the exchange will sell them to me for?

An off-exchange trader with no fees:

https://bitcointalk.org/index.php?topic=87094.0

Exchanges are important because they provide speculators the means to trade quickly. Speculators are important because they add liquidity to the market. On the other hand, adding value to the market is part of the job of buy-and-holders, otherwise known as investors. I have no interest in the exchanges because I expect the value of bitcoin to rise and am not interested in risking my assets on still unproven platforms with high exit costs.

Seems to me he setup a one way exchange but "private"
He based his price on mtgox. He is nothing without a stable exchange to set the price. He would find a new source of buy and asks.
Otherwise i agree with you.

All i am saying is exchanges set the price for so many things it only makes sense btc will follow suit.
Nothing wrong with it.