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Author Topic: Where do you think we are in the bubble?  (Read 9783 times)
thoughtfan
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February 08, 2013, 02:01:08 PM
 #81

Simple, people removing their asks.
A bubble is not created by additional demand but by skewing of the existing demand. That's also why they pop because after the bids run into the remaining asks after the peak the removed asks run into the remaining bids.

Again I may be wrong that it starts now, but I am certain that this behavior occurs when we have our bubble.
I don't think we're in disagreement about the mechanics of a bubble.  It's the chances of a bubble trigger happening without new money I'm doubtful about.  There is of course plenty of money on the bid side to take the price sky high but unless something changes I don't see why people would respond with a panic buy to someone taking the price up a bit.  It might not necessarily be the new money that triggers a bubble but because we don't know how much and when new money arrives when the Japanese banks are open there's more reason to fear a new big fish making the opening price history.  As a consequence even though bidders would rather not buy at or higher than current ask I think they're more likely to keep the finger over the mouse click should their fears materialise.  Bid orders are where they are because people don't really want to pay current ask prices (or above) so if everybody understands weekend buying is only really necessary to obtain immediately required BTC (and later on to anticipate Monday) then nobody needs to panic.

Please disregard Litecoin and Zcash badges to the left. I have just gathered they are an April fool's joke!
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February 09, 2013, 03:53:29 PM
 #82

It seems my intuition had some merit.

now look at them go


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February 09, 2013, 05:03:38 PM
 #83

It seems my intuition had some merit.

now look at them go


Ha, I was earlier trying to remember in which thread we'd had this discussion in order to come back take my hat off to you in respect for your prediction Smiley

I did mention on the wall thread that the 5k buy that looks it like triggered this rally could be because someone needed the bitcoin for a 1m purchace of S.DICE.  However, as much as I like to find a way of fitting what's happened into what I was saying I'd have to conclude I'm verging into wild speculation if I'm going to explain why the raise Smiley

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February 15, 2013, 07:00:33 AM
 #84



we haven't seen a red candle in almost two months. so... how about now?

this sentence has fifteen words, seventy-four letters, four commas, one hyphen, and a period.
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February 15, 2013, 08:20:55 AM
 #85



we haven't seen a red candle in almost two months. so... how about now?

I'd say it's purely arbitrary. If the v-shape reversal yesterday had happened near the Saturday midnight, we would have a short weekly red candle, followed by a long green candle. It's just not happened on the right time and it could be easily manipulated.

Don't be too obsessed to these candles and indexes.

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February 15, 2013, 11:19:47 AM
 #86

Don't be too obsessed to these candles and indexes.

not obsessed. candlestick patterns aren't very rigorous anyway, regardless of the possibilities of manipulation. but as you can see earlier in the year red candles pattern in a fairly consistent way. if a drop isn't timed properly to produce a red candle, it usually means the price didn't stay low enough long enough to be considered an actual correction. and we seem way overdue for one. that is all i meant to suggest.

this sentence has fifteen words, seventy-four letters, four commas, one hyphen, and a period.
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February 15, 2013, 11:22:22 AM
 #87

Eh, I didn't notice this thread. I had posted this in another. I think we're around greed and possibly reaching delusion.

Here's a moving average over the last year


Here's an economic bubble chart:

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February 15, 2013, 11:49:59 AM
 #88

Quote
Here's a moving average over the last year

Here's an economic bubble chart:


Somehow it looks like we are in media attention phase. I haven't seen any significant news articles mainly focussing the bitcoin price yet. Besides the slope is still not as steep as during the 2011 bubble. I think we'll see a final spike to about 40-50.
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February 15, 2013, 12:11:20 PM
 #89

Quote
Here's a moving average over the last year

Here's an economic bubble chart:


Somehow it looks like we are in media attention phase. I haven't seen any significant news articles mainly focussing the bitcoin price yet. Besides the slope is still not as steep as during the 2011 bubble. I think we'll see a final spike to about 40-50.

Really? http://www.forbes.com/sites/timothylee/2013/02/14/why-i-dont-think-bitcoins-big-price-rise-is-another-bubble/

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February 15, 2013, 12:58:22 PM
 #90


The contributor says:
Quote
By the end of 2011, almost everyone regarded the peak of $32 as a crazy bubble, and the subsequent decline as a restoration of sanity. Including me: in August 2011 I predicted that the Bitcoin economy would gradually deflate until it had dwindled away to nothing.

Obviously I was wrong.
Quote
What will people use Bitcoins for? ... That’s just a guess off the top of my head. It’s hard to predict how people will use disruptive technologies, so I’m probably wrong about that specific application.
Quote
The value of Bitcoins has been closely correlated with the total volume of Bitcoin transactions, which have been growing rapidly, if somewhat erratically, for more than 2 years. The supply of Bitcoins is capped, so as the volume of Bitcoin-denominated transactions grows, the value of Bitcoins will have to increase to accomodate it.

That's a lot of light read. Plus the amount of transactions correlates a lot with growth of services doing very small transactions such as SatoshiDice, and the profit volume they eat out of peoples hand is not enough to justify the huge demand for Bitcoins. It's mostly back and forth transaction, not true change of hands.

Plus in the about section:
Quote
I write about how technology shapes society, and vice versa. In addition to blogging for Forbes, I cover tech policy for Ars Technica. I'm an adjunct scholar at the Cato Institute and have a master's degree in computer science from Princeton.

That the article is on Forbes matters not. That's an author that does not appear to have economics background and seems specialized in edge technology. But we're still nowhere near attracting any kind of big money. Bitcoin has not enough use and is not stable enough yet for large investors to feel safe putting in large amounts.

We're still in the beggining... that's just stellar news, we don't have any kind of mainstream press. Bitcoin is just an obscure new thing among tons of new technologies investors are not ready to invest in yet.

Sure, in the long term, I believe Bitcoins will be more valued than they are now. But the current price... I'm ~90% sure it's a bubble. I could be wrong, but I'd bet strongly on the price crashing down hard in the near future.
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February 15, 2013, 01:05:37 PM
 #91

To infinity and beyond, that is sort of how I feel about it since I brought in June 11. My confidence is growing, I even got my teeth whitened this week thanks to Bitcoin.
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February 15, 2013, 01:34:41 PM
 #92

Don't be too obsessed to these candles and indexes.

not obsessed. candlestick patterns aren't very rigorous anyway, regardless of the possibilities of manipulation. but as you can see earlier in the year red candles pattern in a fairly consistent way. if a drop isn't timed properly to produce a red candle, it usually means the price didn't stay low enough long enough to be considered an actual correction. and we seem way overdue for one. that is all i meant to suggest.

Even as a declared TA-naysayer, I agree on this one. "Technical Analysis" comes from historic observations of the early markets. Thus, a public horde gaining control should increase its effectiveness, possibly to the level where it's a significant indicator.

If trends this long were likely, methods like Goomboo's turtling would be incredibly effective. (It was effective enough as is. I found it hilarious how this guy fed on trend-followers.)

Another perspective is the statistical one. Look at future price as a probability distribution function and take the first three moments: expectation value, variance, and skew. For a trader, the expectation value determines which way to trade, the higher moments the risk analysis and thereby the height of the wager. We see that trends exist and are strongly linked with skew. But a strong link from skew to expectation value would be a grave inefficiency that can be exploited. (Unless variance and skew are so extreme that your risk analysis can't take it. But not even Bitcoin is that crazy in the short-term. Wink )

Therefore, either there is a simple get-rich-method, or the trend does not have a strong link to expectation value. In other words, trend length scales up a number like (crash probability * severity).



What I'm doing here is chartism and therefore a bit crazy in itself. Of course, there is always a chance external factors cause the unlikely to happen. But it does show that we have a high amount traders using nonsensical tactics. "It seems to be going up" is not an argument to speculate on rising prices. Not a supporting point, not valid at all. It makes me nervous to be part of a market in which the main price-driver may be nonsense.
deeplink
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February 15, 2013, 02:12:49 PM
 #93

It makes me nervous to be part of a market in which the main price-driver may be nonsense.

Just out of curiosity, then why don't you sell and find another market you feel more comfortable with?
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February 15, 2013, 03:10:28 PM
 #94

It makes me nervous to be part of a market in which the main price-driver may be nonsense.

Just out of curiosity, then why don't you sell and find another market you feel more comfortable with?

I do sell, have been selling these last days.

However, I also like the idea of Bitcoin. Were it other forces driving the price up, I might have continued holding the same amount. This is why I have to find some optimum amount I still want to keep -- which takes time and analysis I might as well post. I see a small but real probability price does jump very high, through a large bubble or reaching critical mass. I'm not sure though whether the former is more help or hindrance to the latter, since I don't think hoarders contribute much to synergy effects, while they do contribute to price instability.

Should it keep going in the same fashion, in effect I'll have to do as you said and leave with at least the funds from the sales. I don't change my mind fast enough to buy back at such rapidly rising prices.

Then again, I'm reluctant to move out for another reason. This kind of (to me) uncomfortable up-spikes happened three times already and each time it just cooled off, crashed or busted and gave me some extra profit plus an opening to buy back in. In two of the cases I even ended up with more Bitcoins than before plus profit; in the third with a sizable profit. Even the worst of these turned out a good deal compared to other options.

Remember that last time we had speculation mania of this size, price crashed to the 16th fraction of the peak, at less BTC in circulation than today! Even if the market grew by a factor 4 since then and better traders cancel out the effect of minting, there's a real chance for a bust. From my perspective, the hype does not increase my personal valuation of Bitcoin by more than a factor 4, and I feel I lack diversification since the price hike. So the natural choice for me is to ponder on Kelly's Criterion to determine with what fraction of my coins I should bet on a crash.

Also, I'm not a speculator with a long history and interested in how well I can do. So short-term speculation is interesting, even with less remaining coins. There has to be money in the game to make a real benchmark. Otherwise it's way too easy to cheat on yourself. Wink



So, uh... I guess the discomfort is mostly when I have to make a tough call on an amount that matters to me. I'm not rich, so the price hikes made Bitcoin more than a small game for me. (Which is also a reason to diversify)

(And I'm a little attached to the community. Have been doing funky stuff and crazy deals with various people, totally walking off would be hard either way. Smiley )
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