[GRAPH] This is not a bubble

[dacoinminster]

Bitcoin growth has always been on a logarithmic scale. 2011 was a bubble. This is not.

I got the graph above taking as many price points as I could find back towards the genesis block. The power function was suggested by Excel, and is "= 4.41877086088824E-17*(X^5.59806919936792)" where X is days since the Genesis Block.

Past performance does not guarantee anything, of course, but I think the current price is just about right.

[1713489025]

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[piramida]

it also is nicely approximated by a linear graph on log scale; can you calc average deviation for this and linear graphs? Maybe starting at July 2010, since there was no real exchange before then.

[nobbynobbynoob]

It mightn't be a bubble... yet.

There's never a bad time to exchange fiat for BTC, but I'm holding off buying BTC for now. I'm still reeling from missing out on bASIC, when that company folded.

[dacoinminster]

it also is nicely approximated by a linear graph on log scale; can you calc average deviation for this and linear graphs? Maybe starting at July 2010, since there was no real exchange before then.

Sure, why not? There are only a couple data points before July 2010, so they don't really affect Excel's fitting function very much.



Excel says R-Squared for the Exp function (= 0.010044939004803*EXP(0.005412898222163*X)) is 0.6990; for the power function, R-Squared is  0.7728

Either way, the 2011 bubble stands out like a sore thumb, and today's prices seem quite reasonable. If we see $200 bitcoins before this summer, that would be a bubble of roughly the same magnitude as 2011, not that I would sell my bitcoins

[TTBit]

Well, the purple line fit pretty well in mid 2011 too:

[fcmatt]

[piramida]

Thanks! I agree with TTbit - we can say that in 2011, bitcoin was ascending in the same fashion only much faster - turned out, that was too fast, so this time it grows at a much more comfortable rate.

I also don't think there will be a third line, because if you make a straight line through *minimums* at the log graph, you would see a very strong bottom that was confirmed multiple times over three years. This bottom, which approximately correlates to minimum price doubling every half a year, says that the currently possible minimum price is $16, and would be $32 by autumn.

Guess we'll know soon

[dacoinminster]

Well, the purple line fit pretty well in mid 2011 too:

Yes, hindsight is 20/20 with things like this. People in 2011 had a decent argument that they weren't in a bubble too. I'm sure in a couple years there will be a much better approximation function.

Imagine the insanity if we are in a correction back to the purple line!

[Vandroiy]

You are aware you are fitting price to absolute supply... which should have an inverse relationship, right?

And no, taking the logarithm of one of them doesn't make this relation any more reasonable.

[cloon]

Well, the purple line fit pretty well in mid 2011 too:

i think this courve here is more expressive, cause it connnects the bottoms which I see as the real value of bitcoin while everything above is just speculation (you call it bubble?). very likely it'll touch this line in future again.
unfortunately i couldn't make the courve as a function in sierra chart (someone knows how to?)

[Melbustus]

And no, taking the logarithm of one of them doesn't make this relation any more reasonable.

Despite being a long-term bull on bitcoin, I agree with this...

You need an underlying thesis to support the reason why you think it's appropriate to graph this logarithmically. Should you forecast the S&P on a log scale? Oil? Gold? Why or why not?

Seems to me that if you think log scales are appropriate, then you're making an implicit assumption that exponentially more people (or other money) are coming into bitcoin as time goes by. Perhaps that's true (I actually believe it *is* true long-term, but that's a different conversation). Perhaps not... Regardless, it makes no sense to say something is undervalued or overvalued relative to some curve without saying why you think that curve makes sense.

And no, generating that curve purely from a very short history of price data that's operated against a market with wildly changing dynamics does not justify the curve in and of itself. Statistical significance is a bitch.

[evolve]

[cloon]

cmon! i can look this up on bitcoincharts.com myself! and why quoting it?
at least comment it please!

[thefiniteidea]

FINALLY! A THREAD LIKE THIS!   I AM SO HAPPY! $50+ by October IMO

+1 for cloons, dacoinminster charts

[evolve]

cmon! i can look this up on bitcoincharts.com myself! and why quoting it?
at least comment it please!

Quoting it as a +1.  The chart alone makes a perfect counterpoint to OPs log graph....no explanation is really needed.

[piramida]

the price chart alone makes no counterpoint to anything. it is the same chart, just harder to see the relative growth rate when you look at absolute values, that's all - not everybody can make the mental exercise of taking log of a graph.

What we are interested here is not an absolute value, but a percentage growth - value % added in a period of time - which is a log chart, meaning the speed at which bitcoin adopters / holders / speculators / users crowd grows.

And about statistics - that bottom line, 4x minimum yearly growth, is being confirmed for three years in a row now, and has yet to be broken. That is somewhat statistically significant, and unless we break below that line ($16 now, $32 in august) it will only be strengthened.

[notme]

the price chart alone makes no counterpoint to anything. it is the same chart, just harder to see the relative growth rate when you look at absolute values, that's all - not everybody can make the mental exercise of taking log of a graph.

What we are interested here is not an absolute value, but a percentage growth - value % added in a period of time - which is a log chart, meaning the speed at which bitcoin adopters / holders / speculators / users crowd grows.

And about statistics - that bottom line, 4x minimum yearly growth, is being confirmed for three years in a row now, and has yet to be broken. That is somewhat statistically significant, and unless we break below that line ($16 now, $32 in august) it will only be strengthened.

3 samples can not possibly give you a very high significance level.

[luffy]

its good to have also a difficulty/btc creation/usd value diagram. i think the last year their relation is linear?!

[piramida]

3 samples can not possibly give you a very high significance level.

I see 6 bottoms on one straight line. We'll see. This looks about right to me, the other charts (like the total transaction fees which I also think is significant) follow the same exact pattern.

[cloon]

here you have some fancy graphs!
(for mor significance ;-))

http://blockchain.info/en/charts
http://blockchain.info/charts/my-wallet-n-users?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address=
http://blockchain.info/charts/n-transactions-excluding-popular?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address=

about difficulty:
linear
http://www.bitcoinx.com/charts1/chart_large_lin.png
logarythmic
http://www.bitcoinx.com/charts1/chart_large_log.png


the one sure thing out of these graphs is that the community does grow slower than an exponential function.
 (its a polynominal form and not of the form a^bx)

this also means that it is not linear in logarythmic scale, why i dont believe in thefiniteidea's chart.

[phelix]

"The fit curve is an exponential percentual to the chart least squares fit - in other words: I played around until it looked good."

As fiat money is inflating exponentially I guess bitcoin value measured in fiat money should increase exponentially, too. Also stock prices have increased exponentially over a long time.

[thefiniteidea]

this also means that it is not linear in logarythmic scale, why i dont believe in thefiniteidea's chart.

Compared to your's, I don't either
It'll work in the short term, that's about it.

Polynomial expansion is way more accurate, especially when you line it up properly- why I threw ya a +1