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Author Topic: MtGox volatility up ... does it feel like the very beginning of the bubble?  (Read 1563 times)
SlipperySlope
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February 28, 2013, 05:59:07 PM
Last edit: February 28, 2013, 07:09:20 PM by SlipperySlope
 #1

As a legacy CPU bitcoin miner, I watched the whole bubble #1 back in June 2011. The recent breakthrough new high is accompanied by increased volume and volatility. A few more media stories are coming out -and the bitcoin economy indicators are continuing exponential growth, albeit from a minuscule base.

I think that we are in the first 20% range of the next bubble - sort of the hills from which we can see the foothills, and from where can see the mountains. Like that, right?
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zby
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February 28, 2013, 06:13:50 PM
 #2

I think I interpret it in the same way - that is we are in the first leg of the bubble from around 12 and which can be around 800% growth (stop around 100) - the analogue of the growth from 1$ to 8$ - then we can have another leg even steeper around 400% growth (or more, the 2011 one stopped because of the hack, but presumably could go even higher).  I would only add that the real peak will last very short.  Then we can also get bad news any time - so it is very risky to try reach the peak.

But it can also go a completely different way this time Smiley

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February 28, 2013, 06:21:08 PM
 #3

If by bubble, you mean sharp increase, followed by a correction - then yes I definitely think that is what we are in. What the next top will be is near impossible to predict. The possible top on this next wave is simply too massive, so saying something like 100 I think is actually quite conservative.

Bro, do you even blockchain?
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February 28, 2013, 06:29:50 PM
 #4

Don't you just hate journalists who can't get their facts straight? http://www.bbc.co.uk/news/technology-21601608

"In June 2011, a huge instance of fraud led to a market crash, with the value of Bitcoins at one point plummeting to almost zero" - that's pretty pathetic, for yesterday's article. Could've used the 2 years to get some facts cleared Smiley

Anyway, mainstream media jumping on. We should spike soon.

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February 28, 2013, 06:36:25 PM
 #5

I got this definition of a bubble from Wikipedia: "trade in high volumes at prices that are considerably at variance with intrinsic values".

Since intrinsic value of Bitcoin (or dollars, for that matter) is exactly zero, I don't understand how we can be in a bubble at one time, and not in a bubble at other time.

Unless a significant portion of people are in Bitcoin for short-term profit, and, say, borrowing dollars to buy Bitcoin (I doubt that), I see no particular reason why the current price could not be sustained.
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February 28, 2013, 07:07:11 PM
 #6

As a legacy CPU bitcoin miner, I watched the whole bubble #1 back in June 2011. The recent breakthrough a new high is accompanied by increased volume and volatility. A few more media stories are coming out -and the bitcoin economy indicators are continuing exponential growth, albeit from a minuscule base.

I think that we are in the first 20% range of the next bubble - sort of the hills from which we can see the foothills, and from where can see the mountains. Like that, right?

Sounds good to me. Another argument with similar results was recently made:

Assuming that the two boom patterns should be similar (i.e. the whole thing be a fractal) - then the second is still very far from the top, it still might grow maybe 10 times.

Exactly. In my opinion the current situation is at most a "small bubble", meaning that there can be a correction, but it's unlikely to be a deep one. To experience a "massive bubble" we would need to see the all time high broken and then panic buys from there. That is the point when it's smart to become skeptical.

there have been 3 "steps" in the 2011 runup to the bubble (from base of about $1):

  • the jump to $2
  • the jump to $4
  • the jump to $9

So the top of the current bubble is either 450, 225 or 100 depending what "jump" the current one is similar to.

I don't believe in this fractal stuff applying to markets somehow, though.

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February 28, 2013, 07:08:03 PM
 #7

On the other hand, many view bitcoin as having two roles, each supporting the other, to wit: (1) transactions, and (2) deflationary store of value. There are good fundamentals on transaction volume, as seen in the blockchain.info log charts. I think the divergence from these fundamentals is under way.
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February 28, 2013, 07:10:22 PM
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I think I interpret it in the same way - that is we are in the first leg of the bubble from around 12 and which can be around 800% growth (stop around 100) - the analogue of the growth from 1$ to 8$ - then we can have another leg even steeper around 400% growth (or more, the 2011 one stopped because of the hack, but presumably could go even higher).  I would only add that the real peak will last very short.  Then we can also get bad news any time - so it is very risky to try reach the peak.

But it can also go a completely different way this time Smiley

The '11 bubble did not get stopped by the hack. The hack was considerably after the top was reached. There was even a smack-down to $10 before the hack and a week passed after that until the hack happened around $16.

+1 on your last sentence.

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February 28, 2013, 07:18:09 PM
 #9

On the other hand, many view bitcoin as having two roles, each supporting the other, to wit: (1) transactions, and (2) deflationary store of value. There are good fundamentals on transaction volume, as seen in the blockchain.info log charts. I think the divergence from these fundamentals is under way.

Imo it diverged already: the transactional features of bitcoin alone would support a price of maybe around $1 (it's transactional features are the closest thing to "intrinsic value" I can think of with bitcoin, btw). So we're already well in gold-territory with the bulk of the value being based on store-of-wealth. This is just my gut feeling at this point (I had calculated a while ago that bitcoin needed to be worth $0.25 in order to drive an "economy" 10 times the size of silkroad, so I don't think $1 is far from the truth).

I really think bitcoins unique combination of the 2 features you mentioned (transactional, store of wealth) make it a winner. The two will reciprocally escalate each others usefulness.

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February 28, 2013, 07:20:04 PM
 #10

Oh, there are only 5 threads that cover this exact same topic already.  I guess that I means I should go start another one.

But seriously, no bubble.  My evidence is that bears have been saying this same thing since $15 and the bears' only evidence is the same thing they've been saying since $15.

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molecular
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February 28, 2013, 07:22:25 PM
 #11

As a legacy CPU bitcoin miner, I watched the whole bubble #1 back in June 2011.

This might be too personal a question, but did you sell some? If so at what point?

I myself am from the GPU era and I held on to my coins all the way through the bubble, accumulating (too moderatly, of course) both on the way up and on the way down... little did I know how markets worked at the time. Little do I know now, so best strategy for me is still hold.

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March 01, 2013, 09:03:10 AM
 #12

I think the data points are too still too few to say we have a volatility problem.

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Stephen Reed


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March 02, 2013, 07:55:27 AM
 #13

I still have every coined I mined, the 5 free coins from the Bitcoin Faucet, and maybe a few coins gained in trading in 2011.
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March 02, 2013, 09:39:05 AM
 #14

I still have every coined I mined, the 5 free coins from the Bitcoin Faucet, and maybe a few coins gained in trading in 2011.

balls of steel award for you! Thanks for the info.

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March 02, 2013, 09:50:39 AM
 #15

Knowing that Coinlab is taking off later this month kind of suspends the rules here in March. It basically boils down to whether you believe if this is start of the mass adoptation phase of Bitcoin or it's just another controversy about to unfold.

What the ticker does over this weekend (-$3 from the high of $34.90 maybe) will have very little to do with the price in 3 weeks.
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March 03, 2013, 12:28:32 AM
 #16

The fact that you are asking this is a good sign that we are at or near the peak of the bubble.

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March 03, 2013, 12:57:57 AM
 #17

For the real long-term health of the project:
Bitcoin needs to develop and mature more before we get a ton of bubble-headed speculators pumping the price up over $100.

...sort of the hills from which we can see the foothills, and from where can see the mountains. Like that, right?

Perhaps not a bubble but a slippery slope, SlipperySlope?   Cheesy
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March 03, 2013, 02:52:06 AM
 #18

I'd argue that there are a number of fundamental indicators that show that the system has significantly more fundamental value than it did in 2011.

Suggestions of a bubble at this level are therefore ridiculous. You're just worried about the 'rate' of price increases vs. the actual fundamental value of the system itself. If the current growth continues in usage, then current price rise is totally justified imo. But then markets are not always rational so who knows what lies ahead.

http://blockchain.info/charts/n-transactions

http://blockchain.info/charts/hash-rate

http://blockchain.info/charts/my-wallet-n-tx
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