My Bitcoin Speculation Thread. Please Critique my Analysis. ;)

[tokeweed]

Hey guys, I will be starting my own BTC speculation thread which I will be updating regularly as the movement of BTC's price permits.  The movement of BTC is starting to become interesting again as we could all see it go over 1000 USD again in the near future and hopefully create a new ATH.  I want to share my thought process and analysis with you and hopefully get some constructive feedback.  Trading is still and will always be a learning process for me.

With that said, let's start with my first thought process.

BTC/USD:  Is This Sell Down Caused by Panicky Traders or Are the Whales Unloading?"



When I saw the sell down from 740 USD to - 680 USD I immediately thought that there was another exchange (hopefully not Bitstamp or BTCe lol) that got hacked.  So I scoured the internet for news on Bitcoin and all I could find was an article about a rumor that China was gonna start imposing capital controls on Bitcoin exchanges.  But there's no official statement, no nothing, just rumors.  So now the question is, was the sell down caused by panicky traders or are the rumors true and that this current sell down might then be caused by the whales and people in the know?

In my opinion insiders and whales would milk the market with as much fiat as they can without causing any panic.  So it was probably caused by panicky traders, or even by trading bots that got their stops hit on the way down falling one by one like dominoes.  

What do you guys think caused it?

Edit:  Here's another point:  1) Caused by panicky traders = The trend continues.  2)  Caused by whales and insiders = The end of the current trend, or possibly just the first wave.

[unknown04]

Fake rumors and people selling their Bitcoins (panic) ... I believe it would go up again.

[Herbert2020]

Edit:  Here's another point:  1) Caused by panicky traders = The trend continues.  2)  Caused by whales and insiders = The end of the current trend, or possibly just the first wave.

in both cases it will stop in a short time and price will go back up and become stable again.

in my opinion bitcoin price over all is rising but if you want to see short term it is mostly manipulation or you can call it "using opportunities". it means for example price has gone up and everybody has made some profit, then there is a rumor, a news etc then everyone starts unloading to take the profit and get ready to buy cheaper that is when panic starts because price has gone down $5 so others join in and price goes down $10-$15 and then everybody join in and price takes a hit which can vary depending on the reason for the start of the drop. the bitfinex hack could drop the price $100+ this one only 30-50 and as always all those who sold on top will buy back at the bottom and you see a sharp come back.

[serjent05]

I think this is a panic sell caused by the rumor about China imposing Capital control over bitcoin.  This is how shakeable bitcoin supporter is lol.  Just a rumor to make them sell, well probably those who sells are already in a profit.  So more possibility is the pre-mature cashing out of people for profit.

Fake rumors and people selling their Bitcoins (panic) ... I believe it would go up again.

More probably it will, as i observed the price it is starting to bounce back now.  Hopefully it will continue.

[Scofield]

It was a purely technical drop... we failed to break the resistance at 5150-5180 CNY,  and fall to about 4500 CNY. This was needed to form a cup and handle pattern. That news was probably spread to create some more panic and blood for the whales to buy up. We're going up from here. 

[amacar2]

It was a purely technical drop... we failed to break the resistance at 5150-5180 CNY,  and fall to about 4500 CNY. This was needed to form a cup and handle pattern. That news was probably spread to create some more panic and blood for the whales to buy up. We're going up from here.  

Actually it was surprising to see so much weak hands sold loads of bitcoin being panic over news from non official source and it was just news regarding they are planning only. Bitcoin banned in china, how this sounds? This can't be reality for sure.

[sandiman]

Where is the analysis ? I can see only questions there ??

you want some tip. Get back to your chart, draw some trendline in the 4h (you'll be able to draw a rising wedge), then put up your rsi indicator and look at the divergence we've been seeing for a good part of that run up, and maybe you'll understand that this move was unsustenaible as we were approach an important resistance and that insider were probably selling. (and damn, look at that reversal candlestick at the exact top of that move....)

I suggest you learn more otherwise this topic doesn't had quality to this part of the forum (which is, i recognize, hard to do).

[bri912678]

The China rumors are not confirmed anywhere, and at the same time zerohedge started them a huge spam attack started all over this forum. There's a thread about it in meta.

Big spam attack in the main section

A day later and the forum is still being spammed by newbie accounts repeatedly posting the same FUD thread. Manipulators are putting massive efforts into fudding the price down when it was overdue a retrace anyway. There would have been a retrace without the FUD, but the FUD probably made it bigger by panicking traders.

The trend continues.

[Wind_FURY]

...

In my opinion insiders and whales would milk the market with as much fiat as they can without causing any panic.  So it was probably caused by panicky traders, or even by trading bots that got their stops hit on the way down falling one by one like dominoes.

What do you guys think caused it?

We have the same theory. I also think that the sell down of Bitcoin was really accidentally caused by trading bots' stop losses being hit and activated causing another sell down and another cycle to continue like, to use your term, "falling dominoes".

Edit:  Here's another point:  1) Caused by panicky traders = The trend continues.  2)  Caused by whales and insiders = The end of the current trend, or possibly just the first wave.

Here is the funny thing. The people who released the rumor knew really that the trading bots stop losses will be hit and it will cause a sell down going below $700.

[tokeweed]

Where is the analysis ? I can see only questions there ??

you want some tip. Get back to your chart, draw some trendline in the 4h (you'll be able to draw a rising wedge), then put up your rsi indicator and look at the divergence we've been seeing for a good part of that run up, and maybe you'll understand that this move was unsustenaible as we were approach an important resistance and that insider were probably selling. (and damn, look at that reversal candlestick at the exact top of that move....)

I suggest you learn more otherwise this topic doesn't had quality to this part of the forum (which is, i recognize, hard to do).

Please look at the edit in the beginning post, basically that's what I think of the sell down.  And please know that I don't believe in market predictions.  No one can predict the market accurately, not even the 'experts'.  So trend lines and technical indicators won't really help me much in the way I trade.  Imho, they only limit the potential of what the markets are trying to tell you.  But that's just me and the way I trade.  I'm sure your style works pretty well for you and maybe others too.

[Killerpotleaf]

What do you guys think caused it?

and then he bought back in..... i guess.

[sandiman]

Where is the analysis ? I can see only questions there ??

you want some tip. Get back to your chart, draw some trendline in the 4h (you'll be able to draw a rising wedge), then put up your rsi indicator and look at the divergence we've been seeing for a good part of that run up, and maybe you'll understand that this move was unsustenaible as we were approach an important resistance and that insider were probably selling. (and damn, look at that reversal candlestick at the exact top of that move....)

I suggest you learn more otherwise this topic doesn't had quality to this part of the forum (which is, i recognize, hard to do).

Please look at the edit in the beginning post, basically that's what I think of the sell down.  And please know that I don't believe in market predictions.  No one can predict the market accurately, not even the 'experts'.  So trend lines and technical indicators won't really help me much in the way I trade.  Imho, they only limit the potential of what the markets are trying to tell you.  But that's just me and the way I trade.  I'm sure your style works pretty well for you and maybe others too.

If you don't believe that we can predict potential outcome with different probability, then you believe that the market is efficient, following the random walk theory, and then there is no point analysing it (or neither trading it) 

[tokeweed]

If you don't believe that we can predict potential outcome with different probability, then you believe that the market is efficient, following the random walk theory, and then there is no point analysing it (or neither trading it)  

Do you really believe you can predict the market?  Then tell me exactly at what price will BTC be on November 6, 2017.  

How can anyone predict the markets when there are real world, random variables always at play here.  It could be another exchange getting hacked, or China finally banning Bitcoin or a comet hitting the Bitmain mining farm...  It could be anything really.  The best we can do is limit our risk and maximize our returns based on the size of our bankroll, the price movement and the volatility.

Edit:  Can you please explain the efficient market hypothesis and the random walk theory and its inverse correlation with market prediction?  I would love to be educated in such matters since you're so smart.  Thanks.

[TERA]

You can trade the market without predicting it. You say 'I'm going to enter here, exit here, and stop loss here'. If the risk with your stop loss is much less than the reward of your exit, then you only need a low probability of being correct.

[sandiman]

If you don't believe that we can predict potential outcome with different probability, then you believe that the market is efficient, following the random walk theory, and then there is no point analysing it (or neither trading it)  

Do you really believe you can predict the market?  Then tell me exactly at what price will BTC be on November 6, 2017.  

How can anyone predict the markets when there are real world, random variables always at play here.  It could be another exchange getting hacked, or China finally banning Bitcoin or a comet hitting the Bitmain mining farm...  It could be anything really.  The best we can do is limit our risk and maximize our returns based on the size of our bankroll, the price movement and the volatility.

Edit:  Can you please explain the efficient market hypothesis and the random walk theory and its inverse correlation with market prediction?  I would love to be educated in such matters since you're so smart.  Thanks.

http://www.investopedia.com/terms/e/efficientmarkethypothesis.asp

Fair explanation in here.

Regarding sentence in bold, those action have an impact on the price, if it is big enough that the "noise" cannot hide it, then you can trade on it. for the bitmain mining farm, since it's an exogenous variable and totally unknown to the market, you can't do anything.

[tokeweed]

If you don't believe that we can predict potential outcome with different probability, then you believe that the market is efficient, following the random walk theory, and then there is no point analysing it (or neither trading it)  

Do you really believe you can predict the market?  Then tell me exactly at what price will BTC be on November 6, 2017.  

How can anyone predict the markets when there are real world, random variables always at play here.  It could be another exchange getting hacked, or China finally banning Bitcoin or a comet hitting the Bitmain mining farm...  It could be anything really.  The best we can do is limit our risk and maximize our returns based on the size of our bankroll, the price movement and the volatility.

Edit:  Can you please explain the efficient market hypothesis and the random walk theory and its inverse correlation with market prediction?  I would love to be educated in such matters since you're so smart.  Thanks.

http://www.investopedia.com/terms/e/efficientmarkethypothesis.asp

Fair explanation in here.

Can you explain it in your own words?  I was hoping you would clarify further how the efficient market hypothesis and the random walk theory has an inverse correlation with market prediction.  That would really be appreciated.  Thanks.

Regarding sentence in bold, those action have an impact on the price, if it is big enough that the "noise" cannot hide it, then you can trade on it. for the bitmain mining farm, since it's an exogenous variable and totally unknown to the market, you can't do anything.

So are you saying that there are only certain variables that directly affect the price of Bitcoin that you can act on or trade?  How can something like a Bitmain mining farm going down be unknown to the market when it has something to do with what makes Bitcoin secure?  I'd say it would really affect the Bitcoin market in a big way.  And knowing how irrational most people are, there will be dumps galore happening.

[sandiman]

If you don't believe that we can predict potential outcome with different probability, then you believe that the market is efficient, following the random walk theory, and then there is no point analysing it (or neither trading it)  

Do you really believe you can predict the market?  Then tell me exactly at what price will BTC be on November 6, 2017.  

How can anyone predict the markets when there are real world, random variables always at play here.  It could be another exchange getting hacked, or China finally banning Bitcoin or a comet hitting the Bitmain mining farm...  It could be anything really.  The best we can do is limit our risk and maximize our returns based on the size of our bankroll, the price movement and the volatility.

Edit:  Can you please explain the efficient market hypothesis and the random walk theory and its inverse correlation with market prediction?  I would love to be educated in such matters since you're so smart.  Thanks.

http://www.investopedia.com/terms/e/efficientmarkethypothesis.asp

Fair explanation in here.

Can you explain it in your own words?  I was hoping you would clarify further how the efficient market hypothesis and the random walk theory has an inverse correlation with market prediction.  That would really be appreciated.  Thanks.

Regarding sentence in bold, those action have an impact on the price, if it is big enough that the "noise" cannot hide it, then you can trade on it. for the bitmain mining farm, since it's an exogenous variable and totally unknown to the market, you can't do anything.

So are you saying that there are only certain variables that directly affect the price of Bitcoin that you can act on or trade?  How can something like a Bitmain mining farm going down be unknown to the market when it has something to do with what makes Bitcoin secure?  I'd say it would really affect the Bitcoin market in a big way.  And knowing how irrational most people are, there will be dumps galore happening.

A strong efficient market hypothesis (one in which there is not point to analyse the market to profit from it) is a market where all information are already priced in. Thus the price "randomly" variates around its fundamental values. In this case there is no point to predict market since, when trying to predict market variation, people are assuming the market is not strongly efficient, and not all information are priced in. The only thing you can do is buy and hold, not trade on any indicator.

Speaking about your second point, the bitmain mining farm would certainly had price impact on the market before it happens, since "insiders" (let's call them this way) will short the market massively. Nonetheless, we were there speaking about a comet destroying this farm, and there is no way this news can not even a tiny bit incorporated in the market since this event is not know to anyone before hands. and yes, it would affect the market in a big way. (to give another similar example, brexit, since most people didn't believe in it nor knew how to price it correctly strongly affected the price afterwards without giving signal beforehands). i hope its clear enough  there are lots of paper and books on that if you want to deep further in.

[Goms]

I think the price dump was due to panicky traders who wanted to make profit before the curtain falls.

[sandiman]

I think the price dump was due to panicky traders who wanted to make profit before the curtain falls.

Thank you for that cutting edge analysis.  

EDIT: how is that sig camp doing

[Denker]

I don't know man.
To me it looks like some big guys don't want us to rise.They need us down, in terms of price, at least for some more while.
That china rumor of course helped in that case. Just spread some neg bs and enough people will start to panic.And the big and smart guys of course take advantage of that and make their stash of coins even bigger.
Or it is just some whales who like to take some more fiat profits for some more time before Bitcoin really starts to accelerate.
Whatever the reason is, we small guys will have no influence.So lets just take things easy and deal with the situatoin.