Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[adamstgBit]

The feeling of a price explosion has almost slipped my mind. Much has changed since the last one. I'm guessing it'll take a big dollop of US inspiration to get the next one rolling.

its turning around now really...

[ChartBuddy]

Explanation

[JayJuanGee]

Happy days are here again why exactly? I really want to know. What has changed?

I think it's improbable that China is done fucking the world markets until it shoots its wad right in Bitstamp's butthole. We have at least 3 potential goxxings on our hands because Huobi, BTC China and OK Coin are all sketchy volume-faking exchanges with very limited and diminishing sources of deposits. It doesn't matter if it's their fault or the PBoC or someone else. These exchanges are likely going to wither and die, crash out or go offshore.  Markets will be rattled and you can either be in a position to profit, ride out the storm or get caught with your pants down.

China is a 50 ton battleship anchor on BTC price and will continue to be until the chain is broken. That doesn't make me happy, but pretending significant negative factors don't exist makes for poor investment strategy. So if there is something good that outweighs this Chinese clusterfuck, I'd love to hear about it, but don't tell me it isn't real or it's irrelevant.

So, if you were a betting man, you would be siding with Windjc about the $435 in the next 30 days?  or do you believe the downfall and FUD spreading of china is gonna last longer than 30 days?

I agree with you that China remains a relevant factor.. and will continue to be a relevant factor, until some other more relevant factor drowns it out.. such as major investment entering into the market (pie in the sky?  does NOT seem to be a long shot)...The existence of these three Fud-spreading China exchanges does seem rife for some kind of a GOX-like scandal, though.

[octaft]

The only thing that makes me doubt $7k bubble this summer/autumn is that this is the big one

this is gonna be the one who makes or break bitcoin

Why do people equate the success of bitcoin with the price of bitcoin?

[podyx]

The only thing that makes me doubt $7k bubble this summer/autumn is that this is the big one

this is gonna be the one who makes or break bitcoin

Why do people equate the success of bitcoin with the price of bitcoin?

adoption comes after speculation

how is this hard to understand?

[ChartBuddy]

Explanation

[JorgeStolfi]

Fortress is turning its direct investment of 13 M$ in Bitcoin into an investment in a hedge fund.

http://www.ft.com/cms/s/0/5877fff0-aefb-11e3-a088-00144feab7de.html#axzz303O1FxGu

This is what I understood, please correct me if I am wrong:

* Fortress owned 13 M$ worth of Bitcoins. (They posted a loss in its Bitcoin investments not long ago, because of the falling BTC prices).

* They have now given the bitcoins to Pantera, in exchange of ownership of a slice of Pantera Capital Management.

* Pantera Capital Management is not a bitcoin investment per se; it manages Pantera Bitcoin Partners (PBP) fund.

* PBP is like SecondMarket's Bitcoin Investment Trust (SMBIT).  Other investors can buy shares of PBP, which will buy bitcoins for them at current marekt price and hold them.  After some time the investors may liquidate, and then PBP will sell those bitcoins at current market price and give the money to them.  (Meanwhile those PBP investors, like the SMBIT investors may perhaps get a chance to trade PBP shares -- privately, or on some specific exchange.)

* If the price goes up in between investment and liquidation, the PBP investors will make a profit.  If the price goes down, they will lose money. If bitcoin goes to the moon, they will be billionaires. If bitcoin crashes to zero, they will lose all their investment.

* Whatever happens to bitcoin price, Pantera Capital Management (hence Fortress) will make money by collecting fees from PBP investors
(a few percent of their investment and eventual profits).

* With a bit of luck, Pantera Capital Management (and hence Fortress) may make additional money by buying bitcoins below market and "selling" them to new PBP investors at market price.

* At some point in the past, the PBP fund already had investors who invested 140 M$ in it.  therefore, it should have bought that much of bitcoins.  (It is not known when they bought and how many BTC the PBP fund now holds.)

It seems that Fortress (like SecondMarket, Pantera, Bitpay, KNC, the exchanges, etc.) found a way to make money from the bitcoin phenomenon, while avoiding the risks of investing directly in bitcoin or bitcoin-based funds.

[octaft]

The only thing that makes me doubt $7k bubble this summer/autumn is that this is the big one

this is gonna be the one who makes or break bitcoin

Why do people equate the success of bitcoin with the price of bitcoin?

adoption comes after speculation

how is this hard to understand?

Bitcoin does what it was intended to do pretty much just as well whether the price is $50 or $5000.

EDIT: Really the only thing I can think of that it doesn't do at $50 is making holders/hoarders rich.

[podyx]

Bitcoin does what it was intended to do pretty much just as well whether the price is $50 or $5000.

EDIT: Really the only thing I can think of that it doesn't do at $50 is making holders/hoarders rich.

No it doesn't
Safer and bigger infrastructure, more user-friendly and better features comes with bigger price - bigger network etc.

[octaft]

Bitcoin does what it was intended to do pretty much just as well whether the price is $50 or $5000.

EDIT: Really the only thing I can think of that it doesn't do at $50 is making holders/hoarders rich.

No it doesn't
Safer and bigger infrastructure, more user-friendly and better features comes with bigger price - bigger network etc.

Coinbase charges fees. Bitpay charges fees. Exchanges charge fees. Investors in bitcoin infrastructure don't care about current price, all they care about is fees, which means they care about more people using it, regardless of price.

Would higher price mean more people would use it? Well, some would argue that a cheaper bitcoin price -- with less volatility, god forbid -- would encourage adoption. It's hard for some people to psychologically pay $5000 for a bit of funny money. Like it or not, there are a good number of people who think that way.

[aminorex]

Bitcoin does what it was intended to do pretty much just as well whether the price is $50 or $5000.

EDIT: Really the only thing I can think of that it doesn't do at $50 is making holders/hoarders rich.

There are several things bitcoin fails to do, which are very valuable and useful things, at its current market price.  One of the primary uses of a currency is as a store of value.  At current prices, bitcoin is incapable of storing much value.  Bitcoin is also incapable of transmitting large amounts of value without resort to an unstable exchange regime at its current exchange rate, and that is a direct failure in the core of the utility of bitcoin.  There are also several things which it does usefully at the present market value, some of which it does usefully even in an unstable exchange regime.  I don't need it for those things.  I think a large proportion of the bitcoin community is primarily interested in a deflationary store of value, preferably anonymous.  Perhaps most holders of bitcoin would lose interest if it were to consistently decline in value.  They might use it for transmission, but probably they would instead find a way to secure an actually deflationary currency instead, which would also fulfill transmission use cases.  Rising price is not very suitable for a unit of account, another primary use of currency, but that has a natural limit, and users are compensated by the rise, so its not a problem.  Bidirectional volatility is, however, a big problem for the unit of account use cases.  Bidrectional volatility is only good for traders, and bad for bitcoin.

Current investors in bitcoin infrastructure primarily consist of the installed base of miners.  They do not care about fees.  They care about block rewards.  The very needed and mostly missing infrastructure which will make the transmission use of bitcoin much more practical will depend on fees.  Part of the reason that is slow to develop is because bitcoin does not offer a large direct reward for the builders of that missing infrastructure, so the business case needs to be quite strong in order to attract the capital-intensive effort required.

[octaft]

Bitcoin does what it was intended to do pretty much just as well whether the price is $50 or $5000.

EDIT: Really the only thing I can think of that it doesn't do at $50 is making holders/hoarders rich.

There are several things bitcoin fails to do, which are very valuable and useful things, at its current market price.  One of the primary uses of a currency is as a store of value.  At current prices, bitcoin is incapable of storing much value.  Bitcoin is also incapable of transmitting large amounts of value without resort to an unstable exchange regime at its current exchange rate, and that is a direct failure in the core of the utility of bitcoin.  There are also several things which it does usefully at the present market value, some of which it does usefully even in an unstable exchange regime.  I don't need it for those things.  I think a large proportion of the bitcoin community is primarily interested in a deflationary store of value, preferably anonymous.  Perhaps most holders of bitcoin would lose interest if it were to consistently decline in value.  They might use it for transmission, but probably they would instead find a way to secure an actually deflationary currency instead, which would also fulfill transmission use cases.

So am I correct that you are suggesting that there are a large number of people interested in using something that has shown the capability of dropping 40% or more inside of a week as a long-term store of value? If that's what you are suggesting, I wholeheartedly disagree.

[aminorex]

Monero is very interesting.   The technology has been proven for about 2 years in BCN.  MRO is a clone with no private mining phase.  I have not yet fully evaluated the technology claims, but it is purported to be a robustly anonymous cpu-only coin.  I think that the strong performance of DRK is proof that stronger anonymity is highly valued by the market, even where it is known to be defective.  If MRO anonymity is a robust as it appears to be, it should displace DRK and BCN very rapidly.  It is immature, a fork of the BCN codebase, which is not derived from BTC codebase, but I can easily see this displacing BTC for most use cases, because it does not have the "fairness taint" of DRK and BCN, so it appeals to miners, and it seems cryptographically superior to any of the alternatives.   It is not yet exchange traded.

[aminorex]

So am I correct that you are suggesting that there are a large number of people interested in using something that has shown the capability of dropping 40% or more inside of a week as a long-term store of value? If that's what you are suggesting, I wholeheartedly disagree.

That would not be a fair characterization.  Volatility is endured because of an expectation of long-term monotonicity.  If there were a superior alternative, it would be preferred, but there is not.

I think it is very clearly a fact that a large number of people are interested in BTC because it is hard to rob you of it, by deflation or force of arms.  This is a store of value use-case.

In the long-run, the volatility problem will only be solved by the increasing value of bitcoin, but it must be solved in order for bitcoin to be deemed successful for this use-case.

[aminorex]

After about 400 more coins are moved on Huobi, I expect another influx of 1000-2000 coin bids.  All it takes is two non-cooperating arbitrageurs in order to insure that Huobi is always about 10 USD below stamp, as long as it remains infeasible for the general customer to deposit funds.  That can continue until the offers stop.  When the external volume on Huobi is less than that on stamp (not the churn, the trading volume reported, but the fiatleak numbers), it will cease to lead the price.  The China problem may be over long before anyone really is expecting it to be over.

[octaft]

So am I correct that you are suggesting that there are a large number of people interested in using something that has shown the capability of dropping 40% or more inside of a week as a long-term store of value? If that's what you are suggesting, I wholeheartedly disagree.

That would not be a fair characterization.  Volatility is endured because of an expectation of long-term monotonicity.  If there were a superior alternative, it would be preferred, but there is not.

I think it is very clearly a fact that a large number of people are interested in BTC because it is hard to rob you of it, by deflation or force of arms.  This is a store of value use-case.

In the long-run, the volatility problem will only be solved by the increasing value of bitcoin, but it must be solved in order for bitcoin to be deemed successful for this use-case.

If by "force of arms" you mean "taxes" then yeah, sure, I guess. But if you literally mean someone assaulting you into giving up your bitcoins, the $5 wrench method is a hack that can be initiated by anybody and is proven effective at cracking passwords (and teeth) in one shot.

[ChartBuddy]

Explanation

[billyjoeallen]

Happy days are here again why exactly? I really want to know. What has changed?

I think it's improbable that China is done fucking the world markets until it shoots its wad right in Bitstamp's butthole. We have at least 3 potential goxxings on our hands because Huobi, BTC China and OK Coin are all sketchy volume-faking exchanges with very limited and diminishing sources of deposits. It doesn't matter if it's their fault or the PBoC or someone else. These exchanges are likely going to wither and die, crash out or go offshore.  Markets will be rattled and you can either be in a position to profit, ride out the storm or get caught with your pants down.

China is a 50 ton battleship anchor on BTC price and will continue to be until the chain is broken. That doesn't make me happy, but pretending significant negative factors don't exist makes for poor investment strategy. So if there is something good that outweighs this Chinese clusterfuck, I'd love to hear about it, but don't tell me it isn't real or it's irrelevant.

So, if you were a betting man, you would be siding with Windjc about the $435 in the next 30 days?  or do you believe the downfall and FUD spreading of china is gonna last longer than 30 days?

I agree with you that China remains a relevant factor.. and will continue to be a relevant factor, until some other more relevant factor drowns it out.. such as major investment entering into the market (pie in the sky?  does NOT seem to be a long shot)...The existence of these three Fud-spreading China exchanges does seem rife for some kind of a GOX-like scandal, though.

Every trader is a betting man (or woman). Yeah, I think we have to go down before we can go sustainably up. I could very easily be wrong, but unless some billionaire bidding war breaks out, it seems unlikely we're gonna see much retail enthusiasm until The China situation is settled one way or another.

[surfer43]

Monero is very interesting.   The technology has been proven for about 2 years in BCN.  MRO is a clone with no private mining phase.  I have not yet fully evaluated the technology claims, but it is purported to be a robustly anonymous cpu-only coin.  I think that the strong performance of DRK is proof that stronger anonymity is highly valued by the market, even where it is known to be defective.  If MRO anonymity is a robust as it appears to be, it should displace DRK and BCN very rapidly.  It is immature, a fork of the BCN codebase, which is not derived from BTC codebase, but I can easily see this displacing BTC for most use cases, because it does not have the "fairness taint" of DRK and BCN, so it appeals to miners, and it seems cryptographically superior to any of the alternatives.   It is not yet exchange traded.

Yes, MRO and BCN are the most anonymous coins out there at the moment. I also think MRO may come to replace Bitcoin, or maybe Zerocash will do that.

[billyjoeallen]

After about 400 more coins are moved on Huobi, I expect another influx of 1000-2000 coin bids.  All it takes is two non-cooperating arbitrageurs in order to insure that Huobi is always about 10 USD below stamp, as long as it remains infeasible for the general customer to deposit funds.  That can continue until the offers stop.  When the external volume on Huobi is less than that on stamp (not the churn, the trading volume reported, but the fiatleak numbers), it will cease to lead the price.  The China problem may be over long before anyone really is expecting it to be over.

So you seem to agree that Huobi is dying. What happens when it flat-lines? bang zoom to the moon immediately or a sharp dip before liftoff like with Silk Road and Gox? I think a sharp dip is probable. What's worse is that the longer it lives, the lower the price is likely to sink before that last. sharp. dip.