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

[ChartBuddy]

Explanation

[Peter R]

Seriously, you are right in that the current price is not supported by its utility but only by the traders' feelings about what the price will do in the near future.  

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

I can best argue this point with the following thought experiment:

Imagine that tomorrow the world knows for certain that the price of bitcoin will neither rise nor fall--1 BTC will forever buy the same basket of goods.  Would worldwide demand to hold bitcoin increase or decrease?  I think it's pretty clear that demand would increase dramatically based on bitcoin's security, privacy, and transportability.  But demand can't increase without a change in the price!

The more I consider bitcoin's game theory, the more confident I am that there are only two equilibrium price levels for the USD/BTC exchange rate. 

[JayJuanGee]

Price is fairly stable. Bears come out and try to talk people into selling by predicting a fall down to 3xx and 4xx. Hrmph.

In other words:  HODL!!!!   or BUY!!!

[JayJuanGee]

Most of these things listed above are NOT pyramid schemes, unless they are causing value to float to the top without any reciprocating value being transferred below.  The only way that value gets transferred lower down the pyramid is to find more suckers below.  None of these listed items are pyramid schemes, unless they are designed as such.  Bitcoin is also NOT a pyramid scheme b/c there are tangible assets, including an infrastructure and a network and continued investments in side businesses.... NO need to explain further at the moment b/c these pyramid scheme/ponzi arguments are totally attempting to simplify bitcoin into something that it is NOT and playing upon ignorance.

What you are writing is correct but you are arguing in a sophistry manner, bitcoin is no pyramid scheme, regarding the typical fraudulent definitions. It's a semantic shift by mmitech, talking of pyramid scheme but meaning a pyramidical wealth distribution. Reading you, I get the impression that you are not silly (even as I would not agree with a lot of your quoted text) and you understood the regarding context. That the wealth of bitcoin is distributed as a pyramid - I think this is undoubtably. But as I said earlier, that is capitalism - not only bitcoin.

Wealth of Bitcoin is more likely to be a Boltzmann type distribution (in my opinion)

In other words, diffuse?; however,  aren't early adopters gonna keep their coins and serve as banks?

[adamstgBit]

Seriously, you are right in that the current price is not supported by its utility but only by the traders' feelings about what the price will do in the near future.  

one of bitcoins  "utilities" is entertainment.

the price swings are entertaining, the more the price swings the more bitcoins entertainment value goes up!

I'd argue that a gr8 deal of this "entertainment value" is priced out of bitcoin atm... so entertaining us, and buy a bitcoin!

1000$ purely on entertainment value  



is this not why you came? Are you not entertained?!?!

[BowieMan]

The only reason some of the charts are even perceived to work is because everyone is drawing the same lines coming to the same conclusions.

Yes, it's like reading entrails in ancient times.  We look back at that practice as ridiculous, but the best haruspices (entrail readers) could actually predict the future to a certain degree.  The reason is that if the people thought a certain future was destined to unfold, in small ways they would each work to make it happen. 

Our shared mythology is a powerful force.

This totally fuels my 'manifest destiny' or 'self-fulfilling prophecy' theory! A lot of people believe in TA and indicators and come to the same conclusions, that's why they all buy as soon as the light MACD turns green.

[JorgeStolfi]

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

True believers in the future success of bitcoin as global currency should be buying and holding even if the price rose to five figures.  That they are not means that any such true believers have run out of money so they can't influence the price any more.

To me it is quite clear that the traders who are defining the price have been buying bitcoins because they hoped to sell them for a profit in a relatively short term, nothing else.  That must have been the motivation for most buyers during the November rally. That must be the reason why there are now enough bidders at Bitstamp to buy 3700 bitcoins at 555$, but not a single person in the world who is willing to buy one BTC there for 590$.

Imagine that tomorrow the world knows for certain that the price of bitcoin will neither rise nor fall--1 BTC will forever buy the same basket of goods.  Would worldwide demand to hold bitcoin increase or decrease?  I think it's pretty clear that demand would increase dramatically based on bitcoin's security, privacy, and transportability.  But demand can't increase without a change in the price!

The more I consider bitcoin's game theory, the more confident I am that there are only two equilibrium price levels for the USD/BTC exchange rate. 

I can see only one.  Within the realm of real numbers, at least. 

That is one reason why I am skeptical of bitcoin: I have yet to see a "business plan", a consistent and fairly complete description of a future "bitcoin economy", with explicit numbers for volume of commercial use, fees, confirmation delays, deflation rate, wealth distribution, hoarding, banking, legal status, taxes, mining costs, etc.

That "business plan" does not have to be probable, and I don't mind if there is no plan to get there from here; but it would have to be detailed enough to withstand "attacks" by skeptics.  Like, why would people use BTC for payments, if it is not inflationary -- why would they not hoard every BTC they get, and use some Garbagecoin or national currencies for payments?  But if they were to do that, why would bitcoin have any value at all?

The simplistic arguments of trillions divided by 21 million seem to fall apart once one tries to fill in the details...

[ChartBuddy]

Explanation

[ChartBuddy]

Explanation

[jl2012]

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

True believers in the future success of bitcoin as global currency should be buying and holding even if the price rose to five figures.  That they are not means that any such true believers have run out of money so they can't influence the price any more.

A rational true believer should understand that any project has a non-zero probability to fail. Also, no one wants to live in underground sewage while holding five figures of bitcoin @ five figures USD each.

[oda.krell]

Still not happy with the 'built up buying pressure from earlier sell-offs plus confidence from phase of relative stability plus naked eye evidence of buying support for mid-400 prices' explanation, huh?

You mean an 'it is raining because drops of water are falling from the sky' kind of explanation?

Almost, prof. More like 'market price being a function of human cognitive process output, so it's futile to look for more "objective" causes'.

Hm, ok, so why can't human cognitive process outputs be worth 10$ apiece tomorrow?  

Seriously, you are right in that the current price is not supported by its utility but only by the traders' feelings about what the price will do in the near future.  (Whether it succeeds or fails, bitcoin will be a valuable experiment for financial studies, as an instrument whose market price evolved for years on pure speculation, with no "contamination" by fundamentals.)

Yet, most of the major price moves since last year have clear external causes, such as the seizure of Silk Road, the PBoC decrees and their workarounds, the "bug in bitcoin" announcement, etc..

Granted, most of these events were unpredictable, and acted through changing peoples' outlooks, so that the magnitude of the change would have been impossible to estimate.  But one can imagine dozens of events like those that could happen an d bring the price down.  Just as some predict a rally if the SEC approves COIN.

As for the May/20--Jun/05 rally, in particular: for most of the time since then, the price has either wandered about or drifted down.  The rise (and the support after it) came in a few sudden, concentrated buying spurts. So that rally cannot be explained as a general diffuse change of traders' outlook; it seems more likely that there was a series of discrete external events causing each spurt,

Thus, I would rather believe that is was a few big traders getting some inside information, one at a time. But I can't figure out what the information could be, nor whether it was in China or in the "West".

I could try to summarize the narrative that to my mind explains best the May 20 breakout and subsequent consolidation, but it's mostly technical, so I already know you won't buy it. Which is okay...

Well, actually more 'stubborn' than 'okay', now that I think of it. Your desire to find the "fundamental" cause of this particular price change seems about as silly to me as if some trader/analyist would look at the October 2 2013 crash and would start explaining it in terms of waning buying pressure and market indecision etc., until someone points out to him that it was an entirely news driven event (Silk Road).

In other words: there are times when it makes sense to look at the news/fundamentals mainly. You'd look silly if you would try to shoehorn an event like the Oct 2 crash into a technical explanation (although the following rise can be seen through that lense). Conversely, trying to "fundamentalize" the May 20 breakout seems silly to me. There was no strong fundamental reason in the vicinity of that date that is likely to have caused it. In fact, that you keep coming back to this date/price event shows how unsatisfactory any fundamental explanations of it so far have been.

The way to look at this one is technical, but since you believe technical explanations are circular or uninformative, they're not available to you, so I predict you will come continue searching for an explanation in the future as well

[aminorex]

I've read we're at a breakout point about 20 times in the last 2 months.
Don't you people ever get tired of claiming this and being wrong.

You don't tire of complaining about it.  Why should they tire of doing it?  And if they were correct would that actually make the situation any better?  Would you respect them more for it?  I probably would not, as the stream of constant predictions insures one lucky winner.

That said we can all bear some reminding of what will inevitably occur at some fast approaching time.

[Melbustus]

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

True believers in the future success of bitcoin as global currency should be buying and holding even if the price rose to five figures.  That they are not means that any such true believers have run out of money so they can't influence the price any more.

A rational true believer should understand that any project has a non-zero probability to fail. Also, no one wants to live in underground sewage while holding five figures of bitcoin @ five figures USD each.

The analysis is the same as it's always been: http://www.honestnode.com/bitcoin-fair-value-a-first-assessment/


tldr:

[aminorex]

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

True believers in the future success of bitcoin as global currency should be buying and holding even if the price rose to five figures.  That they are not means that any such true believers have run out of money so they can't influence the price any more.

You claim is erroneous as usual.  They are.  We are.  This is the golden age of accumulation.  Small players such as myself are riding the coattails of the funds propdesks and family offices which are holding the price down as long as they can.

[aminorex]

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

True believers in the future success of bitcoin as global currency should be buying and holding even if the price rose to five figures.  That they are not means that any such true believers have run out of money so they can't influence the price any more.

A rational true believer should understand that any project has a non-zero probability to fail. Also, no one wants to live in underground sewage while holding five figures of bitcoin @ five figures USD each.

False dilemma much?  I buy as much as I can be 100% certain, barring catastrophe rendering financial reurn calculations moot, I will be able to hold long enough to realize a substantial ROI.

The binary future meme needs to die.  There is only one future worth living in, and in that future bitcoin can only fail by being replaced by superior tech.  Tech which will be available first, at the lowest cost, to then current holders of bitcoin.

In any other future anyone worthy of the label ' human'  will die in the resistance.

[JayJuanGee]

That is one reason why I am skeptical of bitcoin: I have yet to see a "business plan", a consistent and fairly complete description of a future "bitcoin economy", with explicit numbers for volume of commercial use, fees, confirmation delays, deflation rate, wealth distribution, hoarding, banking, legal status, taxes, mining costs, etc.

That "business plan" does not have to be probable, and I don't mind if there is no plan to get there from here; but it would have to be detailed enough to withstand "attacks" by skeptics.  Like, why would people use BTC for payments, if it is not inflationary -- why would they not hoard every BTC they get, and use some Garbagecoin or national currencies for payments?  But if they were to do that, why would bitcoin have any value at all?

The simplistic arguments of trillions divided by 21 million seem to fall apart once one tries to fill in the details...

More or less you are assuming centralization and then asking for centralization - besides being blinded into NOT seeing positive BTC news and developments and blinded into wanting answers to too many questions that cannot be answered at the moment b/c many of the answers depend upon the evolution of the network and multiple players building the infrastructure.  Further, whether BTC is a long term success in 20 to 100 years does NOT matter to it being a success right NOW... so go out and buy a BTC Jorge, and join the club and become informed rather than an on-the-sidelines mudslinger.   

[Peter R]

This time last year….


Things were pretty boring around here:

What happened? Is nobody interested in Bitcoin anymore?
No postings here, no volume on the exchanges, WTF.

Adam was bullish:

if we don't break below 100 today, i'd say the mid term looks crazy bullish.
if we do break 100 today, mid term will still be bullish

Oda was skeptical:

In my mind, I read that in the enthusiastic voice of a shopping network presenter...

We go up? That's bullish! We go down? That's bullish too. We stay where we are? That's ULTRA-bullish!

Some people thought we needed a good drop in price to pick up buying interest:

I agree we needed a drop to get people to start buying again. But I don't think a $5 drop is anywhere near enough. Many people out there were expecting to see 50 on the last drop and we never made it there. Not saying we do this time, but with the dead volume before the drop, it looks like interest (outside of wales) at these levels is not that high.

Justus was correct about Gox (but we never checked the hash of his prediction):

I think that six month from now the top bitcoin-dollar exchange is going to be one that is not currently listed on bitcoinity.

Care to tell us which one?

No, but I'll give you a SHA256 hash you can quote for future reference:

Code:

b8b476ff6b82b9ed7f3d91a69df6cadc00ce800da0804c77dcba0f5564fc9ccd

Solex's prediction came true too:

Why not just change the title to "Wall Observer - BTC/USD wall movement tracker - Hardcore"

And Adam eventually got his $180:

Any time now....

180?

[JayJuanGee]

........Conversely, trying to "fundamentalize" the May 20 breakout seems silly to me. There was no strong fundamental reason in the vicinity of that date that is likely to have caused it. In fact, that you keep coming back to this date/price event shows how unsatisfactory any fundamental explanations of it so far have been.

The way to look at this one is technical, but since you believe technical explanations are circular or uninformative, they're not available to you, so I predict you will come continue searching for an explanation in the future as well

The bolded part above sheds some light on Jorge's MO.  Jorge tends to get caught on some narrow detail and then to harp on it, as if he has some enlightened detail that deserves an answer, and really in fact, it remains a means to troll us and to get us off topic and to get us talking about irrelevant triviality... like how many angels can dance on the top of a pin head... very interesting in academia, but very little relevancy in the real world.

[ChartBuddy]

Explanation

[Peter R]

The binary future meme needs to die.

I think the binary-future meme is useful for social reasons.  People don't want to look stupid.  For example, this meme will allow COIN ETF buyers to logically invest and hold the opinion that the probability of failure is significant.  They'll say:  "The most you can lose is whatever you invest, but if it continues to grow the return could be >10X.  Although it's definitely high risk, the potential reward is so great that I'd be crazy not to take a small position 'just in case.'"