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

[Chainsaw]

How low can this possibly go?  I'm thinking 160ish

TA fodder:

Daily chart on this downmove is on declining volume... that's a sign of market strength. I got out of my short around $230.

I've observed that in Bitcoin, secondary tests of lows after selling climaxes (on larger timescales) generally don't play out all the way to the previous low, which would be $160. We might see $200. We bounced off $160 on such high volume that it's going to be one hell of a support level to break back through (expensive for whales, they can't dump forever unless they get the sheep to follow). The lower we go the stronger the reaction rally will be as more supply from weak hands will be siphoned out.

Another reason for the lull is that in the US, everyone is partying for the Super Bowl. I know I'll be away from the charts drinking beer and eating nachos.

This.

[Sitarow]

[Ezmoneyezlife]

How low can this possibly go?  I'm thinking 160ish

I would speculate 180'sh . Because if it goes to 160, then we are definitely going to see a more lower point after that.

Yep. Tons of stops are placed at 200$, market is still in despair phase, testing of even 140$ is highly possible now.

[mestar]

...  velocity of money ...

What's interesting about money velocity is it's range. Average time bitcoin is held can vary from 10 minutes (confirmation time) to 20 years (retirement money), that is in million times. That is if bitcoin perception in user's mind changes from "hot potato" to "gold", it price will increase million-fold.

Once you decide to hodl, you do not influence the price of bitcoins.  The price is decided by those that trade on the exchanges. 

Currently, those are speculative buyers, speculative sellers,  buying to 'transact', selling to close the 'transact' loop,  and daily $700,000 (or less) that miners have to sell to pay for running costs.

Third and fourth on that list should be equal.  So, once the first and second items on that list become equal, (and there is no reason why speculative buying would have to be higher that speculative selling), the only way the price of bitcoin will go is down.  Miners do have real bills to pay.

Also, not every miner has to sell to "pay the bills" (you assume miners has btc as the only and exclusive revenue.). I do not. I mine, i did not sell a fraction of my BTC so far. Just because i mine BTC does not mean that is the only revenue i have, so i balance my other revenue costs to me to pay electric bill vs future possible profit from mining bitcoin.

By not selling bitcoins to pay the electricity, you are moving yourself into 'speculative buyer' category, in this simple 5 categories model. 

It still holds that some fresh cash is needed, and in this case you provided this fresh cash yourself.

[DaRude]

How low can this possibly go?  I'm thinking 160ish

I would speculate 180'sh . Because if it goes to 160, then we are definitely going to see a more lower point after that.

Yep. Tons of stops are placed at 200$, market is still in despair phase, testing of even 140$ is highly possible now.

Yes lets totally ignore the fact that the dumped coins were borrowed (levereged shorts) and even if they could come up with just another 30% downpayment to dump again, they can't cause there are only about BTC3k left total on finex. Oh i'm sorry another newbie predicting the doom and gloom of BTC without anything to back it up, on ignore list you go

[mestar]

...  velocity of money ...

What's interesting about money velocity is it's range. Average time bitcoin is held can vary from 10 minutes (confirmation time) to 20 years (retirement money), that is in million times. That is if bitcoin perception in user's mind changes from "hot potato" to "gold", it price will increase million-fold.

Once you decide to hodl, you do not influence the price of bitcoins.  The price is decided by those that trade on the exchanges. 

Currently, those are speculative buyers, speculative sellers,  buying to 'transact', selling to close the 'transact' loop,  and daily $700,000 (or less) that miners have to sell to pay for running costs.

Third and fourth on that list should be equal.  So, once the first and second items on that list become equal, (and there is no reason why speculative buying would have to be higher that speculative selling), the only way the price of bitcoin will go is down.  Miners do have real bills to pay.

Holders do affect price! Just imagine a scenario, where everyone who bought a bitcoin would hold. Price would skyrocket. The only way a new buyer could get bitcoin is to find the first holder who partakes his btc at a given highest bidding price (that is market essentially). Every holder is a potential seller, there is no economic theory to exclude holders from the "seller" position.

Until your orders, either bids or asks, hit an exchange, you are not influencing the bitcoin price.

If you allow your indirect price influence, then every person in the world is responsible for bitcoin price not being higher by doing nothing.  I personaly hold Markus Persson responsible for low bitcoin price, because he did not spend at least one Billion dollars on bitcoins.

If everyone who bought bitcoins is holding, sure the price would skyrocket, yet, the price would still be decided only by those that decided to sell.   

[marcus_of_augustus]

Something for all shorts of limited issuance goods to ponder ...

http://www.thedailybeast.com/articles/2015/01/29/the-same-thing-that-ruined-the-housing-market-is-now-ruining-the-super-bowl.html

In the 2015 Super Bowl ticket market, short selling has again played a major role, but this time around, anyone that shorted the market is now looking at losses of as much as $8,000 for each ticket.

[ChartBuddy]

Coin
Explanation

[mestar]

...  velocity of money ...

What's interesting about money velocity is it's range. Average time bitcoin is held can vary from 10 minutes (confirmation time) to 20 years (retirement money), that is in million times. That is if bitcoin perception in user's mind changes from "hot potato" to "gold", it price will increase million-fold.

Once you decide to hodl, you do not influence the price of bitcoins.  The price is decided by those that trade on the exchanges. 

Currently, those are speculative buyers, speculative sellers,  buying to 'transact', selling to close the 'transact' loop,  and daily $700,000 (or less) that miners have to sell to pay for running costs.

Third and fourth on that list should be equal.  So, once the first and second items on that list become equal, (and there is no reason why speculative buying would have to be higher that speculative selling), the only way the price of bitcoin will go is down.  Miners do have real bills to pay.

Mining cost has nothing to do with btc price. It is the other way around, if at all. If you exclude the failing cloud mining services, you will see that all the other miners are still mining (hash/sec ain't dropping significantly). From genesis block, btc had no price at all for months, even though mining still had costs.

Sure, you could say that price follows the mining costs, but you would be wrong.

The price of bitcoins determines how much will be spent on electricity.  Sure, there are lags in this process, and sometimes difficulty changes for other reasons, but, ultimately, if bitcoin price goes up, more energy will be spent on mining. 

[pinky]

How low can this possibly go?  I'm thinking 160ish

I would speculate 180'sh . Because if it goes to 160, then we are definitely going to see a more lower point after that.

Yep. Tons of stops are placed at 200$, market is still in despair phase, testing of even 140$ is highly possible now.

Yes lets totally ignore the fact that the dumped coins were borrowed (levereged shorts) and even if they could come up with just another 30% downpayment to dump again, they can't cause there are only about BTC3k left total on finex. Oh i'm sorry another newbie predicting the doom and gloom of BTC without anything to back it up, on ignore list you go

Better sell now, else you will be panicking below 200. Btc is very bearish, just look at the candlesticks - hammers on daily, 3-day, weekly and nobody is buying. Why the hell do you think we are again at 200 and not above 300?

[mestar]

Assume all daily bitcoin volume are usefull transactions, this will give us an upper bound [to bitcoin's value as currency].

A good fraction of the transaction volume in the blockchain is definitely not payment for goods and services.  Much of it is coins moving between addresses that belong to the same person, such as hotwallet/coldwallet flow.  Add to that tumbling, deposit and withdrawal to exchanges, etc. Here is a summary of partial analyses that identify various non-commercial components of the traffic.

Bitpay processes about 1000-2000 BTC/day, but almost all of that seems to be miners paying bills and/or equipment. Let's say that the real use for e-comemrce through BitPay it is 500 BTC/day.  Multiply by 20 (wild guess) to estimate the world total by all processors and by direct bitcoin payments.  We get 10 kBTC/day of e-commerce.  That is still only 5% of the ~200 kBTC/day blockchain transaction volume (even after excluding apparent change-backs from the latter).

At current prices, that would be about 2 million USD/day.  If there were no speculation, each of the 13 million BTC in existence would be unavailable only between being bought by a customer and being sold by the merchant to another customer.  If that time is at  most 30 days, then the 13 million coins would be storing at most 60 million USD.  That gives about 5 USD/BTC.  If half the coins were locked up by long-term speculators, the price would still be ~10 USD/BTC.

Thanks.

$5 per Bitcoin would give us 2.5% trade, 97.5% speculation ratio.   And even 0.1%-99.9% would not be a surprising result.

[marcus_of_augustus]

How low can this possibly go?  I'm thinking 160ish

I would speculate 180'sh . Because if it goes to 160, then we are definitely going to see a more lower point after that.

Yep. Tons of stops are placed at 200$, market is still in despair phase, testing of even 140$ is highly possible now.

Yes lets totally ignore the fact that the dumped coins were borrowed (levereged shorts) and even if they could come up with just another 30% downpayment to dump again, they can't cause there are only about BTC3k left total on finex. Oh i'm sorry another newbie predicting the doom and gloom of BTC without anything to back it up, on ignore list you go

Better sell now, else you will be panicking below 200. Btc is very bearish, just look at the candlesticks - hammers on daily, 3-day, weekly and nobody is buying. Why the hell do you think we are again at 200 and not above 300?

Why the hell do you think all the trolls come out when the price gets near to breaking out from the down trend lines?

The tape is being painted and it is being walked down ... the idiot TA traders, chart followers and weak hands fall for it every time. At some point though the real bitcoin supply dries up and it doesn't matter what the charts are saying, they are all gone ... short that shit and you're dead.

[Morecoin Freeman]

Yep uptrend will eventually happen. With every major dump passing the chance of this bull market happening increases. Personally I can't wait!

[cbeast]

It looks like a hidden buy wall at stamp at 218.

[ChartBuddy]

Coin
Explanation

[oda.krell]

http://en.wikipedia.org/wiki/Velocity_of_money

It is not compatible. I don't give a shit about that article, or the concept of velocity of money. I have written about that numerous times. Although it can be computed, giving a number, the parameter says exactly nothing of the value of money.

I don't get. At least at its core, this isn't some economical conjecture, this is just what you can or cannot do given a set of constraints on your medium of exchange.

If we agree on a medium that consists of a total of 10 tokens, we know that we'll buy and sell goods worth $100 each day, each transfer causes the tokens used in that transfer to be out of circulation for one day, then there is no way around an associated valuation per token of at least $10, or one of the other constraints has to give in (more tokens, less value transferred, less time before token is back in circulation).

At least to my understanding, velocity of money is essentially a formalization of the intuition behind the trivial example I just gave.

But feel free to correct my lack of understanding on this matter. It's possible that I'm missing something very fundamental here.

The velocity of money is meant to be a parameter of interaction with the so called "Laffer Curve", which in essence is a way to calculate the taxation within a country. I must agree with Erdogan here that (at least for now) velocity of money is incompatible with bitcoin.

FIY: http://www.joshuakennon.com/the-laffer-curve-for-beginners/

I see your point about the perhaps more economically interesting use of the expression, but what I have in mind is

Alternatively and less frequently, it can refer to the transactions velocity of money, which is the frequency with which the average unit of currency is used in any kind of transaction in which it changes possession—not only the purchase of newly produced goods, but also the purchase of financial assets and other items.

I'd think it's pretty uncontroversial that in that sense, total value of transactions + total units + frequency with which units change possession determines the value of the fourth variable: (associated) value per unit.

[AmazonStuff]

Bullish Sunday?

[octaft]

The tape is being painted and it is being walked down ... the idiot TA traders, chart followers and weak hands fall for it every time. At some point though the real bitcoin supply dries up and it doesn't matter what the charts are saying, they are all gone ... short that shit and you're dead.

Funny how no permabulls showed any concern about the "tape being painted" when the price was going up.

[samsonn25]

Supply and demand wants to re=test $205 again

[fonsie]

Assume all daily bitcoin volume are usefull transactions, this will give us an upper bound [to bitcoin's value as currency].

A good fraction of the transaction volume in the blockchain is definitely not payment for goods and services.  Much of it is coins moving between addresses that belong to the same person, such as hotwallet/coldwallet flow.  Add to that tumbling, deposit and withdrawal to exchanges, etc. Here is a summary of partial analyses that identify various non-commercial components of the traffic.

Bitpay processes about 1000-2000 BTC/day, but almost all of that seems to be miners paying bills and/or equipment. Let's say that the real use for e-comemrce through BitPay it is 500 BTC/day.  Multiply by 20 (wild guess) to estimate the world total by all processors and by direct bitcoin payments.  We get 10 kBTC/day of e-commerce.  That is still only 5% of the ~200 kBTC/day blockchain transaction volume (even after excluding apparent change-backs from the latter).

At current prices, that would be about 2 million USD/day.  If there were no speculation, each of the 13 million BTC in existence would be unavailable only between being bought by a customer and being sold by the merchant to another customer.  If that time is at  most 30 days, then the 13 million coins would be storing at most 60 million USD.  That gives about 5 USD/BTC.  If half the coins were locked up by long-term speculators, the price would still be ~10 USD/BTC.

So your entire valuation is based on "Multiply by 20 (wild guess)", yep highly accurate.
Please provide source links for the numbers you come up with next time.