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

[Torque]

Lulz at all da bears trying their darnedest to "engineer" a fake down trend.  It's so cute.  

[MatTheCat]

Some rather odd and fairly large (150+) BTC price insensitive market orders going in on Stamp just then.....

.....looks like arbitrage takers are on the move.

[TERA]

Why is all this bitfinex swap stuff relevant?  I thought the whole theory behind the current rally was that it was neither bitstamp nor huobi that was leading the rally but that it was due to offline whales accumulate huge blocks and due to commercial usage, because there is clearly not enough volume on exchanges to be supporting the rally.

It probably isn't the major cause behind the rally. But it is a significant factor. $24 million in swaps is 37,000 bitcoins (or possibly more if the cost basis for the long positions is below the market price which it probably is).  And in the past, the number of USD swaps has grown faster than the Bitcoin price (eg. 2013) which means that it may continue to be a source of demand.

By contrast, the Bitcoin Investment Trust with their 105k bitcoins looks like they've really slowed down their purchases (of course that could change).

Offline whales might be accumulating large blocks, but we don't have data on that.  If we did - I'd be very happy to see it!

BTC used to do 100-200K per day of volume on mtgox. The tiny volume of 10-20K per day on bitstamp during rally is pathetic and nothing in comparison to previous volume levels. Even huobi (whatever portion is real), stamp, and btce combined are nothing compared to previous combined volume levels. A $10M increase in swaps is nothing compared to an $8Bn market cap. Obvious some other force is moving the market. If I was using Stamp's volume in my technical analysis, I would not even be here - I would have abandoned bitcoin.

You are aware that the price of BTC is massively higher now than it was last year. USD volume is the only relevant metric.

No it is not. When you are trading it is the volume of the base currency that is relevant and not the volume of the quote currency.

Rubbish. If the price of a BTC has risen 50x in a year then clearly expecting the same trading volume in BTC is ridiculous.

Exactly, compare volume in purchasing power.

Base currency volume is the only metric to measure how much of the currency itself has changed hands.

What you are saying is that $10,000,000 has the same relevance to move the market when:

1. The market cap is $10,000,000 and 100% of the coins are being purchased
2. The market cap is $100,000,000 and 10% of the coins are being purchased
3. The market cap is $100,000,000,000 and 0.01% of the coins are being purchased
4. The market cap is $10 and it is impossible to even purchase that many coins.

This is clearly false.

Correct, that's false.

But what you said earlier entails that volume in base currency needs to remain constant as price increases. This is clearly false as well, unless you want to argue that the past 3 years of growth are all going to crumble. Base currency volume is slowly falling over time, and that seems to be okay.

Which doesn't mean the current volume is enough to support the current growth. I'm pretty sure it is not, and I believe that was your point as well.

I've actually been attempting to make bullish arguments by saying that whales are accumulating offline, commercial usage is growing, and activity is moving off of exchanges.

For all the people arguing with me about USD vs BTC volume, I have yet another point to make:  Look at the previous drops in December/January and Feburary. They all had a much higher volume than the current rally while being at the same price area.

[YogoH]

BTC used to do 100-200K per day of volume on mtgox. The tiny volume of 10-20K per day on bitstamp during rally is pathetic and nothing in comparison to previous volume levels. Even huobi (whatever portion is real), stamp, and btce combined are nothing compared to previous combined volume levels. A $10M increase in swaps is nothing compared to an $8Bn market cap. Obvious some other force is moving the market. If I was using Stamp's volume in my technical analysis, I would not even be here - I would have abandoned bitcoin.

I agree that the lack of volume is very disturbing.  I'm skeptical about the level of off the market transactions.  Can this volume be identified in the blockchain?  Why aren't we reading stories (with solid facts) about it?  I know people like to keep things private - but there are a ton of researchers who like to dig things up (ex. the research done into the original Silk Road volume), and at least some bitcoin millionaires who like publicity.

Shouldn't the volume be lower in BTC as the price goes up?  How does the volume in USD and CNY compare?

[nrd525]

There might be an increase in holding. Though it'd be hard to prove. I know I'm holding more.

[TERA]

In order for the price to rally the following needs to occur:

[?] BTC are bought on exchanges
[?] BTC are bought offline in private transactions
[?] BTC are held by people who decide to become long term investors or are not in a position to sell
[?] BTC are purchased in merchandise/services from merchants who hold the BTC as a long term investment rather than selling on exchanges
[?] BTC are lost or are already lost

All of these need to add up to whatever the current markep cap in BTC is (13,000,000 etc)

Even though there are many ways in which each bitcoin can be 'covered', it is still the bitcoin which is the important unit of value here, and all of the above options need to add up to a specific number in bitcoins, NOT in dollars. The U.S.D. or whatever quote currency is used to purchase bitcoins on exchanges is not relevant here.  It is true that , over time, less btc are covered by exchange trades and more btc are covered via the other options. However, it is not at the same rate and not nearly at the same rate as the price is changing. There is no direct or indirect proportion to the dollar. The price and the dollar is totally irrelevant.

[seleme]

Guess lot of people withdrawing coins from Stamp emptied their hot wallet. Lat 7.67 btc I initiated to withdraw is taking almost an hour still waiting to be processed.

[Mayuyu48]

$628, good price for buying
buy and hold more, i believe something big will happen
cheap BTC in stamp, and rarely event when we see stamp and btc-e price are same

[ChartBuddy]

Explanation

[JorgeStolfi]

Your assumption is not too unlikely, but with bitcoin we have no option for high speed trades between exchanges, except if they were conducted over an interchanging platform off-blockchain.

Bitcoin arbitrage is meh, the transaction time is slightly too slow to allow consistently efficient arbitrage.

One does not need to move funds in real time between exchanges to do arbitrage.  Or maybe not at all.

An arbitrage opportunity occurs whenever someone posts a bid at one exchange A that is higher than the lowest sell at the other exhange B (or someone posts a sell at B lower than a bid  at A).  At that moment, an arbitrager at A, if he became aware of that situation before other clients, can sell into that bid, while his collaborator at B (need not be the same person) buys into that ask.  Both traders will then profit, relative to the mean bid-ask price that will result from their actions.  These trades are internal to the exchange, and therefore instantaneous - they do not appear in the blockchain at all.

In fact, one could view arbitrage as two people trading, each within one exchange, with the usual "buy low, sell high" rule.  The difference is that, by knowing the other exchange's order book before other clients, each trader can, in a sense, peek into the immediate the future - he gets a hint as to whether the price at his exchange is currently "low" or "high", relative to the mean price that the arbitragers themselves are about to fix.

With those hints, both traders can consistently "buy low, sell high" and keep increasing the total vaue of their accounts.   It does not matter whether price is in an increasing or decreasing trend, or varying randomly within a band; as long as the bids and asks get posted independently at each exchange, these occasions are likely to happen.

[aminorex]

I can't help but notice that this occurs in conjunction with the bitstamp behaviour.  Someone doesn't want the tape to paint?

[TERA]

What's with all the people who bought at $660? The trend was clearly breaking at $460. Why didn't you buy then? You should be up 40% right now and still be up 25% even at the bottom of the upcoming correction.  Instead I hear all these sob stories "oh no I bought at $660 after the 50% increase. How am I going to live through the correction in the mid 500s? Woe is me."

[aminorex]

[...woefully incomplete enumeration of factors which can contribute to a rising price omitted...]

All of these need to add up to whatever the current markep cap in BTC is (13,000,000 etc)[sic]

Absolutely not.  The amount of fiat burned is not equal to the market cap, ever.

[edwardspitz]

What's with all the people who bought at $660? The trend was clearly breaking at $460. Why didn't you buy then? Instead I hear all these sob stories "oh no I bought at $660 after the 50% increase. How am I going to live through the correction in the mid 500s? Woe is me."

They clearly expected it to go to $666  

[rjp55]

What's with all the people who bought at $660? The trend was clearly breaking at $460. Why didn't you buy then? You should be up 40% right now and still be up 25% even at the bottom of the upcoming correction.  Instead I hear all these sob stories "oh no I bought at $660 after the 50% increase. How am I going to live through the correction in the mid 500s? Woe is me."

All you do is sob.

[TERA]

All you do is sob.

How is this sobbing?

[seleme]

What's with all the people who bought at $660? The trend was clearly breaking at $460. Why didn't you buy then? You should be up 40% right now and still be up 25% even at the bottom of the upcoming correction.  Instead I hear all these sob stories "oh no I bought at $660 after the 50% increase. How am I going to live through the correction in the mid 500s? Woe is me."

Why do you excluding they bought before? Many were buying and selling at pivot points during the rise. 660-670 was the one and it looked we might go higher numerous times we were at that level.

[aminorex]

i.e. If someone has 100 BTC on Stamp and 100 BTC on Bitfinex, and a pile of USD on both, why not take advantage of times like these to take advantage of the cheap BTC on Stamp by switching to 150 BTC on Stamp, and 50 BTC on Bitfinex. Doing so would give the trader the same amount of BTC, but more Fiat. There must be people in Bitcoin who are set up in this way. Anyone with a considerable stake in Bitcoin must infact be set up this way.

That's only valid in flat market which Bitcoin rarely is.

If you are in bull market than you don't give a shit about arbitrage and fiat, and if you're in bear market than you don't give a shit about arbitrage and bitcoins.

My night to be disagreeable I guess.  I contend that it is not only valid in a flat market.  An arbitrage strategy can be robust against trends.  You can do the arb continuously in that case, even while you participate in the trend by taking a view.  In fact, it is wise to do so, because it creates a portfolio effect.
 

[seleme]

All you do is sob.

How is this sobbing?

How it is not?

[JorgeStolfi]

Still on that topic, an exchange owner can profit at his clients' expense, even without arbitrage, if there is a delay of a second or two between the submission of orders by clients and the display of those orders in the public order book and trade log.

Suppose that, at some moment,  the highest bid is 400 USD and the lowest ask is 500 USD.  Client A submits an order to sell 1 BTC at 420 USD.  One second later, client B, who still has not seen A's order, submits an order to buy 1 BTC at 480 USD.  The exchange operator notices the overlapping orders, and then inserts his own orders, with fake times, between those of A and B: first a buy into A's offer at 420, then a sell order at 480, which is then taken by B.   When those transactions finally appear in the trade log, both clients think that they were lucky to get their orders immediately filled; when in fact the operator took from B the 60 USD that he would have saved without his intervention.

(Why invest in bitcoin, if one can make millions *now* by opening a bitcoin exchange -- even a zero-fee one?  )