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

[seleme]

No power in this yet. 

[1714022994]

1714022994

[INSTANTpr]

BTC =
http://hdwallphotos.com/wp-content/uploads/2014/03/High-Roller-Coaster-Cartoon-Wallpaper-HD.jpg

[JayJuanGee]

Just posted the following on reddit in response to "wtf is causing price to fall?", thought I'd share it here, too:

-----------------

Market dynamics:

Negative feedback

Usually there is a dampening effect prevalent in the market

• when price rises, demand decreases and supply increases
• when price falls, demand increases and supply decreases

It's pretty easy to see: at lower prices there's more people willing to buy, at higher prices there's more people willing to sell.

This has dampening effect on price movement: each time the price wants to take a hike in any direction, it's slowed down by this.

This is called **negative feedback**, because a result of the process influences the process itself in such a way that **it reduces changes**.

However in some situations like now there are stronger effects that resemble **positive feedback**. With positive feedback, the results of the process influence the process itself in such a way that the **magnitude of the change increases**.

I can think of a couple of things that might currently be in effect and have a positive feedback on falling price:

• Miners: miners are forced to sell part of the mined coins to cover fiat expenses. A falling price causes them to increase the percentage of coins they have to sell => positive feedback
• Margin calls, forced liquidation:  falling price can trigger leveraged longs on exchange to be automatically liquidated, which results in more selling => positive feedback
• Market participant psychology: falling price causes frustration, anger, and fear in at least some market participants, which in turn causes them to sell => positive feedback.

So: the system is out of balance.

Fortunately, all of the above positive feedback effects are dependant on some resource that is reduced and ultimately depleted in the process:

• miners: they cannot sell more than 100%
• liquidations: there's only so many longs
• psychology: the panic-sellers have only a limited amount of coins

So don't worry: the imbalance to the downside is only temporary ;-)

----------------

not sure how naive or accurate, but these are my thoughts on the reasons of the price fall.

I think what you wrote is really good and gives some perspective; however, I doubt that you can capture all the reasons for market changes...

In any downward trend there seems to also be manipulation and opportunism that cause additional positive feedback effects.

[nomaxpi]

BTC =
http://hdwallphotos.com/wp-content/uploads/2014/03/High-Roller-Coaster-Cartoon-Wallpaper-HD.jpg

and WEEEEEEEEEEEE!!!

[BTCtrader71]

btc-e has been rising over the past 3 hours, from 430 to 445, closing the gap between it and everyone else. Not sure what's going on there but a return to some normalcy sure would be nice ...

[falllling]

btc-e has been rising over the past 3 hours, from 430 to 445, closing the gap between it and everyone else. Not sure what's going on there but a return to some normalcy sure would be nice ...

i can tell you what is going to happen, a huge drop to $350

[Newbie1022]

Not a rally.

[Chuckee]

Chinese sending their coins to exchange to dump into this small rebound. Get ready for huge dump! cut your loose before it's too late!

[JorgeStolfi]

The price may recover, perhaps even in a few days.  What will be hard to recover is the credibility of bitcoin, and of bitcoin "experts".

No one saw this dip coming, no one could tell where it would end.  No one can tell whether it will stop at 460$, keep falling, or reverse.

No on can explain why it happened.  No one can tell for sure even where it was made in China or in the West.

So how could people tell whether and when the price will rise again, and by how much?

The "exponential trend" and the "periodic bubble theory" now seem rather far-fetched.  
[ ... ]

Hang on a minute... this is Bitcoin we are talking about?  the same one as usual right? volatility is not exactly rare... infact I thought it was more than expected by all?  ancd the market goes both ways right? I am pretty sure that it goes up down sideways, up down sideways , etc it has done it as long as I have looked... with BTC even more so...
I just do not get the surprise....  [ ... ]

Seems I was not clear. 

Sure there has always been volatility, and large drops before, but until two months ago it was "expected volatility" that fitted the grand model: namely, average 1000% growth every year, through a series of bubbles more or less regularly spaced in time.   The drop after the November peak was eevn seen as a good thing because it was seen as a repeat of the drop after the April 2013 peak, and thus confirmed that pattern.  And the rise from May/20 to Jun/10 and the following plateau recalled what happened  from July through the end of September last year.

But this drop does not fit that pattern any more.  It is not the panic drop from ~125$ to ~85 on Oct/02, that was quicly reversed.   Analists were expecting the next bubble a month ago, but instead got a week of almost steady drop that brought the price down to the same level as the bottom of the "2014 Silk-Road-Like Dip".   So, what is the grand model now?

[ChartBuddy]

Explanation

[BTCtrader71]

Chinese sending their coins to exchange to dump into this small rebound. Get ready for huge dump! cut your loose before it's too late!

Are you aware that "cut your loose" is not a recognized expression in the English language?

[INSTANTpr]

$450!~BTCULL STAMPEDE!!!

[romneymoney]

Chinese sending their coins to exchange to dump into this small rebound. Get ready for huge dump! cut your loose before it's too late!

Are you aware that "cut your loose" is not a recognized expression in the English language?

He made the same mistake in his sig too. 

HEY EVERYBODY READ MY POSTS, I'M ILLITERATE AND STUPID!!

[blaaaaacksuit]

Chinese sending their coins to exchange to dump into this small rebound. Get ready for huge dump! cut your loose before it's too late!

Are you aware that "cut your loose" is not a recognized expression in the English language?

He made the same mistake in his sig too. 

HEY EVERYBODY READ MY POSTS, I'M ILLITERATE AND STUPID!!

I haven't been to any of the other boards today but I bet these shill trolls are coming out of the woodwork.

[inca]

Just read the last ten pages or so. Sentiment at rock bottom. Trolls doing their thing.

Bottom must be near. Still less than 30 bucks from a 5xx handle.

[JayJuanGee]

Keep selling everyone I'm redoing my kitchen.

MAKES NO sense.... 

[BTCtrader71]

So, what is the grand model now?

One of the widely recognized (I think) elements of the "grand model" is that the timing of the fluctuations above and below the log trendline are not actually expected to be predictable. The log trendline has an explanation that makes sense; but I've never seen anyone offer a theory to explain why bubbles ought to be spaced apart at regular intervals. So if they're not spaced out at regular intervals, there's no reason to abandon the rest of the model.


EDIT: Don't think I said that very well. What I meant was that the timing of the bubbles is not an essential part of anybody's grand model afaik.

[JayJuanGee]

Seems like the worst is yet to come.    

@JorgeStolfi could you please post that chart with your calculations that show that without China we would probably be around something around 70-100$

WHAT?    China's banning bitcoin, again?   

[romneymoney]

Seems I was not clear. 

Sure there has always been volatility, and large drops before, but until two months ago it was "expected volatility" that fitted the grand model: namely, average 1000% growth every year, through a series of bubbles more or less regularly spaced in time.   The drop after the November peak was eevn seen as a good thing because it was seen as a repeat of the drop after the April 2013 peak, and thus confirmed that pattern.  And the rise from May/20 to Jun/10 and the following plateau recalled what happened  from July through the end of September last year.

But this drop does not fit that pattern any more.  It is not the panic drop from ~125$ to ~85 on Oct/02, that was quicly reversed.   Analists were expecting the next bubble a month ago, but instead got a week of almost steady drop that brought the price down to the same level as the bottom of the "2014 Silk-Road-Like Dip".   So, what is the grand model now?

The bubble failing to materialize reminds me of the scene in Back to the Future III which answers your question well I think:

Jennifer Parker: Dr. Brown, I brought this note back from the future and now it's erased.

Doc: Of course it's erased.

Jennifer Parker: But what does that mean?

Doc: It means your future hasn't been written yet. No one's has. Your future is whatever you make it. So make it a good one, both of you.

Marty McFly: [Marty wraps his arm around Jennifer] We will, Doc.

[BTCtrader71]

Chinese sending their coins to exchange to dump into this small rebound. Get ready for huge dump! cut your loose before it's too late!

Are you aware that "cut your loose" is not a recognized expression in the English language?

He made the same mistake in his sig too. 

Ahh yes I had not seen that. Must be on purpose ...