The Bear Market is officially...OFF?!?

[Birdy]

What do you think is the latency between actual good news -- news that truly makes a difference -- and an increase in price?

Zero. The market will internalize all news way before they take effect or even before you hear the news and have the opportunity to act on it. The best news indicator is the ticker itself, if it's up it must be China hype time, if it's down is mtgox lawsuit time.

Ok, who is doing this then? Some people with visions selling/buying before the news is out?
Even if I'm the only one reacting on a news, I already render your argument invalid.

[BubbleBoy]

It doesn't matter who's the precise agent that conveys the information into the market. It could be someone who was lucky to refresh the news page in the moment it was posted. Or maybe he knows the reporter. Or maybe he simply used his deductive powers.

It's irrelevant because it's like winning the lottery. You won't be him; reacting to good or bad news is a beginner's mistake, by the time you learn about it it's too late to act. I'm not saying you should not use information: maybe you have a unique predictive formula that uses the EBITDA and tells you if the stock is any good. So news about the EBIDTA of a company is useful to you. "Apple EBIDTA way above expectations" is useless, the stock price is already up.

[giantdragon]

The market will internalize all news way before they take effect or even before you hear the news and have the opportunity to act on it.

This is true for real-world markets, but Bitcoin lives in alternative universe

[oda.krell]

It doesn't matter who's the precise agent that conveys the information into the market. It could be someone who was lucky to refresh the news page in the moment it was posted. Or maybe he knows the reporter. Or maybe he simply used his deductive powers.

It's irrelevant because it's like winning the lottery. You won't be him; reacting to good or bad news is a beginner's mistake, by the time you learn about it it's too late to act. I'm not saying you should not use information: maybe you have a unique predictive formula that uses the EBITDA and tells you if the stock is any good. So news about the EBIDTA of a company is useful to you. "Apple EBIDTA way above expectations" is useless, the stock price is already up.

That statement, in it's unabashed generality, is plain retarded. According to your hypothesis, stock markets fell preemptively before 9/11 because "maybe they knew the reporter". Or "maybe they simply used their deductive power".

[BubbleBoy]

This is true for real-world markets, but Bitcoin lives in alternative universe

Since there is no way to price a bitcoin and the price is entirely emotional, when they hear the news people are speculating about "what effect would this news have on the emotions of the other players ?". It's still en efficient market, albeit it has no connection whatsoever to reality. Well, emotions are real, I guess.

According to your hypothesis, stock markets fell preemptively before 9/11 because "maybe they knew the reporter".

That's a complete strawman and has little to do with what I actually said. It's not that hard to understand: when you see towers collapsing on TV it's too late to call your broker. Of course someone made that "lucky" order that cleared the bid side and closed the day without a huge loss. It's irrelevant because 99.99% of time it won't be you. Everybody else, including you, had a huge loss on 9/11 and panic selling on the news would have exacerbated that loss.

[dbru77]

What do you think is the latency between actual good news -- news that truly makes a difference -- and an increase in price?

Zero. The market will internalize all news way before they take effect or even before you hear the news and have the opportunity to act on it. The best news indicator is the ticker itself, if it's up it must be China hype time, if it's down is mtgox lawsuit time.

Doesn't make much sense to me either. The market is created by people buying or selling. News can influence this behaviour of course, though I believe mainly speculators will "react" to freshly surfaced information.

"Ordinary" BTC users (the guys who bring fresh money for the traders) buy BTC to use it or sell BTC because they've got no use it for it. They will do so when they need to - or want to. Which may be months after let's say Amazon enabled BTC as a payment option.

[molecular]

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$125 and $80 are the levels to watch. When one of these is broken, a new up-/downtrend is established

I agree with this.  Though, I would call it a continuation of the downtrend or a new uptrend.

I also think that the longer we stay at these levels, the less likely we are to break out into a new uptrend, because investors will continue to lose faith that the market will recover.  The fact that the recent good news/hype  (Gyft, China, ATM, etc) didn't really push the price near our previous levels tells me the hype machine is dead for now. I think it will take will take some amazing news to push us back upwards past 125.

Fair enough.

It's probably hairsplitting, but I don't subscribe to that view because the old downtrend (upper line marked "1 (broken)" in my pic) was broken. So the trend-channel was invalidated. So technically -- I could argue if I was nitpicking -- it'd indeed be new downtrend (that would have to be established by hitting a new low) and we're currently not in one, in fact we're not trending at all.

We're smurfing along, at least on the timescale I'm looking at things.

[molecular]

good point, I'll check it out next time.

what's the reasoning for log-charts again? Because then you're "looking at relative changes"?

Exactly.

but then a straigt line is actually a exponential curve... isn't that a problem?

[molecular]

The fact that the recent good news/hype  (Gyft, China, ATM, etc) didn't really push the price near our previous levels tells me the hype machine is dead for now. I think it will take will take some amazing news to push us back upwards past 125.

What do you think is the latency between actual good news -- news that truly makes a difference -- and an increase in price?

I think the latency has two components:
1) an immediate increase when fence-sitters that already have funds on the exchanges make buys
2) a second wave a few days later when additional USD hits the exchanges.

you forget 2 more effects:

0) even before the news hits, some insiders are buying/selling
3) if news is really big and/or far-reaching, fresh newbs are activated. latency about 6 weeks.

[molecular]

What do you think is the latency between actual good news -- news that truly makes a difference -- and an increase in price?

Zero. The market will internalize all news way before they take effect or even before you hear the news and have the opportunity to act on it. The best news indicator is the ticker itself, if it's up it must be China hype time, if it's down is mtgox lawsuit time.

it's all in the tape.

EDIT: after reading discussion above: I think you're all correct.

The latency from good news to related price action is 0 (or even negative, my item "0.)" ).

However most of the time there will be more action also related to the news with positive latency (items "1.)", "2.)", "3.)")

[old_engineer]

What do you think is the latency between actual good news -- news that truly makes a difference -- and an increase in price?

I think the latency has two components:
1) an immediate increase when fence-sitters that already have funds on the exchanges make buys
2) a second wave a few days later when additional USD hits the exchanges.

you forget 2 more effects:

0) even before the news hits, some insiders are buying/selling
3) if news is really big and/or far-reaching, fresh newbs are activated. latency about 6 weeks.

Good point, but I'd say the latency for n00bs is 1-6 weeks.  Some n00bs are faster than others.

In my book, relevant recent news:
* CFTC "looking at bitcoin", legitimizing bitcoin in many eyes - 5/8
* Gates calls Bitcoin a "tour de force" - 5/8 (remember, there are 12,000 Microsoft millionaires that have followed him)
* $5M investment in Coinbase "biggest investment yet in Bitcoin" - 5/9
* Gyft opening up 50,000 retail locations to on-demand bitcoin spending: 5/10

disclosure: I went long over the weekend, so please point out any selective blindness you may see in my possibly post-hoc rationale.

[xavier]

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$125 and $80 are the levels to watch. When one of these is broken, a new up-/downtrend is established

I agree with this.  Though, I would call it a continuation of the downtrend or a new uptrend.

I also think that the longer we stay at these levels, the less likely we are to break out into a new uptrend, because investors will continue to lose faith that the market will recover.  The fact that the recent good news/hype  (Gyft, China, ATM, etc) didn't really push the price near our previous levels tells me the hype machine is dead for now. I think it will take will take some amazing news to push us back upwards past 125.

Fair enough.

It's probably hairsplitting, but I don't subscribe to that view because the old downtrend (upper line marked "1 (broken)" in my pic) was broken. So the trend-channel was invalidated. So technically -- I could argue if I was nitpicking -- it'd indeed be new downtrend (that would have to be established by hitting a new low) and we're currently not in one, in fact we're not trending at all.

We're smurfing along, at least on the timescale I'm looking at things.

Nice post. It looks like we are at a critical juncture , we're either going up or down. I think we could see a big movement downwards in the next week, as people realise price is not going up. With the price holding so stable recently, a large downwards movement is overdue.

[notme]

good point, I'll check it out next time.

what's the reasoning for log-charts again? Because then you're "looking at relative changes"?

Exactly.

but then a straigt line is actually a exponential curve... isn't that a problem?

No, because the slope of the line is proportional to the growth rate.  It shows change in growth rate much better than looking at the linear scale chart and just seeing it shoot to the moon and not much other detail.

[ShroomsKit]

[/img]



$125 and $80 are the levels to watch. When one of these is broken, a new up-/downtrend is established

I agree with this.  Though, I would call it a continuation of the downtrend or a new uptrend.

I also think that the longer we stay at these levels, the less likely we are to break out into a new uptrend, because investors will continue to lose faith that the market will recover.  The fact that the recent good news/hype  (Gyft, China, ATM, etc) didn't really push the price near our previous levels tells me the hype machine is dead for now. I think it will take will take some amazing news to push us back upwards past 125.

Fair enough.

It's probably hairsplitting, but I don't subscribe to that view because the old downtrend (upper line marked "1 (broken)" in my pic) was broken. So the trend-channel was invalidated. So technically -- I could argue if I was nitpicking -- it'd indeed be new downtrend (that would have to be established by hitting a new low) and we're currently not in one, in fact we're not trending at all.

We're smurfing along, at least on the timescale I'm looking at things.

Nice post. It looks like we are at a critical juncture , we're either going up or down. I think we could see a big movement downwards in the next week, as people realise price is not going up. With the price holding so stable recently, a large downwards movement is overdue.

Either up or down!? That's a pretty impressive analysis.

[notme]

Have y'all considered the possibility that the price action of the past several months might be more similar to August 2012, but was simply larger by an order of magnitude and thus the market will require more consolidation before Mr. Bull can resume his climb?

August 2012
http://s24.postimg.org/5k99jgywl/chart.png

April 2013
http://s24.postimg.org/6b1zp919x/chart.png

The bulls are running out of time to set the trend.  If they don't do it in the next few days you can expect a bear raid.

[oda.krell]

Have y'all considered the possibility that the price action of the past several months might be more similar to August 2012, but was simply larger by an order of magnitude and thus the market will require more consolidation before Mr. Bull can resume his climb?

[pics removed]

Yes, I have been following that line of thought as well. In my opinion, there is (so far) more evidence in favor of comparing the current correction to the 2012 bubble than to the 2011 bubble. The single most important factor: the SHARP decline immediately after the peak, in both the 2013 and 2012 bubble vs. the slower, more "reluctant" decline of the 2011 bubble.

Yet, the permabears keep on mentioning the 2011 bubble only, because it conveniently allows them to remain vague on the question of how exactly they think the current correction will play out.

"It will take at least 3 months for us to go back to normal!", they say, "And we will go down veeerrry verrry much!", they add. So much for short-term precision, and falsifiability.

(Disclaimer: I exclude SlipperySlope from the sarcastic description above. He is more and more including *falsifying* conditions to his posts, which I greatly appreciate)

[evolve]

What are you talking about?

This thread has been sixteen pages of reasons why the price is unsustainable,  why we got here, where we are going from here, the conditions it would take to get us there, and what could turn us around.

The bear argument has been anything but vague.

You may not agree with the analysis, you might not like the analysis, but don't pretend the analysis has no basis or validity.   

In my opinion, there is (so far) more evidence in favor of comparing the current correction to the 2012 bubble than to the 2011 bubble

Such as?

The single most important factor: the SHARP decline immediately after the peak, in both the 2013 and 2012 bubble vs. the slower, more "reluctant" decline of the 2011 bubble.

"Reluctant"? No sharp decline after the peak? Are we looking at the same charts?!?!  The slow slide down happened after a hard crash from the peak and a correction leading to an apparent consolidation period (sound familiar?). 


(2011)

[TimJBenham]

You won't be him; reacting to good or bad news is a beginner's mistake, by the time you learn about it it's too late to act.

Using the evening news to try to time the market is a fool's game, but there is such a thing as slow adjustment. Information is not always incorporated into a market price immediately. Moreover bitcoin is a small market with numerous obstacles to trade (exchanges closing, DDOS, moving money in and out of gox takes ages for many people, etc).

[oda.krell]

Hey evolve.

Noticed how I mentioned SlipperySlope as being an exception to the imprecise, thoughtless, irrational permabear evangelist crowd?

Yeah, you understood that one correctly. The implication was that you are one of them.

On to your attempts at refutation:

re: sharp decline

Let's look at the numbers:

2011 bubble. Peak: June 8th, 32 USD. Lowest point after 10 days: June 12th, 10 USD.

Correction: minus 69%

2013 bubble. Peak 263. Lowest point after 10 days: April 16th, 50 USD.

Correction: minus 81%.

I'm sure you will tell me that's hardly different, right?

Like I said, the intellectually lazy approach you chose will always find similarities and ignore differences in order to prove your point.

re: vagueness & falsifiability

Your 16 pages "reasons why the price is unsustainable" are worth exactly as much as the amount you got paid to produce them. Others here (the permabull crowd, obviously) have produced similar "reasons" for why we will reach 300k USD by the end of the day. I ignore both of those pseudo arguments.

The only thing that counts are a) your model and its predictions, b) your estimations of how certain you are those predictions will come true and c) the circumstances under which you consider your model refuted or confirmed.

Doesn't have to be all numbers, this is not a peer-reviewed publication after all. Go take a look at the post history of SlipperSlope, you might learn something: he has been writing both about points that confirm his predictions as well as those that contradict it. In your post history, I see almost nothing like that (a few days ago the mealy mouthed admission that maybe we have a short-term uptrend, but not *really* as you were quick to add).

This is not about the question whether the correction is over. I don't know that (and neither do you). This is about you not providing a single new estimate of a new correction downtrend now that the old one has been thoroughly broken. This is about you equating the 2011 bubble and the 2013 bubble because they somehow "look alike". Your commentary is worthless until you start acknowledging those predictions that you made that were wrong, and adjusting your theory accordingly. And you haven't done anything like that yet as far as I have seen.

(by the way, no need to tell me to do the same... I'm far from being in a particularly bullish mood. I just prefer to describe the market as objective as possible, rather than looking at it through bull or bear-shaped glasses)

[oda.krell]

Yeah? I haven't seen it yet...

Objectively describe the market (holding yourself to the same standards as you are holding everyone else) and describe how your model is better (or indeed different) from the models presented in this thread.

I am all ears.

Alright, I'll bite.

I've been posting along those lines for a few times in the Wall Observer thread, so here's the barebone argument only:

Based on my order book calculations (bid and ask totals, recent changes, and order book price composition), as well as money flow and momentum indicators of the past 2 weeks, and the fact that since the beginning of May no data points for any of the hypothesized downtrends exist anymore (while the mid-January uptrend is still possible, even if unlikely), I conclude the following:

a) We are still in a consolidation phase. Movement in the coming week will be slow (barring world-changing news of course).

b) Whether the correction is finished or not is too difficult to determine, and I would suggest not to waste time on trying to do so. Predicting the price movement of the coming week(s) is difficult enough, and sufficient knowledge for most speculators to act upon.

c) I see a short-to-medium uptrend as the slightly more likely scenario than a further downward movement, for the reasons outlined above (money entering the order book), and the fact that according to the growth trend that brought us into the 100+ range, we're still *slightly* over target (the mid-January trend has us at around 100 now, so we're 17 above target right now), which means sideways trading for now works in favor of this trend.

As for my own falsifying conditions:

A sharp price decline below 100 within the coming week or two will invalidate my points made above. Falling to a new low will obviously be extremely strong evidence that the correction continues with full strength. I am not entirely ruling out that over the course of the coming week money will leave the market and prices might decline, and a sub-100 scenario could unfold, but I fully expect signs for this drop to manifest in the order book and money flow indicators first.