I fear - BTC is set for another downturn

[WackyWilly]

There was low volume because it was a weekend.

His argument, if I understood it correctly, was not the overall lack of volume, but that volume did not correspond with a positive price development, e.g. when price went up, volume was low, and the only times when volume was comparably high, the price went down.

That is a correct understanding of my words: if a trend is supposed to be sustainable, it DOES need proper volume. Even BTC  cannot defy those market rules. You can see this happening in different time frames - 60 minute, hourly, daily. Therefore, I simply don't trust this market under current conditions. Also price action itself (should BTC crazily enough not adhere to any volume laws) is not giving me confidence enough to "stay in". (See second chart, please)

[WackyWilly]

Appreciate the analysis, OP. I think you're reading maybe a bit too much into the 'volume doesn't support price action' bit... you have a point there, but it looks relatively minor to me, but the conclusion you draw is rather drastic (selling your entire btc position, if I understood you correctly). Nonetheless, I see things similar to you: we'll probably see another drop soon, but not much below 100, if at all.

As said, I am not into gloom & doom. But I'd expect to see prices dropping to $102 - $97 - $80 (for a re-test) or maybe even a re-test of the panic low at $50. You see, I tend to disagree with you on the fact that I am reading too much into volume. In the long run, volume is everything. To a long time holder, and even to a speculator. There will simply not be a sustainable price advance if volume (=people wanting the freakin' bitcoin) is not there. AAPL is not bidded upwards if there are no buyers, Gold is not bidded upwards if  there are no buyers. Etc. etc. etc. The same goes for BTC in my opinion. Market laws apply to BTC as well.

[SAQ]

Appreciate the analysis, OP. I think you're reading maybe a bit too much into the 'volume doesn't support price action' bit... you have a point there, but it looks relatively minor to me, but the conclusion you draw is rather drastic (selling your entire btc position, if I understood you correctly). Nonetheless, I see things similar to you: we'll probably see another drop soon, but not much below 100, if at all.

As said, I am not into gloom & doom. But I'd expect to see prices dropping to $102 - $97 - $80 (for a re-test) or maybe even a re-test of the panic low at $50. You see, I tend to disagree with you on the fact that I am reading too much into volume. In the long run, volume is everything. To a long time holder, and even to a speculator. There will simply not be a sustainable price advance if volume (=people wanting the freakin' bitcoin) is not there. AAPL is not bidded upwards if there are no buyers, Gold is not bidded upwards if  there are no buyers. Etc. etc. etc. The same goes for BTC in my opinion. Market laws apply to BTC as well.

What exactly is wrong with volume again? Looking at the monthly chart and considering that it was a weekend the volume seems fine. Moreover, looking at the hourly monthly chart, it is not the case that volume increases when price goes down. In fact, it's the opposite.

[Babylon]

There was a definite pump and dump involved in the recent rally.  A wall of about $2m that moved up from $100 to $110, staying enough behind that it did not buy any actual bitcoins, and then smaller but still sizeable moving walls as the price approached 125.  That's not usually a great sign.

[Traktion]

There was low volume because it was a weekend.

His argument, if I understood it correctly, was not the overall lack of volume, but that volume did not correspond with a positive price development, e.g. when price went up, volume was low, and the only times when volume was comparably high, the price went down.

That is a correct understanding of my words: if a trend is supposed to be sustainable, it DOES need proper volume. Even BTC  cannot defy those market rules. You can see this happening in different time frames - 60 minute, hourly, daily. Therefore, I simply don't trust this market under current conditions. Also price action itself (should BTC crazily enough not adhere to any volume laws) is not giving me confidence enough to "stay in". (See second chart, please)

I've been looking at the market wondering what is going on too. The price seems to be cheating gravity at the moment. There seems to be a complete lack of support and then a monster order comes in on MtGox to keep the price up, just as the market is about to turn too.

I've been wrong many times, mind!

[oda.krell]

To a long time holder, and even to a speculator. There will simply not be a sustainable price advance if volume (=people wanting the freakin' bitcoin) is not there.

I'm sure you agree that the relevant volume here is USD (since that's the ressource we need enough of to maintain or raise btc price). Hence: "Volume in currency" in the following chart:




Looks good to me. Between 2 and 5 times as high as in March (when the price approached 40), and 10? 20? as high as in January, February. Maybe not the volume to support a price in the multiple 100s, but enough to support 100, 150? Why yes, looks like it to me.

[mgio]

The price is going to $150 by the end of next week at the latest because of the news from China.

That's already priced in. If it goes to $150, that will not be the reason.

How could that be priced in? It only happened a couple of days ago.

[underground_]

To a long time holder, and even to a speculator. There will simply not be a sustainable price advance if volume (=people wanting the freakin' bitcoin) is not there.

I'm sure you agree that the relevant volume here is USD (since that's the ressource we need enough of to maintain or raise btc price). Hence: "Volume in currency" in the following chart:




Looks good to me. Between 2 and 5 times as high as in March (when the price approached 40), and 10? 20? as high as in January, February. Maybe not the volume to support a price in the multiple 100s, but enough to support 100, 150? Why yes, looks like it to me.

That chart should not inspire confidence in anyone with bullish expectations.



Was it a bubble? We'll see. It sure looks like it. But, hey, maybe it'll be different this time!

[RodeoX]

Was it a bubble? We'll see. It sure looks like it. But, hey, maybe it'll be different this time!

There is something that the chart does not show. Bubbles are most well known in the stock market. The chart shows a classic stock bubble, but is that comparable?
With a stock the money from investors is needed to operate the company offering the stock. When the value reaches a critical low and the company becomes insolvent, it all goes to hell. Bitcoin is different. It does not need the money to operate and the price can fall or rise without destroying it's utility. No matter how low it goes, it could go up again. Not true of stocks, bonds, derivatives and most other financial instruments. The closest asset in terms of behavior may be gold. Gold has seen countless bubbles in the last 4000 years, and is still able to set new highs.     

[WackyWilly]

I don't know what you are talking about.
The volume does not look any different than normal.
And you have offered no evidence that the price is going to drop other than voodoo TA BS.
The price is going to $150 by the end of next week at the latest because of the news from China.

The China news has been out since May 3rd (CCTV broadcast). I, too, think that -in the end- a China participation will be beneficial. Yet, I look at the market itself instead of hyping TV stuff. It should be noticeable in the market. The market is up since May 3rd, hitting resistance. On low volume.

The fact you call tech analysis BS is up to you. Voodoo I leave up to others.
But obviously, this isn't for you. Let's be polite and leave it at "everyone is entitled to his/her own reading of reality", shall we?

[mgio]

I don't know what you are talking about.
The volume does not look any different than normal.
And you have offered no evidence that the price is going to drop other than voodoo TA BS.
The price is going to $150 by the end of next week at the latest because of the news from China.

The China news has been out since May 3rd (CCTV broadcast). I, too, think that -in the end- a China participation will be beneficial. Yet, I look at the market itself instead of hyping TV stuff. It should be noticeable in the market. The market is up since May 3rd, hitting resistance. On low volume.

The fact you call tech analysis BS is up to you. Voodoo I leave up to others.
But obviously, this isn't for you. Let's be polite and leave it at "everyone is entitled to his/her own reading of reality", shall we?

Hype means more than anything for bitcoin price right now. Since there are no traditional fundamentals, bitcoin is only about hype. It is almost a pure bubble. Thus what appears in the newspaper means everything to bitcoin right now.

I actually like to see the TA posts here. Kind of like reading my horoscope in the paper from time to time. It is interesting stuff but I have yet to ever see it back by real evidence than it ever works.
If you post it though, expect people to tear it apart if they disagree.

i don't respond to the TA posts in order to start a fight or to piss anyone off. I worry about the newbies who will buy into it without doing their due diligence.

[farfiman]

I do think bitcoin's long-term future is bright, but it lost 80% of its value in the course of a week. Now, and in the short-term, any slight dip will turn into a massive crash. Buyers will only buy so they can sell a few dollars higher. Get rich-quick schemers will take their money elsewhere. Early adopters will cash out en masse. It would take a true black swan event (amazon, google adoption, etc.) to break us out of this downtrend.

As I see it , it would take what you call "a black swan event"  to stop the uptrend ( a fault in the algorithm or the US making bitcoin Illegal).
You are looking on such a small scale. Pull the scale back to 1, 2 ,3 years... we are right on track.

[underground_]

As I see it , it would take what you call "a black swan event"  to stop the uptrend ( a fault in the algorithm or the US making bitcoin Illegal).
You are looking on such a small scale. Pullthe scale back to 1, 2 ,3 years... we are right on track.

I said short-term. Long-term still looks good, I agree.

[Malawi]

Was it a bubble? We'll see. It sure looks like it. But, hey, maybe it'll be different this time!

There is something that the chart does not show. Bubbles are most well known in the stock market. The chart shows a classic stock bubble, but is that comparable?
With a stock the money from investors is needed to operate the company offering the stock. When the value reaches a critical low and the company becomes insolvent, it all goes to hell. Bitcoin is different. It does not need the money to operate and the price can fall or rise without destroying it's utility. No matter how low it goes, it could go up again. Not true of stocks, bonds, derivatives and most other financial instruments. The closest asset in terms of behavior may be gold. Gold has seen countless bubbles in the last 4000 years, and is still able to set new highs.     

Most stocks are shares in a company that already have operational founds, and it's really about the valuation of the firm as it is. A high stock-price will help a firm to get good lending deals etc. but they don't use the stock market as a "cash pool".

[WackyWilly]

To a long time holder, and even to a speculator. There will simply not be a sustainable price advance if volume (=people wanting the freakin' bitcoin) is not there.

I'm sure you agree that the relevant volume here is USD (since that's the ressource we need enough of to maintain or raise btc price). Hence: "Volume in currency" in the following chart:

http://bitcoincharts.com/charts/chart.png?width=967&m=mtgoxUSD&SubmitButton=Draw&r=120&i=Daily&c=0&s=&e=&Prev=&Next=&t=T&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=1&cv=1&ps=0&l=0&p=0&

Looks good to me. Between 2 and 5 times as high as in March (when the price approached 40), and 10? 20? as high as in January, February. Maybe not the volume to support a price in the multiple 100s, but enough to support 100, 150? Why yes, looks like it to me.

Yes, in the long run volume is higher, that is correct. But that would be reasoning from a "buy and hold" long position only. Yet, the chart is confirming my chart and point of view: the intermediate swings that you see show higher volume on falling prices, and lower volume (compared to the previous price drop) on price appreciation. Just look at it in a bit more detail. Otherwise, I just rest my case, but had hoped to point you to the "internals"  

[RodeoX]

...
Most stocks are shares in a company that already have operational founds, and it's really about the valuation of the firm as it is. A high stock-price will help a firm to get good lending deals etc. but they don't use the stock market as a "cash pool".

Right, the funds are not necessarily directly available.  But they are are often needed to operate and provide higher valuations to secure loans. But at some point if the value falls to much the company may hit a cash crunch and not have the collateral to take on new debt. If they crash the stock will be worthless. Bitcoin could loose popularity and become less valuable, but it is not going to go broke and could always bounce back.

[oda.krell]

To a long time holder, and even to a speculator. There will simply not be a sustainable price advance if volume (=people wanting the freakin' bitcoin) is not there.

I'm sure you agree that the relevant volume here is USD (since that's the ressource we need enough of to maintain or raise btc price). Hence: "Volume in currency" in the following chart:



Looks good to me. Between 2 and 5 times as high as in March (when the price approached 40), and 10? 20? as high as in January, February. Maybe not the volume to support a price in the multiple 100s, but enough to support 100, 150? Why yes, looks like it to me.

Yes, in the long run volume is higher, that is correct. But that would be reasoning from a "buy and hold" long position only. Yet, the chart is confirming my chart and point of view: the intermediate swings that you see show higher volume on falling prices, and lower volume (compared to the previous price drop) on price appreciation. Just look at it in a bit more detail. Otherwise, I just rest my case, but had hoped to point you to the "internals"  

Looks like we're in agreement then.

Also, your post gave me an idea: I am wondering now if there is a detailed comparison between trade volume in USD and bitcoin price. The bitcoinchart rendering doesn't give me what I want, and a quick Google search didn't help either. So I downloaded the raw data from bitcoincharts and will see if I can run a correlation test on it.

[Anth0n]

The price is going to $150 by the end of next week at the latest because of the news from China.

That's already priced in. If it goes to $150, that will not be the reason.

How could that be priced in? It only happened a couple of days ago.

Because upon hearing that news, speculators drove the price up accordingly.

[michaelGedi]

Cool story bro.  There's a whole forum for this.

[michaelGedi]

thanks for the post OP

helpful...

I'm into reading TA but don't understand all of it yet.


I would argue that low volume on an uptrend makes sense though if the done thing to do with bitcoin is buy, and hold. Sellers are more and more reluctant to sell at market prices so the bidders have to reach further. Does that make sense?