Money flowing into Gox irrelevant

[xxjs]

You can possibly find some statistical correlation between volume and price on gox, but the idea that billions of USD has to flow into gox to raise the price to a certain level, is irrational.

Here is the formula for USD flow: Inflow - outflow = increase in USD on gox. Basically, inflow is always the same as outflow, modified for change of balance.

What really moves the price, is a change of heart on part of the actors, the gox customers and potential customers. The order book reflects the value scales of the actors somewhat, but remember there are always opinions like "I will sell some at 1000" that is not in the order book.

So, when we have a really slow day (or any time interval), it means that the actors are content with their holdings. When the value scales of some of the actors change, we have trades. For instance, if someone with an order for 100 BTC at 120, waiting for a dip, changes his mind and now values BTC at 300, he will change his order and buy at the current price, driving last price up. But, equally, when someone selling for just above the current price changes his mind likewise, he will withdraw his sell order, indirectly moving the price up for the next buyer. If all actors revalue bitcoin up 10 dollars, the price will move that amount without much trade going on.

Anyway, this is not bitcoin magic, it is the same for all markets.

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[neutrinox]

Interesting argument!

I would like to see the people that are predicting a crash because of the sinking volumes debunk this! I will not attempt to do that myself simply because I don't know enough about trading and markets (I'm in for a long position). But what you wrote doesn't seem illogical to me.

[ElectricMucus]

There is no USD flow in either direction and outflow of BTC.

[RationalSpeculator]

Interesting indeed. Thanks for explaining.

[smoothie]

How about the amount of BTC draining off of exchanges?

BTC-e and Gox have had very low BTC amounts on the sell order book. BTC-e is the lowest I've ever seen it. MTGOX is near its low.

[xxjs]

How about the amount of BTC draining off of exchanges?

BTC-e and Gox have had very low BTC amounts on the sell order book. BTC-e is the lowest I've ever seen it. MTGOX is near its low.

You can speculate that higher valuation on part of potential sellers have made them withdraw for now.

[Walsoraj]

Look at Ask Sum before August 2012 and April 2013 crashes:

[Wekkel]

Look at Ask Sum before August 2012 and April 2013 crashes:

Still plenty of room for a spike UP 

[Walsoraj]

Look at Ask Sum before August 2012 and April 2013 crashes:

Still plenty of room for a spike UP 

Yea, but ask sum below 50k is risky territory. I don't doubt possibility of rapid price spike up, but a mega crash will surely follow.

[Wekkel]

Look at Ask Sum before August 2012 and April 2013 crashes:

Still plenty of room for a spike UP 

Yea, but ask sum below 50k is risky territory. I don't doubt possibility of rapid price spike up, but a mega crash will surely follow.

As long as the spike touches my sell orders, I will be happy.

[Priceslide]

Look at Ask Sum before August 2012 and April 2013 crashes:

Still plenty of room for a spike UP 

Yea, but ask sum below 50k is risky territory. I don't doubt possibility of rapid price spike up, but a mega crash will surely follow.

As long as the spike touches my sell orders, I will be happy.

Where do you have sell orders?

[johnyj]

You can possibly find some statistical correlation between volume and price on gox, but the idea that billions of USD has to flow into gox to raise the price to a certain level, is irrational.

Here is the formula for USD flow: Inflow - outflow = increase in USD on gox. Basically, inflow is always the same as outflow, modified for change of balance.

What really moves the price, is a change of heart on part of the actors, the gox customers and potential customers. The order book reflects the value scales of the actors somewhat, but remember there are always opinions like "I will sell some at 1000" that is not in the order book.

So, when we have a really slow day (or any time interval), it means that the actors are content with their holdings. When the value scales of some of the actors change, we have trades. For instance, if someone with an order for 100 BTC at 120, waiting for a dip, changes his mind and now values BTC at 300, he will change his order and buy at the current price, driving last price up. But, equally, when someone selling for just above the current price changes his mind likewise, he will withdraw his sell order, indirectly moving the price up for the next buyer. If all actors revalue bitcoin up 10 dollars, the price will move that amount without much trade going on.

Anyway, this is not bitcoin magic, it is the same for all markets.

Exactly! The value is decided by supply and demand, and demand is barely a result of change in psychology. People demand something just because they like it, if they have plenty of fiat money, the price will be bid up very quickly

Peole like bitcoin because of its superior properties as a medium of saving, the more they learn about it, the more they will like it

Of course the psychology will change when price crashed too hard, but any kind of price crash won't change those properties of bitcoin, unless something more trustworthy than bitcoin appears, price will eventually recover

[crazy_rabbit]

How about the amount of BTC draining off of exchanges?

BTC-e and Gox have had very low BTC amounts on the sell order book. BTC-e is the lowest I've ever seen it. MTGOX is near its low.

My BTC is off the exchanges after a long while because I've changed my mind about selling them. I've got a job, make a living, etc without selling my bitcoin. I'm in it for the long haul, I'm encouraged by the developments I see daily, by how large the community is, and it's future prospects.

Why not take it off the exchanges? If you're not selling it anytime soon, regardless of price (even if it went to $500 tomorrow I probably would not sell as I would be even more convinced of it one day being higher) and lately day trading only ended up with a net loss of some amount. I will make far more by just being patient. I think many people are thinking the same.

[zoinky]

Look at Ask Sum before August 2012 and April 2013 crashes:

Still plenty of room for a spike UP 

Yea, but ask sum below 50k is risky territory. I don't doubt possibility of rapid price spike up, but a mega crash will surely follow.

Wasn't that around the time when pirateat40 was messing with his stolen coins on the order book?

[wopwop]

The only thing holding the price of bitcoin up is the general belief that in the future bitcoin's price will be even higher

Oh and the temporary issue of MtGox having a few million frozen/faked USD's since a few months ago that they haven't been able to recoup via trading fees just yet which is suppressing the selling force of bitcoins

[Impaler]

The primary driver in this latest upward trend is the absence of BTC flowing onto Gox to be sold.  In the previous bubble their was primarily an inflow of dollars.  A bubble build on artificial coin scarcity can no last, once ASICs decline in profitability the coins will flow back onto exchanges.

[derpinheimer]

You can possibly find some statistical correlation between volume and price on gox, but the idea that billions of USD has to flow into gox to raise the price to a certain level, is irrational.

Here is the formula for USD flow: Inflow - outflow = increase in USD on gox. Basically, inflow is always the same as outflow, modified for change of balance.

What really moves the price, is a change of heart on part of the actors, the gox customers and potential customers. The order book reflects the value scales of the actors somewhat, but remember there are always opinions like "I will sell some at 1000" that is not in the order book.

So, when we have a really slow day (or any time interval), it means that the actors are content with their holdings. When the value scales of some of the actors change, we have trades. For instance, if someone with an order for 100 BTC at 120, waiting for a dip, changes his mind and now values BTC at 300, he will change his order and buy at the current price, driving last price up. But, equally, when someone selling for just above the current price changes his mind likewise, he will withdraw his sell order, indirectly moving the price up for the next buyer. If all actors revalue bitcoin up 10 dollars, the price will move that amount without much trade going on.

Anyway, this is not bitcoin magic, it is the same for all markets.

That isnt whats happening. Your explanation here only works if the price moved on no volume. No, the price does not move on no volume. It moves on very high volume.

It does, however, freely move thru low depth areas on low volume, for obvious reasons. The price cannot drop to 140 without someone saying,

-I want to withdraw
-I want to buy back lower [&think an opportunity is coming]
-?[Other?]

People dont suddenly agree to remove all bids leading to 140, followed by all asks dropping $3.

Yes, walls do move. And they can reduce the volume required to move the price. But again, that isnt happening now. And it is rarely a major part of price movements.

[Spekulatius]

@ OP: You could also say traders are insecure about the current situation when there is low volume.
Like now: The past bumps upwards were clearly pulled off by one or two BIG time investors, that bought thousands of BTC at once. No market participants are waiting on the side lines what happens next, will the mayority catch the bait and buy or will we see a correction? Thats why its so silent atm.

[xxjs]

@ OP: You could also say traders are insecure about the current situation when there is low volume.
Like now: The past bumps upwards were clearly pulled off by one or two BIG time investors, that bought thousands of BTC at once. No market participants are waiting on the side lines what happens next, will the mayority catch the bait and buy or will we see a correction? Thats why its so silent atm.

Could be, but the "BIG time investors" where the ones who changed their mind this time. They changed their minds, trades became possible. To the degree that everyone is now happy, trades die down. So this is consistent with the original post.

[Kupsi]

Look at Ask Sum before August 2012 and April 2013 crashes:

Still plenty of room for a spike UP  

Yea, but ask sum below 50k is risky territory. I don't doubt possibility of rapid price spike up, but a mega crash will surely follow.

Wasn't that around the time when pirateat40 was messing with his stolen coins on the order book?

The August 2012 crash from 15 to 8, after a raise from 5, was when pirateat40 dumped "his" coins. The price was at 10+ soon after.
The April 2013 crash from 266 to 50 came after a raise from 13.

Yes, we will get a new crash. But the price must be much higher than this before anyone will dump a large amount of coins. I guess the upcoming crash will bottom out at 200+ and then stabilize at 300+.