Rally from $500 happened on very low volume, crash looming?

[Apraksin]

Well, I for one agree with Rpietila. This is a tipsy situation. We have a massive influx of newbs buying BTC and altcoins blinded by greed and hoping to get rich quick. Cryptsy is experiencing serious problems with capacity and google trends is at a new ATH, It's beginning to look a lot like the climax of the April bubble. I don't envisage a crash though, but a correction lies ahead in the near future IMO.

A lot of newbs will probably soon be fleeced badly. I've sold a small portion of my holdings to be ready for the drop.

But then there's the question of China....

[trace666]

Overall volume is pretty high actually.
http://data.bitcoinity.org/#caaaddfiaa

However the comparison is somewhat flawed because of the zero fee policy of BTCChina.

Yes, volume is driven to BTCChina because of this, but it is a reality that more BTC are traded there than at e.g. Bitstamp.

I don't think so.
Look: http://data.bitcoinity.org/#caaaadfiaa
That says volume is higher by a factor of  2.5M/1.5M=1.67 and I think it's easy for the volume to be inflated by at least a factor of two with zero fees.

Your chart proves my original point that Bitstamp is not "the market", that BTCChina is larger in volume than Bitstamp and that volume discussions based solely upon Bitstamp volumes are not indicative of the BTC market as a whole.

Do you have a reading impairment?

No, thanks for asking.
Feel free to state your point more clearly -- it obviously hasn't reached its audience.

[Hawker]

Its hard to compare the April market with todays market.  Back then, a whale could pump or dump 2000 Bitcoin on mrgox and shape the market for hours.

But in April, the West was the Bitcoin market.  Now we are an afterthought with BTCChina doing almost as much in a day as gox, stamp and btce combined.  What this means is that a crash has to hit 5 or 6 exchanges at the same time. 

In the absence of a bad news story, its very hard to see how a crash can happen now.

[traderCJ]

Well, I for one agree with Rpietila. This is a tipsy situation. We have a massive influx of newbs buying BTC and altcoins blinded by greed and hoping to get rich quick. Cryptsy is experiencing serious problems with capacity and google trends is at a new ATH, It's beginning to look a lot like the climax of the April bubble. I don't envisage a crash though, but a correction lies ahead in the near future IMO.

A lot of newbs will probably soon be fleeced badly. I've sold a small portion of my holdings to be ready for the drop.

But then there's the question of China....

How do we know it's an influx of newb money?  I'll pose an alternate scenario.  People who have been into BTC for awhile are converting more of their fiat into BTC.  However, since they've been around awhile, they may be reluctant to continue to dump money in past $1k.  I know I am.  Irrational perhaps, but I do have a problem buying something at such a premium that I bought so much cheaper early this year.  This combined with large blocks of investment capital just parked in cold wallets could produce these patterns of steep inclines as large blocks of money come in, then cool off periods when we cross critical price thresholds.  The Chinese certainly threw a wrench into things, because they tend to be gamblers and were obviously inexperienced in this particular market.  If the old steady hands hadn't been around when the Chinese markets slumped, we probably would have had a full blown April all over again.  Now they've wised up like we did.  I expect that the Chinese will drive the alt coin market into fits of mass panic and hysteria in the upcoming months.  Buy! Sell! Buy! Sell!

[User705]

I think my math is right but at this valuation aren't there 6 million usd of new coins per day getting mined.  If prices double it will be 12 million usd per day and that's not including alt coins.  I think Litecoin is generating well over a million usd per day as well.  So at $2000/btc, 500 million usd gets created each month?   

[Apraksin]

How do we know it's an influx of newb money?  I'll pose an alternate scenario.  People who have been into BTC for awhile are converting more of their fiat into BTC. 

Don't think so, at least not regarding the alts. I'm following a bitcoin thread on an Norwegian forum and we've had a massive increase in newbs asking "where do I buy LTC?", "How do I transfer USd to cryptsy?", "Wich alt is the best to buy?" etc.

Also, check out google trends on altcoin: http://www.google.no/trends/explore?q=altcoin#q=altcoin&cmpt=q

The newbs are coming, and a lot of them are going to leave crying.

[traderCJ]

How do we know it's an influx of newb money?  I'll pose an alternate scenario.  People who have been into BTC for awhile are converting more of their fiat into BTC. 

Don't think so, at least not regarding the alts. I'm following a bitcoin thread on an Norwegian forum and we've had a massive increase in newbs asking "where do I buy LTC?", "How do I transfer USd to cryptsy?", "Wich alt is the best to buy?" etc.

Also, check out google trends on altcoin: http://www.google.no/trends/explore?q=altcoin#q=altcoin&cmpt=q

The newbs are coming, and a lot of them are going to leave crying.

I agree that the alt coin market will start going bonkers (hell, it already is).  However, I don't think they will be able to crash the BTC market like in April.  I believe a crash like that would stem from a lack of confidence in the technology, which is what happened in April .. So I don't think comparisons to April are terribly relevant.  How many times have people predicted crashes over the past few months based on coincidences with April data points?

As a sidenote .. I think the trollbox @ BTC-E represents the lowest form of humanity.  Noobs should steer clear.

[elebit]

I think my math is right but at this valuation aren't there 6 million usd of new coins per day getting mined.  If prices double it will be 12 million usd per day and that's not including alt coins.  I think Litecoin is generating well over a million usd per day as well.

The question you should ask yourself is: Do you expect these 6 M USD to be in the market? At what price point will these miners cash out?

Mining equipment is much too expensive for people to cash out immediately. It does not matter if thousands of Bitcoins are minted every day if the holders think that the price is too low to sell.

And the altcoins are mostly traded in BTC, so I don't think any valuation in dollars really make sense there. Cash flows in and out of Bitcoins almost exclusively.

[neutrinox]

Rpietila, when you compare the current situation to the April crash, I think you miss one detail:

The April crash was largely caused by MtGox going down. Now there isn't a single point of failure like that anymore.

[Siegfried]

Isn't this a logical fallacy?  This current run up is different than april in more aspects.  Am I right?

I think a crash is warranted if we hit $3k by Christmas.

You speak about logic.

1. In what aspects is the current runup different?

2. What data supports your prediction?

1) the market has been put into a microscope by media, ie ny times forbes, bloomberg, etc, 2nd market

2) we are still at the 1/4 equivalent of the april run up imo.

1. No big difference.

2. It is not an imo case, if data is available. In spring the top was 20.0x the previous base, now we are 17.6x.

1/4 would be 5x. If spring repeats itself, we will see $1,300 intraday. If base is calculated from $120, it is a different case, then it is $2400 and we are now half way through.

Have you any idea that I actually watch these charts several hours per day, and the reason for the posts is to distill the information for others to learn and act on?

Your wisdom is much appreciated.

[bitleif]

The April crash was largely caused by MtGox going down.

What do you base that on? Gox may have been a trigger cause, but the April crash was one of the most predictable crashes in finance history, far more clear-cut than the current situation. It would have crashed regardless. Like Schiff says, it was a bubble in search of a pin.

[Slingshot]

 Some here seem to be reviewing the wrong type of data. Or at the wrong time. Or in the wrong frame of mind.



 Mainstream news isn't going to offer much in the way of serious thoughts when it comes to Bitcoin or the alt. coins.

 Nor is reading anything about the data from TODAY of all days. Or Thursday (Thanksgiving). Or even since the middle of this week when it comes to any American or Western European BTC Exchange Service data.



 Yes fundamentals and technical's really both matter a lot.

 But this is a Breakout period of the birthing of Crypto-Currencies. This truly is the start of a Monetary Revolution.



 Sure there will be many corrections ahead. And many price surges too. And many trading levels as BTC and other Crypto's march forward.


 As for why anyone would pay x for y (alt-coins) that's silly! It's because they believe they have Value.


 I did enjoy reading this thread though. Seems like a bright bunch here. But maybe a bit nervous, and maybe a bit too nervous for what's arrived! (Bitcoin, and all the various alt-coins).


 Best get used to this being the new ultimate high stakes poker game of sorts. (Best get used to the price swings and all), or get into another line of trade. This is going to be harrowing for quite some time to come. As in wild swings followed by calmer periods, then repeat the same thing over and over. Seems no one here ever traded in the Forex? Or at least never at any level above 10/1 which is extremely sage advice except in the best moments where it's obvious what looms right then and there!


 From a fundamental reasoning BTC will keep marching upwards, but with many corrections. (others may like the term crash) but it's not correctly applied here. This is a new ballgame. A whole new ballgame.


 From a technical perspective $900-ish is the 1st major support level. Below that it's a long way back to any strong support at around $400 if memory serves me correctly, I wont bother to look at the charts now for that one. Fact is BTC broke way, way out of it's prior trading range of $80 to $150s. So heading back there isn't impossible. But it may only be for hours instead of days if that should occur. I seriously doubt it will but it's possible, but with quick recovery of sorts, at least partially. The bottom is likely around $900, or $400 now. Instead of the old trading range of $80 to $150s.

 The new trading range is likely >$800 to <$1300 for a while to come, but not a long while. After that it's either up higher to a new record trading range, or instead a backwards for a spell. It all 'depends'...

 Get used to sweating bullets if your not used to playing high stakes capitalist games because that is what this is if you have a lot on the line. Best stay diversified so that nothing tragic could occur if you have most at stake here and not much in the way of reserves. Otherwise what are we really chatting about? Nervousness...




Caveat emptor - let the buyer beware!

[ajax3592]

My gut instinct says the price will crash and more than 50% what it's currently.
The whales in China have to book their profit in trading after-all!

[Okurkabinladin]

Rpietila, when you compare the current situation to the April crash, I think you miss one detail:

The April crash was largely caused by MtGox going down. Now there isn't a single point of failure like that anymore.

You really believe we would hit 1000 back in april, if not for Gox? Market doesn´t work like that.

[Apraksin]

If there's a bitcoin correction, I wonder if the altcoins will follow or not.

Oh yes, most of them will. After all they are intimately bound to BTC for cashing in and out and some of them are extremely overbought at the moment. If their value suddenly halves because BTC halves I expect pandemonium with sheep rushing to the exit.

[rpietila]

People who have been into BTC for awhile are converting more of their fiat into BTC.

Hmm... this is indeed possible. Again from my own experience, I started to accumulate more of them on top of my previous holdings, when the price had risen significantly early this year, I made for example a BTC2,000 purchase when the price was already at $70. Then I sold very little at >200 and bought very much at <100, and afterwards.

In dollar terms this previously large holder therefore contributed a lot towards the rise.

Now I have decided that I have enough. So I have a diversification schedule that aims to keep BTC at 80% of portfolio. If I have less, I am "short" and positioned to buy back in the event of crash. If I have more, I am waiting for an opportune time to sell some. For me, an opportune time came 2 weeks ago when China was at 45% premium. No matter where the price goes from here, I am fine.

But the thing is that because I am already unloading my bitcoins, does not mean that everybody should be. There are a lot of people who are as rich (or richer) than I am, and not nearly as loaded with bitcoins. For them, this current runup may be a good opportunity to buy more, despite that the price is much higher than it was only 2 months ago.

At any rate, if price goes up quickly, it makes sellers hesitant to sell, buyers even more anxious to buy, the price go up even more quickly, and when it has gone to parabolic (defined by roughly 50-100% increase in 72 hours), it will crash. There is no going around this.

[oakpacific]

People who have been into BTC for awhile are converting more of their fiat into BTC.

At any rate, if price goes up quickly, it makes sellers hesitant to sell, buyers even more anxious to buy, the price go up even more quickly, and when it has gone to parabolic (defined by roughly 50-100% increase in 72 hours), it will crash. There is no going around this.

That pretty much is the only thing missing in your crash picture--rapidly ascending price, we are now stalling and flucutating.

[ElectricMucus]

There are smooth and spiky tops, in the former the fluctuations cancel each other out in the latter they get in phase with each other.

[Dr Bloggood]

Great thread!

Get used to sweating bullets if your not used to playing high stakes capitalist games because that is what this is if you have a lot on the line. Best stay diversified so that nothing tragic could occur if you have most at stake here and not much in the way of reserves. Otherwise what are we really chatting about? Nervousness...

I have no problem dealing with the volatility, I'm prepared to lose it all, and investing more than 10% would be crazy anyways.

What I'm more "nervous" about is some technological or political problem coming up, bringing BC down to 0. Restrictions imposed by the government e.g., problems with the blockchain, etc... these are the only things that would not be nice.

[Pruden]

Data used: Bitstamp's hourly volume weighted average historical trades Nov 1, 00:00 - Nov 30, 09:00.

Total volume during that period: BTC953,782.

Code:

price        volume     mid point    BTC      $m
$200-299     BTC215,619 $250.00   215619 $53.90
$300-399     BTC208,384 $350.00   208384 $72.93
$400-499     BTC135,057 $450.00   135057 $60.78
$500-599     BTC98,430  $550.00    98430 $54.14
$600-699     BTC86,344  $650.00    86344 $56.12
$700-799     BTC46,202  $750.00    46202 $34.65
$800-899     BTC73,779  $850.00    73779 $62.71
$900-999     BTC47,990  $950.00    47990 $45.59
$1000-1099   BTC36,849  $1050.00   36849 $38.69
$1100-1199   BTC5,127   $1150.00    5127  $5.90

During November, 59% of the trades (by BTC volume) happened at prices lower than $500. Conversely, only 9% happened on $900 or higher. The average price for all trades was $517.

Bitstamp might have seen its market share greatly diminished along your time frame. I have imitated your analysis with bitcoinity data for all USD exchanges:

http://data.bitcoinity.org/#ccacdfdgaa

Doubling from $205 to $416 takes 1,67 MBTC, while doubling from $560 to $1130 takes 2,14 MBTC. Please notice both intervals include the same number of crashcorrections (one) and, roughly, of days (14 to 12).

In conclusion, during November, 49% of the trades happened at prices lower than $500.

Thanks for encouraging me to delve into the numbers, I always enjoy some analysis, especially if it makes me a lot more confident on current price levels than I was a few minutes ago.