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

[David Rabahy]

I have never gotten a single Bitcoin via mining and have absolutely no intention of ever trying.  Well, I did run the default miner for a few minutes just for fun/learning.

I have never purchased a single item using Bitcoin yet; I have given some gifts of Bitcoin away (only one has been bought back).

I was the spark for a local retailer, The Bronx Deli http://bronxdeli.com/, beginning to accept Bitcoin.

I brought in $10,000 (USD) (~1-2% of my total net worth) of non-retirement funds through a few different exchanges (to learn about them), fully prepared to lose it all in a flash (still am).  A couple of days ago, I sold BTC1 just to appease my wife, family and friends; they wanted proof that I could get out.

I'm a small number of days away from getting in $25,000 (UDS) of Roth IRA, i.e. tax-free growth, via SecondMarket & Equity Institutional after which I will draw out some more non-retirement funds to rebalance -- my mid-term target is to get back my original $35,000 (USD) (after taxes, fees, etc.).

The longer Bitcoin goes without a fatal flaw the greater the percentage of my net worth will be in Bitcoin but I won't be abandoning USD anytime soon.

I will not be attempting to time my ins and outs.  Anyone, including the OP, that thinks they can reliably and accurately predict corrections/crashes or anything else is deluding themselves although I sincerely appreciate the postings (they make for entertaining/thought-provoking reading).

[beaconpcguru]

I agree that the volume is questionable, mostly in China and Gox.  There are patterns to this but I don't care to elaborate because it seems to irritate people when you talk about the actual nature of coulds and woulds.  This is a great movie!

[rpietila]

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.

6.3% per day over the last 27 days is rapid, but it is not blowoff.

We actually did hit my blowoff trigger event Monday last week, that is why I sold. The price later corrected down -50% (in all exchanges but different times), but it was not yet the beginning of a prolonged cooling period.

I highly doubt that the next one will be a false alarm. It is possible that we go to $2k or $3k before the crash, but remember that with the current ascent (6.3% over X days and then 60% over the final 3 days), we will hit:

$2,000 in Dec 4th

$3,000 in Dec 11th

$4,000 in Dec 15th.

So:

1. Either we will have to slow down and have a sideways correction (which can possibly result in a crash when people realize that the rise has stopped and they are sitting on huge gains several times the ATH of one month ago, and technical indicators are going sour etcetc. somebody pulls the trigger first: manipulators, China, shorters, whales, traders, panickers, SSS subscribers; but buyers will not pick up because coins at $1,000 are not cheap and even if they were, it takes such a number of dollars to absorb them at these levels that it just does not happen)

2. Or we continue this "stalling" with 6.3% daily ascent until we hit either $2k, $3k or $4k before Christmas, and then crash legendarily to sub-$1,000 when all the forces outlined in (1.) - and then some - conflate.

Humankind's greatest disability is the lack of understanding of exponential function.

[rpietila]

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. 

Much appreciated. Do you also have the average price for November trades?

[piramida]

1. Either we will have to slow down and have a sideways correction (which can possibly result in a crash when people realize that the rise has stopped and they are sitting on huge gains several times the ATH of one month ago, and technical indicators are going sour etcetc. somebody pulls the trigger first: manipulators, China, shorters, whales, traders, panickers, SSS subscribers; but buyers will not pick up because coins at $1,000 are not cheap and even if they were, it takes such a number of dollars to absorb them at these levels that it just does not happen)

Scenario 1 is extremely unlikely. Bitcoin has never done this to date - sideways movement at an ATH then crash down. Sideways has always been about gathering forces before the move up. So scenario 2.

And yes, I know that history does not repeat itself etc etc. But since each and every crash always followed a big jump up, I think it is just one of the properties of this system.

[David Rabahy]

Humankind's greatest disability is the lack of understanding of exponential function.

http://en.wikipedia.org/wiki/Albert_Allen_Bartlett

[crazy_rabbit]

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.

6.3% per day over the last 27 days is rapid, but it is not blowoff.

We actually did hit my blowoff trigger event Monday last week, that is why I sold. The price later corrected down -50% (in all exchanges but different times), but it was not yet the beginning of a prolonged cooling period.

I highly doubt that the next one will be a false alarm. It is possible that we go to $2k or $3k before the crash, but remember that with the current ascent (6.3% over X days and then 60% over the final 3 days), we will hit:

$2,000 in Dec 4th

$3,000 in Dec 11th

$4,000 in Dec 15th.

So:

1. Either we will have to slow down and have a sideways correction (which can possibly result in a crash when people realize that the rise has stopped and they are sitting on huge gains several times the ATH of one month ago, and technical indicators are going sour etcetc. somebody pulls the trigger first: manipulators, China, shorters, whales, traders, panickers, SSS subscribers; but buyers will not pick up because coins at $1,000 are not cheap and even if they were, it takes such a number of dollars to absorb them at these levels that it just does not happen)

2. Or we continue this "stalling" with 6.3% daily ascent until we hit either $2k, $3k or $4k before Christmas, and then crash legendarily to sub-$1,000 when all the forces outlined in (1.) - and then some - conflate.

Humankind's greatest disability is the lack of understanding of exponential function.

I understand the paranoia of a crash- certainly I am nervous myself, but this time around it really feels like the infrastructure is doing a much better job of keeping up with the speculation. We went from 1 major conference a year to what seems like weekly bitcoin meet ups and events all over the place. I came home to the us to find everyone I know talking about bitcoin. Asking me about it, and pitching ideas for it.

Of course it's a bubble, but you have to consider as well we might be really starting to fulfill a niche. Speculation is now less speculative, (prior to April there was no china, no Chinese governments tacit approval, no us senate hearings with that sounded like the government was not interested in letting some non-us company get a lead in crypto)

So I think is price reflects a growing certainty about the future. We probably don't even need to be fueled by press coverage for that much longer. It would be enough to enter themainstream to to start slow steady growth.

I know a crash is in the future, but perhaps by then so many peoplew I'll be trying to get in that it will only serve to further the frenzy.

[Tirapon]

I understand the paranoia of a crash- certainly I am nervous myself, but this time around it really feels like the infrastructure is doing a much better job of keeping up with the speculation. We went from 1 major conference a year to what seems like weekly bitcoin meet ups and events all over the place. I came home to the us to find everyone I know talking about bitcoin. Asking me about it, and pitching ideas for it.

Of course it's a bubble, but you have to consider as well we might be really starting to fulfill a niche. Speculation is now less speculative, (prior to April there was no china, no Chinese governments tacit approval, no us senate hearings with that sounded like the government was not interested in letting some non-us company get a lead in crypto)

So I think is price reflects a growing certainty about the future. We probably don't even need to be fueled by press coverage for that much longer. It would be enough to enter themainstream to to start slow steady growth.

I know a crash is in the future, but perhaps by then so many peoplew I'll be trying to get in that it will only serve to further the frenzy.

This time its different.

[rpietila]

I know this time can be different. 6/2010-6/2011 saw about 6000x growth. Don't ever sell out, and stop picking on me for selling 20% and buying a castle 

[explorer]

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.

6.3% per day over the last 27 days is rapid, but it is not blowoff.

We actually did hit my blowoff trigger event Monday last week, that is why I sold. The price later corrected down -50% (in all exchanges but different times), but it was not yet the beginning of a prolonged cooling period.

I highly doubt that the next one will be a false alarm. It is possible that we go to $2k or $3k before the crash, but remember that with the current ascent (6.3% over X days and then 60% over the final 3 days), we will hit:

$2,000 in Dec 4th

$3,000 in Dec 11th

$4,000 in Dec 15th.

So:

1. Either we will have to slow down and have a sideways correction (which can possibly result in a crash when people realize that the rise has stopped and they are sitting on huge gains several times the ATH of one month ago, and technical indicators are going sour etcetc. somebody pulls the trigger first: manipulators, China, shorters, whales, traders, panickers, SSS subscribers; but buyers will not pick up because coins at $1,000 are not cheap and even if they were, it takes such a number of dollars to absorb them at these levels that it just does not happen)

2. Or we continue this "stalling" with 6.3% daily ascent until we hit either $2k, $3k or $4k before Christmas, and then crash legendarily to sub-$1,000 when all the forces outlined in (1.) - and then some - conflate.

Humankind's greatest disability is the lack of understanding of exponential function.

To clarify, by 'crash' do you refer to big drop and sustained (for some appreciable period) low(er) levels as April and previous, or something like Nov 19/20 with a ~50% drop recovered and surpassed in short order?  

[rpietila]

Crash would be a period where it takes several months (2 minimum) to regain the ATH. April took 7 months.

[maz]

Great thread, it's nice to see some fresh perspective on the current situation. Also good to see some statistics to provoke thought deeper thought on that matter rather than gut feeling.

[Odalv]

Crash would be a period where it takes several months (2 minimum) to regain the ATH. April took 7 months.

Keep calm. It is not easy to keep control over 3 brains.

[rpietila]

 

[Hawker]

Crash would be a period where it takes several months (2 minimum) to regain the ATH. April took 7 months.

But isn't that the problem?  All us old hands know that a "crash" will be a buying opportunity and for that reason the market simply won't crash until even us true believers start saying its crazy.  And that won't happen short of $10k.

[Minor Miner]

I think you really skew any case you are trying to make by looking at Bitstamp.    Most of the hardware sellers seem to use bitpay and I "think" bitpay sells through bitstamp which would explain why bitstamp has LAGGED gox/china throughout this entire rally.

[rpietila]

Crash would be a period where it takes several months (2 minimum) to regain the ATH. April took 7 months.

But isn't that the problem?  All us old hands know that a "crash" will be a buying opportunity and for that reason the market simply won't crash until even us true believers start saying its crazy.  And that won't happen short of $10k.

What is your downside target after $10k?

[Hawker]

Crash would be a period where it takes several months (2 minimum) to regain the ATH. April took 7 months.

But isn't that the problem?  All us old hands know that a "crash" will be a buying opportunity and for that reason the market simply won't crash until even us true believers start saying its crazy.  And that won't happen short of $10k.

What is your downside target after $10k?

I don't have one.  I proved my trading skills when I sold 500 btc at the $119.99 "top."  I do think that there are a lot of people who have learnt that the bitcoin market always bounces back and that will prevent a crash to $500.  I'm aware that is opinion rather than a researched fact.

[BitchicksHusband]

Here are some price points with logarithms (× 8 for convenience):

Price  Log  Months
100   14.0   3
200   16.1   2.1
300   17.3   1.2
400   18.2   0.9
500   18.9   0.7
600   19.4   0.6
700   19.9   0.5
800   20.3   0.4
900   20.7   0.4
1000   21.0   0.3


So, let's say that bitcoin spent 3 months in the 100s.  It will only spend 2 months in the 200s and it will spend about 5 weeks in the 300s.

Next, it will spend 1 month in the 400s and 3 weeks at 500 and 600.  

Then it will spend less than 2 weeks each at 700 and 800 less than a week at 900.

So, yes, every $100 point will be faster than the last.  This is to be expected.  Not "OMG!  It's going too fast!  Crash imminent!  SELL SELL SELL."

HAHAA  

It is not so simple. We also have to consider the fundamentals, fundalo-technicals (the long-term exponential chart), technicals, political and infrastructure situation, forum sentiment etc.

Forum sentiment has gone into full-blind territory (see altcoins for further proof).
Price is 3.5x long-term exponential trend (comp. $210 in April).
Long time no negative action from government (not good).


In my situation I would rather have a million of cash in the bank, a ton of silver in my vault, a castle, and more bitcoins than is the fair share of Estonia.  

That you ridicule me for actually doing something with my life and bitcoins, is a proof that you are blinded. Just wait  

You know what? My friend actually congratulated me   He thought I was doing good. What a jerk - not even mortgaged his dog for bitcoins.  

This wasn't directed at you (at least by me).  I just wrote it to explain to people what a logarithm should look like in a perfect world when people complained that bitcoin spent almost no time at $800 and $900.  Since this was to be expected, I wanted people to understand that it should be much faster than the $100s and $200s instead of expecting the $800s to take 3 months like the $100s.

And yes, I understand that there are other factors to consider and that there won't be a perfect logarithmic run-up.  And I didn't ridicule you at all, just people that were trying to convince everyone to panic sell in the 800s because it only took a week.

Anyway, I just don't want to be associated with insulting you, since I never did.

[johnyj]

It is because more and more people start to realize its true potential and start to hold. The coin supply is drying up quickly. Personally I have stopped selling coins after coin price passed $1000 mark