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

[rpietila]

The rise is so fast that it just cannot do it exponentially (fixed % every day), it'll have to go parabolic, crash, parabolic, crash.

Our 6.3% per day during November (which oakpacific renamed "stalling") is such fast growth that we will be at $1 million dollars in:

March 21, 2014.

Well I had this kind of logic and prediction last spring, and it is the most famous thing where I have been wrong. (Is there another?)

If that happens, it is called bitcoin singularity. It just eats dollars away - in the end selling bitcoins for dollars becomes such a pain that nobody will do it anymore, and the whole world wants to buy. The endgame is fast, as for practical reasons only real property is accepted. If you want bitcoins, you need to have or produce something actually valuable.

Before that, 6.3% is unstable. It will either go overdrive and crash or stall (which can also be followed by crash, although not necessarily).

[beaconpcguru]

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. 

You seem to assume the volume BTC is as reported by your numbers atleast, my own estimates report to me that it only took 35 million dollars and ~30,000 BTC bought to make this happen.

[rpietila]

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

Every time I write, using "you" is funny because it can mean singular, plural or general. In Finnish we have different words for each.

No need to apologize. I think the "supporting rpietila" movement has already grown out of proportion, I've received several PM's even

[explorer]

  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.

    This seems to be more and more the case. That, and significant new money, topped off by a more diluted pool of whales selling, US senate hearings, etc. Pretty much all of bitcoin speculation is opinion. More exposure, more exchanges, more money. It won't eliminate spikes and drops (my Opinion   ) but those are the factors that I see as closing the gaps between Events, and somewhat moderating them too.  I think (there's that Opinion again) that having this last spurt of growth makes the whole more viable, and more likely to realize its potential than ever before. On that I base my opinion that $500 is unlikely, and if it came, it would be short lived.

[BitchicksHusband]

The rise is so fast that it just cannot do it exponentially (fixed % every day), it'll have to go parabolic, crash, parabolic, crash.

Our 6.3% per day during November (which oakpacific renamed "stalling") is such fast growth that we will be at $1 million dollars in:

March 21, 2014.

Well I had this kind of logic and prediction last spring, and it is the most famous thing where I have been wrong. (Is there another?)

If that happens, it is called bitcoin singularity. It just eats dollars away - in the end selling bitcoins for dollars becomes such a pain that nobody will do it anymore, and the whole world wants to buy. The endgame is fast, as for practical reasons only real property is accepted. If you want bitcoins, you need to have or produce something actually valuable.

Before that, 6.3% is unstable. It will either go overdrive and crash or stall (which can also be followed by crash, although not necessarily).

How do you calculate the 6.3% for November?  (I've never been good at interest calculations.  I'm getting over 15% per day.  Is this a simple vs. compound thing?)

[SheHadMANHands]

The rise is so fast that it just cannot do it exponentially (fixed % every day), it'll have to go parabolic, crash, parabolic, crash.

Our 6.3% per day during November (which oakpacific renamed "stalling") is such fast growth that we will be at $1 million dollars in:

March 21, 2014.

Well I had this kind of logic and prediction last spring, and it is the most famous thing where I have been wrong. (Is there another?)

If that happens, it is called bitcoin singularity. It just eats dollars away - in the end selling bitcoins for dollars becomes such a pain that nobody will do it anymore, and the whole world wants to buy. The endgame is fast, as for practical reasons only real property is accepted. If you want bitcoins, you need to have or produce something actually valuable.

Before that, 6.3% is unstable. It will either go overdrive and crash or stall (which can also be followed by crash, although not necessarily).

Didn't whats-his-face (oracle picture) write something up a few months back about how Bitcoin is prone to exponential (unsustainable) growths and "crashes"?  Can't find it now..

His thoughts were that this pattern of bubbles would continue, though naturally decreasing in volatility in time.  From a psychological perspective, it's still interesting though.  Are bubbles less likely in Bitcoin considering everyone is so constantly aware and thinking about them? 

[ElectricMucus]

It's all part of one big bubble 

[explorer]

 From a psychological perspective, it's still interesting though.  Are bubbles less likely in Bitcoin considering everyone is so constantly aware and thinking about them? 

The constant of Greed pretty much promises the continuation of bubbles/crashes. magnitude and frequency do seem to be on the fall and rise respectively though. As price rises, less and less of a blip on the line needs to be made to realize a profit.  More and more hands stirring the pot, not necessarily in unison, creates more and more vortexes, but less slop over the side  

[traderCJ]

The rise is so fast that it just cannot do it exponentially (fixed % every day), it'll have to go parabolic, crash, parabolic, crash.

Reality check:  The only thing that gives BTC value is faith.  Faith is mass psychology.  The value of BTC is pure mass psychology, as are damn near all other investments.  I don't care if it's dollars in your pocket, shares of Apple or a bar of gold.  It's all psychology.  About the only thing people can agree on is the value of food, basic shelter and love.  The absolute survival necessities.  Beyond that, it's all a matter of anticipating how other people will value that "thing".  The gold bullion you have has value because other people agree with you.  Will they feel the same way tomorrow?  Shrug.  The only thing this TA does, in my opinion, is capture trends in human psychology (the other traders out there following your TA philosophy, other philosophies, their gut, or some algorithm a guy programmed).

[BitcoinAshley]

Every time I write, using "you" is funny because it can mean singular, plural or general. In Finnish we have different words for each.

If you really want to differentiate, you can use "you" for singular, "y'all" for plural, and "one" for general. Examples:

If you sell now, you are a dipshit.

If y'all sell now, all y'alls are dipshits.

If one were to sell now, one would most certainly be a dipshit.

 

[oda.krell]

Rpietila, your analysis is bad and you should feel bad.

You're either trying to prove a point and cherry pick your data accordingly, or you're honestly too naive to see that in late 2013 you simply cannot take data from one exchange alone and then draw grand conclusions from it.

Here are two charts, daily btc volume over time and daily USD volume over time, summed up over mtgox, bitstamp and btcchina (where the CNY exchange rate for btcchina was fixed at 1/6.1).

I'm too lazy to draw in a nice moving average, but I trust you can see the rough trend yourself: there were indeed two spikes in btc volume compared to which we are somewhat lower now, but not drastically so, and certainly we're not lower in btc volume than in the beginning of the month. In simpler terms: btc volume is stable or slightly going up.

And USD volume paints a stronger version of the same picture, as is to be expected with the hugely increased per coin value: two spikes earlier this month, and we're slightly below them now, but overall it's going up.

That's all there is to say. Looking at those charts and concluding that we are rallying up on "decreasing volume" is wishful thinking at best, or wilful deception at worst.

[Vycid]

Rpietila, your analysis is bad and you should feel bad.

You're either trying to prove a point and cherry pick your data accordingly, or you're honestly too naive to see that in late 2013 you simply cannot take data from one exchange alone and then draw grand conclusions from it.

Here are two charts, daily btc volume over time and daily USD volume over time, summed up over mtgox, bitstamp and btcchina (where the CNY exchange rate for btcchina was fixed at 1/6.1).

I'm too lazy to draw in a nice moving average, but I trust you can see the rough trend yourself: there were indeed two spikes in btc volume compared to which we are somewhat lower now, but not drastically so, and certainly we're not lower in btc volume than in the beginning of the month. In simpler terms: btc volume is stable or slightly going up.

And USD volume paints a stronger version of the same picture, as is to be expected with the hugely increased per coin value: two spikes earlier this month, and we're slightly below them now, but overall it's going up.

That's all there is to say. Looking at those charts and concluding that we are rallying up on "decreasing volume" is wishful thinking at best, or wilful deception at worst.

Wow! That is indeed very different. Thank you.

It appears that sudden volume spikes are associated with big changes in the price, but obviously that is only observable ex post facto and therefore it isn't useful information.

[jbreher]

If you really want to differentiate, you can use "you" for singular, "y'all" for plural, and "one" for general.

If y'all sell now, all y'alls are dipshits.

Some places, y'all is singular. 'Round these parts, it takes all y'all to be plural.

[TiagoTiago]

If you really want to differentiate, you can use "you" for singular, "y'all" for plural, and "one" for general.

If y'all sell now, all y'alls are dipshits.

Some places, y'all is singular. 'Round these parts, it takes all y'all to be plural.

In old English, "you" was supposed to be plural only and there was another word for singular "you"; seems the cycle is repeating...

[User705]

Fasten your seatbelts.

[Nemesis]

Fasten your seatbelts.

LOL only for noobs.....

The next day they will chase the train again.

[aminorex]

Since the second week of November began, the rise has been approximately linear, not exponential, with drops coming on the weekends.  I suspect that institutional buying is driving the rise, and they don't work on weekends.

[Vycid]

Since the second week of November began, the rise has been approximately linear, not exponential, with drops coming on the weekends.  I suspect that institutional buying is driving the rise, and they don't work on weekends.

I think it's just that the banks are closed and it's hard for buyers - individual or institutional - to get money to the exchanges to support the sell pressure.

[rpietila]

Rpietila, your analysis is bad and you should feel bad.

I like y'all's style.

You're either trying to prove a point and cherry pick your data accordingly, or you're honestly too naive to see that in late 2013 you simply cannot take data from one exchange alone and then draw grand conclusions from it.

Honestly naive sounds better to me. I had just gotten to use Bitstamp instead of gox for the analyses, and now the china thing steals the show. It was not intentional to bias this, and I have not verified the "corrected" figures myself yet either. It is very possible that you are right.

I'm too lazy to draw in a nice moving average, but I trust you can see the rough trend yourself: there were indeed two spikes in btc volume compared to which we are somewhat lower now, but not drastically so, and certainly we're not lower in btc volume than in the beginning of the month. In simpler terms: btc volume is stable or slightly going up.

This was not the point. The point was to show that there is markedly less volume in higher prices, compared to lower. It is not the same thing as higher volume over time. The point was to visualize (e.g.) that if only 2% of coins have been traded at over $700, the price level is not yet very established, and will not be supported by buyers if the selling intensifies.

Main thing, as is always the case with fast runups, is the lack of support levels. We have one in $400 and the next one in $190-$266. I don't believe we will ever see the latter, but the former is very much a possibility. All this talk about bitcoin "entering mass adoption" and "everybody talking about it" was there in May. Perhaps we now have 10x more substance, but then again the price is 10x higher.

And USD volume paints a stronger version of the same picture, as is to be expected with the hugely increased per coin value: two spikes earlier this month, and we're slightly below them now, but overall it's going up.

Every spike in USD volume can be the last. We are multiples higher than in the beginning of the month. I appreciate your willingness to delve into the matter but it does not change my very cautious outlook. As for psychology, when everyone thinks that it is time to buy, the time to buy has just ended.

To repeat: by "very cautious" I mean that 80% in bitcoin is warranted but 90-99% is not in these market conditions. If you have less than 80%, then you are actually more bearish than me by your actions.  

[johnyj]

 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.

It is a belief that is growing stronger and stronger among people, and this belief is fundamentally based on very limited supply of bitcoin and almost unlimited supply of fiat money

Once this belief established, it is impossible to break it, it will change people's anticipation and behavior, eventually become a self-realized prophecy: When coin price dropped quickly, there will be many people come in to buy and lift the price back immediately, until they have exhausted all their available risk capital

And then next wave will be taking loan to buy when it drops, that might push the price into bubble area, but as long as the mining cost stays low, fiat money will first flow towards mining equipment makers