THE CRASH OF THE BITCOIN BUBBLE HAS BEGUN! SEE CHART.

[Moogle]

I look forward to the pop. I'll once again buy more coins when it hits low then sit on them and wait for it to rise again ;-)

[Lone Wolf]

I look forward to the pop. I'll once again buy more coins when it hits low then sit on them and wait for it to rise again ;-)

that's the idea.  buy low, sell high.

[raspcoin]

I look forward to the pop. I'll once again buy more coins when it hits low then sit on them and wait for it to rise again ;-)

that's the idea.  buy low, sell high.

The idea is to fool everyone into thinking low is high.

[Lone Wolf]

Here's a very good review on Amazon of the book A Short History of Financial Euphoria by John Kenneth Galbraith.  Only 128 pages and a good read for young people who think they have it all figured out and that this bubble is different from all the rest. 

"Those who don't learn from history are doomed to repeat it" is not some quaint cliche that doesn't apply anymore.

Collective hysteria, June 19, 2013

By eqtbooks - See all my reviews

This review is from: A Short History of Financial Euphoria (Penguin business) (Paperback)

In 1954 the Canadian-born, Keynesian celebrity economist, serial author, academic enfant terrible and producer of timeless quotations - Ken Galbraith published his now classic The Great Crash of 1929. It's never been out of print since. A Short History of Financial Euphoria is a compendious later day sequel, with a broader scope as it tries to establish a framework for how to analyze financial bubbles. It is a short, witty book with superb, sometimes cynical language. It's a pleasure to read.

The general framework in itself is penned down in two initial chapters and in the concluding ending chapter, in total 30 pages. In between these chapters the author exemplifies with a chapter each on the Dutch 17th century tulip mania, the almost contemporary British South Sea bubble, the issuance of un-backed regional US fiat money at the time of the American revolution (which on the one hand paid the US military forces and won the country its independence but on the other hand lead to a long speculative period, inflation and the inevitable crash) and finally the stock market disasters of 1929 to 1932 and of October 1987.

Galbraith presents a number of factors underlying financial euphoria. First there is the combination of a person's private profit motive - a wish to get rich without effort - and group psychology that blocks all doubts. Further the "extreme brevity of financial memory" makes sure that we don't learn from previous bubbles (a new and risk seeking generation is always ready to enter the market) plus a naïve perceived association between wealth and intelligence. Finally, all financial bubbles include the creation of debt in some form. Financial innovation is seldom anything else than leverage. "The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version." Galbraith notes that the booms and busts to a large extent seem to have endogenous origins. Much like MIT's Andrew Lo would argue today.

The anatomy of the bubble is often predictable. At first there is some profitable opportunity that captures the mind of a group. Second, the price goes up. Third, this leads to a self-feeding positive loop as the increased prices draw further investors which creates further price increases. There are two groups that participate in the bubble. On the one hand those who are believers and are convinced that a new world of immediate wealth has been born, on the other hand those who think that the price rises are unsustainable but intend to ride the wave and exit when the crash approaches. The speculative period is prolonged by the fact that those participating psychologically must justify what has made them rich and has given them a feeling of being successful and intelligent persons. ANY DOUBTERS ARE PERCEIVED AS ATTACKING THEIR VERY PERSON. "Speculation buys up, in a very practical way, the intelligence of those involved."

Finally something, unimportant what, triggers a reversal. Those who thought that they could exit in time find the emergency exits overcrowded and those who believed in a new world turn into mourners. When the mass hysteria ends there will be new regulation that takes no notice of the fact that the speculative human psyche is ill suited for regulation. "Nothing is more remarkable than this: in the aftermath of speculation, the reality will be all but ignored." Galbraith is of the opinion that it isn't possible to avoid speculative bubbles by means of regulation. The only thing that helps is the understanding of the mass hysteria that creates them. This however, will not be the media's, the public's and the regulator's view. Since so many has participated in the mania it's much easier to search for scapegoats than to admit one's own stupidity.

It's a great shame that the orthodoxy of neoclassical economics for such a long time excluded psychology from mainstream financial thought. Galbraith, as Hyman Minsky, draws extensively on John Maynard Keynes concept of "animal spirits" when he views financial markets. This might be a short book but it's up there with Gustave LeBon's The Crowd when it comes to best picturing the madness of mobs.

[raspcoin]

Here's a very good review on Amazon of the book A Short History of Financial Euphoria by John Kenneth Galbraith.  Only 128 pages and a good read for young people who think they have it all figured out and that this bubble is different from all the rest. 

"Those who don't learn from history are doomed to repeat it" is not some quaint cliche that doesn't apply anymore.

Collective hysteria, June 19, 2013

By eqtbooks - See all my reviews

This review is from: A Short History of Financial Euphoria (Penguin business) (Paperback)

In 1954 the Canadian-born, Keynesian celebrity economist, serial author, academic enfant terrible and producer of timeless quotations - Ken Galbraith published his now classic The Great Crash of 1929. It's never been out of print since. A Short History of Financial Euphoria is a compendious later day sequel, with a broader scope as it tries to establish a framework for how to analyze financial bubbles. It is a short, witty book with superb, sometimes cynical language. It's a pleasure to read.

The general framework in itself is penned down in two initial chapters and in the concluding ending chapter, in total 30 pages. In between these chapters the author exemplifies with a chapter each on the Dutch 17th century tulip mania, the almost contemporary British South Sea bubble, the issuance of un-backed regional US fiat money at the time of the American revolution (which on the one hand paid the US military forces and won the country its independence but on the other hand lead to a long speculative period, inflation and the inevitable crash) and finally the stock market disasters of 1929 to 1932 and of October 1987.

Galbraith presents a number of factors underlying financial euphoria. First there is the combination of a person's private profit motive - a wish to get rich without effort - and group psychology that blocks all doubts. Further the "extreme brevity of financial memory" makes sure that we don't learn from previous bubbles (a new and risk seeking generation is always ready to enter the market) plus a naïve perceived association between wealth and intelligence. Finally, all financial bubbles include the creation of debt in some form. Financial innovation is seldom anything else than leverage. "The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version." Galbraith notes that the booms and busts to a large extent seem to have endogenous origins. Much like MIT's Andrew Lo would argue today.

The anatomy of the bubble is often predictable. At first there is some profitable opportunity that captures the mind of a group. Second, the price goes up. Third, this leads to a self-feeding positive loop as the increased prices draw further investors which creates further price increases. There are two groups that participate in the bubble. On the one hand those who are believers and are convinced that a new world of immediate wealth has been born, on the other hand those who think that the price rises are unsustainable but intend to ride the wave and exit when the crash approaches. The speculative period is prolonged by the fact that those participating psychologically must justify what has made them rich and has given them a feeling of being successful and intelligent persons. ANY DOUBTERS ARE PERCEIVED AS ATTACKING THEIR VERY PERSON. "Speculation buys up, in a very practical way, the intelligence of those involved."

Finally something, unimportant what, triggers a reversal. Those who thought that they could exit in time find the emergency exits overcrowded and those who believed in a new world turn into mourners. When the mass hysteria ends there will be new regulation that takes no notice of the fact that the speculative human psyche is ill suited for regulation. "Nothing is more remarkable than this: in the aftermath of speculation, the reality will be all but ignored." Galbraith is of the opinion that it isn't possible to avoid speculative bubbles by means of regulation. The only thing that helps is the understanding of the mass hysteria that creates them. This however, will not be the media's, the public's and the regulator's view. Since so many has participated in the mania it's much easier to search for scapegoats than to admit one's own stupidity.

It's a great shame that the orthodoxy of neoclassical economics for such a long time excluded psychology from mainstream financial thought. Galbraith, as Hyman Minsky, draws extensively on John Maynard Keynes concept of "animal spirits" when he views financial markets. This might be a short book but it's up there with Gustave LeBon's The Crowd when it comes to best picturing the madness of mobs.

What exactly is your interest in this forum? Advertising products, spreading misinformation, or something even wilier?

[led_lcd]

and anyone who makes crazy predictions that btc is worth $100,000 (2 analysts at wedbush securities) or $1 million (hugh hendry at eclectica asset management) is either a fool, a liar or someone who is long and wants to pump up the item so they can realize a huge profit and dump their holdings on the latecomers.

This.

'Rigged Money' by Lee Munson

[Lone Wolf]

What exactly is your interest in this forum? Advertising products, spreading misinformation, or something even wilier?

advertising products???  in case you didn't notice i didn't write that book.

what misinformation have i spread?  please enlighten me.

this is a forum to talk about btc right ?  i can have an opinion on btc can i not?  last time i checked its a free country and we have freedom of speech.

"ANY DOUBTERS ARE PERCEIVED AS ATTACKING THEIR VERY PERSON."  still don't get it huh?

[raspcoin]

and anyone who makes crazy predictions that btc is worth $100,000 (2 analysts at wedbush securities) or $1 million (hugh hendry at eclectica asset management) is either a fool, a liar or someone who is long and wants to pump up the item so they can realize a huge profit and dump their holdings on the latecomers.

This.

'Rigged Money' by Lee Munson

Was the Internet a bubble? Possibly in the beginning, yet today's market value of all Internet-related assets is higher than ever.

[Lone Wolf]

Was the Internet a bubble? Possibly in the beginning, yet today's market value of all Internet-related assets is higher than ever.

the internet wasn't a bubble.  that's impossible, it can't be traded for a profit/loss.  internet *stocks* were a HUGE bubble in 1997-2000.

how old were you during that time?

[led_lcd]

Was the Internet a bubble? Possibly in the beginning, yet today's market value of all Internet-related assets is higher than ever.

If you're referring to the Dot-com bubble, it was a bubble:

http://en.wikipedia.org/wiki/Dot-com_bubble

You can't compare current market fundamentals and apply it to market prices at the time when the bubble burst. At the time the bubble burst the fundamentals did not support the market valuations.

[raspcoin]

What exactly is your interest in this forum? Advertising products, spreading misinformation, or something even wilier?

advertising products???  in case you didn't notice i didn't write that book.

what misinformation have i spread?  please enlighten me.

this is a forum to talk about btc right ?  i can have an opinion on btc can i not?  last time i checked its a free country and we have freedom of speech.

"ANY DOUBTERS ARE PERCEIVED AS ATTACKING THEIR VERY PERSON."  still don't get it huh?

I cannot tell which affiliations you have with the publisher of the book, nor with the agenda it represents. Your theory has been unable to predict the future in cryptocurrencies so far (including the recent correction to $950); ergo, is it not unreasonable to describe it as misinformative. Your attempt to change topic to personal rights does not strengthen your thesis.

[raspcoin]

Was the Internet a bubble? Possibly in the beginning, yet today's market value of all Internet-related assets is higher than ever.

the internet wasn't a bubble.  that's impossible, it can't be traded for a profit/loss.  internet *stocks* were a HUGE bubble in 1997-2000.

how old were you during that time?

I agree with the idea that many of the current Bitcoin-related ventures will not make it to the future. However, I take the opportunity to ignore the personal aspect of this discussion.

[raspcoin]

Was the Internet a bubble? Possibly in the beginning, yet today's market value of all Internet-related assets is higher than ever.

If you're referring to the Dot-com bubble, it was a bubble:

http://en.wikipedia.org/wiki/Dot-com_bubble

You can't compare current market fundamentals and apply it to market prices at the time when the bubble burst. At the time the bubble burst the fundamentals did not support the market valuations.

No, the Internet was never a bubble. Related companies were overvalued at the time, yes, but not the concept of the Internet. Cryptocurrencies constitute another breakthrough in technology, but many of the related ventures may as well go bankrupt.

[Lone Wolf]

I cannot tell which affiliations you have with the publisher of the book, nor with the agenda it represents. Your theory has been unable to predict the future in cryptocurrencies so far (including the recent correction to $950); ergo, is it not unreasonable to describe it as misinformative. Your attempt to change topic to personal rights does not strengthen your thesis.

ahaha! "I cannot tell which affiliations you have with the publisher of the book" you are a hoot!  yes, b/c i'm going to make SO MUCH money off a book that none of the young ppl like you (who think this time is different from every other time in history) think is worth reading and therefore will never buy or download off bittorrent.  and books are such a good moneymaker these days!

besides i'm simply a working joe who used to trade stocks and dabbles in technical analysis.

"the agenda it represents" omg.  its a historical book that was written in 1954.  too bad b/c galbraith can't profit off showing that every bubble in history has burst.  b/c he's DEAD.

you can take off your tinfoil hat now.  don't worry i'm not a part of the great conspiracy by the powers that be to bring down btc.

here we go again, its not my theory.  i didn't make any prediction of the future of cryptocurrencies.  i simply expect the speculative bubble that btc is currently in to burst.  its an opinion.  take it or leave it.  

don't take yourself so seriously.  you'll live longer.

this is going to be my new sig

"ANY DOUBTERS ARE PERCEIVED BY THE TRUE BELIEVERS AS ATTACKING THEIR VERY PERSON."

[solarflare]

First of all, Bitcoin is not a bubble, it's like TVs, cell phones, the internet or Facebook, it's a disruptive technology that responds to a need.
What we are experiencing is called exponential growth.

Secondly and a bit off topic, I don't see why Lone Wolf's advice should be discarded because he does not own any BTCs.
I agree with all those who think that Bitcoin is a risky investment and that's why I understand Lone Wolf's choice.

This post for example, is completely ridiculous:

Lone Wolf, if you have no "skin in the game" (as the sayin goes), why do you think your opinion about BTC matters? You think because you worked at a .com and owned a condo that you're some kind of authority on "bubbles"?

If you ain't willing to play the game, don't waste people's time trying to call it.

Anyway, maybe we are simply not talking about bubbles at the same scale.
Of course Bitcoin is only 5 years old and we will see tons of bubbles on the way to the moon.
But right now we just kinda took off. And the whole Bitcoin thing is not a bubble, it's there to stay.
I'm not delusional though, there is always an end and it could arrive in a hundred years as well as tomorrow.
But it won't be because "it's a bubble". There will be a reason, like a ban or a technical issue.

[Lone Wolf]

First of all, Bitcoin is not a bubble, it's like TVs, cell phones, the internet or Facebook, it's a disruptive technology that responds to a need.
What we are experiencing is called exponential growth.

Secondly and a bit off topic, I don't see why Lone Wolf's advice should be discarded because he does not own any BTCs.
I agree with all those who think that Bitcoin is a risky investment and that's why I understand Lone Wolf's choice.

Anyway, maybe we are simply not talking about bubbles at the same scale.
Of course Bitcoin is only 5 years old and we will see tons of bubbles on the way to the moon.
But right now we just kinda took off. And the whole Bitcoin thing is not a bubble, it's there to stay.
I'm not delusional though, there is always an end and it could arrive in a hundred years as well as tomorrow.
But it won't be because "it's a bubble". There will be a reason, like a ban or a technical issue.

just to clarify i don't think btc *itself* is a bubble.  i said its price or value is currently in a speculative bubble.  big difference.

[sidhujag]

There is ZERO chance that my posts will influence the price.  I am not delusional.  I am just someone who has experienced first hand the implosion of the dot com bubble and the real estate/credit bubble.  I just call 'em as I see 'em.

Just trying to tell people that "Those who don't learn from history are doomed to repeat it."

As for putting my money where my mouth is, anything that moves 50% in 1 day, in either direction, is untradeable.  I know that so why would I short btc?  No thanks.  I'll let idiots try that.

I think the waves being completes a signature to prices above $10k. Hundreds of
dollars of movement then will be ok and will provide plenty if liquidity to end waves... larger crashes may be 20% and next up $100k depending on news.

[hyper222]

dont think so.

[sender47]

great for my first post here...

Two factors
1) Bitcoins although are being mined, are finite, therefore the price will go high as is more and more difficult to mine, and as more people start to use it.

2) Being part of a highly (HIGHLY) controlled economy (I can only have the equivalent to 400 USD a year for internet and if I travel as much as 2000$ anything else is illegal), bitcoins for a lt of people that have to fight with these controlled economies see the bitcoins as a form of liberation.

Relating to the second point, the last "crash", that can be somehow related with countries like China saying no to bitcoin as it means to loss part of the control over their finances (many restrictive governments will do the same), will only encourage people to use it, as long as you can access the internet, now you will not only have some freedom about the knowledge you acquire and the opinions you express (something that as I say can only be expressed in the somewhat anonymity of the web) but you are now able to use this as an economic liberation.

Maybe the boom of news about bitcoins make it go faster in its value increase, but, that value is in no way artificially going up, it will continue to go up, and ironically this countries that want to execrate it and prohibit it are the big responsible of its grown.

The only true danger to bitcoins is the security, not only in the crypto currency itself, that for a good deal of years seems secure, but the security of wallets, as much of the online wallet services and others where you have your btc are not as safe as respectable bank, I strongly believe that this should be a priority, and hope its like that since the input.io downfall

BTW I live in Venezuela

[LatestBTC]

For now I think Bitcoin will continue to rise and possibly reach $1500 by late January due to the massive amounts of
mainstream media attention (both good and bad). After that I think there will be a big drop down to settle around $300 for a few months.

Ultimately I would expect Bitcoin to reach $10,000 in the future whenever it becomes much easier to purchase them with debit / credit cards and as it becomes stabler more and more online retailers will start accepting Bitcoin as a form of payment