Stephen Reed's Million Dollar Logistic Model

[cr1776]

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I think it's possible the next peak could be $15000 around december

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Assuming you mean Dec 2014, let's hope that is an accurate prediction.   

[Hiro_Y3k]

There could be very strong underlying buying pressure building. That is the only way for the price to catapult
above 10k. Frenzied speculative buying. With more exchanges and ATMs arriving each day, the possibility of more active market participants grows. Those empty blockchain wallets are the early signs of new potential adopters. For better or for worse, bitcoin's price is one of its sexiest features when it rises. From a purist perspective it's all the things that go into the price: the public ledger, fungibility, scarcity, divisibility, durability and portability that make it possible. For now, bitcoin will trade like a high flying commodity. When it reaches a peak (price stabilizes), it will function as a currency.

[painlord2k]

Currently, the money printing from the Federal Reserve appear to be closing up to the inflation of BTC. This will not do well for the exchange rate USD/BTC

BUT

The new QE of the ECB is probably what will take us up to new highs. Depending on how much the ECB will print to buy trash assets owned by banks and governments, this will push the exchange rate of €/BTC up.

In the end, what it is needed is some currency inflating more than BTC. Larger is the  monetary base of such a currency, larger will be the quantity of this currency converted in BTC.

Japan is returning to print cash as there is no tomorrow, also.

More time we wait at this level, more explosive will be the spike of the price in the future.

[CMMPro]

I believe that some of the "price suppression" we are seeing is due to miner's selling off-market to the etf's/commercial investors.

Now that the miner's are mostly underwater or close to it, the next big swell perhaps will come from the miners refusing to operate or sell at a loss.

Once all mining hardware becomes unprofitable we will see the buying pressure come back to the market as the miners either turn off their non-profitable hardware, or begin to panic hold all their coins for the day it goes up in price. Large off-market buyers will have to get their coins on the markets instead of under the table.

When we are talking about small fry miners like myself, we can run at a loss for as long as we want...the large scale mines have hydro bills and rent in the thousands each month that have to be paid. Either the equipment has to be turned off or the remaining coins (what's left after all the bills are paid each month) have to have to be hoarded or sold at a premium.

Now we wait for the situation to precipitate into a crisis.








 

[flyingcatt]

lol ECB starting to make EUR worth peanuts.

[skivrmt]

lol ECB starting to make EUR worth peanuts.

That's a LONG way off, at least compared to the USD$.  We're at 1.29 now.  We "started" basically at even or really close to it and for a bit the EUR was trading at .83 cents to the dollar.  But since I like to travel to Europe I'm still hoping for .83 cents on the dollar down the road...

[BitDreams]

I wonder how Bitcoin compares to (US$) Velocity of M2 Money Supply.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=GHo

Looked a bit on the net and found a study from 2012 where they've calculated on a quarterly basis. Interesting that the data to calculate the velocity of Bitcoin is available 24 hours a day, 7 days a week and doesn't rely on corporate reporting. Posting a comment to the author suggesting this would be a good article to update.

http://cryptonomics.org/2012/11/10/the-velocity-and-dormancy-of-bitcoin/
 
We can make a back-of-envelope calculation right now. We’ll estimate the average (quarterly) Bitcoin velocity over the same time window studied in the paper, Jan 2009 to mid-May 2012 (13.5 quarters).

According to R&S the sum of all transactions (excluding minted coins) for the period is 423,287,950. As money growth over this period is linear and the first block starts at 50 and the last block is 9 million, the average money supply is 4,500,00. Divide the former by the latter and multiply by \frac{1}{13.5} and you get a quarterly money velocity for bitcoin of just under 7.

Is that high or low? As a benchmark, look at US M1 money velocity, which we can get from the St. Louis Fed. The average quarterly US money velocity over the same period was about 8 (it’s currently about 6.9), and this has been on a downward trend since 2008.

We should really work these numbers into a timeseries, but the average is at least in line with USD velocity numbers, which in itself should cast some doubt on the level of economic activity that gets done in bitcoins. But we should also note that the numerator in our rough calculation includes change, which should be subtracted out; paying yourself doesn’t exactly count as coin “changing hands”. Devising an estimator for this is a task for a rainy day, but suffice it to say that our velocity estimate of \approx 7 is biased upwards.

[ferman]

how is going? can we catch $1m @2019? if it ll be happen i ll have around $600k in 2019

[bitcoinbelieve]

where is updated chart?

[mmortal03]

where is updated chart?

Here, same as always: https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c#gid=1

[lyth0s]

Holy Log 10 delta Batman!

[SlipperySlope]

Here is the chart from Blockchain.info showing the Number of transactions excluding popular addresses. It is for a two-year duration, with a log scale, and includes the data points. Note that the latest value is higher than any preceding point except for a few days at the peak last November. Should this data series continue to climb, I expect that bitcoin prices will also move upwards, perhaps within a couple of months.

[Cablez]

At what point south of -0.8 log delta does the model need to be adjusted?

[SlipperySlope]

At what point south of -0.8 log delta does the model need to be adjusted?

I would wait until the next bubble peak to adjust the model, or 2015 whichever is first. The left end of the logistic function is constrained to fit through the first recorded price. The right end of the model, I try to fit so that the recent variation is balanced above and below the line. If I were to fit the line today, I would balance the current price against the peak last November, and the trend line would likely pass through the low price in April 2014.

Thanks to all of you for watching this model unfold.

[CMMPro]

Thanks to you Stephen! I genuinely appreciate your work.

[KJO]

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I think it's possible the next peak could be $15000 around december

...

Assuming you mean Dec 2014, let's hope that is an accurate prediction.   

[BitChick]

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I think it's possible the next peak could be $15000 around december

...

Assuming you mean Dec 2014, let's hope that is an accurate prediction.   

Maybe if the ETF opens, and Tiger Woods buys and some and convinces his rich friends to do the same.

I know better than to say that it won't happen.

[hopey]

Is it possible to make this thread sticky? Thanks for updating a very interesting chart

[zimmah]

At what point south of -0.8 log delta does the model need to be adjusted?

i guess that depends on how high we will go the next rally.

if we go +0.8 log delta the model is fine, but if we barely touch +0.1 or not even positive deltas than we can be fairly sure it needs to be adjusted.

If we go back to +0.4 delta (which i still expect) than we can just assume this is a negative outlier, just like the positive outlier earlier.

In my opinion ±0.4~0.45 is the standard, but outliers up till ±1.75 can happen occasionally. (yes, crazy swings, but this is bitcoin anyway)

It all has to do with the failed adoption around february/march (maybe because of all the FUD around then) that massively delayed everything. But if all the good news the past 7 months or so are any indication of what will happen, we may as well see +0.7 or higher in the upswing.

I really hope so, but still i think it may be a little optimistic.

I mean even +0.4 would mean 15000~17000 (assuming november~january), +0.7 would mean 30~35k or so. I don't think we're ready for that yet, but on the other hand i wouldn't be too surprised if bitcoin goes all crazy again. It wouldn't be the first time it happened.

[CMMPro]

At some point...if it reaches +0.7 the entire world will suddenly be aware of the bitcoin goldrush, it will be on the front of every money section of every newspaper and website in the world.