rpietila Wall Observer - the Quality TA Thread ;)

[MAbtc]

I have the feeling - nothing scientific, of course - that we will see 500 before 1000 in Bitstamp.

EDIT:
There is some support, though. The number of bids above 500 has actually increased to 13.1k during the crash from about 12.6k yesterday. I've seen charts that say that the strong support is in 550-650, but judging from the bids it is in 350-500.

It seems that I have often been surprised at your predictions being accurate, however, didn't we already have a nice little crash to $500 a few weeks ago? 

I see people often make this case. A drop to below $500 once means that a considerable drop can't happen again? Why would that be?

True. But I often see people make the case that this rally and retraction should be compared to April or 2011, even though those 2 were completely different than each other. Why would that be?

That isn't my method personally. But I think there is something to be said for analyzing "bubble psychology" within reasonable confines. For example, looking to 2011 or April 2013 for guidance on specific price movements would probably be unreasonable. But I think they do offer valuable insight into analyzing market sentiment.

[1715014418]

1715014418

[windjc]

I have the feeling - nothing scientific, of course - that we will see 500 before 1000 in Bitstamp.

EDIT:
There is some support, though. The number of bids above 500 has actually increased to 13.1k during the crash from about 12.6k yesterday. I've seen charts that say that the strong support is in 550-650, but judging from the bids it is in 350-500.

It seems that I have often been surprised at your predictions being accurate, however, didn't we already have a nice little crash to $500 a few weeks ago? 

I see people often make this case. A drop to below $500 once means that a considerable drop can't happen again? Why would that be?

True. But I often see people make the case that this rally and retraction should be compared to April or 2011, even though those 2 were completely different than each other. Why would that be?

That isn't my method personally. But I think there is something to be said for analyzing "bubble psychology" within reasonable confines. For example, looking to 2011 or April 2013 for guidance on specific price movements would probably be unreasonable. But I think they do offer valuable insight into analyzing market sentiment.

I actually thing market sentiment is better when factored into adoption, government sentiment, 3rd world sentiment, institutional sentiment. Forum sentiment only helps only mostly extremely peaks and valleys. But picking correction length cycles, etc. is a factor of world sentiment.

[kkaspar]

This crash will probably last for 20 hours more. It's an important part of the strategy to wear the average Joe traders out with sleep deprivation, so their decision making abilities deteriorate even more

[seleme]

I have the feeling - nothing scientific, of course - that we will see 500 before 1000 in Bitstamp.

EDIT:
There is some support, though. The number of bids above 500 has actually increased to 13.1k during the crash from about 12.6k yesterday. I've seen charts that say that the strong support is in 550-650, but judging from the bids it is in 350-500.

It seems that I have often been surprised at your predictions being accurate, however, didn't we already have a nice little crash to $500 a few weeks ago? 

I see people often make this case. A drop to below $500 once means that a considerable drop can't happen again? Why would that be?

We had actually 2 drops to 500s, that should be something like double bottom for all TA lovers.

[MAbtc]

I have the feeling - nothing scientific, of course - that we will see 500 before 1000 in Bitstamp.

EDIT:
There is some support, though. The number of bids above 500 has actually increased to 13.1k during the crash from about 12.6k yesterday. I've seen charts that say that the strong support is in 550-650, but judging from the bids it is in 350-500.

It seems that I have often been surprised at your predictions being accurate, however, didn't we already have a nice little crash to $500 a few weeks ago? 

I see people often make this case. A drop to below $500 once means that a considerable drop can't happen again? Why would that be?

True. But I often see people make the case that this rally and retraction should be compared to April or 2011, even though those 2 were completely different than each other. Why would that be?

That isn't my method personally. But I think there is something to be said for analyzing "bubble psychology" within reasonable confines. For example, looking to 2011 or April 2013 for guidance on specific price movements would probably be unreasonable. But I think they do offer valuable insight into analyzing market sentiment.

I actually thing market sentiment is better when factored into adoption, government sentiment, 3rd world sentiment, institutional sentiment. Forum sentiment only helps only mostly extremely peaks and valleys. But picking correction length cycles, etc. is a factor of world sentiment.

All factors contribute to market sentiment. Market participants take these factors into consideration. Is everything priced in? No. But our tools are limited. Regardless, I think we tend to see similar cycles in market sentiment in each rally/correction cycle. Price movements play out differently each time, but the psychology behind them are not random, IMO.

[BldSwtTrs]

Transitioning from a buy-and-hold-until-it-goes-to-zero-or-to-big position to the take-profits-as-desired position is the one I am grappling with.  I truly used funds that I can tolerate losing altogether; nothing has changed even though my investment is worth ~7x now.  I firmly believe Bitcoin is going big.  Why in the world would I take profits now?  Where would I park the profits to keep them safe from US dollar inflation which I believe is coming soon?

When bitcoin reaches 60%-80% of your net worth, it starts to make sense to diversify. Before that it doesn't.

Does it make to diversify with altcoins ? I went from 100% BTC to 66% BTC/33% altcoins (net wealth is 6 figures in fiat).

I know it doesn't make sense from a Markowitz standpoint (you don't diversify with correlated assets) but come on, cryptocurrencies are probably the most important technological step in human history since the Industrial Revolution and the fastest growing economy. I think there is a huge oppurtinity cost to not invest as much as one can on it. Am I stupid?

[rpietila]

I have the feeling - nothing scientific, of course - that we will see 500 before 1000 in Bitstamp.

EDIT:
There is some support, though. The number of bids above 500 has actually increased to 13.1k during the crash from about 12.6k yesterday. I've seen charts that say that the strong support is in 550-650, but judging from the bids it is in 350-500.

It seems that I have often been surprised at your predictions being accurate, however, didn't we already have a nice little crash to $500 a few weeks ago? 

I see people often make this case. A drop to below $500 once means that a considerable drop can't happen again? Why would that be?

We had actually 2 drops to 500s, that should be something like double bottom for all TA lovers.

Yes. So far it has played out exactly as the one in April, but with 2-3 times slower speed. 50 was tested two times in quick succession, and the third came later.

It makes me wonder whether the final capitulation this time is also 5 months away, in which case it would probably not go below 500 but rather 700 or so. This would be a negative event for my trading strategy because I would have to wait with lots of cash in the exchanges for months (risk!) + would not even make any gain 

[Anima]

My bet is that we will soon be in the 700's again on bitstamp..

Alot of money are being offered in the order book. Yesterday, i found a 2k dump on a single order at 999's, so for the price to break 1000 will take alot of momentum.

I hope for alot of cheap coins before we set off again to the moon.. i missed the november-rally and would of course like my investment to increase 100 times during this year.

Where do you see the trend going? - surely this 200 dollar downward movement the last two days must be causing some panic..?


Last minute edit: Just saw the price dipping to 790 @ bitstamp.. quick recovery to the 810 usd range.. but this should indicate further movement downwards..

[kkaspar]

To me, this ongoing uptrend doesn't make any sense and my doubts go to:
a) A typical pump and dump scheme by people with deep pockets
b) Organized market manipulation by presenting false market data

Soo.. guys... What do you think is the right answer.. Has BTC been bought up by an organized group of manipulators or are the manipulators the same guys who are running the exchanges, by which they present falsified market data of illusionary transactions?

[gentlemand]

I don't know about a highly organised cabal of manipulators all working in unison.

However someone with some serious change and a hardened trading mentality would regard the Bitcoin market as a gift from god. You've got the prospect of long term returns, zero regulation and a big number of holders who panic constantly. A pretty sweet deal for a few people.

[kkaspar]

I don't know about a highly organised cabal of manipulators all working in unison.

When under 50 people own most of the bitcoins in circulation, then it's not very hard to get organized in a goal to profit at the expense of others.
Though I don't underestimate the chance that maybe even the bigger markets are actually fraudulent and the transaction data they stream, is just simulation for people to give away their money while blaming themselves for doing so. There actually wouldn't be any legal consequences for the people who run those "markets". The bitcoin phenomenon could just be another penny stock scheme with a twist.

[aminorex]

Yes, we can hope so we can scoop some more coins, but on the otherhand it will crush the confidence and the media will burn us down to the ground.

The volatility of bitcoin is no longer news.

[aminorex]

So far the 2 day downtrend hasn't seriously broken the uptrend from 12/17, so it ought not to be terribly surprising if the latter should continue. 

[GreenBits]

I don't know about a highly organised cabal of manipulators all working in unison.

When under 50 people own most of the bitcoins in circulation, then it's not very hard to get organized in a goal to profit at the expense of others.
Though I don't underestimate the chance that maybe even the bigger markets are actually fraudulent and the transaction data they stream, is just simulation for people to give away their money while blaming themselves for doing so.

check these out
http://en.wikipedia.org/wiki/Sumitomo_copper_affair

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

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

these we know about

i sound paranoid but i think its every market with enough volume/capitalization to give a damn. even commodities that aren't traded on exchanges (like pot and cocaine). its the product of human actors in a speculative market. it happens every single time.

~Green

[aminorex]

What is your count? Could this not have fit the top of B in ABC corrective wave?

Looking at the Fisher transform on the daily, it looks like a reversal, so I think you nailed it;  C appears immanent.  On stamp, I'm inclined to expect a bounce off something yet to be determined between 840 and 900 (.382 at 852, .5 at 880 are likely), which may take a day or three, thence down to the 500 region, rather directly.

Presently, it's zagging rather than zigging, down towards 800ish, whereupon it will need to reverse up to 850 overnight for my scenario to prove accurate.

[aminorex]

We tend not to think much about fundamental value when performing technical analysis.  gbianchi has a nice post at https://bitcointalk.org/index.php?topic=394221.0 in which he finds that the price scales at the 9/4 power of the number of wallets (which I would presume tends to scale with the number of user-years).  Network theory tells us that the value of a network scales with the square of the number of vertices (accounting of 8 of 9 fourths of the exponent).

The number of wallets from Q3 to Q4 went from  ~350k to ~1M, a factor of ~3, while the price scaled by roughly the 8 or 9/4 power of that factor.  This suggests to me that the fundamental value of bitcoin has increased at least as much as the price did from bottom to top, during that time.  Probably bitcoin is now undervalued, and will be even more undervalued at the extreme.  Consequently, I would be surprised if the trip back up from the eventual capitulation bottom is a protracted one.  It should move with great force, and will probably never go below 1000 again unless there is a concerted attack or a technical catastrophe.  The number of users will at least double during this quarter, which should at least quadruple the network-derived value component. 

As luxury retailers market to the bitcoin demographic, use of bitcoin is likely to see aspirational emulation.  International remittances for real estate purchases seem to be present news, but are a very small-scale thing.  Volume remittances on the scale of diaspora populations are very slow in coming.  I have yet to meet a New York taxi driver who knows what is bitcoin.  When at least half of them know, I think we will be approaching the remittance volumes which will impose a monetary valuation (aside from the network valuation) component between 3k and 5k USD. That can happen quickly within a given ethnic enclave, but each enclave is a silo-ed market.

[aminorex]

Presently there is a co-ordinated global devaluation, a conspiracy of central banks to inflate their currencies by stealth to destroy debt, without precipitating a trade war.  Presently Japan has been granted leave to run ahead of the group, since its debt situation is so incredibly awful.  The negative real interest rates and asset inflation are punitive to savers, as bankers attempt to force them into risk assets (at a particularly awful entry point, I might add). 

I think savers have been warned very vividly by Cyprus that the central banks are not their friends.  It would start as a trickle, and in fact already has started, the conversion of savings to bitcoin. In a sovereign currency crisis, e.g. in a hyper-inflation such as would result if excess reserves began to circulate, it would rapidly become a flood.  That is when BTC will whizz past 300k, 1M USD on greased skids.

I'm increasingly finding it difficult to imagine a scenario in which BTC fails to become a global reserve currency, and a primary numeraire for international commerce.  Proposed: Superexponential growth in BTC is due to the compounding effect of the exponential failure of the sovereigns.

[2017orso]

Very nice posts aminorex, thanks for sharing your thoughts hope to read more from you.

[windjc]

We tend not to think much about fundamental value when performing technical analysis.  gbianchi has a nice post at https://bitcointalk.org/index.php?topic=394221.0 in which he finds that the price scales at the 9/4 power of the number of wallets (which I would presume tends to scale with the number of user-years).  Network theory tells us that the value of a network scales with the square of the number of vertices (accounting of 8 of 9 fourths of the exponent).

The number of wallets from Q3 to Q4 went from  ~350k to ~1M, a factor of ~3, while the price scaled by roughly the 8 or 9/4 power of that factor.  This suggests to me that the fundamental value of bitcoin has increased at least as much as the price did from bottom to top, during that time.  Probably bitcoin is now undervalued, and will be even more undervalued at the extreme.  Consequently, I would be surprised if the trip back up from the eventual capitulation bottom is a protracted one.  It should move with great force, and will probably never go below 1000 again unless there is a concerted attack or a technical catastrophe.  The number of users will at least double during this quarter, which should at least quadruple the network-derived value component. 

As luxury retailers market to the bitcoin demographic, use of bitcoin is likely to see aspirational emulation.  International remittances for real estate purchases seem to be present news, but are a very small-scale thing.  Volume remittances on the scale of diaspora populations are very slow in coming.  I have yet to meet a New York taxi driver who knows what is bitcoin.  When at least half of them know, I think we will be approaching the remittance volumes which will impose a monetary valuation (aside from the network valuation) component between 3k and 5k USD. That can happen quickly within a given ethnic enclave, but each enclave is a silo-ed market.

Wow. Gbianchi's analysis is some high level shit. Really impressive.

He basically came up with a mathematical formula to explain why I am so bullish on bitcoin.  I keep screaming that we need to pay attention to fundamentals and this is the kind of fundamental analysis I have been referring to.

Short term charts do not tell us when a current rally or retraction will end or, more importantly, how long it will last.

Great find. Thanks for posting.

[Queeq]

Thank you, aminorex, it was impressive, even though I failed to understand some part of it.

However we should keep in mind that growth factor of the number of wallets does not imply the same factor of "new blood" flowing into bitcoin. I think it mostly reflects activity of current users and services which generate new wallets for some kind of convenience. The "new blood flowing" and "old blood accelerating", I believe, have different impact on bitcoin's value. The only question is what is this difference.