rpietila Wall Observer - the Quality TA Thread ;)

[SlipperySlope]

[Anyway one has to recognise that the past exponential trend line MUST be broken sooner or later. The questions is only if it is broken this year (which I believe), the year after that, or the next. What would be the price of BTC in April 2017 if we would stay on the trend line ?  

I have a logistic model of bitcoin adoption that suggests an expected price of $840,503 on July 1, 2017, if we stay on that trend line. Close enough?

https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c

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[MahaRamana]

[Anyway one has to recognise that the past exponential trend line MUST be broken sooner or later. The questions is only if it is broken this year (which I believe), the year after that, or the next. What would be the price of BTC in April 2017 if we would stay on the trend line ?  

I have a logistic model of bitcoin adoption that suggests an expected price of $840,503 on July 1, 2017, if we stay on that trend line. Close enough?

https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c

The probability of such price in 2017 is very low in my opinion. This model, or rather the belief that it still has predictive interest, will not hold much longer.
I am a medium-term bull on bitcoin but this is way too much. I don't say it has 0 probability of happening, but even if we factor the hyperinflation risks, probability remains very low to see a market cap in the 11 trillions USD in three years, imho.

[billyjoeallen]

If $400 falls, it becomes a ceiling instead of a floor. I sold almost everything I have to defend that wall and it may not hold. If it breeches, we may not see another ATH this year. The good news is we'll have weeks if not longer to pick up $300 coins. Plenty of time to have a garage sale and move back in with Mom and Dad.

I understand that when you said "I sold almost everything I have to defend that wall" you mean that you sold ordinary belongings for fiat and used that cash to buy bitcoin. Right?

If so, then I have done something similar by selling an old gold bracelet for cash, then putting that cash into my local Robocoin ATM to buy bitcoin. I have been looking around the house for stuff I do not need anymore, but given my household's frugal lifestyle, there is not much left to sell. By agreement with my still skeptical wife, my bitcoin cold wallet and hot wallet are separate from our substantial retirement savings and real estate portfolio - so can't touch the latter.

Fuck no! I sold almost all the BTC in my trading account to buy back lower. It's a hedge for me because the vast majority of my holdings are in cold storage. It's like buying life insurance. I'm making a bet I hope I lose. I will seriously consider selling other assets only if the price gets stupid low.

[SlipperySlope]

Fuck no! I sold almost all the BTC in my trading account to buy back lower. It's a hedge for me because the vast majority of my holdings are in cold storage. It's like buying life insurance. I'm making a bet I hope I lose. I will seriously consider selling other assets only if the price gets stupid low.

In the collapse of the April 2013 bubble I felt strongly that the retracement would be deeper than it turned out to be, based upon the notion that the April 2013 bubble would be similar in shape to the great 2011 bubble. I felt very bad having fiat in my trading account when prices went up and I had to buy back higher. I resolved to never make that mistake again. Which made me pull all coin out of MtGox well in advance of their subsequent troubles.

Better to be in bitcoin and watch prices go down, than to be in cash and watch prices go up - my experience.

[aminorex]

Because of the various and specialized senses of the term "value" I think it is helpfully clarifying to say instead that you consider btc to be overbought in the near term.  In this way I hope to avoid confusion between distinct concepts with differing relationships to price.

Regarding a 1.000.000 usd exponential trend price in 2017, I think our intuitions are a poor guide, having been trained in radically different domains.  In the past people, notably including Risto, have rationalized the possibilty of such valuations in terms of supplies and the subsumption of pre-existing value into the value of bitcoin.  But what if we instead consider marginal flows, and admit the possibility that bitcoin may create novel economic value - value the magnitude of which we can not presently estimate and therefore can not rationally limit or circumscribe.

Bitcoin ETP would trade against perhaps as much as 1 mm btc of float.  The market cap of a single exchange traded company may range as high as 1 tn usd.  Btc represents not just a single company but an entire economy.  1 marginal dollar of moneyflow can easily move price enough to result in 10 additional dollars of market cap.   If ETPs on 1 mm float were to attract 1 tn in investor funds ( and there exist single investors each capable of investing about that much, such as Norway and PIMCO), which resulted in a market cap float of 10 tn,  then each bitcoin would be trading for 10 mm usd.

The scenario is perhaps unlikely, but it is entirely conceivable and I know of no credible or principled way to rule it out.  I could rationalize an additional factor of 10 if pressed -- after all, you can never have too much overkill.

If btc is replaced by another crypto, whatever value would have accrued in btc will just accrue in newcoin instead - even more , in as much as newcoin will only be able to displace btc by offering  an order of magnitude improvement in utility.

[billyjoeallen]

Fuck no! I sold almost all the BTC in my trading account to buy back lower. It's a hedge for me because the vast majority of my holdings are in cold storage. It's like buying life insurance. I'm making a bet I hope I lose. I will seriously consider selling other assets only if the price gets stupid low.

In the collapse of the April 2013 bubble I felt strongly that the retracement would be deeper than it turned out to be, based upon the notion that the April 2013 bubble would be similar in shape to the great 2011 bubble. I felt very bad having fiat in my trading account when prices went up and I had to buy back higher. I resolved to never make that mistake again. Which made me pull all coin out of MtGox well in advance of their subsequent troubles.

Better to be in bitcoin and watch prices go down, than to be in cash and watch prices go up - my experience.

Yes, Mark Twain told a story about a cat that got burned when it walked on a hot stove. After that, the cat would never walk on the stove even if it was cold. The point is that sometimes we overlearn our lesson. It remains to be seen which one of us has done that.

There is a real albeit improbable risk that this could be more like 2011 than 2013.

[MahaRamana]

Because of the various and specialized senses of the term "value" I think it is helpfully clarifying to say instead that you consider btc to be overbought in the near term.  In this way I hope to avoid confusion between distinct concepts with differing relationships to price.

Regarding a 1.000.000 usd exponential trend price in 2017, I think our intuitions are a poor guide, having been trained in radically different domains.  In the past people, notably including Risto, have rationalized the possibilty of such valuations in terms of supplies and the subsumption of pre-existing value into the value of bitcoin.  But what if we instead consider marginal flows, and admit the possibility that bitcoin may create novel economic value - value the magnitude of which we can not presently estimate and therefore can not rationally limit or circumscribe.

Bitcoin ETP would trade against perhaps as much as 1 mm btc of float.  The market cap of a single exchange traded company may range as high as 1 tn usd.  Btc represents not just a single company but an entire economy.  1 marginal dollar of moneyflow can easily move price enough to result in 10 additional dollars of market cap.   If ETPs on 1 mm float were to attract 1 tn in investor funds ( and there exist single investors each capable of investing about that much, such as Norway and PIMCO), which resulted in a market cap float of 10 tn,  then each bitcoin would be trading for 10 mm usd.

The scenario is perhaps unlikely, but it is entirely conceivable and I know of no credible or principled way to rule it out.  I could rationalize an additional factor of 10 if pressed -- after all, you can never have too much overkill.

If btc is replaced by another crypto, whatever value would have accrued in btc will just accrue in newcoin instead - even more , in as much as newcoin will only be able to displace btc by offering  an order of magnitude improvement in utility.

I don't see why bitcoin would absorb the whole value of the economy "it" supports in its market cap. The main reason that I see is altcoins like AnonyMint mentions. The situation is that the infrastructure that is being built around bitcoin requires very little update to start accepting an altcoin. I don't think an altcoin would offer an order of magnitude improvement over bitcoin (unless AnonyMint convinces me otherwise), but it might offer some forms of specialisations and localisations that we probably didn't think about yet.
When the regulations are made thanks to bitcoin opening the way, the path will be wide open for all kinds of entities to launch their own crypto-currency. Local or national governments, big companies, and many other big and small entities.
Let's give an exemple : reward points from retail chains. Instead of giving reward points, why not to give some units of that new WallMart crypto currency ? You can then use it to pay your future purchases - or trade it on an exchange that accepts WallMart crypto.
Now if WallMart can create a crypto-currency with its own branding and specificities that are aiming at improving the shopping experience of its customers, why would it use bitcoin instead of its own ? I just don't see the logic there.
It is likely that the services and infrastructure that are now being built around bitcoin, will end up accepting all crypto-currencies once there is an exchange that does and that can link to that service/infrastructure. Updating them for that will be trivial.

If an entity is able to draw a crowd to use its own crypto, giving value to its own crypto, that crypto will be traded against bitcoin and then what is the incentive of an entity who has such capacity to choose bitcoin ? Someone please explain.

It doesn't mean that bitcoin would be dropped and die, it could stay at the top and remain the main unit of exchange of the whole crypto world. Or not.

[rpietila]

There is a real albeit improbable risk that this could be more like 2011 than 2013.

That I can easily agree with. As one who bought after the great run up and then down, there was nothing left but upside, and it has transformed my life. (Never ascribe "unfortunate" with buying in 2011 as at the very worst, people would be sitting on 15x gains in 3 years after buying at the very top. You can only lose with Bitcoin if you sell.)

If ETPs on 1 mm float were to attract 1 tn in investor funds ( and there exist single investors each capable of investing about that much, such as Norway and PIMCO), which resulted in a market cap float of 10 tn,  then each bitcoin would be trading for 10 mm usd.

The scenario is perhaps unlikely, but it is entirely conceivable and I know of no credible or principled way to rule it out.  I could rationalize an additional factor of 10 if pressed -- after all, you can never have too much overkill.

If btc is replaced by another crypto, whatever value would have accrued in btc will just accrue in newcoin instead - even more , in as much as newcoin will only be able to displace btc by offering  an order of magnitude improvement in utility.

This is like arguing whether God exists. Nobody under any circumstances can disprove it, so it is possible, and people who deny it risk getting burned. By having bitcoins, you risk getting incredibly wealthy.

Fuck no! I sold almost all the BTC in my trading account to buy back lower. It's a hedge for me because the vast majority of my holdings are in cold storage. It's like buying life insurance. I'm making a bet I hope I lose. I will seriously consider selling other assets only if the price gets stupid low.

I think it is prudent to disclose that at these prices my business, cash, precious metals and RE holdings' combined value almost equals that of my bitcoins. I am in no way overextended, am totally debt-free, and will in no foreseeable case sell any bitcoins unless at 2,000 or more a piece. All my scheduled castle projects and upkeep is accounted for until 2015. So no need to talk to my book, even if coin goes to 200, the construction won't stop, I will just buy more bitcoins on the side.

What we have now is the adjustment to the reality that the adoption curve is really log-logistic as I have shown, thus rpietila's claim from his linear adoption projection chart that the price should be $900+ is likely incorrect.

My best way to convince you this is so, is to note that there is no way the universe would remove all competition to make it so easy for lazy investors to become so insanely rich. To become very wealthy requires active knowledge in developing and managing. The universe doesn't hand great sustained wealth to people who make one lucky decision.

Is your mouth bitter, brother? Have you no idea how difficult it is to hold the bitcoins? There are no lucky decisions. Buying is the rational decision, and selling (out) is the unlucky one.

Why should we listen to you in the first place? Despite your knowledge, you missed out the minimum 10x gains from last year. Aren't I more correct? It seems that no matter whether I am a bull or bear, now I am doing it wrong. Also the long-time trend is not disproven when the low end of the channel is hit. It just screams "buy!!". There is also a high end, meaning "sell!!".

I agree with the fact that we are probably not going to continue following the exponential trendline that Risto is using as a basis for his TA. The question is : how long will we have to remain under the trendline for the recognition that, although is was a good model for the first phase of bitcoin rise, it is not for the next phase that is starting.

Anyway one has to recognise that the past exponential trend line MUST be broken sooner or later. The questions is only if it is broken this year (which I believe), the year after that, or the next. What would be the price of BTC in April 2017 if we would stay on the trend line ?  

The exponential trendline remains valid until Bitcoin has reached 50% of its eventual adoption. In my understanding, the eventual adoption is more than 2x current adoption (potential of 500x-5000x), and therefore the trendline is current for at least this year, and maybe up to 2015, 2016, 2017.

I have never even published the amazingness of the trendline in how it showed the buy point after the 2011 crash. SlipperySlope's model with price data only from the exchange period could not capture it. Then the similar buy signal came after 2013 and also is flashing now. If we go up without ever seeing 400, will you finally believe me?

For Bitcoin to act as a universal savings medium, it will have to replace many current paper instruments like government debt, whose market cap is in 10s of trillions. By simple math, one bitcoin will cost $1M+. If the offchain services make money supply effectively flexible, then there is a possibility that it will have the same value as gold (300,000/BTC). And of course it can fail, and have a value of a few 1,000s or 10,000s.

[MahaRamana]

I agree with the fact that we are probably not going to continue following the exponential trendline that Risto is using as a basis for his TA. The question is : how long will we have to remain under the trendline for the recognition that, although is was a good model for the first phase of bitcoin rise, it is not for the next phase that is starting.

Anyway one has to recognise that the past exponential trend line MUST be broken sooner or later. The questions is only if it is broken this year (which I believe), the year after that, or the next. What would be the price of BTC in April 2017 if we would stay on the trend line ?  

The exponential trendline remains valid until Bitcoin has reached 50% of its eventual adoption. In my understanding, the eventual adoption is more than 2x current adoption (potential of 500x-5000x), and therefore the trendline is current for at least this year, and maybe up to 2015, 2016, 2017.

I have never even published the amazingness of the trendline in how it showed the buy point after the 2011 crash. SlipperySlope's model with price data only from the exchange period could not capture it. Then the similar buy signal came after 2013 and also is flashing now. If we go up without ever seeing 400, will you finally believe me?

For Bitcoin to act as a universal savings medium, it will have to replace many current paper instruments like government debt, whose market cap is in 10s of trillions. By simple math, one bitcoin will cost $1M+. If the offchain services make money supply effectively flexible, then there is a possibility that it will have the same value as gold (300,000/BTC). And of course it can fail, and have a value of a few 1,000s or 10,000s.

I might believe that we continue to follow the trend line for a while longer if there is a rally this year beyond 2-3000 USD, but even then, not for years. I have sufficient faith to be holding right now, so I do believe that the current price point is good. I actually increased my amount of bitcoins by 35% by buying last week around 435 USD.
I think bitcoin could hold on the exponential trend line for some 5 years if it was alone using its own technology. Since it is open-source and due to my concerns expressed in my previous post, I think a huge number of big, powerful entities will launch their own crypto and greatly spread and dilute the crypto market cap. I just don't see why bitcoin would be holding the vast majority of the crypto technology market cap going forward. I have not been explained with enough arguments why that would happen.

[rpietila]

- Trendline comparison: we are now at -0.322 log units. The trendline is at $966 and rising $7 per day, conclusion: rock bottom (of all of the time between the 4/2013 and 11/2013 peaks, only 2% (5 days) was spent this low)

How many days have we spent this low so far??

If we draw the line in -0.3 log units (which equals to being at <50% of the trendline price), last time we were this low 14 days.

This time we have spent this low 7 days.

In the late 2012 we were much lower though, so you always have to be prepared for all scenarios. For me, the scenarios that I prepare for are:

- 400 not breached, stabilization, and next bubble this summer
- going lower, damage of sentiment, and takes longer to get back to the uptrend
- Bitcoin is doomed.

It is just that the first is clearly the most probable imo, and the last is not very probable.

The trendline model tells when it is expensive and when it is cheap. It is too long-term model to forecast if Bitcoin is doomed. That is the reason you should only invest what you can lose, and invest that according to the trendline/SSS and never sell at a loss, rather lose it all if the Internet and crypto are destroyed. (Imagine how rich that guy would be who sold to me his bitcoins in 2011 to get the feeling.)

[Guinpen]

rpietila, thanks for your insigitful comments.

Newbie (=posibly very dumb) question: When you say "invest that according to the trendline/SSS and never sell at a loss", which trendline are you referring to? What is SSS?

[jmw74]

Newbie (=posibly very dumb) question: When you say "invest that according to the trendline/SSS and never sell at a loss", which trendline are you referring to? What is SSS?

https://bitcointalk.org/index.php?topic=345065.0

[Guinpen]

Newbie (=posibly very dumb) question: When you say "invest that according to the trendline/SSS and never sell at a loss", which trendline are you referring to? What is SSS?

https://bitcointalk.org/index.php?topic=345065.0

Thanks! Off to do my homework...

[Mike@Coinswag]

Newbie (=posibly very dumb) question: When you say "invest that according to the trendline/SSS and never sell at a loss", which trendline are you referring to? What is SSS?

https://bitcointalk.org/index.php?topic=345065.0

Thanks! Off to do my homework...

You can also use this tool to help if you are not good with excel: http://bitcoinsavingsplan.com/

[mmitech]

To  objectively analyse this market, I think we need some TA experts who are not involved in Bitcoin at all but understand the concept of this innovation, and we need them to do pure analyses without getting emotional (for or against) in other words.

Because I find it hard my self, when you get involved you get attached to your investment and the whole idea, and no matter how you try to be objective, your conscious tends to always influence your decisions.

[frienemy]

To  objectively analyse this market, I think we need some TA experts who are not involved in Bitcoin at all but understand the concept of this innovation, and we need them to do pure analyses without getting emotional (for or against) in other words.

Because I find it hard my self, when you get involved you get attached to your investment and the whole idea, and no matter how you try to be objective, your conscious tends to always influence your decisions.

Only TA experts expecting the downfall of bitcoin would have a neutral position, because you would have to pay a whole lot of money to experts, who are currently not involved, but see a bright future for bitcoin, so that they stay out of bitcoin. Therefore the concensus of "neutral" experts would be not so neutral at all, but rather too negative.

[rpietila]

I am with this author in that altcoins are pump & dump scams and you should not buy them.

[BitchicksHusband]

Now if WallMart can create a crypto-currency with its own branding and specificities that are aiming at improving the shopping experience of its customers, why would it use bitcoin instead of its own ? I just don't see the logic there.

Do you use store credit cards or VISA?  Why?  Do most stores even HAVE a credit card anymore that ISN'T VISA?  Why not?

[BitchicksHusband]

I am with this author in that altcoins are pump & dump scams and you should not buy them.

A little biased, but the basic point is valid.  Network effect is extremely hard to overcome.

[SlipperySlope]

I am with this author in that altcoins are pump & dump scams and you should not buy them.

Although I accept the arguments made against the altcoin industry, I am a participant in it by way of leasing 3 GPU mining rigs that are currently configured for the Litecoin-compatible Scrypt algorithm. The term of each lease is 72 hours and I get paid in bitcoin. I set the lease prices low enough to keep the rigs continually leased, and they remain slightly more profitable than using a multipool that automatically mines the most profitable altcoin and automatically sells the proceeds on an altcoin exchange for payment to me in bitcoin.