rpietila Wall Observer - the Quality TA Thread ;)

[xxnewbiecoinerxx]

Doesnt this give us more confidence in bear market? http://www.google.com/trends/explore#q=bitstamp&date=today%203-m&cmpt=q

[thezerg]

Doesnt this give us more confidence in bear market? http://www.google.com/trends/explore#q=bitstamp&date=today%203-m&cmpt=q

with institutional investment price may decouple from search terms.

[bitrider]

Doesnt this give us more confidence in bear market? http://www.google.com/trends/explore#q=bitstamp&date=today%203-m&cmpt=q

Not really. Not sure what you are getting at as I don't see any "bear market" coming based on the search/interest fundamentals, or in the technical. We may see some mid-term price correction to the mean trend, but the growth fundamentals are very solid, and rising exponentially as expected.

For an interesting twist on what you were looking at, take a look at where the growth in search interest is happening at the moment (check the regional section). Not for "Bitstamp" (not sure why that was your term?), but for "bitcoin". It is exciting to see where the next wave of adoption may happen or is already happening.

http://www.google.com/trends/explore#q=Bitcoin&date=today%203-m&cmpt=q

[nanobrain]

Quality TA thread?  Does that mean that there will be no pictures of female's derrieres to weed through and millions of CHOO CHOOs and rocket ships?  

So what do you think the trendline is now?  Do most of you think that we are still over the "trendline?"  I have seen a "new and improved" super exponential one that seems closer to how things are moving right now with the price hitting $10,000 in May and $100,000 in August.

I wouldn't hold your breathe waiting for a reply - I think us ladies have to sit at the back and talk quietly while the gents measure their dicks compare their cigars

[xxnewbiecoinerxx]

Doesnt this give us more confidence in bear market? http://www.google.com/trends/explore#q=bitstamp&date=today%203-m&cmpt=q

Not really. Not sure what you are getting at as I don't see any "bear market" coming based on the search/interest fundamentals, or in the technical. We may see some mid-term price correction to the mean trend, but the growth fundamentals are very solid, and rising exponentially as expected.

For an interesting twist on what you were looking at, take a look at where the growth in search interest is happening at the moment (check the regional section). Not for "Bitstamp" (not sure why that was your term?), but for "bitcoin". It is exciting to see where the next wave of adoption may happen or is already happening.

http://www.google.com/trends/explore#q=Bitcoin&date=today%203-m&cmpt=q

Actually i meant the same thing. Correction to near trendline mid-term . Why i chose bitstamp was that during media coverage the search for bitcoin increases more than for exchanges, because not everybody is going to buy. As estonian, i am very happy to see that Estonia is nr.1 country. It proves that we are one of the leading IT countries and maybe this our way to wealth. Currently the next big thing coming from us is Transferwise. Its fast success shows that there is need for bitcoin.

[Lewis2]

rpietila, I have been reading your threats and you seem to know your economics. I wondered what your thoughts on the following are:

I mentioned in another thread that to double the price, the market cap has to be doubled. At that moment (price around $820,-) that meant an extra $10,000,000.- in bitcoin. Somebody else replied the following:

Only a small fraction of coins are on sale at one time. Someone buying bitcoins doesn't have to pay all bitcoin owners.

Meaning that there is no need of a 10 billion dollar injection to double price. Which seems reasonable. How much new money do you think it takes to double the price (i.e. 820 to 1640)

[e4xit]

rpietila, I have been reading your threats and you seem to know your economics. I wondered what your thoughts on the following are:

I mentioned in another thread that to double the price, the market cap has to be doubled. At that moment (price around $820,-) that meant an extra $10,000,000.- in bitcoin. Somebody else replied the following:

Only a small fraction of coins are on sale at one time. Someone buying bitcoins doesn't have to pay all bitcoin owners.

Meaning that there is no need of a 10 billion dollar injection to double price. Which seems reasonable. How much new money do you think it takes to double the price (i.e. 820 to 1640)

Your initial responder was indeed correct. The term "market cap" really means market capitalisation. This is not in fact what is being measured by performing the sum "currenct BTC price (in $) * # of BTC in existence". It is in this case a misnomer.

Think about it, this really is just a rough (over?) estimate of current value. Many bitcoins have been lost or are simply not for sale for any price (for whatever reason, of which there could be many).

Also, many (large) bitcoin trades can take place away from large exchanges at prices either above or below the current price, again, for whatever reason.

Also, many traders will not necessarily keep their trades sitting in the order books, as this might 'give their game away', in whatever way they do not desire. They might be watching charts live or else have bots or traders which only add orders to the books when certain price points are reached. For this reason, even "market depth" is very difficault to calculate (with decent accuracy).

So you see, the total amount spent on bitcoins (to date) by bitcoiners is not equal to the current "market cap". And neither will any doubling in price by the result of another doubling of increase in investment. For example, if 90% of bitcoins are currently 'not for sale' because everybody was hodling (holding), then the price might fly up very quickly with little new "capitalisation" realised into the market.

These are only a few (basic) factors I am outlining, there are sure to be many more...

HTH explain a little of this for you.

[rpietila]

Meaning that there is no need of a 10 billion dollar injection to double price. Which seems reasonable. How much new money do you think it takes to double the price (i.e. 820 to 1640)

My calculations show that on average, an investment of $1M raises the market cap by $4M in the long term. In other words, it takes $3M to raise the bitcoin price by $1 in a sustainable fashion.

...and if we assume that this stays roughly constant, it would take $3 trillion of new investment to raise the bitcoin price to $1 million. Requires some infrastructure yes, but hardly impossible considering how much money there is in the world chasing anything valuable

[Zangelbert Bingledack]

It should be calculable from the average dishoarding rate, right? So I suppose only $2-3 billion is needed to double the market cap.

[wobber]

But that "market cap" is meaningless.

Imagine what would happen if 50% of all bitcoins currently in exchanges go to cold wallets. Suddenly, supply is halved.

On the same reasoning, if only me, Johnny and another 8 guys trade coins and everybody else waits for a bigger price (let's say 1M USD / coin), then we could make the price 8000 USD / BTC and say the market cap is 100 B. Which is not true.

[Lewis2]

Thanks ghdp, e4xit and rptiela. Makes sense now!

[rpietila]

It should be calculable from the average dishoarding rate, right? So I suppose only $2-3 billion is needed to double the market cap.

Yes, these 2 things are exactly equal. I calculated the percentage by using exchange volume data in 2012-2013 and subtracted back-and-forth trading. It is a rough estimate but serves its purpose.

[hdbuck]

hello, lurking around, much appreciated that little quote :

considering how much money there is in the world chasing anything valuable

its, in the end, always all about money isnt it?! 

[Pruden]

I use blockchained.com bid/sum on MtGox (which I take as representative for the whole market given its stable market share). Given that the Wall Observer has found yet another excuse for off-topic talk in bet booking, I shall update my post from yesterday:

Bulls circle-jerk, people confusing the traditional early-month, fresh-paycheck-money rally for the super-exponential trendline, bid sum decreasing because of panic buying and price at double the long-term trendline (the one that takes into account the 2011 bubble, unlike the super-exponential one, that picks the best possible moment as the start)...

You can tell we are turning down sometime within the next 15 days, reaching $650 later. I will be more precise with the timing as it gets closer.  Smiley

Should I be wrong, I will be happier, because I'm hodling, which is the best way of being wrong. You should all try it.

The bid sum top was reached with the price at $800, and it is now clearly trending down, with a -7% decline. I predicted the end of the rally correctly in late May. I am not bragging, just saying where I come from. I might be wrong, but the volume since the december low is abysmal, and I recall feeling uneasy in May with the slow, constant uptrend. People going all "slow and steady wins the race!" and "it is coiling for a major break upwards" and all that. Notice the volume peaked in the last leg up in May.

http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2013-04-16zeg2013-06-04ztgSzm1g10zm2g25zi1gStochRSIzv

Also, notice Stoch RSI has been overbought now for a whooping number of days. Furthermore, my own indicator (that makes it sound so professional wow such awe) for trend reversal based on bid/ask sum has been triggered. Therefore, I contend we have seen the top of this "Back to normal" rally. Of course, it doesn't have to be a replay of the May-July capitulation, but it certainly looks like so.

I must only remind myself that things tend to go slower than one may think. For example, that bet on the Wall Observer about <$750 within next 48 hours is absurd. Even though the price will reach those levels in my most probable scenario, it will take way longer than that.

[MAbtc]

I must only remind myself that things tend to go slower than one may think. For example, that bet on the Wall Observer about <$750 within next 48 hours is absurd. Even though the price will reach those levels in my most probable scenario, it will take way longer than that.

Agreed. I don't see a drop into capitulation starting here. We will consolidate for some time first if/before it comes.

[rpietila]

Bulls circle-jerk, people confusing the traditional early-month, fresh-paycheck-money rally for the super-exponential trendline, bid sum decreasing because of panic buying and price at double the long-term trendline (the one that takes into account the 2011 bubble, unlike the super-exponential one, that picks the best possible moment as the start)...

Yeah, this will look like the most epic double top if we spend here 2 weeks and then turn down

I must only remind myself that things tend to go slower than one may think. For example, that bet on the Wall Observer about <$750 within next 48 hours is absurd. Even though the price will reach those levels in my most probable scenario, it will take way longer than that.

If you took the other side, and hedged the bet by selling BTC4 at $1,000, your return would be:

2000    -1,00
1900   -0,89
1800    -0,78
1700   -0,65
1600    -0,50
1500   -0,33
1400    -0,14
1300    0,08
1200    0,33
1100    0,64
1000    1,00
900   1,44
800    2,00
700   0,71
600    1,67
500   3,00

I would not have offered such good odds, but also did not even consider breaking my promise of not posting to that thread until we hit $500 (I am only about 55% certain of that happening ever again now though   )

[TERA]

So where are these walls?

[Voodah]

I would not have offered such good odds, but also did not even consider breaking my promise of not posting to that thread until we hit $500 (I am only about 55% certain of that happening ever again now though   )

Does that mean 45% of your buy orders are above 500?

[rpietila]

I would not have offered such good odds, but also did not even consider breaking my promise of not posting to that thread until we hit $500 (I am only about 55% certain of that happening ever again now though   )

Does that mean 45% of your buy orders are above 500?

No.

I am not deriving the place of the buy orders solely from probabilities, but mainly from my utility function.

For example now during this uptrend I considered buying some back at a loss (after all they'll be $3-$13k in the end of this year so why risk??) Did not decide to do it, because I am so heavy on coins even now that my utility would be very high in all super-exponential scenarios. It is mainly a matter of vainglory over the regret of not belonging to the 100 most wealthy (and having to settle in the TOP-200). The negative side of having to sell a significant portion of my other assets to buy a small relative number of more coins was weighing more in the equation.

I also considered selling more since the rally seems to me more like a dead-cat bounce than a realistic new uptrend. But this also did not feel right, and the reason was mainly the increase of risk in the scenario of government-coordinated total exchange failure: then my funds + the bitcoins in the exchanges would be seized, I would have relatively little cold-wallet coins, and the price of them would likely collapse. Did not feel I wanted to take more of this risk for just a gamble gain anyway.

If the price goes to $300-$400, then (only) will there be utility for me in buying thousands of more bitcoins with a significant net increase of my bitcoin position, and a small relative decrease in the other assets. The bids are and likely remain there, until the rising trendline prompts the incremental raising of these bids also, and if they are not fulfilled until bitcoin price has risen high enough to prompt my next divesting round, they will be removed and I will keep this cash instead.

This is what I do. SSS is what I tell others to do. Always interested if you have good schemes and want to instruct us!

[rpietila]

By the way hitting $995 in bitstamp before backing down is not a legit crossing of $990 (the daily from 10.12.2013 is still higher). If we do not quickly go back up and smash $1k, this is very bearish and might have been the start of a multi-week downtrend.

EW analysts say that the higher it goes before topping over, the deeper it goes also. I think this was quite high, so will we see $300 also??