rpietila Wall Observer - the Quality TA Thread ;)

[TERA]

Just look at the order book of any exchange. 

This is my favorite one:

[rpietila]

Now, the most interesting question for me - is how much money was invested into btc by now? It's certainly not 11,2 billions, nor it's 5 billions. Sum must be way, way less.

I calculated that $1 investment raises the market cap by $4. So therefore the sum invested over Bitcoin's existence should be about $2.8 billion.

Most of these sums must be stored on main stocks (btistamp, gox, btc-e, okcoin/huobi?), who performed transaction operations.
And in the end, that sum will determine how much btc you can sell, without going price to zero. Because if one (or several guys) wants to liquidate his BTC holdings, if sum will be big enough, there just wouldn't be enough demand ($) in stock balance to buy even at low levels,  and that will crash price to zero.

Having approximate amount of all cash invested to btc, which are in stocks now, might allow us to predict how much % btc will be required to completely crash the market.

By "stocks" you have to mean "exchanges". For sure the $2.8 billion is not there currently. We are talking some (low) hundreds of millions. By pressing "sell" for 200,000 bitcoins, you can crash all the markets 90% or more.

But that is not so meaningful. Exchange system is very untrustworthy and unfunctional, and therefore the money interested in buying bitcoins is not deposited there. There is much hidden demand, which means that no matter how many bitcoins are sold, there will be a buyer. For significantly lower price than now of course, but still a very robust price compared to just a year ago. Maybe $200 or so.

[FiatKiller]

RP, you're finnish? Love how musical that language is. Was actually considering moving to Scandanavia at one point but every woman I hooked-up with hated cold weather.  lol

[kwest]

... but every woman I hooked-up with hated cold weather.  lol

As someone living in the northern parts of Sweden I say: smart women.
Lots of good stuff here, but the winter weather isn't one of them.

[David Rabahy]

The exchange rates reflect liquidity and confidence, and supply and demand; supply and demand reflect want or need but mostly emotion.

Liquidity and confidence (or rather the lack thereof) causes Mt. Gox to be 20% higher than other major exchanges (at least for $US/BTC).

Mostly folks enter sells and buys because they just want to; very few transactions are need driven; anyone playing with their grocery money deserve what they get.

Emotions are driven by a wide variety of stimuli.  News, for example, is a big source.  Word of mouth causes many to act.  One very big source of emotion is the exchange rate itself; folks compare the exchange rate vs. the recent history and become agitated.  Rapid declines evoke terror.  Rapid increases overly excited.

Technical analysis attempts to detect emotions in the historic chart of the exchange rate and then predict future emotions; good luck.  It works until it doesn't.

Bitcoin will benefit from a lower level of erratic emotion regarding the exchange rate.  As infectious enthusiasm for the capabilities spread and they are adopted then the fundamental value of Bitcoin will rise.  Building real world infrastructure to further enable the use of Bitcoin will also increase the fundamental value of Bitcoin.  Shifts in the fundamental value will lead to news, etc., and eventually to movement in the exchange rate.

The other side of the exchange rate is also very important.  Supply and demand for $US, for example, reflect into the $US/BTC exchange rate.  The endless news of quantitative easing (debasing) pushes the demand for $US down.  Etc.

[FiatKiller]

I agree David, that the USD side of the equation in not considered often enough. All fiat will loose value over a long
period of time(hence my username  lol). This alone will cause BTC in USD dollars to rise longterm. At the bare minimum,
if you can buy a Superbowl quality TV now for one bitcoin, then you will be able to do so in the future. The USD cost
of the TV will be much higher and I think it's pretty safe to assume the value of bitcoin will outpace it, causing the amount
of bitcoin needed for a TV is drop below 1.

[rpietila]

Why my threads are actively moderated and I delete posts "at random".

[bambou]

I agree David, that the USD side of the equation in not considered often enough. All fiat will loose value over a long
period of time(hence my username  lol). This alone will cause BTC in USD dollars to rise longterm. At the bare minimum,
if you can buy a Superbowl quality TV now for one bitcoin, then you will be able to do so in the future. The USD cost
of the TV will be much higher and I think it's pretty safe to assume the value of bitcoin will outpace it, causing the amount
of bitcoin needed for a TV is drop below 1.

lol i'd sure hope to buy a lot more than a single TV with 1BTC.. try the whole stadium ^^

[neilol]

Why my threads are actively moderated and I delete posts "at random".

This is a great link and I'm glad there is finally some real research to back it up

[FiatKiller]

I agree David, that the USD side of the equation in not considered often enough. All fiat will loose value over a long
period of time(hence my username  lol). This alone will cause BTC in USD dollars to rise longterm. At the bare minimum,
if you can buy a Superbowl quality TV now for one bitcoin, then you will be able to do so in the future. The USD cost
of the TV will be much higher and I think it's pretty safe to assume the value of bitcoin will outpace it, causing the amount
of bitcoin needed for a TV is drop below 1.

lol i'd sure hope to buy a lot more than a single TV with 1BTC.. try the whole stadium ^^

Me too! I guess the main point is that it really HAS to go up long-term, as long as laws or bitcoin flaws do not kill it.

[jubalix]

I really wonder how all that transaction mechanics works on the stocks for BTC, in terms of real money availability on stocks' balance.

According to this site current "bictoin capitalization" is around 11,2 billion $
http://www.coinometrics.com/bitcoin/bmix
and current amount of btc existing is 12,2 millions

But we understand, that "capitalization" is oversimplified model, basically calculated as
[current value per bitcoin ($/btc) multiplied by the number of bitcoins in circulation]

It's nice to think in terms of "that huge amount of money" but it's just the stock, and price is fully depends on the supply/demand, as example

On 5th of december, selling ~200 000 bitcoins (2% of total)  on btc-e caused price drop from 1068 to 556  in 3 days (by 50%).
We might add there other stocks, as ~175k  for bitstamp and ~200k on gox, it's still aboout 5,5% of all volume.

That's how fast wealth disappearing.



Now, the most interesting question for me - is how much money was invested into btc by now? It's certainly not 11,2 billions, nor it's 5 billions. Sum must be way, way less.

Most of these sums must be stored on main stocks (btistamp, gox, btc-e, okcoin/huobi?), who performed transaction operations. //assuming, that people not cashed out to fiat//

And in the end, that sum will determine how much btc you can sell, without going price to zero. Because if one (or several guys) wants to liquidate his BTC holdings, if sum will be big enough, there just wouldn't be enough demand ($) in stock balance to buy even at low levels (and deposit takes several hours), and that will crash price to zero.

Having approximate amount of all cash invested to btc, which are in stocks now, might allow us to predict how much % btc will be required to completely crash the market.

Sure we can't predict how much support (buying power) will be waiting on $100 mark, but in the end, it's all about current cash  on stock balance - if potential buyer don't have much cash his order will be filled up and price will drops further.

If we have some figures about stock balance funds, we can create approximation scenarios (like 1kk btc to be bought at $100 before cash ends and drops further, etc).

Is there any way to obtain something like that?
I mean all stocks are legal organisations and must provide some finance reports to the govt (and at least partly these reports are open to public).

P.S. in before "who the hell will liquidate all his holdings at one day" stuff - scenario might happen if several major holders (up to I dunno, 1kk BTC?) will liquidate their positions at once for whatever reasons.

I don' really see the problem here. As all companies are valued in the same way, and a market cap has a sort of acid/base buffer system in it, people rush in to buy if it goes don to low, and seel when it goes up to take profits, so it's ok. Of course look at volume as well.

The Cardinal difference between the BTC market cap and say Apple Market cap, it BTC's is infinitely respendable. Eg that BTC buying power does not disappear when I pass it on to someone, like cash. An apple share however can not be used in this way, it can only be swapped again within its share market. So that means there is circa 10 billon of buy power on the table all the time that is not diminished. This inchoate property of a currency, is what often makes people give discounts for cash. Cash is infinitely transmutable to the need you have.

[CoolStoryBro]

I don' really see the problem here. As all companies are valued in the same way, and a market cap has a sort of acid/base buffer system in it, people rush in to buy if it goes don to low, and seel when it goes up to take profits, so it's ok. Of course look at volume as well.

I was just wondering on how much money operating on exchanges and what limits they have in terms of influencing the price.
Ultimately THE EXCHANGES now is the main indicator of the price (i.e. if you crash all exchanges to price $10 BTC, what other sources people will use to determine what price is "right"?)

For that, to understand degree of possible manipulation (or for the sake of curiosity) information about fiat mass on each exchange and/or current number of BTC on balance would be very helpful(because before selling BTC you need to transfer it to exchange first, right?).

i.e. - is there 200 000 BTC on exchanges' balance at the moment (to possibly crash 90%)?

These things would be interesting to know.

[RAJSALLIN]

Question to rpietila and you other high quality thinkers..

The bitcoin price has so far moved up in waves. Each wave top and collapse has been accompanied by debate from non believers of a bubble top which in turn has been followed by a time of consolidation and then a new bubble formation where people have understood the last bubble wasn't the final one etc.

Will this formation continue all the way to the final price top of $300k-1M or will the rise change nature and take another approach? What do you say? I think it's getting more and more obvious that this pattern is repeating itself and in so it's pretty easy to trade it. In one way I guess it's a self fulfilling prophecy but I'm still wondering if this obvious pattern can continue? Next top $5k, crash then $20k, crash then $100k etc.

[Ducky1]

I'm no high quality thinker, but here are my random ramblings of what may make the price move:

If nothing earth shattering happens the price will be stable at the current levels. Stable bitcoin price versus $ is wanted from larger hodlers.

What can move the price:

- New regulation from the New York authorities. This may take months, but has to be done before wall street money may start to flow.
- Winklevoss ETF gets approved - May also take months.
- Stock market crash - That may be sooner, still unsure how it will affect price. Some believe that this will move money to Bitcoin, it may also move money out of Bitcoin to less risky assets?
- Dollar starts inflating even more than it already does due to gold price manipulation being busted. This should happen pretty soon since there is not much physical gold left in the vaults. Money may go from dollar to bitcoin and gold (or money can also move to gold from bitcoin?)

[hdbuck]

I'm no high quality thinker, but here are my random ramblings of what may make the price move:

If nothing earth shattering happens the price will be stable at the current levels. Stable bitcoin price versus $ is wanted from larger hodlers.

What can move the price:

- New regulation from the New York authorities. This may take months, but has to be done before wall street money may start to flow.
- Winklevoss ETF gets approved - May also take months.
- Stock market crash - That may be sooner, still unsure how it will affect price. Some believe that this will move money to Bitcoin, it may also move money out of Bitcoin to less risky assets?
- Dollar starts inflating even more than it already does due to gold price manipulation being busted. This should happen pretty soon since there is not much physical gold left in the vaults. Money may go from dollar to bitcoin and gold (or money can also move to gold from bitcoin?)

imho the next significant price move could be linked to what will happen then:

http://www.zerohedge.com/news/2014-01-30/debt-ceiling-x-date-back-may-hit-soon-february-28

edit: and its likely to go upward.

[merkin51]

I'm no high quality thinker, but here are my random ramblings of what may make the price move:

If nothing earth shattering happens the price will be stable at the current levels. Stable bitcoin price versus $ is wanted from larger hodlers.

What can move the price:

- New regulation from the New York authorities. This may take months, but has to be done before wall street money may start to flow.
- Winklevoss ETF gets approved - May also take months.
- Stock market crash - That may be sooner, still unsure how it will affect price. Some believe that this will move money to Bitcoin, it may also move money out of Bitcoin to less risky assets?
- Dollar starts inflating even more than it already does due to gold price manipulation being busted. This should happen pretty soon since there is not much physical gold left in the vaults. Money may go from dollar to bitcoin and gold (or money can also move to gold from bitcoin?)

imho the next significant price move could be linked to what will happen then:

http://www.zerohedge.com/news/2014-01-30/debt-ceiling-x-date-back-may-hit-soon-february-28

edit: and its likely to go upward.

What does that mean for those of us who do not understand such things?

[CoolStoryBro]

http://www.zerohedge.com/news/2014-01-30/debt-ceiling-x-date-back-may-hit-soon-february-28

edit: and its likely to go upward.

What does that mean for those of us who do not understand such things?

as I understood, US govnt will ran out of money (again) in the period from 28feb to 14march which potentially can lead to US$ default.

In these times, in theory, people move out from US$ to the "safer" investments, or at least try diversificate more.
Though, that's wasn't the issue for Gold in the last few years

But indeed, some folks might want to diversificate in BTC, thus increasing price.
That's how I understanding it. (I also newb at macro)

[seleme]

Rpietilla, any luck with your Gox withdrawals?

4 days here - no bitcoins, no words from Gox.

[rpietila]

Rpietilla, any luck with your Gox withdrawals?

4 days here - no bitcoins, no words from Gox.

They sent me new year's greeting of BTC1 but are still withholding 15 transactions totalling BTC500+.

An unrelated note - I lost half of a 7"-54 cigar (Cohiba Piramides) because it was burning too cold. Is this because of too high or too low humidity (or sth else)? Only the second half worked.

Major announcement: There is a new private bitcoin forum online. If you belong to the top contributors here, please PM and I will send you an invitation. Finally a place to take the discussion to a new level!  

No vacancies currently, thank you

[bangersdad]

Rpietilla, any luck with your Gox withdrawals?

4 days here - no bitcoins, no words from Gox.

They sent me new year's greeting of BTC1 but are still withholding 15 transactions totalling BTC500+.

An unrelated note - I lost half of a 7"-54 cigar (Cohiba Piramides) because it was burning too cold. Is this because of too high or too low humidity (or sth else)? Only the second half worked.

Major announcement: There is a new private bitcoin forum online. If you belong to the top contributors here, please PM and I will send you an invitation. Finally a place to take the discussion to a new level! 

Rpietila do you not have a humidor? i could recommend one which i use myself - until i started storing my cigars this way i thought they were not worth using - but the difference smoking one at optimum moisture levels enhances the flavours considerably.