rpietila Wall Observer - the Quality TA Thread ;)

[aminorex]

the common man is not. He has all sorts of things to balance, such as reporting his unemployment assistance, tax credits, solar installation energy credit, alternative minimum tax, etc....

It would be a very uncommon man who managed the complexity of the tax code at that level of detail.  I think the overwhelming majority either outsource tax concerns and take general advice from experts, or simply don't plan at all.  Definitely a software development opportunity in any case.

[AnonyMint]

The other near-term implication of the tax ruling is the margin call on miners who have to get cash before April 15.

Ditto in China apparently with April 15 deadline to sell and get out before exchanges close.

So we have perhaps persistent selling for next 2 weeks.

About the tax planning+timing issue. You just don't get it. Normal people already have no incentive to use Bitcoin and now they will really stay away from it. Why fuck with the hassle? Most people don't even know what a Schedule D is.

New software? Have you tried using H&R Block? I do every year, and they are the experts on simplification. My ex can't figure it out. I have to do her taxes this week.

Do you realize how stupid Americans are? They voted for Obama.  

None of that affects the fundamental adoption by fanatical white males, but it is enough to bust the bubble run we've had and cause capitulation among all the weak hands.

And I think there are a lot of newbies that bought at $600 - $1000 who are sweating it right now.

Then there are those who are sure it can't go lower than $400. Some of them might capitulate as it breaks down from there.

We don't have the system of Sweden. IN the USA, everyone is afraid of the IRS. Or at least they don't want to add hassle with IRS just to use some stupid technobabble money that they don't need any way.

[RAJSALLIN]

I have a question to the bears. If the price does in fact go the other way at what level will you start buying back? At what level will you panik buy?

lol

I don't think you get it.

You sell when there is upside momentum. You buy / accumulate back when there is downside momentum. One does not simply panic anything. Shorts don't panic buy or panic sell, those who did lost their money long ago and are out of the game. This is why I do not have a short position as of right now.

Don't be fooled into thinking that shorts will panic buy this to the moon. Bears kill rallies they don't participate in them.

So you are a momentum trader. How has that worked out for you with bitcoin?

[jmw74]

the common man is not. He has all sorts of things to balance, such as reporting his unemployment assistance, tax credits, solar installation energy credit, alternative minimum tax, etc....

It would be a very uncommon man who managed the complexity of the tax code at that level of detail.  I think the overwhelming majority either outsource tax concerns and take general advice from experts, or simply don't plan at all.  Definitely a software development opportunity in any case.

I still want to know who AnonyMint is referring to that is going to get burned by the IRS policy on bitcoin.

It's not poor people, they owe no tax at all.

It's not rich people, they are already accustomed to handling CG with their other investments, and their use of bitcoin as a currency will incur negligible CG tax compared to their investment activity.

It's not middle class people like me - given a choice between taxes on gains and no gains at all, I choose gains.

[jmw74]

About the tax planning+timing issue. You just don't get it. Normal people already have no incentive to use Bitcoin and now they will really stay away from it. Why fuck with the hassle? Most people don't even know what a Schedule D is.

New software? Have you tried using H&R Block? I do every year, and they are the experts on simplification. My ex can't figure it out. I have to do her taxes this week.

I'm sorry but this is nonsense.  For years people were required to declare and pay state sales tax on everything they bought from Amazon.com.   Guess how many people stayed away from Amazon because of this?  None.  Either they did the accounting work or they just fucking ignored the IRS [Edit: state department of revenue].  Eventually Amazon was pressured into collecting the tax because the state governments had no way to enforce it.

I suspect Americans will do exactly the same with bitcoin CG that they did with Amazon state sales tax.  It will be an inconsequential amount for 95% of users, they will ignore it and the IRS will do jack squat about it.  It will cost more to audit than the revenue it will bring in.

[AnonyMint]

the common man is not. He has all sorts of things to balance, such as reporting his unemployment assistance, tax credits, solar installation energy credit, alternative minimum tax, etc....

It would be a very uncommon man who managed the complexity of the tax code at that level of detail.  I think the overwhelming majority either outsource tax concerns and take general advice from experts, or simply don't plan at all.  Definitely a software development opportunity in any case.

I still want to know who AnonyMint is referring to that is going to get burned by the IRS policy on bitcoin.

Read my prior post, I said it is not so much about getting burned rather about it not being worth the hassle.

I have friends who work in call centers. Do you realize how many Americans can't figure out how to turn on their cell phone?

Even my mother who is intelligent would never use Bitcoin if it means another form for her to add to her IRS filing. I asked her.

It's not poor people, they owe no tax at all.

They collect the most refunds.

It's not rich people, they are already accustomed to handling CG with their other investments, and their use of bitcoin as a currency will incur negligible CG tax compared to their investment activity.

The rich people are not the target market for a currency. If we are talking about the fundamental adoption among white males, I already agreed this hasn't been affected.

It's not middle class people like me - given a choice between taxes on gains and no gains at all, I choose gains.

Lots of tiny gains for every day transactions. No you won't. Even I won't. Hassle. Major hassle.

And don't tell me about software. I have a word for you n00bs:

interoperability

I am software guy. You are not.

[AnonyMint]

About the tax planning+timing issue. You just don't get it. Normal people already have no incentive to use Bitcoin and now they will really stay away from it. Why fuck with the hassle? Most people don't even know what a Schedule D is.

New software? Have you tried using H&R Block? I do every year, and they are the experts on simplification. My ex can't figure it out. I have to do her taxes this week.

I'm sorry but this is nonsense.  For years people were required to declare and pay state sales tax on everything they bought from Amazon.com.   Guess how many people stayed away from Amazon because of this?  None.  Either they did the accounting work or they just fucking ignored the IRS.  Eventually Amazon was pressured into collecting the tax because the state governments had no way to enforce it.

I suspect Americans will do exactly the same with bitcoin CG that they did with Amazon state sales tax.  It will be an inconsequential amount for 95% of users, they will ignore it and the IRS will do jack squat about it.  It will cost more to audit than the revenue it will bring in.

BS. That was sales tax and Amazon collected it directly on checkout. It was no hassle at all.

[jmw74]

Lots of tiny gains for every day transactions. No you won't. Even I won't. Hassle. Major hassle.

And don't tell me about software. I have a word for you n00bs:

interoperability

I am software guy. You are not.

Exactly.  Tiny gains that nobody will bother to report accurately, and nobody will bother to enforce.

Software is not even relevant here, but I'm a software guy.

[jmw74]

BS. That was sales tax and Amazon collected it directly on checkout. It was no hassle at all.

No.  Look it up.  They didn't collect state sales tax for years.  For example they started collecting CA state sales tax in 2012.

[AnonyMint]

Lots of tiny gains for every day transactions. No you won't. Even I won't. Hassle. Major hassle.

And don't tell me about software. I have a word for you n00bs:

interoperability

I am software guy. You are not.

Exactly.  Tiny gains that nobody will bother to report accurately, and nobody will bother to enforce.

Software is not even relevant here, but I'm a software guy.

What kind of software have you coded and done customer support on?



You want to do something illegal when we are headed into severe totalitarianism?

Do you know the fee penalties and criminal liabilities that can be accessed for willful failure to file?

You are talking about a former time that I remember fondly in my youth.

Do you realize the USA has the highest incarceration rate in the world, 10 to 100 times per capita higher than Europe?

https://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2012/CPA/Nov/PenaltyAbatement.jsp

In 2011, the IRS assessed 38.6 million penalties to taxpayers, totaling almost $31 billion. According to the IRS, the purpose of penalties is to deter noncompliance, not to raise revenues.

http://www.wallandassociates.net/irs-penalties.html

Criminal Prosecution

You may be subject to criminal prosecution by the IRS with the intent of having declared guilty and jailed for (brought to trial) for actions such as:

• Tax evasion (remember Al Capone),
• Willful failure to file a return, supply information, or pay any tax due,

Again the point is that people will have a reason to avoid Bitcoin. It doesn't matter to what degree you think the actual threat is. It adds yet another reason to the long list of reasons why Bitcoin sucks as a currency, e.g. 10 - 60 minute transactions, no consumer protections, etc.

It is as if you guys are completely out-of-touch with the way the real world works.  

You are in your little tech nerd fantasy bubble. Come out and play amongst the common folk.

[AnonyMint]

BS. That was sales tax and Amazon collected it directly on checkout. It was no hassle at all.

No.  Look it up.  They didn't collect state sales tax for years.  For example they started collecting CA state sales tax in 2012.

States argued that (if Amazon had a physical presence in the state) but this was disputed because it violates the interstate commerce clause and the States only got their way by getting Amazon to deduct the taxes.

We are not talking about an ambiguous issue like that. The IRS has made it very clear what the culpability is.

[AnonyMint]

You are asking people to change all the ways they think about money:

• Money is now taxable.
• Money takes 10 minutes to an hour to spend.
• Credit cards can lose their balances.
• Credit cards have no refunds nor consumer protection.

People don't change even one thing easily, much less such a laundry list, unless there is some amazing compelling reason for them to.

People are like cows. They want to go along "mooo, mooo". They don't want new things or hassles, unless it is about Britney Spear's navel or their Xbox.

[AnonyMint]

Sorry so many posts, but I think you guys are highly underestimating the effect of Murphy's Law as new layers of complexity are added.

The masses are not highly motivated to sort through that.

What seems no brainer simple to you, is unfathomably complex (or just not worth figuring out) to them.

Just downloading the Bitcoin client is too complex. That is why they join if they get an email from Coinbase to click a link.

[rpietila]

Interesting points, but:

The last capitulation could very well happen again.

What I notice about the July 2013 capitulation is some very high volume (relative to the time) around the days prior to and after the final low. In contrast, the volume around the present low has been in contrast, average and the most notable trades have been large scale dumps, with the price rising on much lower volume.

I tried to confirm this in different resolutions, and found that in 6-hour chart it is true that as long as the bottom was not in, the high volume candles were red, and green candles had lower volume. After it turned, it was the opposite.

Until so far, we are in the red volume mode. What I have said earlier today that I give 168 hours for this to change. When the volume confirms the tide change, we are already so high that there is a risk for a short-term pullback.

In general I don't understand momentum trading, perhaps that is why. My idea is to buy low and sell high. I don't want to attack momentum traders, if they make money it's fine.

the panic buyers $500-$550........and then who is buying? Nobody? Well guess what happens next amongst a back drop of hoardes of stolen coins and arbitrage taking and USD cashing out Chinese?

After a bottom it goes up. We've seen this like.. 7 times now in Bitcoin's history. 99.95% don't own bitcoins. Hundreds of millions have now heard about them, mostly negative. It takes 12-24 months for them to buy. The first 1% of them is the next 500% of Bitcoin adoption, the ones who lift the price to $5,000 before leaves fall from the trees. If 5 million people invest $1,000 per person, they can buy 10 million bitcoins. That absorbs all the lonely Chinese and stolen coins, like many times before. There is nothing new in Bitcoin. Everything has happened before. It is a fractal. Before I even bought, it was explained to me.

If Bitcoin swings strongly upwards from the $400 zone, but fails to break and confirm itself beyond the long term down trend, I doubt that the market will waste much time in deciding Bitcoin's fate. There will be no doubts and a race to take profits/cut losses. How would support at and above $380 be if such a scenario were to play out, and lets face it, it easily could. Hate to say it but what Bitcoin probably needs to avoid an inevitable slide below $380 is some kind of isolated non USD economic crisis, and a bit of good old capital flight.......which is what I have come to believe Bitcoin was designed for in the first place (I have gone from being a libertarian 'believer' to having the view that Bitcoin is most likely a US intelligence agency project) .

Of course this is possible and some EW theorists believe it but I give higher odds for staying above 400 and therefore making a solid quadruple bottom going back to November, with ascending lows.

I believe you are too preoccupied with USD. The feedback loop of (lower USD price -> less users -> even lower price) has never before held true with Bitcoin, and I have no reason to believe it would now. There are so many reasons for increasing adoption, which inevitably leads to increased price that it is foolish to bet against it.

[jmw74]

BS. That was sales tax and Amazon collected it directly on checkout. It was no hassle at all.

No.  Look it up.  They didn't collect state sales tax for years.  For example they started collecting CA state sales tax in 2012.

States argued that (if Amazon had a physical presence in the state) but this was disputed because it violates the interstate commerce clause and the States only got their way by getting Amazon to deduct the taxes.

We are not talking about an ambiguous issue like that. The IRS has made it very clear what the culpability is.

In many states, residents were required by law to track and report their Amazon purchases for tax purposes.  It did not stop people from using Amazon.  Are you really trying to dispute this?

I just gave you a counterexample where a similar burden was ostensibly placed on people and they just didn't care.  The market decided the Amazon product was compelling enough to either track their purchases or risk the consequence of not reporting them.  

If you want to tell me some crucial difference between tracking Amazon purchases and tracking bitcoin purchases, go ahead.

As for my software qualifications and your rant about going to prison for not paying a few hundred bucks in taxes:  I just took you off ignore *today*, I regret it already.  

[akujin]

Most people I know who have heard of bitcoin, the first thing they do is buy GPU, mine altcoins, convert to BTC then dump  

[David Rabahy]

Most people I know who have heard of bitcoin, the first thing they do is buy GPU, mine altcoins, convert to BTC then dump  

Most people I personally know have heard of bitcoin (mostly because I tell them about it); only 1 or maybe 2 of them mine at all.  Perhaps they heard about it too late or are not inclined to mine.

[AnonyMint]

BS. That was sales tax and Amazon collected it directly on checkout. It was no hassle at all.

No.  Look it up.  They didn't collect state sales tax for years.  For example they started collecting CA state sales tax in 2012.

States argued that (if Amazon had a physical presence in the state) but this was disputed because it violates the interstate commerce clause and the States only got their way by getting Amazon to deduct the taxes.

We are not talking about an ambiguous issue like that. The IRS has made it very clear what the culpability is.

In many states, residents were required by law to track and report their Amazon purchases for tax purposes.  It did not stop people from using Amazon.  Are you really trying to dispute this?

Yes I am disputing it because it was state law versus the Constitution. And it was a change from the long standing hands off policy on all mail order that crossed state lines. Nobody took it seriously because they know the state is impotent and there was no tracking of everything back then. Certainly the states don't have the ability to track what is happening on the internet.

Also sales taxes are not personal income taxes. They are ad valorem. The only people that get prosecuted over sales taxes are the merchants, not the consumer.

And besides that was a long time ago and the USA has morphed significantly of recent.

I just gave you a counterexample where a similar burden was ostensibly placed on people and they just didn't care.  The market decided the Amazon product was compelling enough to either track their purchases or risk the consequence of not reporting them.  

If you want to tell me some crucial difference between tracking Amazon purchases and tracking bitcoin purchases, go ahead.

You built a strawman. Then you get all pompous on me.

The difference is that when the IRS talks, people dread their fucking April 15. And they don't need to add a Schedule D to that, when there is no compelling reason to. And they don't know what a Schedule D is any way.

When someone says, make sure you file your Schedule D, they will say shit I don't need no Bitcoin.

Bitcoin is not 1/100 as compelling as a currency as getting their goodies from Amazon. Your strawman you see.

That is as a currency. Now as a speculation for investment, those who are up for that won't be deterred by capital gains. They want capital gains. I was talking about the impact on the masses of this tax ruling and the effect it will have on sentiment being negative for while until something turns attention back to the "to the moon" theme that is Bitcoin entire reason to exist.

As for my software qualifications and your rant about going to prison for not paying a few hundred bucks in taxes:  I just took you off ignore *today*, I regret it already.  

Instead of ad hominem useless comment how about actually telling me why you are qualified?

I actually made software for the mainsteam (1 million of them twice) and supported them over the phone and email.

If you want to put me on ignore, just do it. What is this fucking political BS every time you disagree with my right to express my thoughts?

The software issue is you don't understand how even what seems simple to you, is not simple for the masses. That is why I asked what kind of experience you have in the industry.

[aminorex]

The other near-term implication of the tax ruling is the margin call on miners who have to get cash before April 15.

This is an interesting point.  In the long run, this IRS opinion that miners need to report income when they mine, is frankly absurd, and will definitely be reversed in a tax court, if they don't revise it before then.  But most people are rather conservative with regard to the IRS, and disinclined to fight, so this may well lead to hobby miner tax sales.  However, most miners are holding for a better price at this point, and those who have any margin to play with will not take a forced sale at a loss, which would be foolish.  Nonetheless, there will be incremental supply as a result of that issue, I agree.  It will dry up on April 15th.

We don't have the system of Sweden. IN the USA, everyone is afraid of the IRS. Or at least they don't want to add hassle with IRS just to use some stupid technobabble money that they don't need any way.

Agreed.  But I see such problems as business opportunities, not for me, but perhaps for someone in whom I may invest.  Almost no one needs bitcoin now.  Some people can benefit strong from using it, but they are not typical consumers.  That needs to change in order to achieve full potential, but not in order to address the low-hanging fruit, of which there is plenty.

[AnonyMint]

The other near-term implication of the tax ruling is the margin call on miners who have to get cash before April 15.

This is an interesting point.  In the long run, this IRS opinion that miners need to report income when they mine, is frankly absurd, and will definitely be reversed in a tax court, if they don't revise it before then.

How do you figure? The network is paying them for their services of mining. Seems correct to me and it is the ruling I expected and predicted since long-time ago.

But most people are rather conservative with regard to the IRS, and disinclined to fight, so this may well lead to hobby miner tax sales.  However, most miners are holding for a better price at this point, and those who have any margin to play with will not take a forced sale at a loss, which would be foolish.  Nonetheless, there will be incremental supply as a result of that issue, I agree.  It will dry up on April 15th.

Agreed.

We don't have the system of Sweden. IN the USA, everyone is afraid of the IRS. Or at least they don't want to add hassle with IRS just to use some stupid technobabble money that they don't need any way.

Agreed.  But I see such problems as business opportunities, not for me, but perhaps for someone in whom I may invest.  Almost no one needs bitcoin now.  Some people can benefit strong from using it, but they are not typical consumers.  That needs to change in order to achieve full potential, but not in order to address the low-hanging fruit, of which there is plenty.

There are so many opportunities in this ecosystem and I agree that solving the tax issue with s/w automation is a very silly one to go after now.

Just make an anonymous coin and the problem is solved for now (no need to hassle with s/w and no need to pay taxes for those in our white male demographic who like to point their middle finger at Uncle Sam). And first you need to fix so many other things before the masses will use BTC as a currency.

Agreed so many lower hanging fruits. Target the current demographic, which are speculative investors who want high tech weapons versus the government and liberate commerce.

That is exactly my marketing plan in spades. And I estimate I will win $billions with that plan.