rpietila Wall Observer - the Quality TA Thread ;)

[AnonyMint]

The reason is that people who buy on overstock or tigerdirect are just buying more bitcoin to replace what they spent.  They originally bought the bitcoin as an investment, they are excited to be able to use it for something, but they don't want to exit their position.

I don't have any solid numbers to support this assertion, but I don't think anyone does.  The takeaway is that the selling pressure is lower when you take into account the behavior of current retail bitcoin customers.

You don't have any data. I have spent 2 or 3 BTC and did not replace it. Occam's Razor says it is not likely that it is isn't lossy in spite of the best intentions.

Besides even if you are 100% correct, your point is irrelevant. If those merchants were increasing their savings of BTC instead, then there would be more upwards pressure on the fiat price of BTC.

Also remember M x V = P x Q. Thus increasing V increases P or Q (in our case we want Q which is quantity of merchants who hold BTC). You make the mistake of thinking value come from a equilibrium of stock. Rather value comes from flows. If the flows are actually occurring in the fiat, then the value from those flows is lost from BTC because there isn't an apparency of more money stock (M x V). Risto apparently can't do this level of math. In short, we increase the # of merchants who accept fiat, not who accept BTC. The switcheroo will later be trivial.


And there was also the issue that miners have razor thin margins now and must convert more to fiat.


The bigger issue is that we are building a merchant base that converts everything to fiat. This is what you are incentivizing. And it is compounding faster than adoption. Once you have a single service provider controlling all merchants, then no altcoin can be accepted (once they do the blacklisting on coins that don't carry full identity). And that provider will be controlled by the government. You say you want to get away from Paypal, then you hand control right back to Peter Thiel again.

Just go ahead 'tards to your centralized hell.

Any one serious about liberty is welcome to come help on something serious. Not this BS.

What fool would lose 3-5% spread (at least) on two times exchanges instead of paying 0% to spend the fiat with a credit card?

And cause a premature capital gains event.

And then only accomplish destroying our collective liberty.

Incredible powers of logic!

Serious parties are being contacted. And will reap incredible wealth because of it (and be able to hang on to it). You know who you are.


In spite of my disappointment (dejection and depression) in our moderator, I thank him for allowing me to post.

Bitcoin is wonderful for merchants (no chargebacks) but sucks and for consumers .

FTFY.

I used Etch-A-Sketch in kindergarten too.

Boycotting merchants who don't use BTC as their unit-of-account will prevent mass adoption. Thus we can now be sure that BTC is converting itself to fiat. And anyone supporting BTC and claiming it helps us get away from fiat is just full of BS.

It will depend on the quality of fiat. For the majority of the countries out there BTC is better than hard currency like the USD or EUR, because in many cases they have restrictions regarding foreign exchange. Convertibility to better quality fiat, which is regarded as "stable", is another issue though. But EU and USA are like 1/10th of the world's population, not 100%.

By the time the confiscation begin in EU (2015?), then you better pray you have a serious anonymous coin because Bitcoin ain't gonna help you hide it.

And Darkcoin's developer is actually saying he doesn't want to try to make it anonymous:

https://bitcointalk.org/index.php?topic=421615.msg6019142#msg6019142

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[jmw74]

Besides even if you are 100% correct, your point is irrelevant. If those merchants were increasing their savings of BTC instead, then there would be more upwards pressure on the fiat price of BTC.

Also remember M x V = P x Q. Thus increasing V increases P or Q (in our case we want Q which is quantity of merchants who hold BTC). You make the mistake of thinking value come from a equilibrium of stock. Rather value comes from flows. If the flows are actually occurring in the fiat, then the value from those flows is lost from BTC because there isn't an apparency of more money stock (M x V). Risto apparently can't do this level of math. In short, we increase the # of merchants who accept fiat, not who accept BTC. The switcheroo will later be trivial.


And there was also the issue that miners have razor thin margins now and must convert more to fiat.


The bigger issue is that we are building a merchant base that converts everything to fiat. This is what you are incentivizing. And it is compounding faster than adoption. Once you have a single service provider controlling all merchants, then no altcoin can be accepted (once they do the blacklisting on coins that don't carry full identity). And that provider will be controlled by the government. You say you want to get away from Paypal, then you hand control right back to Peter Thiel again.

Just go ahead 'tards to your centralized hell.

Any one serious about liberty is welcome to come help on something serious. Not this BS.

Bitpay and coinbase are on the edges of the bitcoin economy.  What's important to note is that they continually push the edges outward.

Just as merchants were motivated to accept bitcoin through bitpay (because it's virtually no risk), the same will happen with those merchants' suppliers.  And once that happens, the merchants don't need to completely convert to fiat anymore.  Eventually the merchant can keep their income in bitcoin, and it's the suppliers who use bitpay.  

What's going to stop the edges from moving outward?

What fool would lose 3-5% spread (at least) on two times exchanges instead of paying 0% to spend the fiat with a credit card?

And cause a premature capital gains event.

If you lose money on the two exchanges, how do you have capital gains?

[VinnyatGyft]

Thank you for all the kind words and comments and for linking to my piece.  I don't want to get into the minutiae here, except to say the following:

My price range of $350-$550 is based more upon gut feel, not technical analysis. If I use the technicals, then it is most likely the psychological barrier of $400 - $436, but I accept that markets overshoot technicals intraday.  I think the equilibrium point is somewhere in that range.

As a corollary to my "gut", I'm seeing a number of high net worth individuals and funds who are long Bitcoin looking to reduce their average holding price from the $800-$1000 range and are continuing to pour dry powder into the market.  I don't know how long this will last, but it's a stabilising factor to some degree. Given the high beta upside of Bitcoin, I don't think we're going to see a bottom much lower than $350, given that Silicon Valley is awash with liquidity right now and the general consensus is that Bitcoin has high upside.  The real question is how much selling pressure comes from Coinbase & BitPay. 

Again, the title of my piece was aptly named - "Finding Equilibrium", no-one knows for certain what the true value of a Bitcoin is but it's really a factor of balancing fiat into Bitcoin and fiat out of Bitcoin that will determine the short term price.  The long term utility and use cases of Bitcoin are yet to be defined and proven and as a result placing the value on a single coin is undeterminable right now - it's just speculation and psychology intertwined.

External factors aside.  If Bitcoin lives up to half the promises and expectations from it's enthusiasts, the outcome will be a price greater than 10x the current price. So, if you assume a 10x payback, you would buy Bitcoin at $450 if you thought it only had a 10% chance of success. On the basis of that logic alone, I'm still a buyer... (and also a keen poker player, of course)

[ArticMine]

...

What fool would lose 3-5% spread (at least) on two times exchanges instead of paying 0% to spend the fiat with a credit card?

And cause a premature capital gains event.

And then only accomplish destroying our collective liberty.

Incredible powers of logic!

Serious parties are being contacted. And will reap incredible wealth because of it (and be able to hang on to it). You know who you are-

...

The costs of a credit card transaction can vary widely, from under 1% to even over 50%. It all depends on the circumstances of the consumer and the merchant. At one extreme on has a consumer with a 1% cash back credit card that has a low merchant fee of say 1.64% rate that a large merchant can get for a domestic card present transaction and one has an effective cost well under 1%. I have such a credit card. At the other extreme one has a person with poor credit spending $50 to purchase a prepaid credit card in order to make a $20 purchase online. Add to this the merchant fees for the much riskier card not present transaction and the cost is well over 50%. I have also witnessed this. Bitcoin will have a hard time competing in the first case but will completely blow the second case right out of the water. Bitcoin does not need to become a replacement for fiat or eliminate all fiat transactions, or cause the demise of the USD or EUR to be successful. In fact this is very unlikely. No all Bitcoin needs to do to be successful beyond most of our wildest dreams is pick off those transactions that are currently horribly inefficient, and least profitable, in the fiat system.

Think of lionesses going after a herd of zebra or wolves going after a herd of bison. They pick off the weakest zebra or bison and eat it, they do not need to take down the entire herd.

[znaky]

The bigger issue is that we are building a merchant base that converts everything to fiat. This is what you are incentivizing. And it is compounding faster than adoption. Once you have a single service provider controlling all merchants, then no altcoin can be accepted (once they do the blacklisting on coins that don't carry full identity). And that provider will be controlled by the government. You say you want to get away from Paypal, then you hand control right back to Peter Thiel again.

Just go ahead 'tards to your centralized hell.

Any one serious about liberty is welcome to come help on something serious. Not this BS.

I dont understand how a merchant base that converts everything to fiat will lead to a single service provider controlling all merchants. Could you please elaborate?

If I understand you correctly your biggest concern is not short term price drop but that your anonymous altcoin will not be adopted because of all this?

[znaky]

The beauty of the 5.25-year trendline with exponential fit (R^2=0.93 which is pretty darn good) is that it takes into account every worry of every person who has ever owned or not owned bitcoins. I put more weight on that than the individual worries of a single person.

The trendline is a representation of how people have speculated in the history of Bitcoin. As Anonymint points out we have a large merchant adoption that we haven't had the last 5.25 years.  Do you think new  factors with a possible large impact like this can make the trendline less accurate?

[aminorex]

The beauty of the 5.25-year trendline with exponential fit (R^2=0.93 which is pretty darn good) is that it takes into account every worry of every person who has ever owned or not owned bitcoins. I put more weight on that than the individual worries of a single person.

The trendline is a representation of how people have speculated in the history of Bitcoin. As Anonymint points out we have a large merchant adoption that we haven't had the last 5.25 years.  Do you think new  factors with a possible large impact like this can make the trendline less accurate?

The more transaction traffic, the more accurate the models should become.  The trendline can be derived from the active wallet trend.  As sample size increases, moments computed on the sample convert to the moments of the population.  It's only when the samples start coming from a different population that the trendline would be less accurate.  That would happen if market dynamics underwent a major structural change.

[BTCtrader71]

The beauty of the 5.25-year trendline with exponential fit (R^2=0.93 which is pretty darn good) is that it takes into account every worry of every person who has ever owned or not owned bitcoins. I put more weight on that than the individual worries of a single person.

The trendline is a representation of how people have speculated in the history of Bitcoin. As Anonymint points out we have a large merchant adoption that we haven't had the last 5.25 years.  Do you think new  factors with a possible large impact like this can make the trendline less accurate?

According to the theory underlying the trendline model, we expect to encounter new factors with large impacts. A year from now, there will be new factors with large impacts that make today's large factors seem unimpressive. When we see them, it should make us more confident in the trendline model, not less.

[cosmofly]

Just wanted to let fellow TA's that the China Ban is now confirmed as real, Bobby Lee has also confirmed it, check here: https://bitcointalk.org/index.php?topic=553276.0

This is huge news, Exchanges like OKCoin already talking about moving out of China.

[BTCtrader71]

Thank you for all the kind words and comments and for linking to my piece.

Glad you are here!

[ArticMine]

The beauty of the 5.25-year trendline with exponential fit (R^2=0.93 which is pretty darn good) is that it takes into account every worry of every person who has ever owned or not owned bitcoins. I put more weight on that than the individual worries of a single person.

The trendline is a representation of how people have speculated in the history of Bitcoin. As Anonymint points out we have a large merchant adoption that we haven't had the last 5.25 years.  Do you think new  factors with a possible large impact like this can make the trendline less accurate?

I do not see a large merchant adoption making the trendline any less accurate, it is simply an indication of the growth of Bitcoin. Furthermore I the find idea that large scale adoption by merchants is bearish for Bitcoin rather bizarre and more an indicator, that we are currently very close to a significant low in the BTC/USD price. Maybe the bears are starting to get a bit on the piggish side here?

As for the trendline it does have some significant limitations:
1) The exponential model makes sense when applied to the market capitalization not the price. The impact of this approximation is to underestimate the price. When applied to 2009 this approximation completely breaks down
2) The data before July 2010 is highly questionable. It also does not include the data from January - June 2010 from http://newlibertystandard.wikifoundry.com/page/Exchange+Rate. This data, unlike the data from 2009 from the same source, is actual trading data in terms of gold (1 gram XAU via Pecunix) from BitcoinMarket and NewLibertyStandard. I do agree with the premise that for a large part of 2009 the USD/BTC rate could have been constant. This is due to the growth in the Bitcoin money supply being approximately equal to the growth in the use of Bitcoin during 2009.

My thoughts on this is that because of the above the trendline errs  on the side of being overly bearish. It for this reason that I was aggressively buying in August / September and into October 2013 (where I was proven right) and held rather than sell in December 2013 - March 2014 (where I was proven for the most part wrong). As for the current situation I see a hold and / or long term buy.

[thefunkybits]

She moved her bids again

what is this referring to?

[tablemanic]

what is this referring to?

Oyvinds is referring to one (or at least most likely one) investor that has placed big bids at several different price levels. This investor appears to most likley be someone who actually wants to buy and not just push the price up. Keep up the good work Oyvinds.

[Syke]

The real question is how much selling pressure comes from Coinbase & BitPay. 

Welcome to the forums, Vinny. I enjoyed your piece. And to answer your almost-question: very little, especially in the long term, because the selling pressure from merchants is only half the equation. The other half of the equation is "where did those bitcoins come from that are being sold?" Most people have to buy them, so the selling pressure is nearly balanced by the buying pressure on the other side. The other way is mining. Years ago mining was a signficant part of the market. Now, very little coins are mined compared to volume of coins bought/sold/traded.

[AnonyMint]

I really don't want to post, but I am compelled to point it out some corrections.

Besides even if you are 100% correct, your point is irrelevant. If those merchants were increasing their savings of BTC instead, then there would be more upwards pressure on the fiat price of BTC.

Also remember M x V = P x Q. Thus increasing V increases P or Q (in our case we want Q which is quantity of merchants who hold BTC). You make the mistake of thinking value come from a equilibrium of stock. Rather value comes from flows. If the flows are actually occurring in the fiat, then the value from those flows is lost from BTC because there isn't an apparency of more money stock (M x V). Risto apparently can't do this level of math. In short, we increase the # of merchants who accept fiat, not who accept BTC. The switcheroo will later be trivial.


And there was also the issue that miners have razor thin margins now and must convert more to fiat.


The bigger issue is that we are building a merchant base that converts everything to fiat. This is what you are incentivizing. And it is compounding faster than adoption. Once you have a single service provider controlling all merchants, then no altcoin can be accepted (once they do the blacklisting on coins that don't carry full identity). And that provider will be controlled by the government. You say you want to get away from Paypal, then you hand control right back to Peter Thiel again.

Just go ahead 'tards to your centralized hell.

Any one serious about liberty is welcome to come help on something serious. Not this BS.

Bitpay and coinbase are on the edges of the bitcoin economy.  What's important to note is that they continually push the edges outward.

Just as merchants were motivated to accept bitcoin through bitpay (because it's virtually no risk), the same will happen with those merchants' suppliers.  And once that happens, the merchants don't need to completely convert to fiat anymore.  Eventually the merchant can keep their income in bitcoin, and it's the suppliers who use bitpay.  

What's going to stop the edges from moving outward?

Talk about fantastical dreaming. I thought I was really far out there with wanting an anonymous coin.

So in order to stop rape, first we need to rape until everyone is raped, then we can suddenly stop raping because everyone has a rape kit.

You won't get to even 1% coverage before the entire ecosystem has been co-opted by centralization and fiat regulation. Dance with the vampires only if you want to be bitten and converted.

I guess the love of greed can make one think up any kind of irrational excuse to continue in that greed.

What fool would lose 3-5% spread (at least) on two times exchanges instead of paying 0% to spend the fiat with a credit card?

And cause a premature capital gains event.

If you lose money on the two exchanges, how do you have capital gains?

Do most people in Bitcoin have only 3 - 5% gains.

What fool would lose 3-5% spread (at least) on two times exchanges instead of paying 0% to spend the fiat with a credit card?

The costs of a credit card transaction can vary widely, from under 1% to even over 50%.

You failed to grasp my point that the credit card holder pays 0% (or even gets cash back). What the merchant pays is irrelevant, unless the merchant is giving that 3-5% discount to the Bitcoin purchaser. Even with a discount, it is bad tradeoff because we are pushing our ecosystem to hell.

The bigger issue is that we are building a merchant base that converts everything to fiat. This is what you are incentivizing. And it is compounding faster than adoption. Once you have a single service provider controlling all merchants, then no altcoin can be accepted (once they do the blacklisting on coins that don't carry full identity). And that provider will be controlled by the government. You say you want to get away from Paypal, then you hand control right back to Peter Thiel again.

Just go ahead 'tards to your centralized hell.

Any one serious about liberty is welcome to come help on something serious. Not this BS.

I dont understand how a merchant base that converts everything to fiat will lead to a single service provider controlling all merchants. Could you please elaborate?

Do you see any competitor to Bitpay (or Peter Thiel's Facebook or Paypal)? Do you know how to compound 3X monthly growth (or thereabouts) and realize how few months before that is the entire value of Bitcoin (thus no room for another player)?

And on what feature could a competitor compete? Bitpay already offers 0% fees, because we the customer pay Bitpay when they fudge the exchange rate slightly.

If I understand you correctly your biggest concern is not short term price drop but that your anonymous altcoin will not be adopted because of all this?

Do you see my name on anything in the altcoin list.

Agreed I have no skin in whether the price drops or not. My concern is whether I end up a slave or not.

The real question is how much selling pressure comes from Coinbase & BitPay.  

Welcome to the forums, Vinny. I enjoyed your piece. And to answer your almost-question: very little, especially in the long term, because the selling pressure from merchants is only half the equation. The other half of the equation is "where did those bitcoins come from that are being sold?" Most people have to buy them, so the selling pressure is nearly balanced by the buying pressure on the other side. The other way is mining. Years ago mining was a signficant part of the market. Now, very little coins are mined compared to volume of coins bought/sold/traded.

Nonsense. The demand of buyers doesn't increase when the amount of selling through merchants increases. It increases only if the people buying at merchants are all replacing their coins. You completely dunced the math that I explained upthread. Remember demand and supply meet at price. Go back to Economics 101 and don't forget marginal supply and demand sets price.

Our timelines on the next launch are almost the same. I still stand by my prediction that Bitcoin will see a new ATH by the end of July 2014. End of the year I predict $5000 will have been hit at least.

The crash from the $32 ATH scared me pretty bad. I almost cashed out back then. The crash from $266 ATH was a little uncomfortable, but didn't really scare me. Now the slide from the $12xx ATH has me very excited. The next runup is going to be awesome!

Markets always move in the direction to hurt the most investors. When most of the investors are 100% sure of something, that is when it most surely won't happen. I don't know if you are representative of the majority or not.

[smoothie]

Oh fuck look what just happened under our nose while we were not paying attention!

https://www.goldsilverbitcoin.com/bitpay-worlds-first-zero-transaction-fee-payment-processing/

So who is paying those high fees? We the customers in the exchange rate!!! And liquidating our investment!

Fuck we've been sucked into a fiat vortex by that same bastard Peter Thiel who angel funded Facebook and Paypal.

(The article is from the beginning of 2013-11-11, so almost a complete boom-bust cycle ago). I don't see the evil here. Everybody is free to liquidate their investment or use bitcoin as a currency, or do both.

Money has different functions, among which the important ones are:

Store of value

If you have a wealth management plan (I had ever since I made my first FIM 10,000, and it has been very elaborate since EUR 40,000), you allocate your assets to different categories that serve different purposes and provide upside and security in different scenarios. What you use as payment is completely different, although it is usually practical to have at least a small balance in the currencies you transact with.

Means of payment

Payment amounts are quoted in different currencies and you can typically pay in any currency with the use of conversion, which may be automatic or manual. What you own does not determine your means of transaction, unless it is a very big one in which case it might carry additional liquidity, tax or hassle considerations. You are free to use whatever currency as your unit of accounting, regardless of the country's fiat, or the allocation of your assets.

Thus, the rise in the use of something as a quote currency or a transaction currency, can at most be irrelevant to its value, but typically is positive, and the following statement

The more success Bitpay has, the worse for Bitcoin. Because Bitpay is all about liquidating BTC from investors (not bringing in proportionally new customers to the ecosystem).

is absurd and wrong.

Bitcoin is pointed down now and it will be a vicious cycle that feeds on itself. It is structural and we have to go down and restart from a low equilibrium.

It is impossible to be 100% certain of anything. But a tendency in your writings seems to be that once you recognize something that in your assessment is a threat to Bitcoin, it means that the price action should follow immediately following your enlightenment. Since the Bitcoin economy is composed of perhaps a million actors, with many holding significant Bitcoin and/or fiat balances, your individual timing in understanding matters is not actually that important.

The beauty of the 5.25-year trendline with exponential fit (R^2=0.93 which is pretty darn good) is that it takes into account every worry of every person who has ever owned or not owned bitcoins. I put more weight on that than the individual worries of a single person.

It almost sounds like that you are first time experiencing a major low in bitcoin exchange rate.

Which graph can you point me to for the 5.25-year exponential trend line?

[smoothie]

Moderator action - this thread is now proceeding at a rate of 200+ posts per day and it affects readability.

I will impose a 10 posts per 24 hours limit on everyone, which lets everyone decide for themselves which posts are most important.

For those with an account less than 6 months old, the limit is 3 posts per 24 hours.

Although I like the high level of discussion, there is a certain amount of repetition here. This measure allows us to take some time off reading and writing to this thread, makes it easier for the lurkers to be up-to-date, and is not intended to lessen the quality at all.

Would it not be better to use the OP at the beginning of the thread to highlight the main points discussed as a way of referencing material/data for new comers?

Just a suggestion.

[smoothie]

So Risto,  What are your feelings at the moment?  I assume now is a great time to buy.  When do you think the next rally will take place and what is your estimation on when we will reach the next ATH?  What do you think the next ATH will be?

I was thinking that I was surprised, yet again, that you were right about how the price was too high and that we would correct down to $400 or so. Yet here we are.  When do we just shut up and stop questioning you? 

- I think it is much more probable (70%) that 400 will hold vs. not. Even if it goes lower, it does not change anything except that price is better for buyers and worse for sellers. There is still exactly the same number of bitcoins in the market and the viability of the technology is exactly the same.
- Yes, it is a great time to buy. If you are thinking of buying bitcoins, you should do it now. Even if you were not thinking, the price is good.
- The tribulation is likely over in a week, at most the sub-500 prices persist until past April 15 (tax sales). In the end of the month we are definitely over 500, probably about at 600.
- We are now at -0.3 log-units in the long term trendline. This situation will persist until the next uptrend launches. Note that the trendline ascends 23% per month and it drags the price up with it.
- After about 2-3 months, we are near 1000 and there is a hurdle to get over it. It succeeds and the rally is ignited, catapulting us to a new ATH of 3000-7000 in July-August. From taking the old ATH of 1163 to making the new, it is only 20-40 days.

Always happy to help

Our timelines on the next launch are almost the same. I still stand by my prediction that Bitcoin will see a new ATH by the end of July 2014. End of the year I predict $5000 will have been hit at least.

[Syke]

Our timelines on the next launch are almost the same. I still stand by my prediction that Bitcoin will see a new ATH by the end of July 2014. End of the year I predict $5000 will have been hit at least.

The crash from the $32 ATH scared me pretty bad. I almost cashed out back then. The crash from $266 ATH was a little uncomfortable, but didn't really scare me. Now the slide from the $12xx ATH has me very excited. The next runup is going to be awesome!

[smoothie]

Our timelines on the next launch are almost the same. I still stand by my prediction that Bitcoin will see a new ATH by the end of July 2014. End of the year I predict $5000 will have been hit at least.

The crash from the $32 ATH scared me pretty bad. I almost cashed out back then. The crash from $266 ATH was a little uncomfortable, but didn't really scare me. Now the slide from the $12xx ATH has me very excited. The next runup is going to be awesome!

Waves and cycles as well as trader psychology and market SENTIMENT.