rpietila Wall Observer - the Quality TA Thread ;)

[Peter R]

Huh, I had a bad dream last night. I had finally given a chance to an altcoin and was playing with about $30k stash. I saw it going for 55 (satoshi, I presume), and decided to buy. It jumped to 80, then came back. I thought it is going to the moon and bought several small lots at market. Then it briefly went to 23, but I was too slow to buy. Back at 50. Bought more. Back at 23. Then... whatth heck.. the price is suddenly dropping to 4!! Someone is dumping. Now I want out. But there is no one to buy. At the instant it goes back to 20ish, the dump starts again.

The idea of losing $20k in a matter of minutes is not very nice. This dream will keep me from buying alts 

LOL, I recently had the opposite dream with bitcoin:
 
======
The price starts to plummet, $400, $300, $200, $100, ….

It is going down so fast that I panic for a second and think it might hit zero.

But then I remember that the value of a spot on the blockchain comes from our shared belief that the blockchain ledger is a legitimate record of account.  And I realize that this current rapid price drop is just the result of a few people who panicked and does not actually represent a change in the shared belief of the economic majority in our community. 

I but a bid wall at $10.00 for 1,000 coins.  It gets filled.  The price goes back up.
======

It seems to me the more people that believe that bitcoin is a store of value, the better store of value it becomes.  Bitcoin can thus have almost any value; it's actually value at any point in time is just the economically-weighted opinion of all the humans in the world. 

[Its About Sharing]

A simple argument for a minimal BTC price of $40-60K in the next 3-3.5 years follows:
The 30 million fiat millionaires capital is currently ~$88 trillion. If only 1% of this capital will be allocated to BTC (a minimal figure for argument's sake), it would constitute 880bil or ~$42000/BTC (at full 21 mil BTC). Family offices and advisors typically suggest allocating more than this to alternative investments, so I think that at least 1% is quite conservative. If the conversion occurs within the next 3 years, BTC will be at ~15-16 mil total coins mined, hence the price projection might be adjusted to $55000-58000/BTC under this scenario. A very good deal at the current $494  .

What is also interesting is the question of how $880 billion pushed into bitcoin would affect its market cap. If it came in very quickly, there is probably a momentum-based 10X multiplier, so conceivably $880 billion could push the BTC price to half a million dollars (followed by a huge crash).  I think Risto estimated the equilibrium multiplier (i.e., the multiplier when money from new adopters comes in slowly) at 3.2X.  I'm hoping to study this question in more detail soon.

What are the number of bitcoins on the exchanges currently, was it something like only 5% (or less) of total bitcoins? That is roughly 500,000 bitcoins.
Not sure how exactly to work out the math as it not linear and new coins would be moved to the exchanges to meet demand, cash out, etc., but it is
safe to say, the move would be beyond violent. It would be a reflection, on a larger scale, of what we saw happen when BTC went from cents to dollars imo.

Just think of one public company and how many shares it has (a few million). Now say instead of there being thousands of companies, each with millions of shares, there is rather a handful (BTC and some "subsidiaries" in LTC, etc. LOL) A move of large amounts of fiat to Crypo's, at this point in time, just seems too early but it appears as though it is going to happen. I get the feeling the infrastructure is being built out, partly, by the same big money that wants to get in. They have to have a foundation first and till then they will buy "off line".

Risto - Regarding your dream. I've done dream analysis for years and love the Jungian method of interpretation where your dream is actually representing other parts of yourself. (If memory serves me correct, thought I might be a bit off.) So, your alt coin is actually just another part of yourself. However you see alt coins (e.g. - Immature but with potential, not quite yet ready, making their mark known, coming onto the scene, an alternative choice, etc.) can be applied to yourself. So, quite simply, if this type of interpretation is valid here, it might just simply mean these other parts of yourself (represented by the alt coins value) are taking a bit of a back seat and shrinking. Just throw your feelings of alts and try to personalize them in this regard. Is quite interesting and I have found valid. To complete the picture you would have to see where you were in the hours/days prior to the dream as some message is trying to be communicated through the subconscious. Of course, it could just be about alts... 

IAS

[prophetx]

Huh, I had a bad dream last night. I had finally given a chance to an altcoin and was playing with about $30k stash. I saw it going for 55 (satoshi, I presume), and decided to buy. It jumped to 80, then came back. I thought it is going to the moon and bought several small lots at market. Then it briefly went to 23, but I was too slow to buy. Back at 50. Bought more. Back at 23. Then... whatth heck.. the price is suddenly dropping to 4!! Someone is dumping. Now I want out. But there is no one to buy. At the instant it goes back to 20ish, the dump starts again.

The idea of losing $20k in a matter of minutes is not very nice. This dream will keep me from buying alts 

LOL, I recently had the opposite dream with bitcoin:
 
======
The price starts to plummet, $400, $300, $200, $100, ….

It is going down so fast that I panic for a second and think it might hit zero.

But then I remember that the value of a spot on the blockchain comes from our shared belief that the blockchain ledger is a legitimate record of account.  And I realize that this current rapid price drop is just the result of a few people who panicked and does not actually represent a change in the shared belief of the economic majority in our community. 

I but a bid wall at $10.00 for 1,000 coins.  It gets filled.  The price goes back up.
======

It seems to me the more people that believe that bitcoin is a store of value, the better store of value it becomes.  Bitcoin can thus have almost any value; it's actually value at any point in time is just the economically-weighted opinion of all the humans in the world. 

lol nice dream

[Siegfried]

I have also had dreams where the price of Bitcoin is in the single digits. It feels terrible. I also have dreams where the price is five or six digits. Those are always daydreams.

[TERA]

Huh, I had a bad dream last night. I had finally given a chance to an altcoin and was playing with about $30k stash. I saw it going for 55 (satoshi, I presume), and decided to buy. It jumped to 80, then came back. I thought it is going to the moon and bought several small lots at market. Then it briefly went to 23, but I was too slow to buy. Back at 50. Bought more. Back at 23. Then... whatth heck.. the price is suddenly dropping to 4!! Someone is dumping. Now I want out. But there is no one to buy. At the instant it goes back to 20ish, the dump starts again.

The idea of losing $20k in a matter of minutes is not very nice. This dream will keep me from buying alts 

Kind of reminds me of the opening day of Feathercoin on btc-e where I lost 25% of my stash.

[SlipperySlope]

I have also had dreams where the price of Bitcoin is in the single digits. It feels terrible. I also have dreams where the price is five or six digits. Those are always daydreams.

It appears that folks here should learn to control their night dreams . . .

http://www.scientificamerican.com/article/how-to-control-dreams/

My siblings and I are lucid dreamers from childhood. One of the tricks is to recognize that you are in a dream and what the constraints are. For example, in a lucid dream I launch myself into the air because I can swim in it. I know I can so I attempt it. Likewise, I can perform any physical exercise in a lucid dream without tiring.

My mind cannot invent text as fast as I can read it, so I know to avoid trying to read a sign or book in a lucid dream. If something goes wrong, or is otherwise annoying, in a lucid dream I know that I have control and have touchstone places and events that I can return to - as a way of resetting.

My brothers and I dream in color with surrealistic sounds, smells and so forth. In school I read a psychology of hypnotism textbook and learned that people like me are easily hypnotized. One of my younger brothers sleepwalked as a child and it was my responsibility to keep him away from the stairs and make sure he really knew  where the toilet was. I could control him, with his eyes wide open as he moved around, by gentle voice command.

Such memories. But I far prefer daydreams.

[nioc]

I don't know if it's the same thing but I was able to remain conscious while falling asleep and therefore be aware of my dreams as if I was awake.  After a couple of nights of this I had to stop because it wasn't very restful.  After I did this I found out Richard Feynman did the same thing when he was young with the same results.  There is a reason we lose consciousness.  That our conscious mind thinks it's in control of things is merely illusion/delusion.

[SlipperySlope]

I don't know if it's the same thing but I was able to remain conscious while falling asleep and therefore be aware of my dreams as if I was awake.  After a couple of nights of this I had to stop because it wasn't very restful.  After I did this I found out Richard Feynman did the same thing when he was young with the same results.  There is a reason we lose consciousness.  That our conscious mind thinks it's in control of things is merely illusion/delusion.

It seems to be similar. For myself and siblings, we sleep first and the lucid part of the dream happens maybe after an ordinary dream. For me, its the flying part where I swim through the air. I say to myself "there is gravity, I should be falling" but I feel the viscous air as my hands pull through it like water, something tells me then that I am dreaming but I never use the concept dreaming - rather the concept is control. I do not want to wake up at that point because it is so much fun. My lucid dreams do not allow me the freedom of script afforded by a daydream. I am mostly an observer of scenes that associate from one to the other. I can somewhat control and especially enjoy what my character does but there is very little control over and often surprise at what scene comes next.

Another aspect of my dreams is my second life. This was much more pronounced when I was younger, but I would have distinct memory from previous dreams - a continuing story so to speak. This helped control the lucid dream because I had explored a building before and knew that it had stairs for example.

I have fair recall of dreams and I have never dreamed about technical analysis or charts. Ha.

[SlipperySlope]

Here is the Number of transactions excluding popular addresses chart from blockchain.info, which has duration of 180 days on a Log10 chart with a 7-day moving average to smooth out the day-of-week variation. Note that the rightmost data points suggest a trend upwards and yet the price chart does trend upwards yet with that strength.

Interesting . . .

[rpietila]

Quick TA update (at $0.481):
- 6H candle color/volume: not much volume during this week, conclusion: none/(historically: bearish)
- Bid/ask strengh at market (Bitstamp): slippage to sell 5k: $0.040, slippage to buy: $0.043, conclusion: both sides have built up since last time
- Trendline comparison: we are now at -0.355 log units. The trendline is at $1.090 and rising $0.008 per day, conclusion: rock bottom (note: it is not necessary that 'rock bottom' will change until the parabolic uptrend starts, because the trendline is itself rising)
- Sentiment: n/a
- Prognosis: shortest term unsecure, mid-term not sure if reversal seems confirmed, long-term buy zone



The volume in Bitstamp is absolutely anemic. I remember it took a week for me to purchase my initial lot of coins in 2011. It would now similarly take a week to acquire a corresponding position. Either there is nobody in the world in the process of doing it (!) or they are using other methods. Granted, buying a large number of bitcoins takes more cash now than in 2011, and therefore the buyers may be different class of people mainly...

The "price vs. trendline" has dipped lower than at any point in the slump of mid-2013. Before the beginning of the (first) 2013 rally, it was -0.583. If we were that low now, the price would be $0.285. The historically correct way to use the trendline has been to buy at the first time the price crosses -0.3 from above. This gave excellent results in 10-2011 and 7-2013, and I believe the $0.46 from 4-2014 will turn out to be a prime low-risk entry point.

In another forum, I read about the urge to "boredom sell" if "nothing" is happening for "a long time". It is sometimes hard to comprehend how quickly some of the forum frequents would like things to happen. Bitcoin has sustainably gained value 1,000% per year, which is 0.7% per day on average. The yearly return is 1,000 times more than you get from a bank, and on average 100 times better than stock market. (There is no comparison in "10 times better", because no investment can generate such returns, and still it would be only 1/10 as good as Bitcoin has historically been).

Think in bitcoins! Think in percentages! I have tried to keep my share as 1/1000 of the world's bitcoins, and only slowly going down when it gains more appreciation. Don't sell out of boredom, like I did last September, wasting 2000+ bitcoins and gaining.. nothing really. Only sell if you gain something, and even then only if the price is right.

[tablemanic]

Quick TA update (at $0.481):
- 6H candle color/volume: not much volume during this week, conclusion: none/(historically: bearish)
- Bid/ask strengh at market (Bitstamp): slippage to sell 5k: $0.040, slippage to buy: $0.043, conclusion: both sides have built up since last time
- Trendline comparison: we are now at -0.355 log units. The trendline is at $1.090 and rising $0.008 per day, conclusion: rock bottom (note: it is not necessary that 'rock bottom' will change until the parabolic uptrend starts, because the trendline is itself rising)
- Sentiment: n/a
- Prognosis: shortest term unsecure, mid-term not sure if reversal seems confirmed, long-term buy zone

I just wanted to state that I really appritiate the fact that you have started talking in terms of mBTC as I see it as necessary in the future to speak in terms of smaller fractions of bitcoin (even though it doesn't necessarly have to be in terms of mBTC), so why not start now?
Regarding the price prediction fear is starting to build up again. Even though I like the latest green candles we need to see more of those soon, else I think we will see more red candles and panic selling comming up.

[AlexGR]

In another forum, I read about the urge to "boredom sell" if "nothing" is happening for "a long time". It is sometimes hard to comprehend how quickly some of the forum frequents would like things to happen. Bitcoin has sustainably gained value 1,000% per year, which is 0.7% per day on average. The yearly return is 1,000 times more than you get from a bank, and on average 100 times better than stock market. (There is no comparison in "10 times better", because no investment can generate such returns, and still it would be only 1/10 as good as Bitcoin has historically been).

Think in bitcoins! Think in percentages! I have tried to keep my share as 1/1000 of the world's bitcoins, and only slowly going down when it gains more appreciation. Don't sell out of boredom, like I did last September, wasting 2000+ bitcoins and gaining.. nothing really. Only sell if you gain something, and even then only if the price is right.

...and bitcoin is relatively stable in this regard. The boredom factor is ten times stronger with altcoins.

[rpietila]

...and bitcoin is relatively stable in this regard. The boredom factor is ten times stronger with altcoins.

That is understandable, because few if any (LTC, DOGE, ?) altcoins have any economy supporting them. If they don't gain in value, they lose it, and quickly. With Bitcoin, the economy is constantly growing and the lead time with real-world projects is so long (6-24 months) that it is virtually shielded from short-term price fluctuations. Eg. the Malla project is fully funded for 2014, and only if Bitcoin loses nearly all of its value, would its growth (in a sense of increasing contribution to "real" economy with bitcoins) be hampered, and even that only from 2015 on.

Only if existing bitcoin economy participants start closing shop in droves, mitigating the effect of the myriad of new projects, would there be any chance for Bitcoin to even stall in the long term. Anything else is supportive to continuing price appreciation.

(Yes I acknowledge that the closing of exchanges counts in the equation.)

[pinksheep]

Surely if 'existing participants close shop in droves', there'll be no new participants entering the bitcoin economy. If they see others giving up on it, they'd be unlikely to enter themselves?

[rpietila]

Surely if 'existing participants close shop in droves', there'll be no new participants entering the bitcoin economy. If they see others giving up on it, they'd be unlikely to enter themselves?

In real life, investment/development decisions are not flip-flopped overnight. There are factors like funding, resourcing people, etc. that make the planning horizon to be at least several months, even years.

The closure of Mt.Gox did not affect Malla at all. It may have postponed many ideas that were in planning stage, and it has definitely built up a growing backlog of people who would have liked to buy bitcoins but are now hesitant since they await for clearer waters. When all these start to move, they will be the building blocks of the next rally.

Last summer we did not see the rally immediately after the capitulation. It took months for new people to become confident enough to start buying. Patience! Don't sell now!

[pinksheep]

no, definitely not going to sell now, but getting a little bored waiting on some action

[Torque]

Surely if 'existing participants close shop in droves', there'll be no new participants entering the bitcoin economy. If they see others giving up on it, they'd be unlikely to enter themselves?

In real life, investment/development decisions are not flip-flopped overnight. There are factors like funding, resourcing people, etc. that make the planning horizon to be at least several months, even years.

The closure of Mt.Gox did not affect Malla at all. It may have postponed many ideas that were in planning stage, and it has definitely built up a growing backlog of people who would have liked to buy bitcoins but are now hesitant since they await for clearer waters. When all these start to move, they will be the building blocks of the next rally.

Last summer we did not see the rally immediately after the capitulation. It took months for new people to become confident enough to start buying. Patience! Don't sell now!

Risto, thanks again for your level headed and clear perspective on overall bitcoin analysis.  You are one of the few on this board that takes a rational, intelligent, and fairly optimistic approach to bitcoin's long term potential.  

On the notion of "boredom selling", I've thought about this idea is well.

The probability of selling out of boredom would seem to be affected by factors such as:
1.  Respective to one's entry position, i.e. buyers at the lowest historical point will not have seen a lot of volatility, and a higher chance of seeing a protracted "sideways" stagnation movement...possibly for months.  They also have the least to lose percentage wise, even if the price goes a bit lower.  So their probability of selling out of boredom if the price stagnates for a long period would seem higher relative to others that invested at a much higher price point.
2.  Inversely proportional to how underwater one is in terms of *total* investment.  I.e., someone who invested $300 worth total when the price was at $1000/BTC has less to lose overall if they boredom sell at $500/BTC (their loss being -$150 total). But someone who invests $30K when the price was at $1000/BTC has much more to lose by selling now.  People are more willing to lock in losses when they are relatively small, but not so much when they are great.
3.  Conversely, some may have so relatively little purchased compared to their net worth (like say $10-20) they they don't really care to sell at all, even if the price goes down from their entry point.
4.  Maturity level of the buyer.  The more mature the buyer, the less likely they will boredom sell.

So the question is, out of how many holders of BTC really have purchased a) enough to matter to them to continue holding onto it, and b) what is their average entry point and total investment mean average (+/- %) relative to the current price level?  I'm guessing this is not an easy thing to even try to estimate, if not impossible.

[pinksheep]

I know I have invested way beyond what is sensible but that's my choice & I don't regret it. It's a risk I'm prepared to take. I'll either be selling at $50k or more or I'll lose everything, but I'll hold to the bitter end

[Siegfried]

I know I have invested way beyond what is sensible but that's my choice & I don't regret it. It's a risk I'm prepared to take. I'll either be selling at $50k or more or I'll lose everything, but I'll hold to the bitter end

I feel you bro.

[romneymoney]

I've invested an amount I can afford to lose, average buy price $508
First buy was Feb 20 2014
I'm still a bit bitter about not first buying in at $140ish.  I really wanted to, but MT.GOX scared me away before I committed.

Even assuming BTC becomes worthless.  It has been educational for me enough that I feel like I'd still walk away a winner.  My interest in economics has been re-kindled and I believe that knowledge of crypto-currencies may end up being an important part of my resume in the future if I continue learning at this pace.