rpietila Wall Observer - the Quality TA Thread ;)

[BitThink]

No one  knows bitcoin's value, then how can we know it is overvalued? Bitcoin is not a stock.

[rpietila]

 I think it might be a good idea to start selling small amounts as soon as we cross above the trend line.
If you have faith that this bubble will hit the same max with respect to the exponential trend as the last two bubbles did, then you can wait until Bitcoin is heavily overvalued to sell.  But the idea that we are going to have a carbon copy of the last two bubbles strikes me as a little fishy.  It's lax thinking.

I think that the worst time to sell is actually after just crossing the previous ATH. Historically rapid appreciation has always resulted. If you want to minimize the risk, just sell when it is the most overextended Otherwise you increase the risk that you are holding depreciating fiat and squander your bitcoins. My minimum sell price is $3. I can sell you CALL options with that or anything above as the strike price

Thinking that the bubbles repeat the same pattern.. if SlipperySlope would post his chart of the relative valuation - at least last time they did.

We could have a 2011 style bubble this summer.
This is bitcoin.

This is also possible. Therefore only sell 20-30% at your preferred sell point so that you can fire another if it goes up another 10x. Or use the SSS method to rule out human judgement. If you do, I suggest you set the first sell point in $2-$3 range.

[darlidada]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

[ArticMine]

I think it might be a good idea to start selling small amounts as soon as we cross above the trend line.
If you have faith that this bubble will hit the same max with respect to the exponential trend as the last two bubbles did, then you can wait until Bitcoin is heavily overvalued to sell.  But the idea that we are going to have a carbon copy of the last two bubbles strikes me as a little fishy.  It's lax thinking.

I think that the worst time to sell is actually after just crossing the previous ATH. Historically rapid appreciation has always resulted. If you want to minimize the risk, just sell when it is the most overextended Otherwise you increase the risk that you are holding depreciating fiat and squander your bitcoins. My minimum sell price is $3. I can sell you CALL options with that or anything above as the strike price

Thinking that the bubbles repeat the same pattern.. if SlipperySlope would post his chart of the relative valuation - at least last time they did.

We could have a 2011 style bubble this summer.
This is bitcoin.

This is also possible. Therefore only sell 20-30% at your preferred sell point so that you can fire another if it goes up another 10x. Or use the SSS method to rule out human judgement. If you do, I suggest you set the first sell point in $2-$3 range.

I take it you mean $3 per mBTC; sorry I have to get used to thinking in terms of mBTC.  

[Peter R]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

I am surprised that many people are assuming that Willy's purpose was to pump the price.  That is the least likely explanation in my opinion.  I believe Willy was used to procure bitcoins so that MtGox could meet BTC withdrawal requests to hide the fact that a huge number of coins had been missing for years.  Pushing the price up was an unfortunate side-effect from Mark's perspective, and a side-effect that eventually forced MtGox to recognize its insolvency.

[mladen00]

I think it might be a good idea to start selling small amounts as soon as we cross above the trend line.
If you have faith that this bubble will hit the same max with respect to the exponential trend as the last two bubbles did, then you can wait until Bitcoin is heavily overvalued to sell.  But the idea that we are going to have a carbon copy of the last two bubbles strikes me as a little fishy.  It's lax thinking.

I think that the worst time to sell is actually after just crossing the previous ATH. Historically rapid appreciation has always resulted. If you want to minimize the risk, just sell when it is the most overextended Otherwise you increase the risk that you are holding depreciating fiat and squander your bitcoins. My minimum sell price is $3. I can sell you CALL options with that or anything above as the strike price

Thinking that the bubbles repeat the same pattern.. if SlipperySlope would post his chart of the relative valuation - at least last time they did.

We could have a 2011 style bubble this summer.
This is bitcoin.

This is also possible. Therefore only sell 20-30% at your preferred sell point so that you can fire another if it goes up another 10x. Or use the SSS method to rule out human judgement. If you do, I suggest you set the first sell point in $2-$3 range.

I take it you mean $3 per mBTC; sorry I have to get used to thinking in terms of mBTC.  

i have the same problem

maybe $3 pek k Satoshi is better

[mladen00]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

I am surprised that many people are assuming that Willy's purpose was to pump the price.  That is the least likely explanation in my opinion.  I believe Willy was used to procure bitcoins so that MtGox could meet BTC withdrawal requests to hide the fact that a huge number of coins had been missing for years.  Pushing the price up was an unfortunate side-effect from Mark's perspective, and a side-effect that eventually forced MtGox to recognize its insolvency.

I think so, huge number of BTC are missing from first bublle on Gox

[rpietila]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

Yes I read it.

The main point is that when people send bitcoins or fiat to gox to trade with them, it results in:

people             gox
bitcoins, fiat ->
                  -> bitcoins, fiat.

gox then issues goxcoins in the same quantity, also goxbux.

When Willy/gox buys the goxcoins for uncovered fiat (acting as a CB), it raises the price of goxcoins, and also of bitcoins in other exchanges. But there is no effect on the real bitcoins or real fiat (which are stored in gox) until the customers withdraw.

So during the runup, when gox was still by and large operational, they pumped up the price of BTC and ran into fiat debt, covered only by their customers' fiat deposits. Then they did not pay out the fiat to stay afloat. The higher price in gox induced people to try arbitrage, to deposit coins there, which Willy bought.

At the apex of the bubble, gox had issued a lot of goxbux fraudulently and ran a ponzi with them. They were correspondingly long in goxbtc.
What happened to the real bank balances of gox (in the tune of $100 million) and the real BTC hold (1MBTC?) is still unknown. Both were stolen in some point. This is where the theft occurred - what was played in gox' system goes under other crimes.

Then in the end all the withdrawals were halted and Willy put on reverse, to dump all the goxcoins bought. I do not know if this made a small or huge loss. Also I don't know the purpose of it, because all(?) withdrawals were canceled, and there was no change happening in the actual liquidity position, except the very last deposits made by arbitrageurs of goxcoins in btc/gxc-exchanges.

What the end result seems to me, is that gox pump did raise the bitcoin price. Also gox did act fraudulently for a very long time, and without proof to the contrary, also stole its customer reserves. Who is now holding the reserves, is an important question. Either the trading was so abysmal that they were lost as trading losses (perhaps to the insiders), or Mark holds them and is willing to risk prison because afterwards he will be so rich (yes, such people do exist that can live on after causing suicides of family fathers with their actions), or the 3-letter agencies hold them and Mark has for a short or longer time been a tool, either as a result of profession, bribery, or coercion.

For now, it is a small stain in Bitcoin's reputation that another few % of them are in criminal hands. But the main effect on price has been seen long ago, including the price dips in February-April. All those who lost in gox, need to get back into the game (if they want to stay), and judging from the price action in the last months, they have not done it yet en masse.

I am grateful to the author of the blog for explanation, but I don't think there is any relevance to where Bitcoin and USDBTC are going from now on.

[Peter R]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

I am surprised that many people are assuming that Willy's purpose was to pump the price.  That is the least likely explanation in my opinion.  I believe Willy was used to procure bitcoins so that MtGox could meet BTC withdrawal requests to hide the fact that a huge number of coins had been missing for years.  Pushing the price up was an unfortunate side-effect from Mark's perspective, and a side-effect that eventually forced MtGox to recognize its insolvency.

I think so, huge number of BTC are missing from first bublle on Gox

Right.  We know MtGox was hacked on June 19, 2011.  At this point in time, the missing 850,000 BTC only represented about $15 million dollars (so it's somewhat plausible that they keys could have been sitting in a hot wallet).  If the thief had proceeded to dump these 850,000 BTC between July and November 2011, it would also explain the very severe bear market at this point in bitcoin's history.  

Mark wanted to "dig his way out" of this hole, but he couldn't.  The more bitcoins he procured to meet customer withdrawal requests, the further he pushed up the price.  He kept digging and what started as a $15 million dollar hole grew $1 billion deep.  

[rpietila]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

I am surprised that many people are assuming that Willy's purpose was to pump the price.  That is the least likely explanation in my opinion.  I believe Willy was used to procure bitcoins so that MtGox could meet BTC withdrawal requests to hide the fact that a huge number of coins had been missing for years.  Pushing the price up was an unfortunate side-effect from Mark's perspective, and a side-effect that eventually forced MtGox to recognize its insolvency.

Willy bought goxcoins for goxbtc, which was manufactured from air. Unfortunately, buying goxcoins did not increase the bitcoin reserves at all so this explanation is perhaps not adequate.

Unless you tried to say that it increased the number of suckers that, inspired by gox-bb arbitrage actually deposited BTC to the shithole and took a grave loss.

[RAJSALLIN]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

Yes I read it.

The main point is that when people send bitcoins or fiat to gox to trade with them, it results in:

people             gox
bitcoins, fiat ->
                  -> bitcoins, fiat.

gox then issues goxcoins in the same quantity, also goxbux.

When Willy/gox buys the goxcoins for uncovered fiat (acting as a CB), it raises the price of goxcoins, and also of bitcoins in other exchanges. But there is no effect on the real bitcoins or real fiat (which are stored in gox) until the customers withdraw.

So during the runup, when gox was still by and large operational, they pumped up the price of BTC and ran into fiat debt, covered only by their customers' fiat deposits. Then they did not pay out the fiat to stay afloat. The higher price in gox induced people to try arbitrage, to deposit coins there, which Willy bought.

At the apex of the bubble, gox had issued a lot of goxbux fraudulently and ran a ponzi with them. They were correspondingly long in goxbtc.
What happened to the real bank balances of gox (in the tune of $100 million) and the real BTC hold (1MBTC?) is still unknown. Both were stolen in some point. This is where the theft occurred - what was played in gox' system goes under other crimes.

Then in the end all the withdrawals were halted and Willy put on reverse, to dump all the goxcoins bought. I do not know if this made a small or huge loss. Also I don't know the purpose of it, because all(?) withdrawals were canceled, and there was no change happening in the actual liquidity position, except the very last deposits made by arbitrageurs of goxcoins in btc/gxc-exchanges.

What the end result seems to me, is that gox pump did raise the bitcoin price. Also gox did act fraudulently for a very long time, and without proof to the contrary, also stole its customer reserves. Who is now holding the reserves, is an important question. Either the trading was so abysmal that they were lost as trading losses (perhaps to the insiders), or Mark holds them and is willing to risk prison because afterwards he will be so rich (yes, such people do exist that can live on after causing suicides of family fathers with their actions), or the 3-letter agencies hold them and Mark has for a short or longer time been a tool, either as a result of profession, bribery, or coercion.

For now, it is a small stain in Bitcoin's reputation that another few % of them are in criminal hands. But the main effect on price has been seen long ago, including the price dips in February-April. All those who lost in gox, need to get back into the game (if they want to stay), and judging from the price action in the last months, they have not done it yet en masse.

I am grateful to the author of the blog for explanation, but I don't think there is any relevance to where Bitcoin and USDBTC are going from now on.

It may not be relevant to where btc is going from here in the long run but it's relevant when looking at the bubble properties. Seeing a bubble that high over the trend again just became much less likely imo.

[rpietila]

The bubble of 2011 was much larger - 2013/I & II were smaller (about 0.47).

The trendline is fitted such that it has to spend as much time above and below it. So either we are actually going higher next time a'la 2011, or the trend will be recalculated lower and lower in the subsequent iterations.

Or both.

[Peter R]

Risto, have you read the willy report? you can find it here: http://willyreport.wordpress.com/

What does it mean for the price of bitcoin and your investment strategy?

I am surprised that many people are assuming that Willy's purpose was to pump the price.  That is the least likely explanation in my opinion.  I believe Willy was used to procure bitcoins so that MtGox could meet BTC withdrawal requests to hide the fact that a huge number of coins had been missing for years.  Pushing the price up was an unfortunate side-effect from Mark's perspective, and a side-effect that eventually forced MtGox to recognize its insolvency.

Willy bought goxcoins for goxbtc, which was manufactured from air. Unfortunately, buying goxcoins did not increase the bitcoin reserves at all so this explanation is perhaps not adequate.

Unless you tried to say that it increased the number of suckers that, inspired by gox-bb arbitrage actually deposited BTC to the shithole and took a grave loss.

The explanation makes perfect sense.  Like you mentioned, Willy attracted new BTC into Gox due to the arbitrage premium and Willy transferred GoxBTC from depositors to Willy.  The net result was that MtGox reduced its BTC liabilities and increased its holdings of real BTC (to allow it to meet withdrawals).  It did this by increasing¹ its fiat liabilties, but that didn't matter because fiat withdrawals had been halted.  MtGox only needed to meet BTC withdrawal request in order keep its insolvency hidden, and that's where Willy came in.  

https://bitcointalk.org/index.php?topic=497289.0

¹Until Willy was shifted into reverse, thereby converting the fiat liabilities back into BTC liabilities.  This (almost) balanced that fiat side of the MtGox ledger, and allowed Gox to claim that "bitcoin were lost due to malleability."

[rpietila]

https://bitcointalk.org/index.php?topic=497289.0

Thanks, I read it. Good work. But that is the non-malicious non-CIA explanation, and therefore likely incorrect

[Peter R]

https://bitcointalk.org/index.php?topic=497289.0

Thanks, I read it. Good work. But that is the non-malicious non-CIA explanation, and therefore likely incorrect

Yes, no three-letter agencies involved  

But regardless of what actually happened at MtGox, I think we both agree that the Willy Report is not bearish (and in fact was already known by many of us here).  

[rpietila]

you love censoring rpietila or was it someone else this time?

wth?

[rpietila]

you love censoring rpietila or was it someone else this time?

wth?

I post I wrote in this thread 10 minutes ago got censored within 1 minute. That's pretty normal for this heavily censored and moderated forum, I was just curious if it was you or someone else this time.

no, not me. Post a PM if it's so hot

afaik this forum is very sloppily moderated. I did not know of censoring, that would be stupid because it just irritates people

[molecular]

I think it might be a good idea to start selling small amounts as soon as we cross above the trend line.
If you have faith that this bubble will hit the same max with respect to the exponential trend as the last two bubbles did, then you can wait until Bitcoin is heavily overvalued to sell.  But the idea that we are going to have a carbon copy of the last two bubbles strikes me as a little fishy.  It's lax thinking.

I think that the worst time to sell is actually after just crossing the previous ATH. Historically rapid appreciation has always resulted. If you want to minimize the risk, just sell when it is the most overextended Otherwise you increase the risk that you are holding depreciating fiat and squander your bitcoins. My minimum sell price is $3. I can sell you CALL options with that or anything above as the strike price

Thinking that the bubbles repeat the same pattern.. if SlipperySlope would post his chart of the relative valuation - at least last time they did.

We could have a 2011 style bubble this summer.
This is bitcoin.

This is also possible. Therefore only sell 20-30% at your preferred sell point so that you can fire another if it goes up another 10x. Or use the SSS method to rule out human judgement. If you do, I suggest you set the first sell point in $2-$3 range.

I take it you mean $3 per mBTC; sorry I have to get used to thinking in terms of mBTC.  

i have the same problem

maybe $3 pek k Satoshi is better

You mean $3 per kBit

[rpietila]

maybe $3 pek k Satoshi is better

You mean $3 per kBit

$3 per ksat is obviously better 

[darlidada]

https://bitcointalk.org/index.php?topic=497289.0

Thanks, I read it. Good work. But that is the non-malicious non-CIA explanation, and therefore likely incorrect

I wanna hear about this malicious CIA explanation. Please tell us!