rpietila Wall Observer - the Quality TA Thread ;)

[AnonyMint]

Correct me if I'm wrong, but Armstrong is advocating that the US share market is the only market in town for big money who doesn't want to be in the debt market. So the coming rally in the equity market is not because of bulls, but because of capital flows. Why wouldn't some of that capital seek towards bitcoins/crypto-currencies?

I may be entirely wrong, but here is one spin on that...

1. Bitcoin investor demographics are (to some significant extent) former gold bugs. Gold to be sideways or lower lows until 2015.75.

2. Traditional capital is seeking sure thing and safe haven, not risky obscure speculations. Realize most people don't look at BTC the way we do. They see it sort of like snake oil gambling. The media isn't out there blowing Bitcoin's horn right now as it was in 2013. Too coincidental gold crash 2012 - 2013, Bitcoin up like crazy. Seems almost intentional to sucker the gold bugs into another bubble to fleece them.

3. Retail investor is wiped out and conservative since the 2008 crash. They will come rushing back into the stock market near the top. Jealousy. They are actively scared and avoiding speculations. But their jealously will fool them.


In short, the professional speculators shorts are now on board fleecing all the gullible gold bugs who believe Bitcoin is the new savoir after they thought they wised up from their wrong-headed thinking about gold (I was one of them   ). Easy market to manipulate because float is reasonably small, i.e. buying pressure has relented since the media went home.

We get glossy eyed and we bet the farm on grand fables that really don't have that much upside as they did (in January 2013).

I am not long-term bearish, just trying for sobriety and prudence. I don't like being fleeced.

[1714504705]

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[1714504705]

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[wachtwoord]

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

Those add up to 111%

[AnonyMint]

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

Those add up to 111%

They are not mutually exclusively. Each lower amount is achieved on the way to the higher one.

I just pulled numbers out of my arse, but the essence of my opinion is:

1. $million is a very remote fantasy. (as far as I know, adoption rates are no where near that trajectory)
2. $100,000 is very unlikely but not impossible.
3. $50,000 is somewhat unlikely but less fantastical.
4. $10,000 is somewhat likely, but not assured.
5. $3000 is very likely and nearly assured.
6. $0.10, $1, $100, and $1000 have already been achieved.

[Wexlike]

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

Those add up to 111%

That means great ROI! I am really curious what 2014 has left for bitcoins.

[wachtwoord]

Long-term (up to 3 years or more), I place 1% probability on $1 million, 10% probability on $100,000, 20% probability on $50,000, and 80% probability on $10,000.

Those add up to 111%

They are not mutually exclusively. Each lower amount is achieved on the way to the higher one.

I just pulled numbers out of my arse, but the essence of my opinion is:

1. $million is a very remote fantasy. (as far as I know, adoption rates are no where near that trajectory)
2. $100,000 is very unlikely but not impossible.
3. $50,000 is somewhat unlikely but less fantastical.
4. $10,000 is somewhat likely, but not assured.
5. $3000 is very likely and nearly assured.
6. $0.10, $1, $100, and $1000 have already been achieved.

Ah, you're numbers were: "these will someday be passed numbers?" I thought we were talking long term value.

[AnonyMint]

According to the first hand sources coming out of Cali and other places, VC money is pouring into the bitcoin space. Literally pouring. That might paint the picture of investor demographics differently. But I don't know. I agree with you that people should avoid being in a position of getting fleeced though.

The question is also, wherelse can average joes with a bit of money actually go and very likely double their money (let alone potentially triple, or if Risto et al is to be believed 10x their money within that short amount of time).

I protesth too much. Let me dig my hole deeper while defending one possible perspective...

I may be wrong but here is my spin...

http://en.wikipedia.org/wiki/Pets.com

Btw, I knew the dot.com bust was coming because I couldn't buy advertising at profitable rates, and I had a successful product with extremely low overhead of a one-man SOHO company. So I knew the VCs were inflating the ad costs by pumping too much money into promoting dot.bomb startups.

Average joe is tired of losing money on snake oil. Socialism is peaking. People want to be taken care of and insured. Boomers are the largest Western age bracket and they are retiring and need to downsize and be more conservative with their finances. The youth are saddled with student debt and often can't find work in the field of their non-engineering degrees.

http://www.washingtonpost.com/business/where-has-the-retail-investor-gone/2012/08/17/9a915eee-e7cf-11e1-936a-b801f1abab19_story.html

http://www.economist.com/node/21547997

http://finance.yahoo.com/blogs/daily-ticker/facebook-fatal-blow-retail-investors-were-equities-already-150247745.html

http://www.cnbc.com/id/101599140

I expect BTC will rise again and the average joes will come rushing in late as they always do, after leaving dejected when they got fleeced out of their hodlered positions at the coming firm bottom.

Remember my series of posts began on the point of diversifying some portion and especially if you needed cash in the next few months because volatility to the downside might not be finished from the 2013 peak.

P.S. the successful design of an altcoin will take this in account and leverage sunk costs, so the average Joe can participate en masse immediately.

[windpath]

A castle built from Bitcoins rises in Estonia

http://www.arcticstartup.com/2014/09/01/estonian-bitcoin-castle

[aminorex]

Average joe is tired of losing money on snake oil. Socialism is peaking. People want to be taken care of and insured. Boomers are the largest Western age bracket and they are retiring and need to downsize and be more conservative with their finances. The youth are saddled with student debt and often can't find work in the field of their non-engineering degrees.

Your macro views are remarkably similar to my own.  The demographic cycle in particular is very compelling to me.  I see fascism as the dominant economic and political paradigm, rather than socialism.  Bread and circuses for the masses, the dole for the the underclass, subsidies to sop and co-opt fractious demographics, while structural factors are crafted to drain the shrinking productive classes of wealth, and concentrate it with laser focus in the hands of the two major power centers:  The deep state, and the financiers.  Fiat slavery seems the clearest and most explanatory name for the dominant global system, a serfdom crafted to the tolerance parameters of the indoctrinated bourgeoisie.  But the oxygen has been consumed.  Flows upon which the homeostasis depends can no longer be supported.  Leveraged structures must collapse.  Debt must be destroyed.  Rigidities must be pulverized, so that the system can be reshaped into something capable of surviving with the current resource profile (including the ruins of the old among those resources).  Average joe is just cannon fodder on that scale.

The opposing case (bullish risk, now and forever) is that central banks determine asset prices now, not markets, and, as a result of the dominant economic theories of their generation, will not allow what they miscast as "deflation" and its spiral boogeyman.  We are living out the consequences of the lessons learned by misinterpreting the history of the great depression through Keynes-colored glasses.  As long as it is common knowledge that the central planners are omnipotent, the kabuki continues. (Although, the actors beneath their costume robes become increasingly gaunt and weak with each new act.  When the first principal character can no longer mumble his lines, the plot thread will be lost.)

War may crush those old bones very quickly.

That said, I find it difficult to time the macro events.  It is even difficult to recognize them, through the crafted storylines of crony corporate journalism, and increasingly difficult to recognize them through the astroturfed agit prop and mental flak of the infected internet. Difficult, and exhausting.

For estimating asset values on short and medium term scales, what I find most productive, in terms of timing, is gaming scenarios, estimating driver events, and tracking the over-extension of correlation schemas, responding to their breakdown.

In BTC, the eventual listing of COIN is a likely watershed.  It enables but does not enforce a massive burn of fiat, beyond anything previously seen.  Once that channel is open, almost any triggering event has the potential to create a stampede and superbubble.  Until then, it's just drip drip drip mining inflation, overlaid on chaos, overlaid in turn on top of a long-term network growth which looks less exponential each day.

The intraday moves tend to be anti-dollar, pro-commodities, but not so much on a daily scale, where uncorrelated jumps enforce the chaos.   I say uncorrelated only because I don't know with what, if anything, they correlate.

[SlipperySlope]

Here is the one-week resolution chart from Bitstamp. On it I have drawn two trendlines suggesting a damped oscillation pattern that might breakout mid October. The green candle I was watching a couple of weeks ago, turned out not to be a hammer on any of the high volume exchanges that Bitcoin Wisdom charts.

[aminorex]

who deleted their posts?  It was about 2 pages worth.

[AnonyMint]

Average joe is tired of losing money on snake oil. Socialism is peaking. People want to be taken care of and insured. Boomers are the largest Western age bracket and they are retiring and need to downsize and be more conservative with their finances. The youth are saddled with student debt and often can't find work in the field of their non-engineering degrees.

Your macro views are remarkably similar to my own.  The demographic cycle in particular is very compelling to me.  I see fascism as the dominant economic and political paradigm, rather than socialism.  Bread and circuses for the masses, the dole for the the underclass, subsidies to sop and co-opt fractious demographics, while structural factors are crafted to drain the shrinking productive classes of wealth, and concentrate it with laser focus in the hands of the two major power centers:  The deep state, and the financiers.  Fiat slavery seems the clearest and most explanatory name for the dominant global system, a serfdom crafted to the tolerance parameters of the indoctrinated bourgeoisie.  But the oxygen has been consumed.  Flows upon which the homeostasis depends can no longer be supported.  Leveraged structures must collapse.  Debt must be destroyed.  Rigidities must be pulverized, so that the system can be reshaped into something capable of surviving with the current resource profile (including the ruins of the old among those resources).  Average joe is just cannon fodder on that scale.

First let me make a post which expounds on this tangent, before I tie it back into price analysis in the next reply.

The solution to the problem of the power vacuum of democracy is to eliminate top-down issues so that people can be free to organize more locally. The technological solution is coming with decentralized technology. For example, 3D printing, flying cars with computerized avoidance systems, decentralized anonymous crypto-currency (Bitcoin isn't decentralized and isn't robust in a fractured internet), decentralized corporations, decentralized social organization over the internet, etc..

Why does local organization work better? Because it is impossible for top-down laws or issues to be optimized to every local situation and especially dynamically because everything is always changing.

The gripe against local organization has been that economies-of-scale can't be attained. This was true in the Industrial Age where fixed capital and stored money were paramount. But with the internet economies-of-scale can be attained even if only 1 in 1000 people are availing of each thingamajig. This is why I have been writing about the coming Knowledge Age and the death of all top-down organization, including the death of passive capital investing such as bonds and usury finance. Instead we will move towards where capital is knowledge. Money will only be a currency and not for storing capital. There will be no way to store capital for long periods of time that isn't knowledge (money will have high rates of debasement in order to fund its decenralized crypto-currency security). The old world overlords will die away along with the socialism masses who don't cross the chasm. This is why their NWO is a death paradigm.

And this is why massive poverty is coming because most people aren't ready to cross the chasm. And this poverty will usher in disease and war. Out of the ashes, will come the Knowledge Age. For a while, the old will hang on and the socialism will become very idealistic (youth are glossy-eyed ready to the "end the corruption" mantra employing more top-down Marxism) and try for the NWO top-down solutions that Armstrong and others espouse. But that is the dying paradigm on the long haul. The Knowledge Age will be growing.

I can see clearly and lucidly the Big Picture how it all fits together in a perfect puzzle.

Get it. Or perish. I am tired of explaining it.

...

Armstrong had made the point that not all traceable assets such as real estate (which the Europeans and Chinese are buying in the USA to "get off the grid" to hide wealth from their own countries) can be confiscated because it would result in a total breakdown of civilization. My rebuttal is that it won't be outright blanket confiscation (decree) rather tax avoidance will be the catalyst by which these traceable assets are liquidated to pay tax judgments and the G20 will be cooperating with each other and the NSA to make sure all assets are traced. And a slow grinding ratcheted breakdown of civilization is the desired outcome of the global elite so they can bring about their NWO outcome, because in order for them to maintain control as the Industrial Age dies and the Knowledge Age grows, they need to increase their economies-of-scale and bring the masses (who can't cross the chasm to the Knowledge Age) down into the abyss of their dying epochal paradigm.

http://www.silverbearcafe.com/private/01.10/thinklikeabanker.html

http://www.silverbearcafe.com/private/06.11/owntheearth.html

In the following linked blog post, Armstrong failed to grasp that "let me control the currency, and I care not who makes the laws"- Rothschild. Who ever issues the one-world currency, controls the world. If the one-world ends up as a decentralized crypto-currency which no one controls, then Armstrong's point below would be valid. But Armstrong doesn't even believe crypto-currency can remain independent of government (although we smart programmers and technologists disagree with him on that point). If we are correct, then crypto-currency will gain much more value than gold will and gold would be relegated to tangible store of wealth that can be moved (anonymously) across borders by selling it for crypto-currency and repurchasing with crypto-currency.

http://armstrongeconomics.com/2014/05/28/one-world-government-impossible-one-world-currency-inevitable/

Refer to my essays linked below...

Another culling of the population is unfortunately perhaps necessary because the vast majority of people are not ready to be productive in the Knowledge Age as the Industrial Age is dying (China swallowed that zero profit oversupply of industrial capacity), otherwise we will end up with a Dark Age of circling the toilet bowl socialism.

Economic Devastation and the Coming Knowledge Age:

https://bitcointalk.org/index.php?topic=355212.0

https://bitcointalk.org/index.php?topic=495527.msg6065144#msg6065144

Armstrong and Margaret Thatcher have the same gullible misunderstanding that most people of lower IQ have. They haven't taken the time to,or don't have the mental abstraction IQ to, comprehend how degrees-of-freedom and the granularity of adaption to maximize fitness interact with the immutable Second Law of Thermodynamics such that it is impossible that top-down organization of anything can ever work. I have explained this ad nausem in my past writings as AnonyMint:

https://bitcointalk.org/index.php?topic=355212.0

http://unheresy.com/Information%20Is%20Alive.html#Knowledge_Anneals

https://bitcointalk.org/index.php?topic=495527.msg6065144#msg6065144

https://bitcointalk.org/index.php?topic=557732.msg6078778#msg6078778

https://bitcointalk.org/index.php?topic=495527.msg6716262#msg6716262

Simulated annealing is the only known algorithm which can maximize fitness...

---------------------------- Original Message ----------------------------
Subject: Armstrong is wrong if he is claiming central banks aren't complicit
From:    AnonyMint
Date:    Sat, July 26, 2014 10:17 pm
To:      "Armstrong Economics" <armstrongeconomics@gmail.com>
--------------------------------------------------------------------------

http://armstrongeconomics.com/2014/07/26/stockman-v-greenspan-just-absurd/

Armstrong is correct that the fundamental problem is the power vacuum of democracy which is inherent in human nature, that allows socialism (i.e. debt, pensions, vested interests) to grow until it strangles the productive economy.

Armstrong is correct that capital moves internationally to escape such peaking socialism, and central bankers could not stop this movement forever as the fundamental rise of socialism is not under their control.

However, Armstrong is contradicting himself as he implies (unintentionally?) that central banks aren't complicit in that they have collaborated to extend the debt bubbles and socialism to prevent a crash and reset that would have otherwise have occurred much sooner. Armstrong wrote about this collusion just days ago:

http://armstrongeconomics.com/2014/07/24/world-central-bank-secret-agreements/

Also there is substantial evidence that central banks cause delays in debt and socialism resets. For example, the depression of 1919 was finished in only 2 years, primarily because the government and central banks did not intervene. The defaults proceeded rapidly and the reset and adjustment occurred at full speed. In the 1800s, there were numerous short-lived depressions (or recessions) often due to bank runs because there was no central bank backstopping these private banks who were issuing fractional reserve loans. The resets were more frequent and thus more shallow.

What global central banking has done to use since the early 1900s is sustain (preventing a default and rest of) the largest and longest growth of socialism without a reset since perhaps Rome.

Central banking is an invention of the socialism, for the socialism to sustain itself. Central banking needs to recede for the socialism to recede. They go hand-in-hand together.

Even Armstrong has written about how the Fed was originally charted only to buy corporate bonds. Socialism morphed it. Yeah it is fundamentally human nature at the root cause, and central banking is one of the bad symptoms or artifacts.

Sorry Martin.

[aminorex]

My former post contained a link to my recent summary of Armstrong's thesis, which says that printing is ending in all the western countries other than Europe and Japan. This was a secret central bank agreement to prop up those dying economies by driving bond investors to Europe and Japan (declining interest rates cause the value of pre-existing bonds to appreciate, whereas rising interest rates in the other western countries drive speculative bond investors out and the long-term bond investors such as pensions are dying).

Armstrong's ECM model had turning point this Sept 3 or 4 2014 which means the stampede into the dollar could accelerate and volatility could be very high in all markets this week! The Euro recently turned down. And now Draghi says Germany is wrong and the ECB must print trillions of Euros.

There is shockingly little market discipline in sovereigns.  Sovereign bond rates are policy rates subject to market noise.  Increasingly, even equity prices are becoming a kind of policy rate.  No developed nation has a hope of paying down debt significantly at market rates, so market rates must be destroyed and central banks buy the nations' debt.

Pension funds don't fold, much.  They restructure perforce instead.  The dominant trends are to shift to equities or to increase leverage in order to achieve target returns.  The former is rather incompetent, if you ask me.  The latter aligns the funds with policy, which works until it doesn't.  I would not enjoy being responsible for a large amount of other people's retirement money, at this juncture.

The present regime of falling oil (probable u.s./saudi collusion punitive to russia) falling gold (probable central bank futures sales), rising rates, rising dollar is well suited to positioning for war, while retaining economic policy objectives.  But rates should fall again soon enough, with a risk-off trade when more geopolitical risk becomes inescapably obvious.  btc is correlating to falling risk, falling hard money, but there is no flight to safety happening yet, more like obedient alignment to policy.

With Yellen at the helm they will print again soon enough.  Taking away the punchbowl is not going to sit well in equities.  They want a correction, but can barely tolerate it when it happens.  So far they have anticipated/managed the markets remarkably well.  When the whipsaw begins, then you know the whole thing is about to unravel massively.  War would tend to make things easier to predict, and defer whipsaw.  I suspect they have been running scenario analyses at the fed for several months already.  Sadly, I am not privy, and am unlikely to be able to anticipate the results of 20 diverse Ph.D.s role-playing for 12 weeks, at least not without running agent model simulations, which I can't.  Conceivably Armstrong might.  Although, I am very skeptical of his technical claims, having seen powerpoints attributed to 1997(?) but authored with Office 2003.

I notice that 1000 NATO troops are going to Ukraine for exercises now.  That's a temperate but firm little escalation.  Did someone with a very small brain discover they had a backbone?

[AnonyMint]

That said, I find it difficult to time the macro events.  It is even difficult to recognize them, through the crafted storylines of crony corporate journalism, and increasingly difficult to recognize them through the astroturfed agit prop and mental flak of the infected internet. Difficult, and exhausting.

I suggest deferring to Armstrong's ECM computer model of international capital flows.

For estimating asset values on short and medium term scales, what I find most productive, in terms of timing, is gaming scenarios, estimating driver events, and tracking the over-extension of correlation schemas, responding to their breakdown.

This is often correct 50% of the time.

Armstrong made a valid statistical point that the longer the time frame, the more reliable the prediction, if you have his database. He has proven this to be true. The short-term is noisy, the long-term follows a predictable cycle.

In BTC, the eventual listing of COIN is a likely watershed.

I didn't think of that. Am I correct to assume it is an ETF. When is that?

[AnonyMint]

No developed nation has a hope of paying down debt significantly at market rates, so market rates must be destroyed and central banks buy the nations' debt.

That is only an extension or delaying tactic. At the end game, they always raise taxes. Only completely failed states give up their power by hyperinflating.

Europe and Japan will print now while the rest of the world stops and allow long-term rates to rise. This is leading us to the big crash 2015.75. Armstrong's model based on all recorded history of what happened.

Pension funds don't fold, much.  They restructure perforce instead.  The dominant trends are to shift to equities or to increase leverage in order to achieve target returns.  The former is rather incompetent, if you ask me.  The latter aligns the funds with policy, which works until it doesn't.  I would not enjoy being responsible for a large amount of other people's retirement money, at this juncture.

As empires collapse, the pension funds do fold (or restructuring which is effectively a non-payment). Inability to pay the pensions of soldiers lead to the collapse of Western Rome. The taxes were raised until nothing was profitable. This is how empires collapse, not in hyperinflation.

Tangentally, this is why Monero is not good enough for me. We are facing a horrific beast.

The present regime of falling oil (probable u.s./saudi collusion punitive to russia) falling gold (probable central bank futures sales), rising rates, rising dollar is well suited to positioning for war, while retaining economic policy objectives.

Agreed. Armstrong's model predicted this.

But rates should fall again soon enough, with a risk-off trade when more geopolitical risk becomes inescapably obvious.

Rates will fall in Europe and Japan as the last gasp attempt to prevent the contagion, but Russia and West are already moving into war in Ukraine. By November it will be full blown conflict.

Rates are rising in the rest of the West because central banks see capital fleeing Europe and emerging markets which is driving an asset bubble in the rest of the West. Also there is a calculation on how long QE can mathematically run and this was already met in the USA. That calculation is in one of my archived posts. I forget the exact point of it. Do you want me to try to find it?

So we are entering the point of no return. The next stage is war and confiscation. The soft gloves of lowering rates are nearly exhausted.

btc is correlating to falling risk, falling hard money, but there is no flight to safety happening yet, more like obedient alignment to policy.

I posit that Btc was correlated with the speculative bubble that drove the silver and gold bubbles to peak in 2011. Btc's bubble was the follow-on effect as the hard money and libertarians moved on to the "next big thing".

We exhausted that demographic. Btc is unable to pull significantly from demographics outside its core. Every where it gains a little bit of traction (e.g. Brazil and Argentina) is slapped by back down (e.g. China, Ecuador and State of New York).

Even I see the Bitcoin whitepaper mentioned gold to suck in our libertarian demographic. And Nick Szabo had been writing about a conceptual "bit gold" which was basically a description of what became Bitcoin. Nick Szabo is either Satoshi or his blog post inspired the NSA or whoever the group is that was "Satoshi".

With Yellen at the helm they will print again soon enough.  Taking away the punchbowl is not going to sit well in equities.

Armstrong's model disagrees and I concur with his model.

Conceivably Armstrong might.  Although, I am very skeptical of his technical claims, having seen powerpoints attributed to 1997(?) but authored with Office 2003.

Please provide me evidence and I will email him. He reads my email. He has 80,000+ readers. Someone would be making such proofs available on the internet if it has any credibility.

So what he opened an old office file in a newer version to create a blog post? Does that refute all the attendees none who have refuted his claim as far as I know? Shoud I advise him to use instead open orfice in the future.

I notice that 1000 NATO troops are going to Ukraine for exercises now.  That's a temperate but firm little escalation.  Did someone with a very small brain discover they had a backbone?

The dog & pony show on display in Ukraine is an intentional escalation to take the public's attention away from the true blame for this global economic implosion and from the power elite who are benefiting.

[aminorex]

For estimating asset values on short and medium term scales, what I find most productive, in terms of timing, is gaming scenarios, estimating driver events, and tracking the over-extension of correlation schemas, responding to their breakdown.

This is often correct 50% of the time.

All you ever look for in those areas is a small edge.  There's a trade-off of time-scale, price-scale and edge-scale, with an efficient frontier.   Empirical evidence is that my methods are very effective at providing a quite significant edge, which is  heteroskedastic, and works over a small range of elastic time-scales.   Turning such a conditional edge into an optimal strategy is a monstrously complex undertaking, however.  So far I am just doing manual trades with dead-reckoning informed by distribution estimators, for lack of time/manpower to implement the proper optimal automated form.  I find that it works best in FX majors so far, where slippage is minimal and I can turn about 64bp per diem reliably (with a wicked tail of course).  But even that is consuming too much time.  I'm probably going to have to drop the project in favor of the day job for a while.

Armstrong made a valid statistical point that the longer the time frame, the more reliable the prediction, if you have his database. He has proven this to be true. The short-term is noisy, the long-term follows a predictable cycle.

This is very deeply ingrained in my psyche, so that it seems almost too obvious to articulate - as deep and important things often do. But I don't have that much time, personally.  I have targets to meet.  They are insanely aggressive.  I don't invest for generational wealth, but for instrumental wealth to accomplish very specific, and pressing tasks.  To avert imminent negative outcomes and mitigate immediate ones.

In BTC, the eventual listing of COIN is a likely watershed.

I didn't think of that. Am I correct to assume it is an ETF. When is that?

Correct.  The Winklevoss Bitcoin Investment Trust is sponsoring an ETF.  Very good lawyer they have:  http://www.bloomberg.com/news/2014-08-15/spiderwoman-brings-hope-to-winklevoss-twins-bitcoin-etf.html

As Wachtwoordt once said of the SEC, I don't think they can stop it, but they can surely delay it.

The amount of liquidity which will then become available to flow into bitcoin is essentially unlimited.  It's a hole big enough to drain the whole ocean through it.

My best estimate of a desirable target date for the issuers (assuming SEC does not seek to delay it unreasonably) is November 8th, 2014, which is the 10th anniversary of the issuance of GLD.   I do not have expert data required to form a mechanism-based timing estimate.

While COIN is the best, because it is NASDAQ, you can be assured that if it tarries, a London, Frankfurt, Singapore, and/or Hong Kong listing will occur before 2016.  Any of those would suffice to drain a lesser ocean.  A Japanese listing seems likely to take longer.

[iCEBREAKER]

The Winklevoss Bitcoin Investment Trust is sponsoring an ETF.  Very good lawyer they have:  http://www.bloomberg.com/news/2014-08-15/spiderwoman-brings-hope-to-winklevoss-twins-bitcoin-etf.html

As Wachtwoordt once said of the SEC, I don't think they can stop it, but they can surely delay it.

The amount of liquidity which will then become available to flow into bitcoin is essentially unlimited.  It's a hole big enough to drain the whole ocean through it.

My best estimate of a desirable target date for the issuers (assuming SEC does not seek to delay it unreasonably) is November 8th, 2014, which is the 10th anniversary of the issuance of GLD.   I do not have expert data required to form a mechanism-based timing estimate.

While COIN is the best, because it is NASDAQ, you can be assured that if it tarries, a London, Frankfurt, Singapore, and/or Hong Kong listing will occur before 2016.  Any of those would suffice to drain a lesser ocean.  A Japanese listing seems likely to take longer.

Once COIN does the heavy lifting, we'll see a flood of clones and mutants lining up to compete.

And then the real fun begins:

[AnonyMint]

My original theory of Bitcoin was that it was created by TPTB to suck in the high-tech libertarians and keep them preoccupied on speculation and greed so they wouldn't actually develop Nick Szabo's idea into something that could actually challenge the NWO plan. It seems they are succeeding. The ETFs will be concrete boots on Bitcoin.

I posit that Btc was correlated with the speculative bubble that drove the silver and gold bubbles to peak in 2011. Btc's bubble was the follow-on effect as the hard money and libertarians moved on to the "next big thing".

We exhausted that demographic. Btc is unable to pull significantly from demographics outside its core. Every where it gains a little bit of traction (e.g. Brazil and Argentina) is slapped by back down (e.g. China, Ecuador and State of New York).

Even I see the Bitcoin whitepaper mentioned gold to suck in our libertarian demographic. And Nick Szabo had been writing about a conceptual "bit gold" which was basically a description of what became Bitcoin. Nick Szabo is either Satoshi or his blog post inspired the NSA or whoever the group is that was "Satoshi".

The ETFs could (will likely) lift the price to say $1000 - $3000 from 2015 to 2016 (similar to the silver ETF in May, 2006 and the $21 peak in 2007), so let's assume $1-10 billion of new capital inflowing in 2015, thus 300,000 to 10,000 million coins removed from the market and sitting in cold storage.

I understand the remaining coins are divisible to 1 Satoshi, thus there is no limit on the availability of coins if the price is higher. But the salient point is the percent of the market cap which is not moving, i.e. the Velocity of money, V, in the M × V ≈ P × Q ≈ GDP Quantity Theory of Money.

http://arcticstartup.com/2014/09/01/estonian-bitcoin-castle

Rpietila is, for one, the person behind the calculations estimating the inequality in Bitcoin world to be ten times higher than in real world.

This will further reduce (or destroy in the extreme case) Bitcoin's adoption rate and limit its maximum upside price, because there are only 15 million BTC as of 2015 and the market cap is correlated to the square of the transaction volume:

I had explained months ago what is wrong with Bitcoin's targeted market of investment pump:

Now on to the analysis...

Well if this is the bottom it is U shaped, not V, which is what I predicted upthread.

The price action seems to be very quiet, so not much to talk about from a TA perspective.

First a math point about relating adoption rate to price. Peter R confirmed upthread with a chart that proxies for adoption, N, are tracking price = N x N. And if adoption is growing by rate R per year, then it grows R x R rate in two years. Thus we can say that the annual rate of price increases is proportional to the biannual rate of adoption. You see when our Y axis is logarithmic (e.g. log 10 on chart Risto shows) then exponentiation becomes additive and thus linearly proportional.

So I've been FA thinking about why Bitcoin adoption is likely declining, i.e. as I showed a log-logistic curve fit.

As I explained in that linked post, the slope of the price increase was 0.33 before July 2011, and has been 0.09 since January 2012 until now. So it had already declined. The question is was the early period an aberration or part of the trend?

SlipperySlope had been fitting a logistic curve to Bitcoin's price, because technology which spreads out to the masses typically has that S shape of exponential adoption. The key factor is that logistic adoption rate (slope) increases until the midway point, i.e. at 50% of the adoption before decreasing. Whereas, log-logistic adoption rate (slope) is maximum at the start and is always declining. This is a very important distinction because logistic means we can expect Bitcoin's price rate of increase to accelerate, whereas log-logistic we can expect the rate of price appreciation to slow further (as it already did slowing from 0.33 to 0.09 after July 2011).

I gave the explanation that money is power-law distributed and thus we should expect the greatest serious network effects on adoption at the beginning because the power investors come in the earliest. The log-logistic (cumulative distribution function) curve corresponds to the power-law distribution.

I had an epiphany in my dream last night that there is a simpler explanation which also corresponds to the power-law distribution of money as follows.

"Most people who learn about Bitcoin, don't adopt it".

Why? Because it doesn't fulfill a general need. The need it fulfills is very specific to a white male, hate central banking demographic. It doesn't have fast transactions, doesn't have consumer protection, the money is difficult to secure, it is technically challenging to use, etc..

A consumer adopted item such as a washing machine has logistic adoption curve because every person who hears about wants it. Thus maximum word-of-mouth is reached at 50% of adoption. Whereas, for Bitcoin maximum rate of effectiveness of word-of-mouth was when only the correct demographic was listening back before July 2011. Now as Bitcoin tries to speak to the masses, they mostly don't care.

Thus if you want to build a Bitcoin killer altcoin, you simply make sure it is something every person will want to do.

...

I was speaking to my filipino neighbor just now, who works online for a Florida real-estate foreclosure listing company and who is aware of Bitcoin. He confirmed exactly my suspicion, which is that he was merely jealous of missing out on the investment gains but he had no practical use for Bitcoin as a currency. He gets paid via oDesk which he can withdraw from his ATM locally. He said he doesn't even know what advantages if any Bitcoin could offer him over Paypal and it would surely be a hassle to use.

The target market for Bitcoin was originally the high-tech inclined among the alternative asset investors (e.g. goldbugs). The investment pump pulled in the white males motivated by a goal to get rich in high-tech while satiating their idealistic tilt against government-gone-mad. Problem is there are only so many of us. We reached that stampede peak in Nov. 2013.

The problem is that many people have heard of Bitcoin, but their only true interest is as an investment. Thus many have heard but not availed of it (because they are not investors).

Dogecoin managed to attract a different demographic of altruists and I am not sure if this was sourced solely from those in Bitcoin or if it drew in new people who would not be attracted to Bitcoin? Does anyone have any data on this?

The way to beat Bitcoin and blow away every existing altcoin is to target a non-investor demographic and scale outside the confines of Bitcoin's paradigm.

Risto's egregious category error is he seems to not appreciate the critical importance of spenders, i.e. that savers and spenders are in the same category. Without spenders, there can't exist savers and vice versa.

http://armstrongeconomics.com/2014/09/02/will-gold-still-go-to-5000/

As for those who insist gold in money, let me make this point very clear. Money is ONLY a medium of exchange it has NEVER been a store of value for money has NEVER retained a specific buying power from one day to the next EVER! I understand people hate me for saying this for they just have to cling to their myths and theories to justify their losses. Some people cannot admit they are wrong and those are typically the people who cannot trade and why most people who try to trade lose money.

...

A return to the gold standard would create deflation and high unemployment for it would introduced austerity. If a gold standard were truly implemented it would shrink the money supply and economic growth would decline as we see in Europe with these same ideas of austerity.

I am asserting that the challenge is to design an upstart crypto-currency which has enough near-term investment appeal to drive excitement and investment adoption, while simultaneously driving synergistic adoption for spending which eventually subsumes the investment gains.

Some here are challenging my assertion.

Money cannot have an issuer that must be trusted.

Bingo.

And currency can't all end up in the hands of the power-law distributed savers. It also has to be continuously debased so that spenders can spend. Savers and spenders are symbiotic.

You can claim that investors send the money back to spenders via wages, but the fact is they don't. They pool their money in usury interest bearing bonds, which is a form of mutual bondage (slavery) for both the lender and the borrower. That is a deeper, detailed mathematical analysis that I don't have time to reexplain right now. Refer to my older writings on the Hommel forum. There is a reason the Bible says you can only lend at interest to a stranger, not to one of your own.

In other words, savers will destroy themselves if left to their own natural behavior. Don't just look down on spenders, look down on savers too.

Thus I posit that if you want to drive the price of the coin skyhigh, you need everyone who uses the coin to mine with their sunk costs. And then you need to scale usership to millions or billions. The other route is to allow centralization and sell out to the powers-that-be as I posit Bitcoin has done (and Ethereum also), who then drive the investment in mining higher in an investor pump with their mass media and Congressional hearings, etc.. I posit the latter is log-logistic (did a rough curve fit as mentioned) and the former is logistic (refer to our discussions in the Monero economy thread on the adoption rates of technologies that were not centralized).

As to whether higher prices (i.e. via usership demand) drive more investment in mining, I posit that network effects and the Metcalf law correlation that Peter R showed are driven more by the investment in mining, than vice versa, at least while debasement rates are high early on. Those with the most investment also invest the most (time, effort, and capital) to drive adoption, so when the investors are not also the miners early on then there is a loss of synergy (as you say below many miners just dump the coins to a whale and don't even spend them into the ecosystem to drive network effects such as more merchants).

Thus despite sharing some facets of agreement, yes we appear to disagree fundamentally on how crucial mining and breadth of distribution are.

Crypto-to-crypto markets are largely frictionless, and people who want the coin can just buy it while miners who don't want it can just sell it.

Agreed but that says nothing about why one coin is demanded more than another.

Specialization and trade make an economy stronger, not weaker.

Agreed the maximum division-of-labor and the 51% Rule of Decentralized Consensus are fundamental.

However, assets can be specialized but currency can not be. Just because we can trade between crypto-currency assets, doesn't mean all of them are currencies.

Why? Even if you ignore the round-trip costs of spread, the fundamental problem is that when people use one currency as their unit-of-account, then all timing-dependent exchange rate risks disappear.

And this is why Moldberg is correct "there can only be one", and why either we "aim big or go home".

Yeah we could make an anonymous crypto-currency asset that we can use to protect capital in the coming chaos, but if it is not a currency then we will have to trade out to the majority's currency in order to spend this asset. And this is where the powers-that-be have us cornered. When they require everything to be computerized, even including real estate purchases and rentals, then where we will spend our anonymous crypto-asset without being forced to reveal our private keys and the entire trail of ownership??

Open Question: could we end up with two economies?

One the official government edict digital fiat and another the underground economy that goes anonymous because the government becomes unreasonable (as socialism always does at the end stage mega-death mode). I wrote my logic for why I think this is likely and the underground economy could be largely virtual digital works.

Thus perhaps Moldberg is correct and the government's edict fiat is the one that is dying with the dying Industrial Age and the rise of the virtual Knowledge Age means the winning one could be the decentralized crypto-currency after a battle of chaos interim.

I'd like to try for that goal. Succeed or fail, is it not worthy?

With such a goal, there is enough prosperity to share with everyone. So we should cooperate.

[kbm]

Dogecoin managed to attract a different demographic of altruists and I am not sure if this was sourced solely from those in Bitcoin or if it drew in new people who would not be attracted to Bitcoin? Does anyone have any data on this?

It brought in those who lived a lifestyle of satire and burlesque. People who spend idiotic amounts of time browsing the internet all day looking for the funnies .. likely to be associated with a nerd consumer culture in which memes were already ubiquitous. These are the people who spend money wastefully on browser based games linked with social media, browse various internet forums for no real reason other than lacking a hobby, or job (generally because they're locked up in an apartment for 10-14 hours a day and going stir crazy - but can't afford to do much else than internet based hobbies). It brought in many Americans who saw it as the punt. These same people only ever focus on the punt, because they're generally onto the next punt before the first one lands. These punts are free so the attention span is microscopic.

It brought in people that wanted to see bitcoin as a joke, and a satire of it was a digging dog that speaks in its own dialect. It fit into the subconscious of people that are completely miserable, and made a joke from the folly of their poverty -- and even then told them they'll be rich beyond all else because of their folly. It fit well because it was an accurate description of what people think this is all about - a cult of people digging for electronic gold saying things that make mostly no sense. It was a comfortable description, and I haven't really seen much to say that it's not an accurate one save for people telling me it's gonna be worth something some day.

Understand that these are my opinions, but I don't think it's a flight of fancy to say that this is largely true. Personally, I think that there's more here .. but take what I wrote for what it's worth.

[AnonyMint]

kbm, I appreciate that insight, whether it is true or not it highlights the importance of qualitative and quantitative demographics. Also the network effects in games of life.

[aminorex]

The ETFs could (will likely) lift the price to say $1000 - $3000 from 2015 to 2016

That seems very unrealistic to me. 50 kBtc would suffice to pass 1k.  After that, there just aren't any left.