rpietila Wall Observer - the Quality TA Thread ;)

[kbm]

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.

Yes, forums outside this one that now have a cryptocurrency section or topics that weren't there before.

4chan now has a /biz section, which was originally designed to facilitate the rampant discussion of alternative cryptocurrencies .. that began with the excessive moderation of Doge and Stablecoin threads that were springing up like weeds. That section continues to maintain multiple conversations about cryptocurrencies today. Before that, there was a sparse mention of a bitcoin thread in the /pol section .. they were largely ignored. You may consider that these people would have ordinarily not have invested in bitcoin .. because these threads have been on that site for years and were'nt producing the effect like it did with Doge.

Reddit now has an incredible number of threads dedicated to alternative currencies, and are a staple of some communities. Thousands of pages of nothing but Doge.

Even obscure forums like SMD, and GameFAQS forums are now exposed to these alt coins.

The qualification that forums were exposed to cryptocurrencies like Bitcoin through Doge is an important one. You've mentioned many times that people always have to go through KYC/AML laws in order to get their hands on cryptocurrencies .. well in this case thousands of people grabbed Doge and in my case Stablecoin before ever touching bitcoin. I say thousands because just a few months ago I saw more than double the number of average users on poloniex trading as I do right now (770). These people were on constantly .. and now they're not. I feel pretty safe to say that a lot came for both the Doge and Bitcoin rush.

I feel this way because when comparing the Doge and Bitcoin reddits, there are 133,973 readers and 87,036 rich shibes. From those numbers, I'd say that of the 800 (that are now not there) that were there for the 'bitcoin boom', 39.3% of them were brought in mostly from Doge using only reddit numbers. This is 315 people out of ~1500. I'm making the point that there were 87,036 people that were interested in cryptocurrencies because for one brief moment there was a link to something they were already familiar and comfortable with - making fun of people on the internet.

If you're looking for more quantification, take a look at the site traffic from those sites .. because I'd be very surprised if most of these people didn't come from one of those sources. So yes, I agree that qualitative and quantitative demographics studies show that Doge "drew in new people who would not be attracted to Bitcoin", because the avenues these people took to get doge coin were, for the most part, already subjecting these same people to bitcoin (which they then ignored) for years.

[1714482679]

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[1714482679]

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[AnonyMint]

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.

If that were true, doesn't it support my thesis even more— the distribution is abnormally inequitable and thus the coin's market cap can't rise to lofty levels.

It is analogous to the microcosm of 5 guys all owning all goods and factories in a small town and no labor needed to produce those goods. Or 5 guys owning the entire market cap and no other buyers available. Thus no money circulates and those 5 guys are effectively bankrupt and impoverished.

No man is an island. No Money Exists Without The Majority[1].

The greater fool theory of investing is a zero sum game. The real way to create prosperity is to grow the production in the economy by circulating the money.

[1] http://www.gold-eagle.com/article/no-money-exists-without-majority
https://bitcointalk.org/index.php?topic=226033.0;all

[79b79aa8d5047da6d3XX]

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.

I doubt the SEC cares much about anniversaries. The paperwork has been in since June or July 2013. ETF approval sometimes takes two, three or more years. The fund's lawyer says it's best not to rush it.

I would not be surprised if it did not happen in 2014.
 

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.

Good.

[zby]

Looks like the current trend line according to the formula described in the quoted below post would be around 2300.

perl -e 'print 10**(-2.869800 + 0.003012 * 2070)'
2317.60809973308

Quite a divergence.

rpietila - when are you going to retire this formula? Or maybe you already have done that? Do you still expect the price to follow it?

Everyone is on vacation while we reached -0.5 Log from the S.reeds trendline

It's already 30 weeks after last ATH (last one ,,consolidation period'' took 27 weeks)
 
If market would repeat itself identically we would need one more high volume sell-of to trigger run-up, if I made right assumptions?

Shameless repost of my new research, originally in the Trendline thread:

I just updated my personal sheet tracking these things. The parameters of that one:
- flat price 0.005 assumed until Mt.Gox opens
- for 7/2010-2012, Mt.Gox prices used
- for 2013, three exchanges
- for 2014, Bitstamp only
- daily VWAP
- first day 2009-1-3, the first day of Bitcoin; last day 2014-7-9, the 2014th day of Bitcoin

The exponential trendline for this time:
USD/BTC = exp(-2.869800 + 0.003012 * D), D being the number of days

R^2 = 0.934183

The trendline is at $1583.

At $623, we are currently -0.405 units below the trend.

For comparison, the max we ever went below the trend prior to the first 2013 runup, was -0.573.
Prior to the second 2013 runup, -0.341.


The maximum downside (greatest drop in price experienced ever after) after a day when price has already been at a low of -0.4 or lower, is -19%, experienced in 2012-10-5 to 2012-10-26, when the price dropped from $12.75 to $10.31.

This is comparable to the price going from $623 to $504 this month. This would put us on par with the maximum historical downside from already such a low point as $623 represents in the trendline.

I will not go to the upside calculations now, just leave the closing remark:


TL;DR: Historically, buying at a price such as this has represented a very low risk entry point with very limited downside in dollar terms.

Historically, selling at a price such as this (for any other purpose than covering immediate needs) has been counterproductive, as it is very likely that you will get a better or at least not much worse a deal; 1, 2, 3, 6, or any number of months in the future.

[AnonyMint]

kbm, Doge was being widely distributed by people sending micro txs on Likes for Reddit posts correct? So many people obtained it without ever going through an exchange?

So Bitcoin is the rich boys exclusive club and these Doggie people were not included until they got their own coin that distributed in the way they normally interact?

Doge is a niche market though. Most people don't want to do those activities that drives the Doge community. The world is a smorgasbord of niche markets.

[rpietila]

I sense a misunderstanding here.

The formula cannot be retired, since it is a financial truism/unity - there always is one and only one best-fitting trendline for USD/BTC all time dataset. It's like your shoe size is a certain measure and you cannot retire it.

Disregarding the use of the trendline at the point that has historically offered the least risk and best upside, is not smart in my investment philosophy. Quite the contrary, you should now make the adjustment to benefit most from the fact that we are at such a cheap and low-risk point.

[AnonyMint]

there always is one and only one best-fitting trendline for USD/BTC all time dataset

Mathematically false. For example, there may be only one least squares linear fit (on a logarithmic scale), but that is just one model and you do not know which model is the correct one. For example, I posit that log-logistic curve fit is more apropos.

[rpietila]

there always is one and only one best-fitting trendline for USD/BTC all time dataset

Mathematically false. For example, there may be only one least squares linear fit (on a logarithmic scale), but that is just one model and you do not know which model is the correct one. For example, I posit that log-logistic curve fit is more apropos.

A trendline with lesser fit can have greater predicting power. But there are no more than 1 trendline with the best fit, and it is mine. Situation is analogous to our shoe size, either I have larger, or you have, or they may be the same, but only if they actually are the same.

[kbm]

kbm, Doge was being widely distributed by people sending micro txs on Likes for Reddit posts correct? So many people obtained it without ever going through an exchange?

Doge was a new cryptocurrency, and had a low hash rate. Not only was there tipping involved ... that came later. A large part of its hashrate came from it being so easy to mine. There were hundreds of people posting on threads there learning how to mine just stablecoin. Imagine how many were trying to mine dogecoin? The first few days I got tens of thousands, on miserable hardware. People who didn't even know what they were doing got millions.

Then there was an irc chat right on some of the pools .. so the comfortable thread like nature could continue.

My point here is that you got people who didn't even think about a power bill into mining because it was easy to do and got a couple dollars on your computer, however few dollars that was. The mining came before the tipping, and that's what brought the people to want to tip - because it was worth jack squat to someone who was around for a week and knew that 50 doge was nothing .. but to someone who didn't and was just moving with the exuberant herd .. well that was really something.

Really, in one night, you had hundreds of people who would just sit in a thread and flame people for no reason set up a server, start mining and find a block. It was just so easy and it had some kind of value (which is more value than sitting around flaming people and not getting magic internet money - the choice was logical). Again, the tipping came later.

So Bitcoin is the rich boys exclusive club and these Doggie people were not included until they got their own coin that distributed in the way they normally interact?

It had nothing to do with BTC being an exclusive rich club .. it had more of a creepy lurker vibe than anything else .. like the 22 year old man who's telling you he's making an Iron Man suit out of titanium in his dorm room. People were even making flame 'buttcoin' threads pretty regularly. It was a joke that Doge captured pretty well .. without being directly offensive. Satire.

[AnonyMint]

there always is one and only one best-fitting trendline for USD/BTC all time dataset

Mathematically false. For example, there may be only one least squares linear fit (on a logarithmic scale), but that is just one model and you do not know which model is the correct one. For example, I posit that log-logistic curve fit is more apropos.

A trendline with lesser fit can have greater predicting power. But there are no more than 1 trendline with the best fit, and it is mine. Situation is analogous to our shoe size, either I have larger, or you have, or they may be the same, but only if they actually are the same.

How can you assert that a fit with one model is lesser fit than a fit with another model? Define 'lesser'?

[zby]

I sense a misunderstanding here.

The formula cannot be retired, since it is a financial truism/unity - there always is one and only one best-fitting trendline for USD/BTC all time dataset. It's like your shoe size is a certain measure and you cannot retire it.

Disregarding the use of the trendline at the point that has historically offered the least risk and best upside, is not smart in my investment philosophy. Quite the contrary, you should now make the adjustment to benefit most from the fact that we are at such a cheap and low-risk point.

Hmm - do you say that the line you are watching is not 'USD/BTC = exp(-2.869800 + 0.003012 * D), D being the number of days' anymore? Have you changed the coefficients or have you changed it altogether so some other function?

Your comment about only one best fitting trendline only makes sense if you constrain your search space - for example by choosing only exponential functions.

A side note - if you for example allow for trendlines to be polynomials of unrestricted degree - then you'd be able to fit the trendline to the price chart exactly (with no divergencies at all).

[AnonyMint]

kbm, I think you will find that Bitcoin did not accomodate that usage because it is a rich boys club and you can't play if you don't have real money. And the velocity of money is what drove the value of Doge (which is orthogonal to the creepy community that drove that velocity of money). My theory seems to be anecdotally verified by the Doge coin experience. The problem for Doge is it is just a small niche market and only one way of usage that doesn't appeal to wider audience, thus the market cap has scaled back accordingly also because the supply of cheap coins has been halving at a very accelerated rate and it is 91% mined out already. Doge provides one case study that my marketing concept may be true, but they made some big mistakes on the design (conceptually only a small niche and phasing out the debasement radically fast). The Doge target market is too narrow to synergize with the investor demographic—economies-of-scale are lacking.

[rpietila]

How can you assert that a fit with one model is lesser fit than a fit with another model? Define 'lesser'?

The best fit is when you have a better R-squared value than any other fits. Excel calculates the best fits for every model automatically, so you can just conclude that a log-linear model has a better fit (0.94) than log-logistic (0.73).

[AnonyMint]

How can you assert that a fit with one model is lesser fit than a fit with another model? Define 'lesser'?

The best fit is when you have a better R-squared value than any other fits. Excel calculates the best fits for every model automatically, so you can just conclude that a log-linear model has a better fit (0.94) than log-logistic (0.73).

If I am not mistaken, the best R-squared (least error from the data points) would be an N-degree polynomial for N data points such that the curve passes through every point.

Thus 'best fit' may have no correlation to predictive power.

[rpietila]

Hmm - do you say that the line you are watching is not 'USD/BTC = exp(-2.869800 + 0.003012 * D), D being the number of days' anymore? Have you changed the coefficients or have you changed it altogether so some other function?

It is always, every day, the line (or other construct) that gives the highest R^2 fit with the USD/BTC price data between 2009-1-3 and present_day. For all the time it has been an exponential function, which is linear when plotted in logarithmic space as I do.

Your comment about only one best fitting trendline only makes sense if you constrain your search space - for example by choosing only exponential functions.

A side note - if you for example allow for trendlines to be polynomials of unrestricted degree - then you'd be able to fit the trendline to the price chart exactly (with no divergencies at all).

1. Not really. Others just don't come close. 2. That's quite theoretical, since I cannot convince myself that a model with more than 2nd degree term is anything but noise with no predictive power, and Excel allows construction to 6th degree, with no improvement in R^2.

What IS important is if the growth trend is slowing or not. I currently hold the opinion that the trend is pretty much intact and price is about to increase 10x in a year. AnonyMint thinks it has slowed.

[zby]

Hmm - do you say that the line you are watching is not 'USD/BTC = exp(-2.869800 + 0.003012 * D), D being the number of days' anymore? Have you changed the coefficients or have you changed it altogether so some other function?

It is always, every day, the line (or other construct) that gives the highest R^2 fit with the USD/BTC price data between 2009-1-3 and present_day. For all the time it has been an exponential function, which is linear when plotted in logarithmic space as I do.

Your comment about only one best fitting trendline only makes sense if you constrain your search space - for example by choosing only exponential functions.

A side note - if you for example allow for trendlines to be polynomials of unrestricted degree - then you'd be able to fit the trendline to the price chart exactly (with no divergencies at all).

1. Not really. Others just don't come close. 2. That's quite theoretical, since I cannot convince myself that a model with more than 2nd degree term is anything but noise with no predictive power, and Excel allows construction to 6th degree, with no improvement in R^2.

What IS important is if the growth trend is slowing or not. I currently hold the opinion that the trend is pretty much intact and price is about to increase 10x in a year. AnonyMint thinks it has slowed.

How about trigonometric functions? Have you tried them? Or polynomials with trigonometric functions? I am sure Excel have many many functions and you can combine them in many many ways - I am sure you have not tried them all. So my question is how do you chose your functions - why are you sure that exp is good and cos is not?

[rpietila]

Hmm - do you say that the line you are watching is not 'USD/BTC = exp(-2.869800 + 0.003012 * D), D being the number of days' anymore? Have you changed the coefficients or have you changed it altogether so some other function?

It is always, every day, the line (or other construct) that gives the highest R^2 fit with the USD/BTC price data between 2009-1-3 and present_day. For all the time it has been an exponential function, which is linear when plotted in logarithmic space as I do.

Your comment about only one best fitting trendline only makes sense if you constrain your search space - for example by choosing only exponential functions.

A side note - if you for example allow for trendlines to be polynomials of unrestricted degree - then you'd be able to fit the trendline to the price chart exactly (with no divergencies at all).

1. Not really. Others just don't come close. 2. That's quite theoretical, since I cannot convince myself that a model with more than 2nd degree term is anything but noise with no predictive power, and Excel allows construction to 6th degree, with no improvement in R^2.

What IS important is if the growth trend is slowing or not. I currently hold the opinion that the trend is pretty much intact and price is about to increase 10x in a year. AnonyMint thinks it has slowed.

How about trigonometric functions? Have you tried them? Or polynomials with trigonometric functions? I am sure Excel have many many functions and you can combine them in many many ways - I am sure you have not tried them all. So my question is how do you chose your functions - why are you sure that exp is good and cos is not?

I am sure that you are trolling, yet want to explain the scientific method to others:

- The model needs to have a good fit to the data (best fit is usually best)
- The model needs to be in unison with the observed mechanisms that produce the data
- In absence of exact mechanisms (which is usually the case), the model should rely on general events (time passing) more than special (number of sunspots), if they give the fit that is equally good to explain the historical data.

- The model is used to predict the future. Therefore its future predictions have to be reasonable. In most other contexts, predicting a market cap of $17,000 billion dollars in 4 years is not credible. Here disregarding it as an impossibility may be a grave mistake, as it was to refuse to invest a few grand into Bitcoin 4 years back when it was available to all with little effort at $0.08. If Bitcoin has done something that other haven't, ever, it has a nonzero possibility of repeating the behaviour, and the model is better knowing it.

[AnonyMint]

Risto I trust common sense much more than short-term models and quants. Quants always fail eventually because as Armstrong points out their data sets do not encompass the long-tail events from a plurality of completed case histories going back 1000s of years.

That Bitcoin is not being used spontaneously by more people as they do facebook or viber should be a warning sign imo.

The upside price is certainly not finished. But is it really scaling to the general population (of which the vast majority are not investors)?

[Newbie1022]

Hmm - do you say that the line you are watching is not 'USD/BTC = exp(-2.869800 + 0.003012 * D), D being the number of days' anymore? Have you changed the coefficients or have you changed it altogether so some other function?

It is always, every day, the line (or other construct) that gives the highest R^2 fit with the USD/BTC price data between 2009-1-3 and present_day. For all the time it has been an exponential function, which is linear when plotted in logarithmic space as I do.

Your comment about only one best fitting trendline only makes sense if you constrain your search space - for example by choosing only exponential functions.

A side note - if you for example allow for trendlines to be polynomials of unrestricted degree - then you'd be able to fit the trendline to the price chart exactly (with no divergencies at all).

1. Not really. Others just don't come close. 2. That's quite theoretical, since I cannot convince myself that a model with more than 2nd degree term is anything but noise with no predictive power, and Excel allows construction to 6th degree, with no improvement in R^2.

What IS important is if the growth trend is slowing or not. I currently hold the opinion that the trend is pretty much intact and price is about to increase 10x in a year. AnonyMint thinks it has slowed.

If we ever hit $5000/BTC... I give you legal ownership of my left kidney.

I like my kidneys... so what I am saying is that will never happen. Not next year. Not ever. Merry Christmas.

I could see $1500-$2000 in a bullish scenario.

Too many new players, too much regulatory bulls---, no Willy Bot, reduced black market presence, newbies getting Wall Street raped, etc., etc. Just because new adoption has, historically, been at a certain rate does not mean that this new adoption will continue out into the future. The baseline for the forecast is off.

It's, logically speaking, not terribly far off the rationale that banksters and credit agencies used in assigning inflated ratings to what were truly junk bonds -- the price of housing had not historically gone down and there had not been such a batch of foreclosures in prior history (and that sample size was much larger). However, the situation had changed... you had different people buying homes, different underwriting standards and down payment requirements, the perverse incentives created through securitization and derivatives, and balloon payments that functioned as a ticking time bomb.

Here, the dynamic that has changed is different, but the result is similar... adoption rates increased more dramatically when the price was still psychologically affordable. Now, simply having seen so many people profit, a lot of new users know that they are late to the game and that the odds are higher, now, that they'll be left holding a bag rather than profit. Tack on the fact that we went pop (moved away from black markets and towards regulation, taxation, and Wall Street) and have, resultantly, lost our hipness and appeal. Yea, this s--- is going down man. I'm not saying your math is wrong, but the application is off base.

[farfiman]

...
The upside price is certainly not finished. But is it really scaling to the general population (of which the vast majority are not investors)?

The main problem is "ease of use"  -  for the general population it is too much trouble to buy bitcoins and use them. I see it all the time with people I know. But things are getting better. Services like coinbase and easier to use phone apps will help the general population move into bitcoin. Maybe it isn't happening as fast as Risto thought it would but once we get over this hump  the younger generation will jump on the wagon.