Vague similarities...

[oda.krell]

You are as blind in that assumption as you are blind in looking at the graphs, i.e. a complete miss. I could not care less to actually get "unbalanced" by your pattern observations, just pointed out a fact that a coin toss would result in a much better prediction power than your TA. If you want to present a bearish point of view, you should try harder, your reasoning at the moment is even less credible than proudhon's "sources" or somebody else's dream, definitely much less funny since you seem to actually believe the gibberish that you post.

vs.

But then I think that'd be too easy.... Bitcoin price has a habit of biting you in the ass if you rely on half arsed pattern recognition too much.

or

Nice observation. I mean, it's all rather uninformative eyeballing, but your eyeballing was slightly less uninformative than mine :P

Reading is hard. Let's go shopping!

[piramida]

Adding "but bitcoin price can do whatever it wants" does not make the prior analysis less silly.

[N12]

oda, that's what happens when you even dare suggest that Bitcoin could maybe possibly decrease in value in the short and medium term. Bitcoin cultists to the rescue. Price graphs are useless, technical analysis is a distraction.

And it's interesting that you refer to the past bitcoin price to justify your position today yet you fail to remember that anyone investing in 2011 would be a rich man today.

Well, guess who did … I didn't achieve this by listening to the fiat cultists at the time, and I will certainly not achieve to protect myself like I have done in the past by listening to Bitcoin cultists.

On the topic: We are in a clear triangle now, and we are nearing its end. 880 and 1022 on MtGox are its last borders as I see it.

[piramida]

Price graphs are useless, technical analysis is a distraction.

You know that technical analysis is a useful tool to estimate sentiment. This here is not even trying, though. I agree that we approach a triangle tip. It might go both ways from there.

[T.Stuart]

Price graphs are useless, technical analysis is a distraction.

You know that technical analysis is a useful tool to estimate sentiment. This here is not even trying, though.

You know I wish some TA analysts (not necessarily OP) would remember this - TA is a tool to estimate sentiment. It is not the other way around - sentiment should not bend to the will of TA. For example I've seen analysts write about hodling as if it is some kind of cheating - not fair because it might skew TA. But it is the job of the analyst to factor hodling into their estimate, not for hodlers to conform to the analyst's personal estimates!

[MAbtc]

Though this consolidation is more like a triangle, so it seems more likely to break up with a target of around $1120 before breaking back down

Interesting to hear this from you. Regarding this triangle, what gives you the impression of a bullish bias?

[N12]

I wouldn't dismiss "eyeballing" certain segments of Bitcoin's history and comparing it to past ones. Since the psychology in Bitcoin always works the same, certain patterns emerge that repeat themselves. 1093 certainly has the potential to be what 166 was last year.

For example I've seen analysts write about hodling as if it is some kind of cheating - not fair because it might skew TA.

Noone serious would say such nonsense. And like it or not, the charts do lead the sentiment because sentiment is influenced by the booms and busts. Sentiment is at its worst at the very bottom and highest at the top. It is very easy to track this, just look at the way the hype works (there are many metrics, like Google trends, Wikipedia hits, client downloads, etc.) and how it dies down … it is a lagging indicator.

[oda.krell]

Adding "but bitcoin price can do whatever it wants" does not make the prior analysis less silly.

Nobody said "price can do whatever it wants". I simply said, from post one, "this is not serious TA, but eyeballing charts". I post more seriously in other threads, but consolidation times like this can be frustrating.

There's something amusing about your insistence to point out that my OP is baseless speculation: this subforum is *full* of baseless speculation why we're about to go TO DA MOON, usually with no such thing as a disclaimer that's it's speculation rather than TA. Maybe some bias there, after all?

Oh well, never mind. Join the tea leaf reading group or don't.

* * *

How do we feel about the single (high volume) bottom so far? I never quite made up my mind if we actually found support (at a level based on some less obvious trend, perhaps) on Dec. 18, or if we're in for another re-test of a capitulation bottom?

[N12]

How do we feel about the single (high volume) bottom so far? I never quite made up my mind if we actually found support (at a level based on some less obvious trend, perhaps) on Dec. 18, or if we're in for another re-test of a capitulation bottom?

The million dollar question … Literally.

A problem with 455 is that it's a mere 63% off the top, and it was no particularly high volume either. But, purely from the changed look of the chart because of the uptrend from 455, it looks unlike 2011. While that doesn't necessarily mean it can't play out similarly or even worse regardless, I think there's at least as good an argument to be made for a larger triangle/sideways move that will take months to conclude, and thus, a bottom higher than 455.

In any case, Bitcoin has fundamentally become a dangerous game because miners have had such large marginal profits for an unprecedented amount of time. Here's the chart I watch for that. Just ignore the pre-ASIC period and the y axis labelings, the only thing that matters is the relative trend here. New lows in margin profits mean higher and higher pressure on miners, and eventually, they will have to sell nearly all of the daily supply, of which I suspect, unlike any real world mining market, a large part has been withheld from the market until now.
We are speculators. If we even get a whiff of this, we bail and force them to sell an even larger percentage because of the decreased price. It's a positive feedback loop of nightmarish proportion, and it is what happened in 2011. The difficulty even began to decrease because it became unprofitable – something I don't expect to happen with ASICs because they can only do SHA256, but I do expect the difficulty growth to decrease extremely, and that could be a hint for investors.

[T.Stuart]

How do we feel about the single (high volume) bottom so far? I never quite made up my mind if we actually found support (at a level based on some less obvious trend, perhaps) on Dec. 18, or if we're in for another re-test of a capitulation bottom?

The million dollar question … Literally.

A problem with 455 is that it's a mere 63% off the top, and it was no particularly high volume either. But, purely from the changed look of the chart because of the uptrend from 455, it looks unlike 2011. While that doesn't necessarily mean it can't play out similarly or even worse regardless, I think there's at least as good an argument to be made for a larger triangle/sideways move that will take months to conclude, and thus, a bottom higher than 455.

In any case, Bitcoin has fundamentally become a dangerous game because miners have had such large marginal profits for an unprecedented amount of time. Here's the chart I watch for that. Just ignore the pre-ASIC period and the y axis labelings, the only thing that matters is the relative trend here. New lows in margin profits mean higher and higher pressure on miners, and eventually, they will have to sell nearly all of the daily supply, of which I suspect, unlike any real world mining market, a large part has been withheld from the market until now.
We are speculators. If we even get a whiff of this, we bail and force them to sell an even larger percentage because of the decreased price. It's a positive feedback loop of nightmarish proportion, and it is what happened in 2011.

Do you have some sources to back this up? I would be interested to read up on this.
The counter-argument goes that mining difficulty increasing will raise the price of Bitcoin, isn't it?
Thanks for any sources!

[N12]

Yes … Charts.

Here are charts for difficulty (alltime log chart included): http://bitcoin.sipa.be/ Compare them with the price chart and it is easy enough to see.

Mining difficulty doesn't increase the price of Bitcoin, it is a common error. Certainly noone is refraining from buying Bitcoin because the difficulty is too low or selling them due to this. As always, price is the leading indicator.

edit: Sorry, I missed the bolded part. Unfontunately, it is probably impossible to show this, but the source of my suspicions rests on the fact that exchanges are seeing very little influx of Bitcoin even in times when prices don't increase. It would be extremely difficult for Bitcoin to become as illiquid as it did if you had a constant influx of 3600 BTC/day. Aside from that, simply sentiment: It makes sense for miners to become irrational and get caught up in the Bitcoin hype so that they don't sell a single coin more than necessary to cover expenses. There are also anecdotes of miners confirming this.

[T.Stuart]

Yes … Charts.

Here are charts for difficulty (alltime log chart included): http://bitcoin.sipa.be/ Compare them with the price chart and it is easy enough to see.

Mining difficulty doesn't increase the price of Bitcoin, it is a common error. Certainly noone is refraining from buying Bitcoin because the difficulty is too low or selling them due to this. As always, price is the leading indicator.

edit: Sorry, I missed the bolded part. Unfontunately, it is probably impossible to show this, but the source of my suspicions rests on the fact that exchanges are seeing very little influx of Bitcoin even in times when prices don't increase. It would be extremely difficult for Bitcoin to become as illiquid as it did if you had a constant influx of 3600 BTC/day.

Let's just say for the sake of argument that mining becomes so clearly unprofitable that miners start pulling out. With the network where it's at, at what stage does this become an obstacle to the network's ability to function usefully (timely confirmations etc.)? Can you point me towards any recent study of this?

[N12]

I don't know of any elaborate writings on this, but I can tell you that it's not a problem for the network: Difficulty would just decrease. The network functions fine at any difficulty. Remember, Satoshi mined on his own in the beginning. The only problem could possibly be an extremely abrupt decrease so that transactions take too long to go through, but at 10 minutes per block, how likely is that?

Electricity in some parts of the world or situations is free, and ASICs have an extremely high efficiency, so it probably won't happen for a longer time. Once an ASIC is unprofitable, the owner will simply sell it to another who has lower costs. Mining is a professional business, the resources will get allocated to those who can make best use of it.

[HairyMaclairy]

I have heard one miner claim that a single block eruptor has enough processing power to process all current transactions on the entire bitcoin network.  

Obviously it would be massively profitable on transaction fees alone (without even thinking about block reward) so I don't think we need to worry about running out of processing power.

[T.Stuart]

I don't know of any elaborate writings on this, but I can tell you that it's not a problem for the network: Difficulty would just decrease. The network functions fine at any difficulty. Remember, Satoshi mined on his own in the beginning. The only problem could possibly be an extremely abrupt decrease so that transactions take too long to go through, but at 10 minutes per block, how likely is that?

Electricity in some parts of the world or situations is free, and ASICs have an extremely high efficiency, so it probably won't happen for a longer time. Once an ASIC is unprofitable, the owner will simply sell it to another who has lower costs. Mining is a professional business, the resources will get allocated to those who can make best use of it.

Thanks for your explanations.

[HairyMaclairy]

In the real world 90% or more of all diamonds mined have been held back from market creating artificial scarcity. This is starting to break down now and diamond prices are starting to fall.  

http://depletedcranium.com/the-facts-about-diamonds-and-why-i-dont-like-de-beers/

[Tzupy]

... it looks unlike 2011 ...

The problem with the 2011 bubble deflation is that Gox was hacked and closed down for several days, in the middle of wave B, so the equivalent of this 6th January rise to 1093$
is missing from the 2011 charts. Remains to be seen how low it will drop now, in 2011 it dropped to about 11.5$ on the 5th July, that was a 64% drop from the 32$ peak.
For comparison, 64% of 1240$ is 445$, so this bear market still may be closer to 2011 than to 2013.

[N12]

I forgot about that. Even though I'm not sure a week of market suspension (just looked it up on the charts, there's data from 19th and after that, 26th of June) is enough to disturb that, it's a good argument particularly in conjunction with an initial drop of the same magnitude, thanks for reminding me.

I have to say though, in 2011, we did bounce off 10 to 25, an enormous bull trap in proximity of the 32 high, and on the 13th of June, it left this price behind to 18-17, so I'm leaning towards discounting this week's pause. The difference is that this countertrend rally off 10 lasted a mere 1-2 days. At the time, I would have easily believed MtGox's 1068 to be equivalent to that 25 since it was a countertrend of only 3 days.

[T.Stuart]

As much as it is fun comparing bubbles the fact is they happened for different reasons and have resolved differently. I said the China bubble would resolve higher [EDIT: in proportion] than previous bubbles and I think it's going to keep going as is. We'll see!  

[windjc]

Yes … Charts.

Here are charts for difficulty (alltime log chart included): http://bitcoin.sipa.be/ Compare them with the price chart and it is easy enough to see.

Mining difficulty doesn't increase the price of Bitcoin, it is a common error. Certainly noone is refraining from buying Bitcoin because the difficulty is too low or selling them due to this. As always, price is the leading indicator.

edit: Sorry, I missed the bolded part. Unfontunately, it is probably impossible to show this, but the source of my suspicions rests on the fact that exchanges are seeing very little influx of Bitcoin even in times when prices don't increase. It would be extremely difficult for Bitcoin to become as illiquid as it did if you had a constant influx of 3600 BTC/day. Aside from that, simply sentiment: It makes sense for miners to become irrational and get caught up in the Bitcoin hype so that they don't sell a single coin more than necessary to cover expenses. There are also anecdotes of miners confirming this.

How many newly mined coins are being sold off exchange? Prove to me that it is not a substantial amount and I will give your theory more credibility.

And before you scoff, just think if the above question is true. What are the implications in future price?

During the first run up in China back in November when it went to 8000, the exchange was literally running out of coins. Was this just because of miner's greed or could there be other potentials factors? I think it's important to analyse all possibilities, not just the ones you saw in effect in 2011.