The correction and recovery in a nutshell.

[aminorex]

what will go to 0 first? bicoin? or the dollar?

0 value is elusive.  I paid 4USD for a quadrillion in Zimbabwe notes.  Think of it more like this:  Which one will destroy the most exchange value in the next 20 years?    I think USD will not be a reserve currency in 20 years, but BTC will.  I think USD might not be usable for paying taxes in 20 years, but BTC will.  I think 20 years may be very very optimistic, and I hedge for 2.5 years.

What's the probability that BTC goes below parity with a reserve currency basket valued 10 $USD2012 in a given time increment, as a function of time horizon?  It's the sum of three threat models:  Social exogenous, social endogenous, and technical.

Exogenous:  de minimis until the next sovereign crisis, rising fast to a peak around 2%/year, then dropping dramatically, and rising gradually over subsequent years due to macro risk.

Endogenous:  linear upslope from 2%/year to around 3%/year, until a political reorganization of nation states or of the bitcoin infrastructure,  unknowable thereafter.

Technical model:  de minimis, rising to approach a peak at some low value, say 1%/year, then decaying over time.

Endogenous threats are dominant in the current regime, I think.

[Impaler]

Very good analysis Mat, I'd like to voice my speculation on WHO the manipulators are and WHY they act as they do.

First off WHO, the simple answer is 'deeper pocketed versions of the same zealots who have been railing against you in this thread', I know this seams almost anti-climactic doesn't it.  You normally think of manipulation as being done by people who are fundamentally different from the 'small fry' both in the depth of their pockets AND a more 'predatory' nature.  We don't expect manipulators to be delusional zealots but in BTC I think they are.  First off we know for sure the big holders of BTC are early adopters who drank the kool-aid very early, these folks have now accumulated sums of USD in the several million range (all still on exchanges mind you) and they thus have leverage on both sides to control the price.  'New' investors might come in with huge sums of USD but they can never match the BTC holdings of the early adopters so they can't do the kind of narrow-holding range manipulation your seeing, they can only cause a price spike as China effectively did when it entered the market.

And the WHY should be evident from some of the posts earlier, the manipulators feel they are 'saving' BTC from the evil forces of the Persian Army  THIS IS BITCOIN!!!  HODL!!!!!  This meme is very telling, we see that people equate the price of BTC with the success of BTC, this view is reinforced by the detractors that call BTC a bubble.  If the supporters 'HODL' the price up high enough then they are 'right' about BTC and everyone else is wrong, and most importantly their Libertarian wold-view is right and everyone else is wrong.  And these people see libertarian/Austrian economic theory as something that needs to be promoted and defended at any cost.  All of this is to ultimately as you said yourself fell that this is the "result of something inherently great about themselves", an ego trip that completely validates their political beliefs and ideologies.

Now what dose this mean for the long run price, are they preparing to crash the market some day and leave the rest of us holding the bag.  NO!!  These people will WILLINGLY go down with the ship if BTC ever finally tanks, nigh they would flaunt their martyrdom saying they 'lost everything because they had FAITH and held to the end, if only the wretched weak-handed fools had not crashed the price of BTC we could have defeated the evil gobermint and the FED and the USD and ushered in a libertarian Ann Randtopia!!!  The know that a fast-crash attempt to empty the exchanges and exist with the USD will net at most a ~40 million in exchange CREDITS which have very little chance of actually being redeemed for real USD at that scale, indeed most of the credits are on Gox which may not even be solvent and which will de-facto force them to put thouse credits back into the market, so for the whales BTC is like a tuna-net in the ocean, they can swim around and seem liquid but are really quite constrained, they realized their BTC AND exchange-credit wealth is illiquid and they like it that way, weakness should be PUNISHED not rewarded after-all (I wouldn't be the least surprised if their are intentional retaliations against anyone who breaks ranks and tries to cash-out).  So they are happy to just get a trickle of USD as they so very slowly sell, it's still enough for them to practically live off and it's more then they deserve anyways so why not keep this whole BTC thing going as long as possible, when it looks like 'stability' is what is needed then they create stability until it looks like another crop of new adopters is ready to be lured in, to them BTC is like that Spartan army doing a simple 'charge', 'fallback (as little as possible) and 'hold' pattern, claiming 'ground' is the goal and ground is measured in exchange rates.

The question is now, can they keep this up?  And for how long?  I think it will eventually break them, the waning availability of new suckers, the exodus of China, and the declining profitability of mining hardware which will force more coins to flow into exchanges will exert enough pressure to break out of this ~850 band and bring a correction down to a more sustainable level.  Sustainable here simply meaning how much actual USD per day that libertarians can find out of their own pockets to throw at buying up the ~5k new BTCs per day that come into existence.  This should not be confused with the LONG term sustainability issue which involve a whole slew of legal and economic factors beyond the scope of just throwing USD purchases at BTC.  But for the short and mid term I feel we will see corrections in which small fry run for the doors but whales do not.

[Holliday]

Very good analysis Mat, I'd like to voice my speculation on WHO the manipulators are and WHY they act as they do.

First off WHO, the simple answer is 'deeper pocketed versions of the same zealots who have been railing against you in this thread', I know this seams almost anti-climactic doesn't it.  You normally think of manipulation as being done by people who are fundamentally different from the 'small fry' both in the depth of their pockets AND a more 'predatory' nature.  We don't expect manipulators to be delusional zealots but in BTC I think they are.  First off we know for sure the big holders of BTC are early adopters who drank the kool-aid very early, these folks have now accumulated sums of USD in the several million range (all still on exchanges mind you) and they thus have leverage on both sides to control the price.  'New' investors might come in with huge sums of USD but they can never match the BTC holdings of the early adopters so they can't do the kind of narrow-holding range manipulation your seeing, they can only cause a price spike as China effectively did when it entered the market.

And the WHY should be evident from some of the posts earlier, the manipulators feel they are 'saving' BTC from the evil forces of the Persian Army  THIS IS BITCOIN!!!  HODL!!!!!  This meme is very telling, we see that people equate the price of BTC with the success of BTC, this view is reinforced by the detractors that call BTC a bubble.  If the supporters 'HODL' the price up high enough then they are 'right' about BTC and everyone else is wrong, and most importantly their Libertarian wold-view is right and everyone else is wrong.  And these people see libertarian/Austrian economic theory as something that needs to be promoted and defended at any cost.  All of this is to ultimately as you said yourself fell that this is the "result of something inherently great about themselves", an ego trip that completely validates their political beliefs and ideologies.

Now what dose this mean for the long run price, are they preparing to crash the market some day and leave the rest of us holding the bag.  NO!!  These people will WILLINGLY go down with the ship if BTC ever finally tanks, nigh they would flaunt their martyrdom saying they 'lost everything because they had FAITH and held to the end, if only the wretched weak-handed fools had not crashed the price of BTC we could have defeated the evil gobermint and the FED and the USD and ushered in a libertarian Ann Randtopia!!!  The know that a fast-crash attempt to empty the exchanges and exist with the USD will net at most a ~40 million in exchange CREDITS which have very little chance of actually being redeemed for real USD at that scale, indeed most of the credits are on Gox which may not even be solvent and which will de-facto force them to put thouse credits back into the market, so for the whales BTC is like a tuna-net in the ocean, they can swim around and seem liquid but are really quite constrained, they realized their BTC AND exchange-credit wealth is illiquid and they like it that way, weakness should be PUNISHED not rewarded after-all (I wouldn't be the least surprised if their are intentional retaliations against anyone who breaks ranks and tries to cash-out).  So they are happy to just get a trickle of USD as they so very slowly sell, it's still enough for them to practically live off and it's more then they deserve anyways so why not keep this whole BTC thing going as long as possible, when it looks like 'stability' is what is needed then they create stability until it looks like another crop of new adopters is ready to be lured in, to them BTC is like that Spartan army doing a simple 'charge', 'fallback (as little as possible) and 'hold' pattern, claiming 'ground' is the goal and ground is measured in exchange rates.

The question is now, can they keep this up?  And for how long?  I think it will eventually break them, the waning availability of new suckers, the exodus of China, and the declining profitability of mining hardware which will force more coins to flow into exchanges will exert enough pressure to break out of this ~850 band and bring a correction down to a more sustainable level.  Sustainable here simply meaning how much actual USD per day that libertarians can find out of their own pockets to throw at buying up the ~5k new BTCs per day that come into existence.  This should not be confused with the LONG term sustainability issue which involve a whole slew of legal and economic factors beyond the scope of just throwing USD purchases at BTC.  But for the short and mid term I feel we will see corrections in which small fry run for the doors but whales do not.

Nice analysis. True believers in Bitcoin don't have any fiat and they certainly don't keep any coins at an exchange.

[aminorex]

...the exodus of China...

There it is with that chexit meme again.  WTF is this?  Exactly what does it mean for "China" to "exit"  bitcoin?  Is China trapped inside bitcoin, sending messages in fortune cookies that I never get?  I question that it actually has a meaning.  I'm beginning to think that it is actually just a sequence of syllables computed to create some desirable emotions in the readers, but it doesn't actually *mean* anything.

... the declining profitability of mining hardware which will force more coins to flow into exchanges ...

I'm certainly don't want to imply that anything else you said made sense, but this is particularly incomprehensible to me. Miners will not sell coins unprofitably.  They will hoard them until they are profitable.  A miner who did otherwise would be bankrupt very quickly, and thus forced out of mining, in a word, non-miners.  I'm quite convinced that Impaler is not a miner.  If you were, you would quickly become a bankrupt non-miner.  I am a miner.  I hoard until my gains allow me to multiply the size of my mining operation.  In this way, I am constantly iterating to higher and higher cashflows.

[Impaler]

... the declining profitability of mining hardware which will force more coins to flow into exchanges ...

I'm certainly don't want to imply that anything else you said made sense, but this is particularly incomprehensible to me. Miners will not sell coins unprofitably.  They will hoard them until they are profitable.  A miner who did otherwise would be bankrupt very quickly, and thus forced out of mining, in a word, non-miners.  I'm quite convinced that Impaler is not a miner.  If you were, you would quickly become a bankrupt non-miner.  I am a miner.  I hoard until my gains allow me to multiply the size of my mining operation.  In this way, I am constantly iterating to higher and higher cashflows.

Considering that you yourself posted in the thread in which that theory was presented by me and positively received by a number of people

https://bitcointalk.org/index.php?topic=414657.0

your incredulity is surprising.  I am indeed not a miner, I am an observer of miners and a student of macro-economics which puts me in a better position to predict the overall trends then an individual miner who thinks micro-economically.  First you confuse 'declining profitability' with 'unprofitable', as you said the unprofitable miner ceases to mine and the miners as a whole stay profitable but JUST BARELY.  And just barely profitable miners still have costs that need to be paid, so the percentage of your daily take that can be hoarded declines.  It is as simple as that.

[fonzie]

Very good analysis Mat, I'd like to voice my speculation on WHO the manipulators are and WHY they act as they do.

First off WHO, the simple answer is 'deeper pocketed versions of the same zealots who have been railing against you in this thread', I know this seams almost anti-climactic doesn't it.  You normally think of manipulation as being done by people who are fundamentally different from the 'small fry' both in the depth of their pockets AND a more 'predatory' nature.  We don't expect manipulators to be delusional zealots but in BTC I think they are.  First off we know for sure the big holders of BTC are early adopters who drank the kool-aid very early, these folks have now accumulated sums of USD in the several million range (all still on exchanges mind you) and they thus have leverage on both sides to control the price.  'New' investors might come in with huge sums of USD but they can never match the BTC holdings of the early adopters so they can't do the kind of narrow-holding range manipulation your seeing, they can only cause a price spike as China effectively did when it entered the market.

And the WHY should be evident from some of the posts earlier, the manipulators feel they are 'saving' BTC from the evil forces of the Persian Army  THIS IS BITCOIN!!!  HODL!!!!!  This meme is very telling, we see that people equate the price of BTC with the success of BTC, this view is reinforced by the detractors that call BTC a bubble.  If the supporters 'HODL' the price up high enough then they are 'right' about BTC and everyone else is wrong, and most importantly their Libertarian wold-view is right and everyone else is wrong.  And these people see libertarian/Austrian economic theory as something that needs to be promoted and defended at any cost.  All of this is to ultimately as you said yourself fell that this is the "result of something inherently great about themselves", an ego trip that completely validates their political beliefs and ideologies.

Now what dose this mean for the long run price, are they preparing to crash the market some day and leave the rest of us holding the bag.  NO!!  These people will WILLINGLY go down with the ship if BTC ever finally tanks, nigh they would flaunt their martyrdom saying they 'lost everything because they had FAITH and held to the end, if only the wretched weak-handed fools had not crashed the price of BTC we could have defeated the evil gobermint and the FED and the USD and ushered in a libertarian Ann Randtopia!!!  The know that a fast-crash attempt to empty the exchanges and exist with the USD will net at most a ~40 million in exchange CREDITS which have very little chance of actually being redeemed for real USD at that scale, indeed most of the credits are on Gox which may not even be solvent and which will de-facto force them to put thouse credits back into the market, so for the whales BTC is like a tuna-net in the ocean, they can swim around and seem liquid but are really quite constrained, they realized their BTC AND exchange-credit wealth is illiquid and they like it that way, weakness should be PUNISHED not rewarded after-all (I wouldn't be the least surprised if their are intentional retaliations against anyone who breaks ranks and tries to cash-out).  So they are happy to just get a trickle of USD as they so very slowly sell, it's still enough for them to practically live off and it's more then they deserve anyways so why not keep this whole BTC thing going as long as possible, when it looks like 'stability' is what is needed then they create stability until it looks like another crop of new adopters is ready to be lured in, to them BTC is like that Spartan army doing a simple 'charge', 'fallback (as little as possible) and 'hold' pattern, claiming 'ground' is the goal and ground is measured in exchange rates.

The question is now, can they keep this up?  And for how long?  I think it will eventually break them, the waning availability of new suckers, the exodus of China, and the declining profitability of mining hardware which will force more coins to flow into exchanges will exert enough pressure to break out of this ~850 band and bring a correction down to a more sustainable level.  Sustainable here simply meaning how much actual USD per day that libertarians can find out of their own pockets to throw at buying up the ~5k new BTCs per day that come into existence.  This should not be confused with the LONG term sustainability issue which involve a whole slew of legal and economic factors beyond the scope of just throwing USD purchases at BTC.  But for the short and mid term I feel we will see corrections in which small fry run for the doors but whales do not.

+1

I have seen so many "cultish" beaviour here on the board in the last time, that really worries me most about BTC. Like only true "believers" hold and will be rewarded (coz it might jump to 10000$ in 3 seconds, and nobody should miss the train. Also all the requests that everyone should immediately tell his friends that they should invest money, right now, coz it´s 100% that it´s goin to .. whatever. Most of them don´t see the slightest possibility that it possibly might not go up forever in this rate. All of the bad news are easily turned into good news, in fact every news is good news that show that Bitcoin will 100% go to the moon very soon. Everyone who is not overall positive for the Bitcoin technology itself or it´s actual price is an enemy and liar that must be fought, an idiot and what else. Altough it´s common sense that those enemies will not be able to surpess the rise to the moon, they can at best only delay it. So every true Bitcoiner should missionize as many new so far uninvolved peopele(and their money) as possible, so that they will be able to "see the light" .

Join the Cult!






Btw i am an early adopter and used BTC first about more than 2 years ago and can see some positive advantages of the BTC technology, but i´m still scared of this behavior.

Kill the naysayers!!!

[Ibian]

Didn't even get through two paragraphs of your shit Impaler. Why is it so hard to avoid getting personal? Whatever validity your arguments might have, nobody cares when you present it that way.

[qbits]

Very good analysis Mat, I'd like to voice my speculation on WHO the manipulators are and WHY they act as they do.

First off WHO, the simple answer is 'deeper pocketed versions of the same zealots who have been railing against you in this thread', I know this seams almost anti-climactic doesn't it.  You normally think of manipulation as being done by people who are fundamentally different from the 'small fry' both in the depth of their pockets AND a more 'predatory' nature.  We don't expect manipulators to be delusional zealots but in BTC I think they are.  First off we know for sure the big holders of BTC are early adopters who drank the kool-aid very early, these folks have now accumulated sums of USD in the several million range (all still on exchanges mind you) and they thus have leverage on both sides to control the price.  'New' investors might come in with huge sums of USD but they can never match the BTC holdings of the early adopters so they can't do the kind of narrow-holding range manipulation your seeing, they can only cause a price spike as China effectively did when it entered the market.

And the WHY should be evident from some of the posts earlier, the manipulators feel they are 'saving' BTC from the evil forces of the Persian Army  THIS IS BITCOIN!!!  HODL!!!!!  This meme is very telling, we see that people equate the price of BTC with the success of BTC, this view is reinforced by the detractors that call BTC a bubble.  If the supporters 'HODL' the price up high enough then they are 'right' about BTC and everyone else is wrong, and most importantly their Libertarian wold-view is right and everyone else is wrong.  And these people see libertarian/Austrian economic theory as something that needs to be promoted and defended at any cost.  All of this is to ultimately as you said yourself fell that this is the "result of something inherently great about themselves", an ego trip that completely validates their political beliefs and ideologies.

Now what dose this mean for the long run price, are they preparing to crash the market some day and leave the rest of us holding the bag.  NO!!  These people will WILLINGLY go down with the ship if BTC ever finally tanks, nigh they would flaunt their martyrdom saying they 'lost everything because they had FAITH and held to the end, if only the wretched weak-handed fools had not crashed the price of BTC we could have defeated the evil gobermint and the FED and the USD and ushered in a libertarian Ann Randtopia!!!  The know that a fast-crash attempt to empty the exchanges and exist with the USD will net at most a ~40 million in exchange CREDITS which have very little chance of actually being redeemed for real USD at that scale, indeed most of the credits are on Gox which may not even be solvent and which will de-facto force them to put thouse credits back into the market, so for the whales BTC is like a tuna-net in the ocean, they can swim around and seem liquid but are really quite constrained, they realized their BTC AND exchange-credit wealth is illiquid and they like it that way, weakness should be PUNISHED not rewarded after-all (I wouldn't be the least surprised if their are intentional retaliations against anyone who breaks ranks and tries to cash-out).  So they are happy to just get a trickle of USD as they so very slowly sell, it's still enough for them to practically live off and it's more then they deserve anyways so why not keep this whole BTC thing going as long as possible, when it looks like 'stability' is what is needed then they create stability until it looks like another crop of new adopters is ready to be lured in, to them BTC is like that Spartan army doing a simple 'charge', 'fallback (as little as possible) and 'hold' pattern, claiming 'ground' is the goal and ground is measured in exchange rates.

The question is now, can they keep this up?  And for how long?  I think it will eventually break them, the waning availability of new suckers, the exodus of China, and the declining profitability of mining hardware which will force more coins to flow into exchanges will exert enough pressure to break out of this ~850 band and bring a correction down to a more sustainable level.  Sustainable here simply meaning how much actual USD per day that libertarians can find out of their own pockets to throw at buying up the ~5k new BTCs per day that come into existence.  This should not be confused with the LONG term sustainability issue which involve a whole slew of legal and economic factors beyond the scope of just throwing USD purchases at BTC.  But for the short and mid term I feel we will see corrections in which small fry run for the doors but whales do not.

+1

I have seen so many "cultish" beaviour here on the board in the last time, that really worries me most about BTC. Like only true "believers" hold and will be rewarded (coz it might jump to 10000$ in 3 seconds, and nobody should miss the train. Also all the requests that everyone should immediately tell his friends that they should invest money, right now, coz it´s 100% that it´s goin to .. whatever. Most of them don´t see the slightest possibility that it possibly might not go up forever in this rate. All of the bad news are easily turned into good news, in fact every news is good news that show that Bitcoin will 100% go to the moon very soon. Everyone who is not overall positive for the Bitcoin technology itself or it´s actual price is an enemy and liar that must be fought, an idiot and what else. Altough it´s common sense that those enemies will not be able to surpess the rise to the moon, they can at best only delay it. So every true Bitcoiner should missionize as many new so far uninvolved peopele(and their money) as possible, so that they will be able to "see the light" .

Join the Cult!

Kill the naysayers!!!

+1 +1 +1 +1 +1 +1 +1 +1

p.s. btw the original meaning of the word "idiot" (http://en.wikipedia.org/wiki/Idiot) describes a person who is concerned with his own private affairs only. So an "idiot" does not vote, does not post on bitcointalk and is in general, and I quote from wikipedia, an "uneducated or ignorant person". All of which demonstratively you are not. But "infidel" you are

p.p.s. "To the moon!"

[T.Stuart]

+1 +1 +1 +1 +1 +1 +1 +1

p.s. btw the original meaning of the word "idiot" (http://en.wikipedia.org/wiki/Idiot) describes a person who is concerned with his own private affairs only. So an "idiot" does not vote, does not post on bitcointalk and is in general, and I quote from wikipedia, an "uneducated or ignorant person". All of which demonstratively you are not. But "infidel" you are

p.p.s. "To the moon!"

Interesting, as I always suspected that people who need to quote the almighty Wikipedia rather than being able to rely on their own brains come across as idiots! 

[MatTheCat]

I'd like to voice my speculation on WHO the manipulators are and WHY they act as they do.

What can I say. That was probably one of the most eye-opening things I have ever read on here. The early Bitcoin adopters were not cut-throat pirate financiers who like to drink babies' blood at the weekends on a full moon. They were wild-eyed libertarian zealots such as sgbett who have seriously lucked out. I made a 'near term price prediction' thread when Bitcoin was hovering at 790, telling people to go long Bitcoin, then short at 815-820 range. Bitcoin then done exactly as I predicted, at which point sgbett jumped into the thread and had a rant at my day-trading antics telling me that I should just be buying as many Bitcoins as I possibly can at these prices cos Bitcoin is going to $10K. Someone who bought Bitcoin at $1, getting ratty at someone successfully day-trading Bitcoin and demanding that the daytrader buy as many Bitcoins as he can, at $800!!

Very telling!

I thought that perhaps he had ran into the blatant bulltrap. Perhaps it is more that fact that him and a few of his cronies set-up the bulltrap, that absolutely nobody walked into and are now a few Bitcoins/USD shorter than they were before. It took a volume of about 5000 BTC (on Bistampt) to ramp bitcoin from 790 - 817, yet just 500 BTC to bring it back down to 795. I don't believe for a minute that fresh capital is what caused Bitcoin to surge up from 790. It was USD from existing whales, trying to kickstart market. Joe Bloggs proved he wasn't so stupid to fall for it when we got up to the huge ask walls at the £820 range. Absolutely zero interest whatsoever.

The zealot theory as opposed to my financial shark theory could also explain the huge stage managed cash-outs being triggered as a result of the engineered frustration of free market price discovery. The whales need ammunition (USD) to throw at coming battles below.

In reality, there will be both sharks and zealots and all other kinds of political implications and interests at work in the higher echelons of Bitcoin or affecting Bitcoin. One thing is clear, is that the public interest in Bitcoin is dead for now. All that is going to prevent Bitcoin from tanking from these wildly overinflated prices achieved on relatively very low volume, is a prevailing of the HODL mentality amongst the well heeled Bitcoin classes. But there is just one problem with that. China.

I would also surmise that if Wall St capital is preparing to get into Bitcoin (a big IF), then those market players will do whatever they can to bring the Bitcoin price down as much as they can so they can take an as proficient an entry as they possibly can......cos that is what they do. It is their job. I wouldnt be surprised if we see a Bitcoin slaughter so big, that it causes even the fattest most zealous whales to squeel and drop a shit ton of coin into Wall St koffers.

[T.Stuart]

I wouldnt be surprised if we see a Bitcoin slaughter so big, that it causes even the fattest most zealous whales to squeel and drop a shit ton of coin into Wall St koffers.

I think you underestimate the hardened nerves of experienced Bitcoiners. Over the past three years the market has been up and down with swings and doomsday scenarios massively bigger than most Wall Streeters have ever seen. This experience counts for something you know, even among people without experience of financial markets, stocks, etc. (probably more so among this demographic actually).

[oda.krell]

You know, somehow I can tolerate Mat's doom & gloom brand of bearism... at least he has some skin in the game in a way most bears rarely do, he's actively shorting. I appreciate the drama around that, if not his analysis.

But you, Impaler...

your incredulity is surprising.  I am indeed not a miner, I am an observer of miners and a student of macro-economics which puts me in a better position to predict the overall trends then an individual miner who thinks micro-economically.  First you confuse 'declining profitability' with 'unprofitable', as you said the unprofitable miner ceases to mine and the miners as a whole stay profitable but JUST BARELY.  And just barely profitable miners still have costs that need to be paid, so the percentage of your daily take that can be hoarded declines.  It is as simple as that.

You just sound like a pompous prick when you put on that bear suit.

I remember the last discussion we had about this topic.  August 7th, in one of chodpaba's threads. Price had dipped slightly below 100 again these days (on bitstamp), and based on the same "I have a deep insight into the psychology of miners" bullshit argument, you predicted, what?, going back to 50? Something like that. You recommended fucking shorting, in fact, a few days before a trend that took us from ~100 to ~1200.

I'm sure you will forgive me if I'm not exactly reading your analysis based on miners' sales/hoarding strategies with the utmost reverence.

[oda.krell]

Double post. 'cause I got another nugget of wisdom for you guys.

All those walls of text about manipulation here and miner profitability there and how it all can only mean one thing: DOWN DOWN DOWN, or the bullish alternative: buy back now or the CHOO CHOO leaves without you... they're just noise. They miss one insight I recommend hammering into your brain, mantra like, until you *get* it...

What we've seen for the past 3 odd years follows one simple rule:

For the bootstrapping phase of a global, peer-to-peer {reserve currency, store of wealth, payment system} USD/BTC necessarily looks the way it does;

The way USD/BTC looks is not sufficient to guarantee the success of this becoming a global, peer-to-peer {reserve currency, store of wealth, payment system}.

That is all. If you convinced yourself of the above, many of your little nervous breakdowns will simply go away. You can still daytrade if that's what you do best, you can buy & hold (which means you bet on the long term success as described above), or you can close your positions and leave (if you have serious doubts about the success of Bitcoin in the fields described above). But you probably won't look at each minor swing and see dark forces at work pulling string at the expense of the "small guy", whether it's pulling price up or pushing it down.

In reality, this is what one of the most amazing social experiments during my lifetime looks like, in which a plethora of market forces attempt to participate in the experiment in order to fulfill their own highest ranked desire (idealism, greed, curiosity). It couldn't be any other way.

[T.Stuart]

Double post. 'cause I got another nugget of wisdom for you guys.

All those walls of text about manipulation here and miner profitability there and how it all can only mean one thing: DOWN DOWN DOWN, or the bullish alternative: buy back now or the CHOO CHOO leaves without you... they're just noise. They miss one insight I recommend hammering into your brain, mantra like, until you *get* it...

What we've seen for the past 3 odd years follows one simple rule:

For the bootstrapping phase of a global, peer-to-peer {reserve currency, store of wealth, payment system} USD/BTC necessarily looks the way it does;

The way USD/BTC looks is not sufficient to guarantee the success of this becoming a global, peer-to-peer {reserve currency, store of wealth, payment system}.

That is all. If you convinced yourself of the above, many of your little nervous breakdowns will simply go away. You can still daytrade if that's what you do best, you can buy & hold (which means you bet on the long term success as described above), or you can close your positions and leave (if you have serious doubts about the success of Bitcoin in the fields described above). But you probably won't look at each minor swing and see dark forces at work pulling string at the expense of the "small guy", whether it's pulling price up or pushing it down.

In reality, this is what one of the most amazing social experiments during my lifetime looks like, in which a plethora of market forces attempt to participate in the experiment in order to fulfill their own highest ranked desire (idealism, greed, curiosity). It couldn't be any other way.

I agree wholeheartedly. But I reserve the right to get excited and yell "CHOO CHOO!" during rallies!  

[threecats]

Double post. 'cause I got another nugget of wisdom for you guys.

All those walls of text about manipulation here and miner profitability there and how it all can only mean one thing: DOWN DOWN DOWN, or the bullish alternative: buy back now or the CHOO CHOO leaves without you... they're just noise. They miss one insight I recommend hammering into your brain, mantra like, until you *get* it...

What we've seen for the past 3 odd years follows one simple rule:

For the bootstrapping phase of a global, peer-to-peer {reserve currency, store of wealth, payment system} USD/BTC necessarily looks the way it does;

The way USD/BTC looks is not sufficient to guarantee the success of this becoming a global, peer-to-peer {reserve currency, store of wealth, payment system}.

That is all. If you convinced yourself of the above, many of your little nervous breakdowns will simply go away. You can still daytrade if that's what you do best, you can buy & hold (which means you bet on the long term success as described above), or you can close your positions and leave (if you have serious doubts about the success of Bitcoin in the fields described above). But you probably won't look at each minor swing and see dark forces at work pulling string at the expense of the "small guy", whether it's pulling price up or pushing it down.

In reality, this is what one of the most amazing social experiments during my lifetime looks like, in which a plethora of market forces attempt to participate in the experiment in order to fulfill their own highest ranked desire (idealism, greed, curiosity). It couldn't be any other way.

Great post.

[proudhon]

Very good analysis Mat, I'd like to voice my speculation on WHO the manipulators are and WHY they act as they do.

First off WHO, the simple answer is 'deeper pocketed versions of the same zealots who have been railing against you in this thread', I know this seams almost anti-climactic doesn't it.  You normally think of manipulation as being done by people who are fundamentally different from the 'small fry' both in the depth of their pockets AND a more 'predatory' nature.  We don't expect manipulators to be delusional zealots but in BTC I think they are.  First off we know for sure the big holders of BTC are early adopters who drank the kool-aid very early, these folks have now accumulated sums of USD in the several million range (all still on exchanges mind you) and they thus have leverage on both sides to control the price.  'New' investors might come in with huge sums of USD but they can never match the BTC holdings of the early adopters so they can't do the kind of narrow-holding range manipulation your seeing, they can only cause a price spike as China effectively did when it entered the market.

And the WHY should be evident from some of the posts earlier, the manipulators feel they are 'saving' BTC from the evil forces of the Persian Army  THIS IS BITCOIN!!!  HODL!!!!!  This meme is very telling, we see that people equate the price of BTC with the success of BTC, this view is reinforced by the detractors that call BTC a bubble.  If the supporters 'HODL' the price up high enough then they are 'right' about BTC and everyone else is wrong, and most importantly their Libertarian wold-view is right and everyone else is wrong.  And these people see libertarian/Austrian economic theory as something that needs to be promoted and defended at any cost.  All of this is to ultimately as you said yourself fell that this is the "result of something inherently great about themselves", an ego trip that completely validates their political beliefs and ideologies.

Now what dose this mean for the long run price, are they preparing to crash the market some day and leave the rest of us holding the bag.  NO!!  These people will WILLINGLY go down with the ship if BTC ever finally tanks, nigh they would flaunt their martyrdom saying they 'lost everything because they had FAITH and held to the end, if only the wretched weak-handed fools had not crashed the price of BTC we could have defeated the evil gobermint and the FED and the USD and ushered in a libertarian Ann Randtopia!!!  The know that a fast-crash attempt to empty the exchanges and exist with the USD will net at most a ~40 million in exchange CREDITS which have very little chance of actually being redeemed for real USD at that scale, indeed most of the credits are on Gox which may not even be solvent and which will de-facto force them to put thouse credits back into the market, so for the whales BTC is like a tuna-net in the ocean, they can swim around and seem liquid but are really quite constrained, they realized their BTC AND exchange-credit wealth is illiquid and they like it that way, weakness should be PUNISHED not rewarded after-all (I wouldn't be the least surprised if their are intentional retaliations against anyone who breaks ranks and tries to cash-out).  So they are happy to just get a trickle of USD as they so very slowly sell, it's still enough for them to practically live off and it's more then they deserve anyways so why not keep this whole BTC thing going as long as possible, when it looks like 'stability' is what is needed then they create stability until it looks like another crop of new adopters is ready to be lured in, to them BTC is like that Spartan army doing a simple 'charge', 'fallback (as little as possible) and 'hold' pattern, claiming 'ground' is the goal and ground is measured in exchange rates.

The question is now, can they keep this up?  And for how long?  I think it will eventually break them, the waning availability of new suckers, the exodus of China, and the declining profitability of mining hardware which will force more coins to flow into exchanges will exert enough pressure to break out of this ~850 band and bring a correction down to a more sustainable level.  Sustainable here simply meaning how much actual USD per day that libertarians can find out of their own pockets to throw at buying up the ~5k new BTCs per day that come into existence.  This should not be confused with the LONG term sustainability issue which involve a whole slew of legal and economic factors beyond the scope of just throwing USD purchases at BTC.  But for the short and mid term I feel we will see corrections in which small fry run for the doors but whales do not.

I've checked all the sources and this is confirmed.  Additionally, I believe this to be one of the most inspiring market discourses of this decade.  This should be required reading for anyone interested in bitcoin.

[aminorex]

For the bootstrapping phase of a global, peer-to-peer {reserve currency, store of wealth, payment system} USD/BTC necessarily looks the way it does;

The way USD/BTC looks is not sufficient to guarantee the success of this becoming a global, peer-to-peer {reserve currency, store of wealth, payment system}.

Essentially and importantly true.  Worthy of deeper discussion, on both the necessity and sufficiency sides.

Clearly you don't mean this specific chart is necessary, but rather a chart conforming to the necessary conditions.   Knowing what those were would suffice to detect when they fail.  Similarly, clearly identifying the sufficient conditions would enable one to determine whether they were present.  I'm not going to contribute to such a discussion presently, but I hope the value of it is clear, and that this clarity motivates thought.

[aminorex]

I am still hoping for someone to explain what chexit actually means, though.  If you can't defend it, and you don't stop using it, you're going to look like a disingenuous person, a liar even.

[oda.krell]

For the bootstrapping phase of a global, peer-to-peer {reserve currency, store of wealth, payment system} USD/BTC necessarily looks the way it does;

The way USD/BTC looks is not sufficient to guarantee the success of this becoming a global, peer-to-peer {reserve currency, store of wealth, payment system}.

Essentially and importantly true.  Worthy of deeper discussion, on both the necessity and sufficiency sides.

Clearly you don't mean this specific chart is necessary , but rather a chart conforming to the necessary conditions.   Knowing what those were would suffice to detect when they fail.  Similarly, clearly identifying the sufficient conditions would enable one to determine whether they were present.  I'm not going to contribute to such a discussion presently, but I hope the value of it is clear, and that this clarity motivates thought.

True. The exact graph we see isn't the only one possible, but a number of underlying conditions generating the price are, so any version of it would probably be equally exciting /infuriating /paranoia provoking.

[billyjoeallen]

You call us zealots? We are zealots exactly the was Sir Francis Bacon was a zealot about the scientific method. He said it that simple idea would change the world dramatically for the better and most people thought he was off his rocker, but he was absolutely right and history validated that. Praxeology will do to economics what empirical skepticism has done for the physical sciences. Bitcoin may not become the world's reserve currency, but some cryptocurrency eventually will. It's the algorithm that's revolutionary and it's bitcoin that's proving it.
if BTC eventually drops below $100/BTC agian, I may consider the possibility that I was wrong, but not before that.

We weren't lucky. We made a bet with our own hard-earned money that what we believed in was right. We did this when almost all our families, friends and colleagues ridiculed us, discouraged us, and tried to convince us anyway they could that we were making a huge mistake. We fucking deserve it if we become fabulously wealthy. Now I'm not arrogant enough to believe that I know everything, so after bitcoin went 100X my buy-in, I pulled my original investment out so I'm only playing with house money now, but I'm sitting on a small paper fortune and I'm letting it ride. Sure, I do what I can do to reduce volatility, but I have an economic as well as an ideological reason for doing so. Satoshi got the incentives right, and so far all I have heard from you is more of the same poopooing I heard three years ago at $3/BTC. If I didn't listen to such sour grapes then, I sure as hell won't listen to it now. Time will tell who's right. 

Whether or not Bitcoin succeeds, this was an experiment worth doing. We will all learn from the results, unless you wanna bash the scientific method also. But these days, the cranks are the ones on the other side of that issue.