simple numbers

[slowlyslowly]

Hi

there are many graphs around showing the volatility of bitcoin - many are almost mesmerising.
I like simple numbers/charts so have created the one below.
It highlights the volatility and how short a time span it has all happened in.

Note I have arbitrarily selected day 1 as the price reaching $250 as I assume if you bought/mined above that you have a lot more exposure to what is going on than say $25 - it also fits with being the last 100 days ( more or less).

 

DAY   PRICE   LAST DAY SINCE DAY 1 AT THIS PRICE
1   250   never
28   1147   never
42   522   DAY 11
60   940   DAY 34
100   656   DAY 48

Hope its useful to someone else

[keithers]

Im trying to understand what your graph is saying. Are you stating the # of days that the value was at that specific price?

[slowlyslowly]

It is to be read as follows

1. Today the price is $656
2. Going back just 100 days from today (called day 1) the price was $250 and in the 100 days since, the price has never gone back down to this price.
3. Just 28 days after being $250 it hit $1147 and in the 100 day period the price has never hit this high again.
4. Just 14 days later (day 42) it was down to $522 - and it has been there before - on day 11 (31 days earlier)
5. Just 18 days later (day 60) it was as high as $940  -  and it has been there before - on day 34 (26 days earlier)
6. 40 days later (day 100) the price is $656  - and it has been there before - on day 48 (52 days earlier)

Summary:
1. if you bought 100 days ago even if you sold on a very bad day for you  (ie a price at $522) you more than doubled your money (up 100%+).
2. if you bought in when you saw it going up quickly after it went through the $250 mark and even if you paid up to $522 and sold on the worst day the outcome was your money back. The best outcome was to have sold at the peak and roughly doubled your money. if you have not sold and sell today you are going to make about a 20% gain.
3. if you bought in well above $522 ( say $700) and have sold you will probably lost money as it is likely you saw the $1147 as just the beginning of much larger rises and did not sell then. Obviously if you have not sold earlier and did so today you are going to sell at a loss.

So;
If people are thinking of speculating on bitcoin at the current price of $656 based on the lessons from the last 100 days they would be very brave indeed.

My 2 cents would be _ Sure it may go to $10,000 like some believers think it - so buy 3 bitcoins as I am sure you could do with $30,000 . And if you only had 3 and it tanks to say $20 you are only out of pocket by $1800 which you hopefully could live with.

But spend no serious money.

Just do nothing else and review in another 100 days. Expect the answer in another 100 days will be again wait another 100 days. The volatility may take some time to settle. Further new speculators not entering the market should be good for their own financial health and good for bitcoin as the focus should be on its use not its short term gains (or losses) from speculating.

[grifferz]

I'm extremely sceptical that it's worth relying on these numbers when there are so many huge factors dominating bitcoin today.

For example, so much of bitcoin's volume, press and mind-share is tied up in the MtGox vortex of failure. MtGox does something newsworthy (in any respect) and the price skews wildly. At best the only people who can predict that are MtGox.

Next up you've got the protocol itself. The statistical methods you're using might work for fiat markets which are most of the time fairly rational. It's extremely rare that any problem is discovered in the "protocol" of fiat. But it's inevitable that there will be further bugs found in bitcoin, or further issues which were thought trivial yet become of major concern when an Internet full of trolls is added to the mix.

So, I'm glad you posted this as it was an interesting read, but I do think that everyone needs to stop short of the "therefore, you should do this…" point. Because honestly I don't think anyone can be particularly confident!

[slowlyslowly]

hi grifferz

agree with what you about the future ie in the next 100 days - the issues bitcoin face will be different to the last 100 days. But if people could not pick the issues nor when and how they effected the price last time it is unlikely they are going to do so next time. In fact some issues if they come in the next 100 days (eg the beginnings of regulation etc) could really hit the price or equally a competitor (eg paypal) aligning itself for a bitcoin could really boost it.

So its likely to be volatile again and since the only history of bitoin we have is in that chart which says that if you buy in at say $200 you do well and $500 you sort of just hold on then that makes $600 odd seem not an ideal price to buy in at. Agree with you though others with higher risk thresholds will see it differently. Good luck to them if they make money.

[keithers]

One thing worth noting is that a lot of the bad news that has rolled out lately seems to be worse news than things such as silk road 1 shutting down, and the downswing caused by the current bad news is less than that of before.   This shows that despite bitcoin values going down recently, it is still growing in resilience. 

We are just in a rough patch, but I have no doubt that we will be on the upswing again over the next 1-2 months..