Log Chartists

[N12]

Can you draw me a long-term trendline up?

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[proudhon]

Prices just need to stay in that trend channel there.  More seriously, sorry Blitz, I wish things had turned out differently, but it's clear enough to me at this point where this is going.

[netrin]

Prices went far above the long term channel in May and have crossed below in September. That doesn't in anyway detract from the asserted superiority of log charts over linear charts when discussing trends.

[Explodicle]

This talk of a "long-term channel" is all bunk.

Clearly, there are two things going on. For a good look at what the long-term history of bitcoin is, go to bitcoincharts, get the mt. gox data on a log chart with just the 30-day average. Bitcoin is inflating, so with a steady interest/adoption, the price goes down assyptotically aproaching a fundemental value. As more people adopt bitcoin, that fundemental value goes up. There have been waves of bitcoin adoption, each pushing the value up onto a higher curve which it follows downward. As time goes on, the rate of inflation lowers, so we should see the downward curve leveling off, and future price moves will be more determined by interest/adoption, rather than the inflation.

+1

I just hope when the price bottoms out at whatever and starts to grow, it does so in a more gradual manner than the June bubble. I think now a lot more people KNOW about Bitcoin but are steering clear until the dust settles. If we're lucky, speculators who wish they had cashed out at $30 will be less patient and just sell sooner, unwilling to wait until the next cycle.

[netrin]

There is no relationship between the volatility & adoption rate and monetary inflation. With 7.2K coins generated each day into the current 7.2M supply, the depreciation pressure (mining rate) should be 0.1% daily. Since June we've experienced 1.3% average daily depreciation, with 50% swings not uncommon. Demand can and has easily absorbed supply and we can hope it will eventually decrease volatility.

[Technomage]

There is no relationship between the volatility & adoption rate and monetary inflation. With 7.2K coins generated each day into the current 7.2M supply, the depreciation pressure (mining rate) should be 0.1% daily. Since June we've experienced 1.3% average daily depreciation, with 50% swings not uncommon. Demand can and has easily absorbed supply and we can hope it will eventually decrease volatility.

Indeed. Demand is everything. The lower we go the less $ demand is needed to sustain that particular price. And it's also clear to me, just like Explodicle said, that the next "bubble" won't be quite like the last one. It'll be more back and forth in the short term, but less volatile in the mid term and long term.

But I do think that a new significant uptrend won't form based on nothing. There needs to be real achievements to build expectations on, we've pretty much exhausted all the potential we can possibly get from pure hype.

[BitMagic]

This talk of a "long-term channel" is all bunk.

Clearly, there are two things going on. For a good look at what the long-term history of bitcoin is, go to bitcoincharts, get the mt. gox data on a log chart with just the 30-day average. Bitcoin is inflating, so with a steady interest/adoption, the price goes down assyptotically aproaching a fundemental value. As more people adopt bitcoin, that fundemental value goes up. There have been waves of bitcoin adoption, each pushing the value up onto a higher curve which it follows downward. As time goes on, the rate of inflation lowers, so we should see the downward curve leveling off, and future price moves will be more determined by interest/adoption, rather than the inflation.

Your "waves" of bitcoin adoption were based mostly on speculative interests. If you're looking for fundamental value, you have to discount the speculative aspect that will follow any and all price fluctuations more fervently than dyed-in-the-wool interests in BTC usefulness.

The last people standing will not be fundamentals. They will be speculators (think big, Bitcoinica). That is what is propping up BTC demand. When MtGox tanks, say goodbye.

[netrin]

Really? I expect the next bubble will be enormous. The previous bubble grew roughly ten times higher in price, three times longer in time, and a hundred times greater in volume than its previous bubbles last year. The June bubble was entirely in the geek community. With mobile phones, easier conversion between fiat, the next bubble could be mainstream. You will hear well justified explanations why "this time is different" but we early adopters will be just a bit smarter as were those who've been around since 2010 or earlier.

[BitMagic]

Really? I expect the next bubble will be enormous.

I think you're overestimating most people's stupidity. The composition of the last bubble was not just geeks, it was anyone with the basic tech to follow a guide on how to get BTC. It was people who either didn't understand the true risks of BTC (hacks, theft, scams, above and beyond just volatility), or people who did and love high-risk gambling (me). The former are gone and will not come back, and there will be no more adoption until regulation and reassurance that some asshole already convicted of mortgage fraud isn't collecting coins for a "project" that will never be realized. This will never happen, because some large degree of market cap is necessary to initiate any kind of regulatory pressure. Chicken and egg in the negative direction.

Look at the world you're living in: there are "businesses" advertising that they are ponzi schemes. I don't understand how you all can miss this, log chart trends or not.

[netrin]

I think you're underestimating the former number of people who do not understand the true risks of BTC. I really don't care if there are numerous lottos, ponzi schemes, and hacks. There are now a bunch of exchanges that have built trust. It's great that ExchB has said "hey guys, we can't compete, you'll get all your money back." Granted if Gox or TH run off with our money, it would be devastating, but still not insurmountable eventually.

I believe it is possible that one day Mum will ask "Sonny, have you heard of bitchipz?" and then I'll buy. When she says "I want to invest in bitchipz" then I'll sell again.

[dancupid]

We need to drop the log - splash and flush

[BitMagic]

I think you're underestimating the former number of people who do not understand the true risks of BTC.

In fact, I am not. I'm sure it was massive. But past tense doesn't stay in the past in this case. People remember that their money is not safe in BTC. People read and hear about all the shady crap going down. It's a losing PR battle, and without easy transaction tools because of their failure, there is no confidence to support use.

You must have confidence. You may be the last man standing.

[Explodicle]

Right now, IMHO, the main reason to use Bitcoin is its "anonymity". Lots of Silk Road, probably some money laundering and such. Sure we have idealists who do business in Bitcoin just because, but they are a minority.

[WILD speculation follows]

The next big bubble will be when other features are better used. For example, Bitcoin's low transaction costs have the potential to enable Coasian externality resolution, to succeed where the state currently struggles. Farmers would more efficiently reimburse beekeepers, polluters would be effectively forced to reimburse local neighborhoods, and released gang leaders would have to convince their ACTUAL peers that their life of violence was behind them.

That kind of social empowerment might be very attractive to people. We're close to achieving the technology for this already, and it would render many government functions obsolete.

But maybe this post belongs more in "Politics and Society", I could be projecting my own ideas on to the public at large.  

[netrin]

I'm hardly standing. I have come to believe the crotchety old Austrian economists who unwaveringly require that money must first be a physical commodity with inherent value. The secure, encrypted, semi-anonymous, non-reversible transaction service has value but little scarcity. Bitcoin is currently an unreliable store of value and unit of account.

However, I don't believe the exchange price will go down very much. Perhaps $.5, maybe even $0.1, but it will bottom out to the point where owners of bitcoin don't care any more what price it is, when the only trades on the exchange are for those who buy in, transfer, buy out. For me, that's anywhere under $1. I know there are a lot of people for whom the price of a bitcoin is irrelevant, a delightful June surprise but no more.

[BitMagic]

Bitcoin's low transaction costs have the potential to enable Coasian externality resolution, to succeed where the state currently struggles.

There is nothing inherent in BTCs "low transaction costs" (i.e. skipping physical exchange costs, finding buyers, etc.) that solves the tragedy of the commons. You have to be joking.

it will bottom out to the point where owners of bitcoin don't care any more what price it is, when the only trades on the exchange are for those who buy in, transfer, buy out.

You have to be smart enough to realize that any point at which people "don't care about" its value means it's literally worthless. You can't have a medium of exchange without people caring about its value. Right now, that value is represented by its exchange value for USD (wildly fluctuating). Until BTC is what you get paid in, and pay your taxes in, it will always be represented by USD/BTC ratio. And that has more opportunity to tank to 0 before any real adoption.

I will laugh in a year when there is nothing left, and you can reflect on this and reorient your expectations for the future like the rest.

[ElectricMucus]

I can probably construct a log trendline with an uptrend as long as it is up at all if I use another number base  

But yeah the traditional log10 chart line which we were so proud of is now practically broken... I admit that.

[dree12]

I can probably construct a log trendline with an uptrend as long as it is up at all if I use another number base  

But yeah the traditional log10 chart line which we were so proud of is now practically broken... I admit that.

There isn't a mathematical difference between bases, unless you use a complex one (in which negative values could be in theory selected, preserving an uptrend by flipping the graph). To understand this better, realize that b^mn = (b^m)ⁿ.

[RandyFolds]

Log shartists...hehehe.

[Explodicle]

Bitcoin's low transaction costs have the potential to enable Coasian externality resolution, to succeed where the state currently struggles.

There is nothing inherent in BTCs "low transaction costs" (i.e. skipping physical exchange costs, finding buyers, etc.) that solves the tragedy of the commons. You have to be joking.

(This is a tangent)

http://en.wikipedia.org/wiki/Coase_theorem

For example, let's say we create a prediction market for "will Explodicle dump sewage into the river".  We start out with a simple equilibrium from speculators, holding all else equal, that there is X% chance I will dump sewage.

So then you think "man, I hate all that sewage." You decide that me not dumping is worth 10 BTC to you, and bet that much that I will dump. So if I pollute, you win Bitcoins, and if I don't, you lose whatever it's worth to you.

It's not a tragedy of the commons because you do not lose anything by placing your bet (assuming accurate speculation prices), and gain more than someone who doesn't quantify their burden from pollution, or speculators, since you have more to gain than just winning the bet.

[ElectricMucus]

I can probably construct a log trendline with an uptrend as long as it is up at all if I use another number base  

But yeah the traditional log10 chart line which we were so proud of is now practically broken... I admit that.

There isn't a mathematical difference between bases, unless you use a complex one (in which negative values could be in theory selected, preserving an uptrend by flipping the graph). To understand this better, realize that b^mn = (b^m)ⁿ.

No there is still a uptrend, but it doesn't appear linear on the logarithmic chart in the number base used. Look it up here before you wrongly correct me..
http://en.wikipedia.org/wiki/Logarithmic_scale

you can think of it of a way of blowing the bottom up more and more until we have a line again, no way this gonna change a downtrend into a uptrend but as long as we are above the previous selloff @0.8 or something it can always be made look like a straight line.
And actually it is even worse than that if I make the number base arbitrarily I can probably make it look like the trend bounces of a line as long as the price is above the initial opening bid at mtgox.

So the conclusion to this nonsense is: Bitcoin doesn't die unless it dies, you have your answer now stop trolling (please)