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Author Topic: Bubble not yet popped  (Read 2901 times)
BTC Economist
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October 18, 2011, 01:47:48 AM
 #1

Sorry to the optimists, but you're still going to have to wait for the bottom.  Bitcoin is going to at least halve before any rebound.  Once volume gets back to pre-Gawker levels, I'm going to call a bottom.

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grod
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October 18, 2011, 01:48:41 AM
 #2

My indicator is hashing power on deepbit.   While 60%+ of the bitcoin community are still bullish on bitcoin it's not a bottom.
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October 18, 2011, 02:29:28 AM
 #3

My indicator is hashing power on deepbit.   While 60%+ of the bitcoin community are still bullish on bitcoin it's not a bottom.
That's backwards. Those are the people putting Bitcoins into the system. Not the ones who are putting in dollars.
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October 18, 2011, 02:31:43 AM
 #4

No, it's a good proxy for overall bitcoin ecosystem sentiment.  They're bullish and expecting BTC to go up, not down.  Anyone expecting lower BTC prices (like me) has already shut down.

Peak hashing power was 5.4 gigahash on deepbit.   Currently at 3.1.  Looking like about 60% of us are still bullish.
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October 18, 2011, 04:25:45 AM
 #5

No, it's a good proxy for overall bitcoin ecosystem sentiment.  They're bullish and expecting BTC to go up, not down.  Anyone expecting lower BTC prices (like me) has already shut down.

Peak hashing power was 5.4 gigahash on deepbit.   Currently at 3.1.  Looking like about 60% of us are still bullish.

I've just shut down my (deepbit) miner for another day, as 'free' power from my solar PV array has finished for today.  I wouldn't discount the possibility that a large proportion of miners on deepbit have 'free' power (solar PV, or stealing it from someone else), are on fixed power contracts (which will go up long after they finish mining due to the lag effect), or have some of the cheapest power on Earth and don't mind having hundreds of dollars in hardware producing cents per day.

Then there are the optimists, who see the current crash as temporary.

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October 18, 2011, 05:52:08 AM
 #6

Question is: Where is the bottom?

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October 18, 2011, 06:09:16 AM
 #7

Question is: Where is the bottom?

That's what we all want to know. Pre-gawker volumes mean price under $1, but I think that is too low. My bet goes to $1.5/$2.
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October 18, 2011, 06:09:26 AM
 #8

I've just shut down my (deepbit) miner for another day, as 'free' power from my solar PV array has finished for today.  I wouldn't discount the possibility that a large proportion of miners on deepbit have 'free' power (solar PV, or stealing it from someone else), are on fixed power contracts (which will go up long after they finish mining due to the lag effect), or have some of the cheapest power on Earth and don't mind having hundreds of dollars in hardware producing cents per day.


While that might be true, it isnt driving hash rate unless ALL of them have free electricity or dont care. The miners that do have free electricity (or dont care about the price and act irrationally) will drive out the miners that dont have it and hash rate will still plummet.

What you are seeing is more likely a delayed response. Price plummets, miners reevaluate but dont instantly pull the plug or sell their gear. It takes time to convince them the price is going to stay that low, it takes time for electricity bills to arrive, it takes time to find buyers for their equipment. Hash rate will lag bitcoin price, but in the long run, will always correlate as long as there is a single rational miner left that actually pays for his electricity.

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October 18, 2011, 06:24:41 AM
 #9

Question is: Where is the bottom?

That's what we all want to know. Pre-gawker volumes mean price under $1, but I think that is too low. My bet goes to $1.5/$2.
Everyone said the same thing at the $16 price level, the $11, $7, $5, and $3 level.  I don't hold out too much hope of mining profitability in the near future.

Of course, given that I heat with straight up electric coils, I'll be using miners come winter weather.  It wouldn't make sense not to, no matter what the price is.
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October 18, 2011, 07:53:17 AM
 #10

Question is: Where is the bottom?

That's what we all want to know. Pre-gawker volumes mean price under $1, but I think that is too low. My bet goes to $1.5/$2.
Everyone said the same thing at the $16 price level, the $11, $7, $5, and $3 level.  I don't hold out too much hope of mining profitability in the near future.

Of course, given that I heat with straight up electric coils, I'll be using miners come winter weather.  It wouldn't make sense not to, no matter what the price is.

I don't think mining profits are important here. We didn't have a buying force strong enough to sustain the price at higher levels so what we need to find out is how many people are actually buying bitcoins because they need it and not because of the "curiosity bubble". These people will keep the price from crashing for months to come (until the next press hit shows up).
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October 18, 2011, 10:18:35 AM
 #11

Capitulation based on indicators grod is describing will never happen. There are many reasons for this. Just like Cluster2k said, some of us don't really pay for electricity so it's still profitable even with the current price.

Second and more importantly, there is always a significant delay. Miners are not only expecting changes in prices but changes in difficulty! They don't need to expect a rise in price, I'm pretty sure most people don't at the moment, but what they can expect is a significant drop in difficulty during the next two adjustments.

That's why the change will always be gradual. Nothing drastic is going to happen to the hash rate because of price changes, it's gradual. What can affect the hash rate much more is pools getting dossed etc.

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October 18, 2011, 10:30:43 AM
 #12

What the bottom will be is a good question and it's an important question for many. We're reaching the stage where most of the bears are slowly starting to think about actually missing the bottom which means the bottom will undoubtedly be higher than what the majority of bears think it will be.

Now, my personal bet is that it'll be somewhere around $1.x, that's as detailed as I can be because otherwise I would reveal my positions. But it's possible that if everyone thinks it'll be at $1.5, maybe then $2 never breaks. This is why it's smart to use multiple buy-in points while buying back because you simply can't know what will happen.

If enough people use gradual buy-in points starting from around $2, there will be quite heavy support at $2 already. And to be honest, selling is more and more unattractive the lower we go. I recently talked to some of my friends who didn't sell at $4 and are now in a difficult position, none of them are about to sell any coins and will hold as long as it's needed.

This will be the thought pattern for many because everyone knows Bitcoin doesn't go to 0 and is actually quite unlikely to go below $1 due to the fact that even small players can buy serious amounts of coins at that price and we definitely have a large amount of small players willing to buy at that point.

Regardless, the lower it goes the more stupid selling feels for any bag holders. But it's interesting to see what happens.

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October 18, 2011, 10:59:40 AM
 #13

Question is: Where is the bottom?

That's what we all want to know. Pre-gawker volumes mean price under $1, but I think that is too low. My bet goes to $1.5/$2.

Pre-gawker volume means whatever the price is when the volume retreats to those levels.  There is some deflation and a wider bitcoin economy since Gawker so I would expect a higher absolute price as the bottom.  Volume levels are still inflated, though.

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October 18, 2011, 12:44:46 PM
 #14

A thought.

We're at the price range where I first bought Bitcoins. But at that time it was way harder for non-US people to buy than it's now.

I've been buying more on MtGox now that they accept EUR bank transfers and have a separate EUR denominated market.

There might have been a bubble forming at that time. But should a rally occur now, there would be much fewer hindrances for many of those who might want to enter the market.

So, any uptrend we'd have might be surprisingly strong. And we might just be on the way to another bubble.
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October 18, 2011, 12:57:32 PM
 #15

What the bottom will be is a good question and it's an important question for many. We're reaching the stage where most of the bears are slowly starting to think about actually missing the bottom which means the bottom will undoubtedly be higher than what the majority of bears think it will be.

Now, my personal bet is that it'll be somewhere around $1.x, that's as detailed as I can be because otherwise I would reveal my positions. But it's possible that if everyone thinks it'll be at $1.5, maybe then $2 never breaks. This is why it's smart to use multiple buy-in points while buying back because you simply can't know what will happen.

If enough people use gradual buy-in points starting from around $2, there will be quite heavy support at $2 already. And to be honest, selling is more and more unattractive the lower we go. I recently talked to some of my friends who didn't sell at $4 and are now in a difficult position, none of them are about to sell any coins and will hold as long as it's needed.

This will be the thought pattern for many because everyone knows Bitcoin doesn't go to 0 and is actually quite unlikely to go below $1 due to the fact that even small players can buy serious amounts of coins at that price and we definitely have a large amount of small players willing to buy at that point.

Regardless, the lower it goes the more stupid selling feels for any bag holders. But it's interesting to see what happens.

i think it could easily go under $1 because the market always overshoots. So even if a sustained 'bottom' is supposedly $1.x... it'll still spike down briefly and pop back up.
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October 18, 2011, 01:06:51 PM
 #16

A thought.

We're at the price range where I first bought Bitcoins. But at that time it was way harder for non-US people to buy than it's now.

I've been buying more on MtGox now that they accept EUR bank transfers and have a separate EUR denominated market.

There might have been a bubble forming at that time. But should a rally occur now, there would be much fewer hindrances for many of those who might want to enter the market.

So, any uptrend we'd have might be surprisingly strong. And we might just be on the way to another bubble.

That's what worries me. I suspect a LOT of people are sick of buying while Bitcoin drops but remain interested. If the price bottoms out and starts going up for a couple days, everyone pushes their "buy" button. Hopefully those holding coins won't be so insanely bullish this time... I know I won't be. It's going to oscillate, but will it get more or less unstable from this point?
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October 18, 2011, 05:17:18 PM
 #17

hopefully with the price drop hackers will have less incentive to steal coins and in result finally stabilize the market.

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October 18, 2011, 05:19:06 PM
 #18

A thought.

We're at the price range where I first bought Bitcoins. But at that time it was way harder for non-US people to buy than it's now.

I've been buying more on MtGox now that they accept EUR bank transfers and have a separate EUR denominated market.

There might have been a bubble forming at that time. But should a rally occur now, there would be much fewer hindrances for many of those who might want to enter the market.

So, any uptrend we'd have might be surprisingly strong. And we might just be on the way to another bubble.

That's what worries me. I suspect a LOT of people are sick of buying while Bitcoin drops but remain interested. If the price bottoms out and starts going up for a couple days, everyone pushes their "buy" button. Hopefully those holding coins won't be so insanely bullish this time... I know I won't be. It's going to oscillate, but will it get more or less unstable from this point?

I've have plenty of fiat on mt.gox - once we have a trend that looks promising I'll be back in the game.
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October 18, 2011, 07:40:17 PM
 #19

There seems to be a real disconnect in this community between those who MINED all their Bitcoins, and those who actually BOUGHT their Bitcoins using traditional "fiat" currency.  Wink

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October 19, 2011, 07:03:07 AM
 #20

i think it could easily go under $1 because the market always overshoots. So even if a sustained 'bottom' is supposedly $1.x... it'll still spike down briefly and pop back up.
+1

Good point, if there is a panic sell of some sort the price certainly could spike below $1.

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