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Author Topic: This is to the buyers in this market environment  (Read 1490 times)
fastandfurious
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November 30, 2011, 08:29:37 PM
 #1

You are right now investing in Bitcoins. As an idea I think this is a good one, you will probably make some kind of good return on it within 2-5 years, but what you are missing is that you guys are in a hurry, don't forget the high inflation environment. You have put in your buying orders at least 6 months to early, we are still printing 7200 bitcoins/day, so you are buying to high to soon, it is a classic beginners mistake and you will pay it by forced liquidation (if you buy through Bitcoinica with leverage) or you have to wait maybe up to several years to get a good return. Let the market do what it is best at doing, giving what is traded the right value, knowing that we are printing 7200 BTC/day will let everyone that is interested get in to BTC at fair levels, and that level isn't 3 USD, it is much lower.

The market will do this with "force", meaning people will do all what it takes to tackle the high inflation environment (and losing a lot of money doing so), or we can just get to a good fair value as soon as possible and start building up the Bitcoin community and price.

To compare it, it is like the Economy in the real world, the central banks tries in every way keep the bubble intact, what is necessary is to let the bubble burst all the way as soon as possible (like 1929-1932 great depression), and after that start building it up again.

This is my point of view, lets see which one the market will choose.
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November 30, 2011, 08:31:44 PM
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will let everyone that is interested get in to BTC at fair levels

Whenever I see the word "fair" in relation to a price, I know to stop reading.

EDIT: Sorry I came across as kinda an ass there... didn't mean to be rude, but people who claim a certain price is fair or unfair are missing the whole purpose and function of a price.  Regarding your inflation argument, it's true that 7200 coins per day is "high inflation" by typical definitions, but if the demand for coins is more than 7200 per day, the inflating currency will still see a rising price. Personally, I don't think the 7200 coins matter much at all, A) because only a portion of them are sold, the rest are kept and B) the daily volume of sales is much higher than 7,200 coins (meaning the new coins are only a minor part of the coins on offer).

Bitcoin's price will be almost entirely depending on it's adoption over the next few years, not on its inflation rate. Inflation is a factor, sure, but only a minor one given the massive potential for wider adoption and global demand. If the Bitcoin price falls further, it will not be because of the inflation rate.
fastandfurious
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November 30, 2011, 08:34:54 PM
 #3

will let everyone that is interested get in to BTC at fair levels

Whenever I see the word "fair" in relation to a price, I know to stop reading.

Fair in not in the way I am guessing you are thinking, fair from a fundamental point of view knowing that we are still in a high inflation environment.
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November 30, 2011, 08:42:52 PM
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You are right now investing in Bitcoins. As an idea I think this is a good one, you will probably make some kind of good return on it within 2-5 years, but what you are missing is that you guys are in a hurry, don't forget the high inflation environment. You have put in your buying orders at least 6 months to early, we are still printing 7200 bitcoins/day, so you are buying to high to soon, it is a classic beginners mistake and you will pay it by forced liquidation (if you buy through Bitcoinica with leverage) or you have to wait maybe up to several years to get a good return. Let the market do what it is best at doing, giving what is traded the right value, knowing that we are printing 7200 BTC/day will let everyone that is interested get in to BTC at fair levels, and that level isn't 3 USD, it is much lower.

The market will do this with "force", meaning people will do all what it takes to tackle the high inflation environment (and losing a lot of money doing so), or we can just get to a good fair value as soon as possible and start building up the Bitcoin community and price.

To compare it, it is like the Economy in the real world, the central banks tries in every way keep to the bubble intact, what is necessary is to let the bubble burst all the way as soon as possible (like 1929-1932 great depression), and after that start building it up again.

This is my point of view, lets see which one the market will choose.

Thanks for the advice, fastandfurious.  As a buyer I can tell you that I really don't care what the value of bitcoin is today, 6 months from now or 5 years from now.  They could all be valueless at some point and it would not bother me in the least.  I won't be selling anytime soon anyway.

I invest a nominal amount on every paycheck.  I'll either earn bitcoins or buy them at the current price every time.  I'm not purchasing bitcoins to make a profit.  I'm buying them because they intrigue me and I want them.  I like the concept of bitcoins and that is why I want them.

If there continues to be buyers like me out there and our numbers consistently grow then your short position may get tenuous.

I will say that you daytraders of bitcoins have gigantic balls and I salute you for that!

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November 30, 2011, 09:02:55 PM
 #5

I just recently realized the highest savings interest I can get is similar to or lower than the inflation, and I realized the euro is crashing. So now I invested a part of my savings in bitcoin. Maybe it will go down, maybe it will go up. Don't know. Same goes for the entire European Union at the moment, anyway.

I don't plan on daytrading. I tried that, and sucked at it. I'll just hold some bitcoins. Maybe do some arbitrage on markets without an API, or direct selling to friends if they become interested.

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November 30, 2011, 10:54:58 PM
 #6

You are right now investing in Bitcoins. As an idea I think this is a good one, you will probably make some kind of good return on it within 2-5 years, but what you are missing is that you guys are in a hurry, don't forget the high inflation environment. You have put in your buying orders at least 6 months to early, we are still printing 7200 bitcoins/day, so you are buying to high to soon, it is a classic beginners mistake and you will pay it by forced liquidation (if you buy through Bitcoinica with leverage) or you have to wait maybe up to several years to get a good return. Let the market do what it is best at doing, giving what is traded the right value, knowing that we are printing 7200 BTC/day will let everyone that is interested get in to BTC at fair levels, and that level isn't 3 USD, it is much lower.

The market will do this with "force", meaning people will do all what it takes to tackle the high inflation environment (and losing a lot of money doing so), or we can just get to a good fair value as soon as possible and start building up the Bitcoin community and price.

To compare it, it is like the Economy in the real world, the central banks tries in every way keep to the bubble intact, what is necessary is to let the bubble burst all the way as soon as possible (like 1929-1932 great depression), and after that start building it up again.

This is my point of view, lets see which one the market will choose.

Thanks for the advice, fastandfurious.  As a buyer I can tell you that I really don't care what the value of bitcoin is today, 6 months from now or 5 years from now.  They could all be valueless at some point and it would not bother me in the least.  I won't be selling anytime soon anyway.

I invest a nominal amount on every paycheck.  I'll either earn bitcoins or buy them at the current price every time.  I'm not purchasing bitcoins to make a profit.  I'm buying them because they intrigue me and I want them.  I like the concept of bitcoins and that is why I want them.

If there continues to be buyers like me out there and our numbers consistently grow then your short position may get tenuous.

I will say that you daytraders of bitcoins have gigantic balls and I salute you for that!

agreed

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December 01, 2011, 01:08:48 AM
 #7

Thanks for the advice, fastandfurious.  As a buyer I can tell you that I really don't care what the value of bitcoin is today, 6 months from now or 5 years from now.  They could all be valueless at some point and it would not bother me in the least.  I won't be selling anytime soon anyway.

I invest a nominal amount on every paycheck.  I'll either earn bitcoins or buy them at the current price every time.  I'm not purchasing bitcoins to make a profit.  I'm buying them because they intrigue me and I want them.  I like the concept of bitcoins and that is why I want them.

If there continues to be buyers like me out there and our numbers consistently grow then your short position may get tenuous.

It is very refreshing for me to see that there are still (after the bubble) or again people joining bitcoin for the same (or similar) reasons I joined bitcoin.

I will say that you daytraders of bitcoins have gigantic balls and I salute you for that!

Now this, sir, made me laugh.

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old_engineer
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December 01, 2011, 02:24:40 AM
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I will say that you daytraders of bitcoins have gigantic balls and I salute you for that!
Hey, that made me laugh, too.  I've been doing reasonably well daytrading, but this hasn't been intentional as I'm not in it for the money, but rather to reduce volatility and to help make bitcoin a useable currency.

I'm even happy to explain exactly what I've been doing because I think the market could use more dampening.

Here's what happened to me the other day:



first sell: I caught was confirmed as a liquidation of someone else's order (I forget whose) as a short squeeze happened after a large movement.
first rebuy: after any big market move up or down, there's a small retrenchment as arbitrage kicks in from Tradehill.  catch it.
second sell: after recent market move, market depth is small, and it's easy to catch re-retrenchments
second rebuy: I didn't know what was going to happen next, so I sniped on the big bidwall, figuring that the big wall might disappear and a dump/crash might follow. It didn't disappear, and I somehow caught a coin dumper.  I was asleep at the time, not sure what happened.

One other suggestion: rather than bid walls or sell walls, put a bunch of smaller orders over the range of a several cents, otherwise you'll get sniped (other bid/sells just below your chosen spot), or the whole order will be chomped wholesale by another player (which doesn't help with my goal of reducing volatility).

In the $2.64 to $2.7 range, there are clearly two order slopes.  The steeper one on the left was me; the shallower one on the right is someone else doing the same thing.  It seems to be a winning strategy, and others seem to be using a similar strategy.

Hope that helps and/or is interesting!
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December 01, 2011, 06:18:18 AM
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How much BTC are you moving around?  How much can you change the price?  You say you are trying to reduce volatility.  So you have at least half of the 50,000 BTC guy sitting @2.63 currently, right?
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December 01, 2011, 07:48:58 AM
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How much BTC are you moving around?  How much can you change the price?  You say you are trying to reduce volatility.  So you have at least half of the 50,000 BTC guy sitting @2.63 currently, right?
Heh, no, I said the range $2.64 to $2.70, ie, not inclusive of that huge $2.63 bidwall.  I think those orders were 200 btc every half cent or so, maybe 1.6k btc total, and is completely enclosed by the left side of the "buy (caught dump)" circle. 

So far as I can tell, putting in orders that don't execute immediately will always reduce volatility.  Well, so long as the orders are small - a big wall can drive the price away from it - but since I can't put up a wall, all I do is create a bit of drag using some play money.  I'm not an early adopter, and bought my first coins at $17 (ouch).  I'm the stereotypical geek learning finance through bitcoin, and didn't really know how a short worked 6 months ago.  And like a stereotypical geek, I'm explaining what I know about bitcoin since there seem to be several new faces in this forum the past couple days.
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December 01, 2011, 07:58:32 AM
 #11

I wasn't clear, sorry.  When I said you have half of the guy with 50,000 BTC at 2.63, I meant do you have 25,000+ BTC in funds available to damp and stabilize?  Whether they are active trades or just money sitting in the exchange ready to trade.

The reason I say that is because only a few days ago we saw tens of thousands of BTC thrown around that moved the price a lot.  Sure, someone with a few hundred BTC, even leveraged, can damp the market a bit...but not when the 50k BTC wall comes into play.  Then you become an ant.
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December 01, 2011, 08:06:54 AM
 #12

You are right now investing in Bitcoins. As an idea I think this is a good one, you will probably make some kind of good return on it within 2-5 years, but what you are missing is that you guys are in a hurry, don't forget the high inflation environment. You have put in your buying orders at least 6 months to early, we are still printing 7200 bitcoins/day, so you are buying to high to soon, it is a classic beginners mistake and you will pay it by forced liquidation (if you buy through Bitcoinica with leverage) or you have to wait maybe up to several years to get a good return. Let the market do what it is best at doing, giving what is traded the right value, knowing that we are printing 7200 BTC/day will let everyone that is interested get in to BTC at fair levels, and that level isn't 3 USD, it is much lower.

The market will do this with "force", meaning people will do all what it takes to tackle the high inflation environment (and losing a lot of money doing so), or we can just get to a good fair value as soon as possible and start building up the Bitcoin community and price.

To compare it, it is like the Economy in the real world, the central banks tries in every way keep the bubble intact, what is necessary is to let the bubble burst all the way as soon as possible (like 1929-1932 great depression), and after that start building it up again.

This is my point of view, lets see which one the market will choose.

Translation: My plan was to buy at another dip, now it does not look very likely, why you buyers don't think like me?
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December 01, 2011, 08:41:50 AM
 #13

Soon we have christmas and Newyear coming. How will it affect the price?
My guess is that many casual buyers will stop buying and caring about Bitcoin during that time instead putting money into other expenses.

But there will also be the oposite, people have time to play with Bitcoin during the holiday, question is which effect will be the stronger of the two.


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December 01, 2011, 08:47:07 AM
 #14

Soon we have christmas and Newyear coming. How will it affect the price?
My guess is that many casual buyers will stop buying and caring about Bitcoin during that time instead putting money into other expenses.

But there will also be the oposite, people have time to play with Bitcoin during the holiday, question is which effect will be the stronger of the two.
Bitcoins as a winter solstice gift? Smiley

old_engineer
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December 01, 2011, 08:51:53 AM
 #15

I wasn't clear, sorry.  When I said you have half of the guy with 50,000 BTC at 2.63, I meant do you have 25,000+ BTC in funds available to damp and stabilize?  Whether they are active trades or just money sitting in the exchange ready to trade.

The reason I say that is because only a few days ago we saw tens of thousands of BTC thrown around that moved the price a lot.  Sure, someone with a few hundred BTC, even leveraged, can damp the market a bit...but not when the 50k BTC wall comes into play.  Then you become an ant.

I'm curious who that is, too, but it's certainly not me.  You can barely see me on the depth charts these days unless you zoom in on mtgoxlive, in which case I can be huge! Smiley

Both the sets of orders I referred to are completely enclosed by that lowermost circle.  They're tiny little segments, but the one on the left (me) is steeper than the one on the right (someone else), thus showing that there's another trader with an identical order placement strategy, that's all.
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December 01, 2011, 10:06:36 AM
 #16

Soon we have christmas and Newyear coming. How will it affect the price?
My guess is that many casual buyers will stop buying and caring about Bitcoin during that time instead putting money into other expenses.

But there will also be the oposite, people have time to play with Bitcoin during the holiday, question is which effect will be the stronger of the two.

You can play with Bitcoin by buying new year gifts with them to cover all bases.
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