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Author Topic: Warning: bubble #2 might be forming  (Read 3793 times)
dree12
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December 31, 2011, 03:56:26 AM
 #1

We are on a mammoth upswing right now. Many people who use technical analysis are assuming that the indicators are pointing to a strong rise and further increase. The period of time between May 1 and July 31 is detailed below:


As you can no doubt see, all indicators (and volume) turned massively up before the giant crash. The current market situation is simulating the period of time before that. We have not yet reached the point where all indicators are hard up, and there is still no sign of an impending top, or at least not one yet.

The sample size of the "indicators turn to bubbles" is 1, so don't take too much out of this analysis. However, I would advise caution for anyone with a long position if the indicators continue pointing towards strong, rapid, gains, and if volume increases dramatically. Some members of the bitcointalk forum propose a correction to the rally; if this occurs, it will remove any immediate threat of a bubble.

As a footnote, notice that the NVI is not very useful when applied to the 2011 bubble. It is included here because it has been consistantly high the period of time before the 2011 bubble, and if our NVI continues the uptrend further bubble development is possible.
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mjcmurfy
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December 31, 2011, 04:02:33 AM
 #2

A second bubble will not occur any time soon. All those people who have taken losses on the way down are waiting to sell in order to recoup some of their starting capital. There will be far too much selling pressure on the way up this time for a bubble to form, there was nobody in a losing position the first time around to dampen the spike.

I wouldn't worry about it.

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December 31, 2011, 04:04:24 AM
 #3

A second bubble will not occur any time soon. All those people who have taken losses on the way down are waiting to sell in order to recoup some of their starting capital. There will be far too much selling pressure on the way up this time for a bubble to form.

I wouldn't worry about it.

+1.  Believe it or not, I consider current growth rates "slow and steady."  This is bitcoin, after all Wink

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cypherdoc
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December 31, 2011, 04:29:30 AM
 #4

A second bubble will not occur any time soon. All those people who have taken losses on the way down are waiting to sell in order to recoup some of their starting capital. There will be far too much selling pressure on the way up this time for a bubble to form, there was nobody in a losing position the first time around to dampen the spike.

I wouldn't worry about it.

au contraire.  most of the large geek holders of btc already coughed up all their btc on the way down not understanding the fundamental dynamics of what they had created.  these have now moved into more strategic non techie investors who will not be shaken out of their positions easily on the way up.
mjcmurfy
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December 31, 2011, 04:36:00 AM
 #5

au contraire.  most of the large geek holders of btc already coughed up all their btc on the way down not understanding the fundamental dynamics of what they had created.  these have now moved into more strategic non techie investors who will not be shaken out of their positions easily on the way up.

Hehe. You're hoping for a bubble, aren't you? Keep hoping...
Non techie investors. Love it. Who else but a geek would involve themselves with bitcoin, even now?
Even many of us 'smart' folk still are failing to understand what we have created, so what hope is there for the meatheads?
It's the same people with the same money and the same coins (plus some new ones that have yet to hit the markets).

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dree12
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December 31, 2011, 04:49:53 AM
 #6

I don't think we have bears and bulls on this forum anymore. The bulls were turned into "another bubble" and the bears were turned into "price won't go up" (as opposed to "price will go down").
au contraire.  most of the large geek holders of btc already coughed up all their btc on the way down not understanding the fundamental dynamics of what they had created.  these have now moved into more strategic non techie investors who will not be shaken out of their positions easily on the way up.
Even many of us 'smart' folk still are failing to understand what we have created, so what hope is there for the meatheads?
I know "smart" is in scary quotes here, but we, as a community, are not any smarter than the general populace. Calling them meatheads is hardly appropriate when half the board can't comprehend simple speeling, sYntax, grammars and: punctuation.
ineededausername
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December 31, 2011, 04:51:26 AM
 #7

I don't think we have bears and bulls on this forum anymore. The bulls were turned into "another bubble" and the bears were turned into "price won't go up" (as opposed to "price will go down").

Ha!  This is so true right now Tongue

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mjcmurfy
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December 31, 2011, 04:56:57 AM
 #8

I know "smart" is in scary quotes here, but we, as a community, are not any smarter than the general populace. Calling them meatheads is hardly appropriate when half the board can't comprehend simple speeling, sYntax, grammars and: punctuation.

I hope people realize I was being deliberately flippant with my 'meathead' comment. And I was referring to 'non techie traders' (i.e professional traders) as meatheads, not the general population. I.e. the stereotypical wall street 'meathead' who thinks that the world can be plotted neatly on a graph and that reality is nothing more than a trivial nuisance.

Or did you mean by your post that 'meathead' was not strong enough of an adjective? Hehe. I'm not quite sure.

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cypherdoc
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December 31, 2011, 05:09:57 AM
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I know "smart" is in scary quotes here, but we, as a community, are not any smarter than the general populace. Calling them meatheads is hardly appropriate when half the board can't comprehend simple speeling, sYntax, grammars and: punctuation.

I hope people realize I was being deliberately flippant with my 'meathead' comment. And I was referring to 'non techie traders' (i.e professional traders) as meatheads, not the general population. I.e. the stereotypical wall street 'meathead' who thinks that the world can be plotted neatly on a graph and that reality is nothing more than a trivial nuisance.

Or did you mean by your post that 'meathead' was not strong enough of an adjective? Hehe. I'm not quite sure.

heh, i resent this too!
mjcmurfy
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December 31, 2011, 05:14:15 AM
 #10

Alright, how about 'intellectually challenged' then? Does that fit better with the sensibilities of this subforum? Cheesy

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mjcmurfy
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December 31, 2011, 05:19:13 AM
 #11

LMFAO @ panerai! I actually LOL'd.
I'm all giddy tonight. Even the trolls are making me laugh.
It's 5am here. I've been up all night waiting for this rally to fail to emerge.

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echowhiskey
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December 31, 2011, 05:21:50 AM
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au contraire.  most of the large geek holders of btc already coughed up all their btc on the way down not understanding the fundamental dynamics of what they had created.  these have now moved into more strategic non techie investors who will not be shaken out of their positions easily on the way up.

Hehe. You're hoping for a bubble, aren't you? Keep hoping...
Non techie investors. Love it. Who else but a geek would involve themselves with bitcoin, even now?
Even many of us 'smart' folk still are failing to understand what we have created, so what hope is there for the meatheads?
It's the same people with the same money and the same coins (plus some new ones that have yet to hit the markets).
I would just like to point out the traveling purchaser problem.

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

When Cypherdoc talks about the techies not knowing the consequences of what they created, he's not too far from truth.  The fact is, all market participants want one thing: maximize profit.  Currencies are beneficial for all market participants because they shorten the path of the traveling purchaser problem.  This increased utility is incredibly valuable.  This is why the US Dollar is so valuable: it isn't because you have to pay your taxes with them, it is because you can buy *anything in the world* with a them.  Bitcoin has not yet realized this value, but the fact is, it is the cheapest solution to the travelling purchaser problem.

Think of any other form of payment: I don't care what or how - it isn't cheaper than bitcoin.  All other forms of electronic payment require a company to make the transfer.  These middlemen cost and it is reflected in the cost of these services (credit card fees, paypal fees, western union fees, bank wire fees, etc...)  Bitcoin is cheaper than this.  Bitcoin is even cheaper than cash because you don't have to pay for a armored truck to move it.  It is just the cheapest form of payment that the world has ever seen. 

If markets really are efficient, and bitcoin is the cheapest way to move money, then market participants are going to use bitcoin.  There just isn't any other way around it.  And when that happens, bitcoin will realize it's value as a currency: no longer as a speculative vehicle.  I think Cypherdoc is right when he says bitcoin is massively undervalued.
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December 31, 2011, 05:28:17 AM
 #13

I think you're preaching to the choir! Cheesy

I also believe that bitcoin is massively undervalued too, but only when compared with the price in 10-15 years, and only because I speculate that bitcoin WILL be the cryptocurrency of the future. The price cannot be supported by hopes and dreams alone, it has to have a real economic backdrop supporting it. Wide distribution is first required for this to happen. And until the everyday person is able to obtain and spend bitcoin on the things they want and need, it will remain a speculative commodity and not a currency. And we will continue to do what we are doing within the given boundary parameters.

In the mean time, none of that detracts from the fact that the market is currently overbought at these price levels and that a market correction is imminent. The price will not continue to rise because of what bitcoin might be in the future. The only real demand right now is speculative.

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the joint
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December 31, 2011, 05:37:37 AM
 #14

I'm smiling at the few thousand BTC that were just dropped on Gox.

My prediction:  No bubble unless there is an exponential increase in new users.  I see no evidence of a rapid influx of new users right now.  I do think there will be other bubbles but you need a reason for a bubble, and right now there is no reason.

That being said, I do think there is higher demand nowadays in terms of the actual number of people wanting to buy (not in terms of the bid/ask amounts in the orderbook) and I think there is some renewed optimism that couldn't be found 2-3 months ago.  Bitcoin has had some nice media exposure lately which might continue when that Bitcoin episode thingy airs in the middle of January.  I think there's a good chance for modest value increases in the short term (2-4 weeks), but I wouldn't expect anything crazy.

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December 31, 2011, 05:40:41 AM
 #15

Those few thousand btc sure didn't move the price much.
Also, modest means "doubling in a month instead of a week" when it comes to Bitcoin Wink

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cypherdoc
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December 31, 2011, 05:48:37 AM
 #16

I'm smiling at the few thousand BTC that were just dropped on Gox.

My prediction:  No bubble unless there is an exponential increase in new users.  I see no evidence of a rapid influx of new users right now.  I do think there will be other bubbles but you need a reason for a bubble, and right now there is no reason.

That being said, I do think there is higher demand nowadays in terms of the actual number of people wanting to buy (not in terms of the bid/ask amounts in the orderbook) and I think there is some renewed optimism that couldn't be found 2-3 months ago.  Bitcoin has had some nice media exposure lately which might continue when that Bitcoin episode thingy airs in the middle of January.  I think there's a good chance for modest value increases in the short term (2-4 weeks), but I wouldn't expect anything crazy.

don't forget that the Bitcoin market is miniscule compared to the number of ppl exiting the Euro, gold, and silver right now.  I bet this has something to do with the rally we've seen so far.
mjcmurfy
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December 31, 2011, 05:52:08 AM
 #17

Those few thousand btc sure didn't move the price much.
Also, modest means "doubling in a month instead of a week" when it comes to Bitcoin Wink

When you have thousands more where that came from, the best time to cash out is when your trade affects the price the least. I'm telling you guys, there is some serious profit taking going on. Over the past 10 days there have been volumes of selling equal in magnitude to about half of the total demand on mtgox right now.

don't forget that the Bitcoin market is miniscule compared to the number of ppl exiting the Euro, gold, and silver right now.  I bet this has something to do with the rally we've seen so far.

Somehow, I doubt it. Those traders are looking for safe harbors, not a coast of jagged rocks on which to shipwreck!

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the joint
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December 31, 2011, 05:54:10 AM
 #18

Those few thousand btc sure didn't move the price much.
Also, modest means "doubling in a month instead of a week" when it comes to Bitcoin Wink

Nope, they sure didn't, but that might be due to the lack of any sizable bidwall down to $4.

In the past, it seemed that large dumps like these were followed by more dumping because someone would pull back a 20,000 BTC bidwall and people would panic.  That's why I said it seems to me that there is more demand now in terms of the number of people wanting to buy.  The bid side on Mt. Gox live is almost a perfect diagonal down to $4.  

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December 31, 2011, 08:30:40 AM
 #19

Non techie investors. Love it. Who else but a geek would involve themselves with bitcoin, even now?
Even many of us 'smart' folk still are failing to understand what we have created, so what hope is there for the meatheads?
It's the same people with the same money and the same coins (plus some new ones that have yet to hit the markets).

The cryptographic technicalities, once they are vetted sound are not that important.  I would argue that they cryptography is more or less vetted now - during the first bubble computer geeks had enough incentives to check this.  Now it is time to check the economy of bitcoin - and computer geeks are rarely experts in this area.
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December 31, 2011, 11:39:27 AM
 #20

I'm not hoping for a repeat of June but it's certainly possible that we will see a new bubble. Bitcoin could bubble many times before it calms down because we simply need a higher market cap for more stability. If Bitcoin gains widespread popularity for any type of usage we will be looking at three digit prices and probably four digit prices eventually. It's quite flawed to think that there won't be way more bubbles in that case. If Bitcoin stays as a small niche, then it's a different story however.

I see Bitcoin as a massively revolutionary type of money both as a store of value and a medium of exchange, it would be quite disappointing if it didn't gain a large foothold in at least some possible usages. And there are many possibilities. And I strongly disagree that there isn't a massive inflow of users on the way, Bitcoin already got some pretty decent press with the "Bitcoin coming back from the dead" news but that is just the beginning.

If the rally manages to break $5 and eventually further, a massive amount of smart investors will start looking at Bitcoin with very large interest. It's not just a fluke if it comes back after a massive crash. This will create the kind of interest that will make May/June events look like nothing in comparison. This is going to happen with high likelyhood if we continue to rally beyond $5 in the short term.

As far as the influx of regular users, it's hard to say when and if there is a massive increase. It will depend on the marketing, acceptance, development of Bitcoin etc. But investors will come aboard without any of that if the price technicals start to look as good as they will if we continue to rally. There will be a lot of press involved in this as well.


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