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Author Topic: $7 - explaination of price level  (Read 2800 times)
ArsenShnurkov
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January 16, 2012, 11:23:30 AM
 #1

It's because of bitcoinica. When there were no mass adoption of bitcoinica, the price was $2.
After that many bulls come to bitcoinica and take long position with 2,5 leverage.
This lead to the current situation ($2 + $2 * 2,5 = 7)
when bitcoinica is constantly showing "no buys" sign.
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notme
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January 16, 2012, 11:29:40 AM
 #2

It's because of bitcoinica. When there were no mass adoption of bitcoinica, the price was $2.
After that many bulls come to bitcoinica and take long position with 2,5 leverage.
This lead to the current situation ($2 + $2 * 2,5 = 7)
when bitcoinica is constantly showing "no buys" sign.

You got it... Bitcoinica users magically set the price at 7 with your flawless maths.

https://www.bitcoin.org/bitcoin.pdf
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January 16, 2012, 12:02:46 PM
 #3

It's because of bitcoinica. When there were no mass adoption of bitcoinica, the price was $2.
After that many bulls come to bitcoinica and take long position with 2,5 leverage.
This lead to the current situation ($2 + $2 * 2,5 = 7)
when bitcoinica is constantly showing "no buys" sign.

You got it wrong. The price was $7 before the adoption of bitcoinica. That was in September 2011.

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ArsenShnurkov
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January 16, 2012, 12:34:55 PM
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You got it wrong. The price was $7 before the adoption of bitcoinica. That was in September 2011.

I don't see logic. The price of $7 was in the mid of May 2011 (that point is more relevant to the current situation than september).
Both that points are irrelevant to my current observation, because they was before $2 (and was caused by different reasons).
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January 16, 2012, 12:48:13 PM
 #5

I just wanted to point out that Bitcoinica caused the prices to go low from $7 down to $2 last autumn.

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ArsenShnurkov
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January 16, 2012, 12:50:12 PM
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Bitcoinica caused the prices to go low from $7 down to $2 last autumn.

It was not the bitcoinica, it was several hacks of exchanges and wallets and inflation, caused by mining
notme
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January 16, 2012, 12:51:50 PM
 #7

Bitcoinica caused the prices to go low from $7 down to $2 last autumn.

It was not a bitcoinica, it was several hacks of exchanges and wallets and inflation, caused by mining

Most of that happened before bitcoinica opened their doors.  Bitcoinica shorts caused an overcorrection until the market adapted to all the shorting.

https://www.bitcoin.org/bitcoin.pdf
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ArsenShnurkov
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January 16, 2012, 12:55:16 PM
 #8

Bitcoinica shorts caused an overcorrection

Do you have a proof ?
notme
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January 16, 2012, 12:56:44 PM
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Bitcoinica shorts caused an overcorrection

Do you have a proof ?

Do you have proof of your assertion besides 2 + 2.5*2?  You can't be serious.

https://www.bitcoin.org/bitcoin.pdf
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bittenbob
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January 16, 2012, 12:59:37 PM
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I just wanted to point out that Bitcoinica caused the prices to go low from $7 down to $2 last autumn.

+1

Zhoutong even admitted that bitcoinica sold down below $2.
ArsenShnurkov
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January 16, 2012, 01:00:29 PM
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Do you have proof of your assertion besides 2 + 2.5*2?

Yes:
1) the volume of trades through bitcoinica reaches 83% of all trades (see a link at the first message).
This mean, that almost all positions go through bitcoinica.

2) bitcoinica shows "no enough dollars" star
This mean that all positions are leveraged.

This and the start price gives the formula, which you quote
ArsenShnurkov
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January 16, 2012, 01:01:16 PM
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Zhoutong even admitted that bitcoinica sold down below $2.

But the volume of bitcoinica trades was not so high at that time
notme
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January 16, 2012, 01:09:41 PM
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Do you have proof of your assertion besides 2 + 2.5*2?

Yes:
1) the volume of trades through bitcoinica reaches 83% of all trades (see a link at the first message).
This mean, that almost all positions go through bitcoinica.

2) bitcoinica shows "no enough dollars" star
This mean that all positions are leveraged.

This and the start price gives the formula, which you quote

1) That was one time during a no fee special.  Also, it was one side of 83% of trades.  If you count both sides, bitcoinica accounted for 41.5% of volume.

2) This is true, but doesn't make your math realistic.

Personally, my leverage is currently at 3.23:1 and has varied from -3:1 to 10:1 between 2 and 7.  There is certainly room for a squeeze if you have the funds to burn through the support, but as always the price is determined by those who trade successfully and don't run out of money, not some magical formula of
arbitrary start price + levergage * arbitrary start price = final price.

https://www.bitcoin.org/bitcoin.pdf
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pent
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January 16, 2012, 01:12:19 PM
 #14

bullshit. 2011 rally was without any margin trading platform and brought $32 high. This time much more people involved. And if bitcoinica will join, it will just accelerate the price spike.
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January 16, 2012, 01:13:40 PM
 #15

It's because of bitcoinica. When there were no mass adoption of bitcoinica, the price was $2.
After that many bulls come to bitcoinica and take long position with 2,5 leverage.
This lead to the current situation ($2 + $2 * 2,5 = 7)
when bitcoinica is constantly showing "no buys" sign.

I don't think it's quite that simple, but it does bring up another point for me.

If this rally from $2-$3 to $7 is highly leveraged, what would a reversal in price look like?  People are betting on a higher price with other people's money, but if the market turns it could be a swift and violent shock downwards as speculators are liquidated and short selling intensifies.  

It's easy to bet with leveraged money when the market is rising.

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January 16, 2012, 01:17:42 PM
 #16

It's because of bitcoinica. When there were no mass adoption of bitcoinica, the price was $2.
After that many bulls come to bitcoinica and take long position with 2,5 leverage.
This lead to the current situation ($2 + $2 * 2,5 = 7)
when bitcoinica is constantly showing "no buys" sign.

I don't think it's quite that simple, but it does bring up another point for me.

If this rally from $2-$3 to $7 is highly leveraged, what would a reversal in price look like?  People are betting on a higher price with other people's money, but if the market turns it could be a swift and violent shock downwards as speculators are liquidated and short selling intensifies.  

It's easy to bet with leveraged money when the market is rising.

This will happen... the only question is will it happen before or after $10?
bittenbob
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January 16, 2012, 01:19:19 PM
 #17

It's because of bitcoinica. When there were no mass adoption of bitcoinica, the price was $2.
After that many bulls come to bitcoinica and take long position with 2,5 leverage.
This lead to the current situation ($2 + $2 * 2,5 = 7)
when bitcoinica is constantly showing "no buys" sign.

I don't think it's quite that simple, but it does bring up another point for me.

If this rally from $2-$3 to $7 is highly leveraged, what would a reversal in price look like?  People are betting on a higher price with other people's money, but if the market turns it could be a swift and violent shock downwards as speculators are liquidated and short selling intensifies.  

It's easy to bet with leveraged money when the market is rising.

On the way down people leveraged on the bet it was going to continue going down. When those shorts got liquidated we got a nice price spike. They are short on USD which means people are overleveraged for it it to go down, meaning more fuel for the rocket. It is for this reason bitcoinica exaggerates movement in any direction.
notme
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January 16, 2012, 01:23:23 PM
 #18

On the way down people leveraged on the bet it was going to continue going down. When those shorts got liquidated we got a nice price spike. They are short on USD which means people are overleveraged for it it to go down, meaning more fuel for the rocket. It is for this reason bitcoinica exaggerates movement in any direction.

Only bad trades will over exaggerate the movement.  Bitcoinica is just a tool.  It doesn't exaggerate anything.  People who use it to exaggerate movements will eventually run out of money... just give it time.

Also, bitcoinica is out of USD, which means people are overleveraged long, meaning resistance for the rocket as the take profits.  There is fuel for a downspike if we move down far enough to trigger significant liquidations.

https://www.bitcoin.org/bitcoin.pdf
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proudhon
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January 16, 2012, 01:23:43 PM
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Bitcoinica: Adding volatility to volatility since 2011.
bittenbob
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January 16, 2012, 01:29:00 PM
 #20

It seems the price is being driven down by one determined bear at the moment. Looking on clark moody the person keeps on piling their 430BTC ask lower and lower.
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