Estimating the distribution of trading in bitcoin.

[qwerty555]

I am attempting to estimate the approximate distribution of bitcoin purchases and sales. Any input will be helpful.

My first guesstimate will focus on 4 main groups. ( please suggest others that I have missed)

1. Speculators buy and hold.

2 Arbitrage traders attempting to make short term gains

3 regular commercial activity for purchases

4 remittance users.

The first guesstimate will be based on dollar volume history here

http://www.quandl.com/BCHAIN/ETRVU-Bitcoin-Estimated-Transaction-Volume-USD

Based on the May trading days

May 1-7 has an approx $31M /day volume

May 8-14  $31M/day

During this period I suggest that most traders and speculators are not active. Few arbitrage traders as the price volatility is low and there are less opportunities for making money. Few buy and hold speculators as most are waiting to see which way the price is going from the $420 ish mark.If it soundly breaks below the $400 they will wait to see how far it goes down..If it pushes above $450 and holds they will dip their toe in the water and buy

This indicates that the $31M / day volume is approximately the amount that is used in commerce and remittance activity. We already know that bitpay is using over $1m/day add the many others and we can start to get a picture of that segment.  

May 15-21  $266M total approx $38M/day  .from the 20th it appears that speculators are coming in as the price rises past the $450 mark. for many this is a "buy" signal and a possible reversal of the bear market.

May 22-31 ( 10 days)  $740M  or $74 M / day which is $430M or $43M/day above the first 2 weeks of May average

of this $430M  how much is buy and hold speculators and how much is traders attempting to make quick money  from price volatility?

This is the area that needs more work..I will initially assume that arbitrage trading is small (10%max) and place a $43m or $4.3m/day volume on that. therefore the buy and hold speculators account for 90% of the increase ( $430 M) in volume or $387M over the last 10 days of May.

The pie therefore (first attempt) looks like this for May 2014

1 speculators buy and hold                                                       $13M/day

2 Arbitrage/short term traders                                                   $1.4M/day  

3 regular commercial activity for purchases etc.                            $29M / day

4 remittance activity (including avoidance of currency controls)       $1.4M/day

The purpose is to gauge the commercial activity to establish a growth curve and estimate the amount of speculation as much of this will eventually be sold (particularly when we get close to major price resistance levels) and have a negative impact on the price (Temporarily)

[qwerty555]

and for factoring in growth I am using this as reference which is handy for all sorts of things

http://www.bitcoinpulse.com/

[bryant.coleman]

I have already posted about this. A large part of the transaction volume is taken up by the mining pools (bitcoin blocks to mining pools, and then to individual miners) and gambling sites (such as primedice.com). The real transaction volume is likely to be much lower.

[qwerty555]

I have already posted about this. A large part of the transaction volume is taken up by the mining pools (bitcoin blocks to mining pools, and then to individual miners) and gambling sites (such as primedice.com). The real transaction volume is likely to be much lower.

Thanks..I would place both those activities under commercial activity for now and I will try  to expand that segment at a later date. I have located a post on gambling which at that time suggested between 20 to 50% of (commercial) transactions are related to that

https://bitcointalk.org/index.php?topic=561307.msg6129168#msg6129168

I imagine that percentage wise that will decrease as purchase activity increases .

With respect to mining monthly data can be found on # of coins mined. Those figures in turn will need an estimate of miners who mine and sell for fiat and those who mine and hold for increase in value (speculation) or mine and hold for other commercial activity/purchases. That whole sub sector is likely to be in the region of $2M / day or 60M /month (and maybe only 50% of that will be sold  in the current market but thats just a guess for now)
https://blockchain.info/charts/miners-revenue

If you have other posts that would help please link.

Also it is likely that any purchase data may have to be cut in half..eg if the volume related to purchases is $5M then the actual purchases could well be $2.5 M as assuming they had to buy bitcoin first..use it to purchase goods or services and the entity that receives them will eventually convert to fiat that transaction will show up twice in $volumes. The same applies for remittances.