Market psychology thread

[thezerg]

Most people satisfy rather than optimize.  If the water is fine here, why should I swim over there?  All the positive news is great preparation, but the next bubble won't happen without a kick -- some negative news in the fiat world -- that drives people to switch.

[okthen]

It is true to say that the leveraged longs on Bitfinex are very high at the moment, if indeed not maxed out going by the hike in the swap rate from 0.1% to a whopping 1% per day during one of the $680-$620 slides.

The USD swap offer rates did indeed shoot way up during the most recent price surge. They have been slowly edging downward over the past few days, not all the way back to 0.1% yet, but they just crossed into the sub-0.2% range. (btw it's the 30 day rates that I am paying the most attention to.) I interpret this to mean that the recent market inactivity has given people enough time to deposit USD into bitfinex and take advantage of the high rates of return. This extra fiat and relatively lower rates will make it more appealing for people to go long on bitcoin when it makes its next move upward.

The lending rate is a bullish sign.

Lots of cash waiting for the right moment to buy in.
I think it's now, but I guess all those who never lived a bubble and are beginners with btc investment need more solid "proof" that it is here to stay (some sort of big news).
This means they will buy in a bit later that they should, but it's what happens in all bubbles. Then comes the snowball effect.

[CEG5952]

Most people satisfy rather than optimize.  If the water is fine here, why should I swim over there?  All the positive news is great preparation, but the next bubble won't happen without a kick -- some negative news in the fiat world -- that drives people to switch.

I'm not sure we need news to start anything. I tend to fall into the "price follows price" camp. There's so much money waiting to buy in right now, waiting for whales to show that the bottom is in. But I'm also not convinced that the time for bubble is now.

[keithers]

I think the market is feeling a "calm before the storm" type dynamic again.   We have had price stability for a good run now, and it is about that time where people start calling for the volatility to come back.   

  A lot of market analysts are looking at this thinking that it is a bullish sign, and that we may be headed up from here.   But the last time everyone started saying that the prices were "boring"   we went literally straight down.

[Benjig]

I think the market now is set to left behind those people who are unpatient and are desperate of the current price, you can expect even a dump here.

[smoothie]

Most people satisfy rather than optimize.  If the water is fine here, why should I swim over there?  All the positive news is great preparation, but the next bubble won't happen without a kick -- some negative news in the fiat world -- that drives people to switch.

This ^

The next time the world has a financial crisis, Bitcoin and other cryptos will soar to the heavens as central banks around the world print to oblivion.

[Benjig]

Most people satisfy rather than optimize.  If the water is fine here, why should I swim over there?  All the positive news is great preparation, but the next bubble won't happen without a kick -- some negative news in the fiat world -- that drives people to switch.

This ^

The next time the world has a financial crisis, Bitcoin and other cryptos will soar to the heavens as central banks around the world print to oblivion.

Very clever, and it will happen for sure, better to the bitcoin infrastructure to stand up before that, if we had a 10x raise with Cyprous and another 10x raise with China (this one without having any financial crisis) what can we expect in a crisis scenario with a huge nation like USA? i think we could see a 100x raise in days 

[jcoin200]

Most people satisfy rather than optimize.  If the water is fine here, why should I swim over there?  All the positive news is great preparation, but the next bubble won't happen without a kick -- some negative news in the fiat world -- that drives people to switch.

This ^

The next time the world has a financial crisis, Bitcoin and other cryptos will soar to the heavens as central banks around the world print to oblivion.

I think we are in financial crisis. US debt is set to climb higher than 20 trillion and is not stopping.  Not to mention argentina, spain, etc. Its just not being acknowledged by everyone, its almost being kept quiet by the media under reporting.  I also remember a few months back a bunch of banker "suicides" that seemed awfully similar in manner and time frame.  Makes you wonder what is going on behind the scenes?

[rhino34567]

Most people satisfy rather than optimize.  If the water is fine here, why should I swim over there?  All the positive news is great preparation, but the next bubble won't happen without a kick -- some negative news in the fiat world -- that drives people to switch.

This ^

The next time the world has a financial crisis, Bitcoin and other cryptos will soar to the heavens as central banks around the world print to oblivion.

I think we are in financial crisis. US debt is set to climb higher than 20 trillion and is not stopping.  Not to mention argentina, spain, etc. Its just not being acknowledged by everyone, its almost being kept quiet by the media under reporting.  I also remember a few months back a bunch of banker "suicides" that seemed awfully similar in manner and time frame.  Makes you wonder what is going on behind the scenes?

Corruption. But it'd have to be way higher than people thought for it to cause this much of a financial crisis.

[thezerg]

Are we feeling the pain yet? 


This is what I think; its total speculation.  Miners have been holding a significant portion of their supply hoping for an upwards bounce.  But those coins eventually needed to be sold to make ends meet.  Essentially you can think of it like these miners were leveraged long (borrowing $ from their own bills that must be paid).  As the price slowly dropped, we approached the line where certain miners had to sell to make sure they could keep the electricity on.  This became a cascading effect, driving a rapid price descent.

I'm waiting for the hash rate graph to flinch.  This will indicate that some miners are shutting off units, which will tell me that we are approaching the marginal cost to produce a coin.  Shutting off miners will reduce supply, and likely indicate a bottom since utility (as measured by metrics like transactions to new addresses) is still increasing.

[MNDan]

Are we feeling the pain yet? 


This is what I think; its total speculation.  Miners have been holding a significant portion of their supply hoping for an upwards bounce.  But those coins eventually needed to be sold to make ends meet.  Essentially you can think of it like these miners were leveraged long (borrowing $ from their own bills that must be paid).  As the price slowly dropped, we approached the line where certain miners had to sell to make sure they could keep the electricity on.  This became a cascading effect, driving a rapid price descent.

I'm waiting for the hash rate graph to flinch.  This will indicate that some miners are shutting off units, which will tell me that we are approaching the marginal cost to produce a coin.  Shutting off miners will reduce supply, and likely indicate a bottom since utility (as measured by metrics like transactions to new addresses) is still increasing.

I like this theory! So you figure the cost is in the $300's somewhere for the more efficient mining setups?

[IMZ]

Hmmm . . .  gotta chaw this over. However . . . it is a reasoned thesis; and that's what I came lookin' for.

Mark (IndiaMikeZulu), Australia

[thezerg]

Are we feeling the pain yet? 


This is what I think; its total speculation.  Miners have been holding a significant portion of their supply hoping for an upwards bounce.  But those coins eventually needed to be sold to make ends meet.  Essentially you can think of it like these miners were leveraged long (borrowing $ from their own bills that must be paid).  As the price slowly dropped, we approached the line where certain miners had to sell to make sure they could keep the electricity on.  This became a cascading effect, driving a rapid price descent.

I'm waiting for the hash rate graph to flinch.  This will indicate that some miners are shutting off units, which will tell me that we are approaching the marginal cost to produce a coin.  Shutting off miners will reduce supply, and likely indicate a bottom since utility (as measured by metrics like transactions to new addresses) is still increasing.

I like this theory! So you figure the cost is in the $300's somewhere for the more efficient mining setups?

Idk it depends a lot on the cost of electricity and a little on the production cost of the HW.  Anyone have the latest stats?

[Hunyadi]

  Shutting off miners will reduce supply, and likely indicate a bottom since utility (as measured by metrics like transactions to new addresses) is still increasing.

I don't understand how would shutting down miners reduce supply as a whole. 3600btc/day will still be mined.

[thezerg]

  Shutting off miners will reduce supply, and likely indicate a bottom since utility (as measured by metrics like transactions to new addresses) is still increasing.

I don't understand how would shutting down miners reduce supply as a whole. 3600btc/day will still be mined.

This is a common misconception, and requires a background in control theory to intuitively grasp.  But in essence the difficulty adjustment trails hash rate changes.  So for example for the past year or more 4000+ btc/day have been mined on average because lots of hashing power has been entering the network, but the difficulty only adjusts approx every 2 weeks.  So the transient extra hash power results in a faster block confirmation time.

The opposite will happen if mining capacity goes offline.