The recovery in one picture, or: why bulls shouldn't salivate too much yet

[oda.krell]

There it is: one picture to summarize why and how we got out of the bear valley in May. But also: why you shouldn't really expect price to reach the moon anytime soon.

Huh?

Oh, alright, I'll state the obvious: selling pressure declined, buying pressure is only up slightly. The order book history (I picked stamp) shows that pretty well. In other words, our recovery is - so far - driven mainly by the reluctance to sell, not by overwhelming desire to buy.

And that's okay for now. Just keep that in mind when we get near $700 again and you start feeling that urgent desire again to post pictures of rockets and moons.


(disclosure: I'm long. Will trade big enough swings should they arise, but I see more potential to the upside right now than to the downside. Just not that much upside potential, see above.)

[Wandererfromthenorth]

It seems 100& natural to me.


Whales wanted to keep the price down as long as we were inside the huge bearish triangle. As soon as we had to get out of it, they all figured: no point in keeping the price down anymore. Same thing with any other player that was more and more reluctant to sell.
The intent of these whales was also to egg the market in opening shorts after shorts, and then squeezing the hell out of them (looking at Bitfinex USD and BTC SWAPs that is very clear).

I'm guessing the real panic buys were not there because big players were waiting on the sidelines (still a lot of fiat they accumulated from the bear market) for more confirmations (such as the traditional pre-bubble crash (15-20% drop)).

They have these confirmations now, yet they are not really panic buying. I think this is because of the Silk Road coins auction still in the air, a lot of FUD around that event.

I think very soon after June the 27th we will have a more definite push in the right direction.

[Tzupy]

And oda.krell is going to be called a perma-bear too!  
Correct observation about the reluctance to sell. Compared with the early March peak of 710$, the 681$ peak
saw about 10k less asks, but also 15M$ less in bids. So it appears Bistamp has been losing a lot of market share,
or is this the effect of the decoupling with BFX? Also on the 15m chart it looks like someone is pumping with
~1K BTC buys and then sells in small chunks at the top of the local uptrend he created.

[Arghhh]

The desire to buy will be driven by news that no TA is prepared for. Take Lawsky's bitlicense announcement, US exchanges, ETFs, and the inevitable EBay/Paypal integration for future examples.

[oda.krell]

And oda.krell is going to be called a perma-bear too!  
Correct observation about the reluctance to sell. Compared with the early March peak of 710$, the 681$ peak
saw about 10k less asks, but also 15M$ less in bids. So it appears Bistamp has been losing a lot of market share,
or is this the effect of the decoupling with BFX? Also on the 15m chart it looks like someone is pumping with
~1K BTC buys and then sells in small chunks at the top of the local uptrend he created.

Valid point about Bitstamp's reduced market share. The order book picture is much less clear on Bitfinex, with much wilder swings in either direction. I suspect that's because of the possibility to trade (and fill the order book) on margin.

In any case, the order book history is only one possible "snapshot" of the situation. Daily Chaikin Money Flow paints a similar picture, as does volume, which is anemic compared to volume during the bear market.

[MatTheCat]

Valid point about Bitstamp's reduced market share. The order book picture is much less clear on Bitfinex, with much wilder swings in either direction. I suspect that's because of the possibility to trade (and fill the order book) on margin.

In any case, the order book history is only one possible "snapshot" of the situation. Daily Chaikin Money Flow paints a similar picture, as does volume, which is anemic compared to volume during the bear market.

I find that the Bitstamp charts are a much better market barometer than Bitfinex. Bitfinex charts are full to the brim with margin traders switching positions every 5 minutes with erratic spikes and dips that come about due to margin calls in a thin market with very often illusory Ask/Bid wall depth. I have never witnessed Bitfinex take the lead in any direction and the rest of the market follow. On two occasions at recent top of market, Bitfinex broke to upside, Huobi and even BTC-e followed, but Bitstamp never budged. Bitstamp spent the following few days below the average spot price of all other exchanges, but in the end, Bitcoin went the way of the Bitstamp charts.

And I concur. The market right now is being held up more by a lack of willingness to sell other than by buying pressure/support. There are a 101 different indicators which could be used to paint a similar picture as your Bid/Ask ratio graph. The more I look at it, the more short term bearish I am becoming. I think a correction down to mid/upper $500s in the first instance is looking increasingly more likely than even a move up to $630.

[Wandererfromthenorth]

Bitstamp lost market share because:

-outrageous fees
-ridiculous fee structure (https://bitcointalk.org/index.php?topic=597647.0)
-fears that Bitstamp could become the new MtGox (BTC withdrawals delays, invasive info for fiat withdrawals, the audit with Mike Hearn was suspicious, etc.).


Traders still refer to Bitstamp for TA because it has historical chart data from 2011 until today, though.

[TERA]

Bitstamp lost market share because:

-outrageous fees
-ridiculous fee structure (https://bitcointalk.org/index.php?topic=597647.0)
-fears that Bitstamp could become the new MtGox (BTC withdrawals delays, invasive info for fiat withdrawals, the audit with Mike Hearn was suspicious, etc.).


Traders still refer to Bitstamp for TA because it has historical chart data from 2011 until today, though.

Bitstamp lost market share? I wasn't aware of that. I thought volume declined all accross the board. Who gained market share?

Bitstamp's fee structure isn't really that bad.  It advances about 10 times faster than gox's old fee structure did.

[elebit]

Oh, alright, I'll state the obvious: selling pressure declined, buying pressure is only up slightly. The order book history (I picked stamp) shows that pretty well.

How do you calculate selling pressure?

I think total buy sum is pretty straightforward, because there is a fixed amount of dollars at the exchanges, and if these dollars are in the orderbooks they should be visible there.

But the sum of all sells nominated in dollars, what does that mean? Given that a lot of people store their bitcoins at the exchanges (which we've seen again and again), and a lot of them would put down "yeah, I'll sell for 10k", calculating the dollar sum of all asks would give an inflated value.

[oda.krell]

Bitstamp lost market share because:

-outrageous fees
-ridiculous fee structure (https://bitcointalk.org/index.php?topic=597647.0)
-fears that Bitstamp could become the new MtGox (BTC withdrawals delays, invasive info for fiat withdrawals, the audit with Mike Hearn was suspicious, etc.).


Traders still refer to Bitstamp for TA because it has historical chart data from 2011 until today, though.

I disagree. Real volume analysis right now is difficult without some form of aggregating over exchanges, but if you'd have to pick any one exchange, I'd always take stamp. The main reason is that their volume is consistent and transparent. Bitfinex still refuses to distinguish between routed volume and in-house volume, so I know it is inflated, at least on days when they have to route to stamp. How often does that happen? Anyone's guess.
Chinese volume is tricky because of zero fees. I've said more than once: I don't dismiss it entirely as "fake", but I certainly don't count it 1:1 either. So stamp and btc-e are left, and in my opinion, btc-e rarely if ever starts larger moves, so picking stamp is (still) the default choice for me.

[oda.krell]

Oh, alright, I'll state the obvious: selling pressure declined, buying pressure is only up slightly. The order book history (I picked stamp) shows that pretty well.

How do you calculate selling pressure?

I think total buy sum is pretty straightforward, because there is a fixed amount of dollars at the exchanges, and if these dollars are in the orderbooks they should be visible there.

But the sum of all sells nominated in dollars, what does that mean? Given that a lot of people store their bitcoins at the exchanges (which we've seen again and again), and a lot of them would put down "yeah, I'll sell for 10k", calculating the dollar sum of all asks would give an inflated value.

Not sure I get your point. The order book history I posted doesn't denominate ask sum in USD. It's misleading perhaps that the two are shown in the same chart, just imagine them to be in two different ones. The point I made isn't affected by that.

[MatTheCat]

I'm not sure, I suppose fiat was withdrawn from Bitstamp and moved to Bitfinex. That would explain the surge in loans
that allowed the pump. And even more BTC were withdrawn from Bitstamp, so little resistance was met during the pump.

Bitstamp's fee structure is OK. It's relatively easy to meet the 150K$ volume per month required for the 0.2% fee.

I can't get any fresh fiat directly onto Stamp, because I refuse to submit to their KYC procedures. I suspect that this has slowed the flow of fresh capital onto Stamp.

[elebit]

I can't get any fresh fiat directly onto Stamp, because I refuse to submit to their KYC procedures. I suspect that this has slowed the flow of fresh capital onto Stamp.

In that case you are pretty restricted in your trading, since all the big ones use similar procedures. There's only the pseudonymous Russian one left for you.

[MatTheCat]

I can't get any fresh fiat directly onto Stamp, because I refuse to submit to their KYC procedures. I suspect that this has slowed the flow of fresh capital onto Stamp.

In that case you are pretty restricted in your trading, since all the big ones use similar procedures. There's only the pseudonymous Russian one left for you.

Kraken....

....and from their, I can transfer BTC to where I want. But if I was dealing with any kind of volume, then Kraken wouldn't be an option for getting funds into Bitcoin land......

......and also often, the premiums on LocalBitcoin (GBP) are pretty much equivalent to spot on the exchanges these days.....must be a big supply of BTC making their way onto UK LocalBitcoins. When I used to buy my BTC from LocalBitcoins, there was always a hefty 5-6% premium as a bare minimum to be paid over exchange rate.

Edit: And it just isn't the case that 'they are all the same'. Bitstamp used to request, proof of ID, verification of address, and locked the account to accept payments from the registered bank account only. In that sense, it is just like all the rest. These days, Bitstamp want to stick a stethoscope up the traders ringpiece. They want me to provide them with tax returns, proof of where my funds originally came from etc etc. It is like these boys have had the wind put right up them and they don't know how to properly behave, so are excercising caution to an extreme. Really, it is like they just don't know what they are fucking doing.

[elebit]

Kraken....

The one exchange that actually says "Lube up!" when you submit for a KYC? At least they used to. TBH I didn't notice any difference in their KYC proceedings, what did I miss?

[BuildTheFuture]

...Who gained market share?
Bitstamp's fee structure isn't really that bad.  It advances about 10 times faster than gox's old fee structure did.

I'm not sure, I suppose fiat was withdrawn from Bitstamp and moved to Bitfinex. That would explain the surge in loans
that allowed the pump. And even more BTC were withdrawn from Bitstamp, so little resistance was met during the pump.

Bitstamp's fee structure is OK. It's relatively easy to meet the 150K$ volume per month required for the 0.2% fee.

Up until a few weeks ago Bitfinex used to route some of their orders to Bitstamp, but they announced recently they have grown to the point that they feel ok in completely stopping that. I guess they might have been gradually tailing it off before that. But as of 2-3 weeks back, they are now totally separate. They announced this in a comment on reddit, sorry don't have the link handy.

[oda.krell]

...Who gained market share?
Bitstamp's fee structure isn't really that bad.  It advances about 10 times faster than gox's old fee structure did.

I'm not sure, I suppose fiat was withdrawn from Bitstamp and moved to Bitfinex. That would explain the surge in loans
that allowed the pump. And even more BTC were withdrawn from Bitstamp, so little resistance was met during the pump.

Bitstamp's fee structure is OK. It's relatively easy to meet the 150K$ volume per month required for the 0.2% fee.

Up until a few weeks ago Bitfinex used to route some of their orders to Bitstamp, but they announced recently they have grown to the point that they feel ok in completely stopping that. I guess they might have been gradually tailing it off before that. But as of 2-3 weeks back, they are now totally separate. They announced this in a comment on reddit, sorry don't have the link handy.

Probably this is the reddit post you have in mind. You'll note how he doesn't say that they completely discoupled. In fact, about 3 weeks ago, there were signs that during high volume periods, that link might still be active - see the discussion in the wall thread

[MatTheCat]

Probably this is the reddit post you have in mind. You'll note how he doesn't say that they completely discoupled. In fact, about 3 weeks ago, there were signs that during high volume periods, that link might still be active - see the discussion in the wall thread

+1

Synchronous LARGE trade orders listed on Bitfinex, can still be seen going through Bitstamp when the market is really moving.

[PirateHatForTea]

They would never completely decouple, because there will always be market makers arbitraging between Finex and Stamp. But it's true that if people think they're seeing a sudden thinning out of the order book that there may still be some BFX - Stamp routing going on behind the scenes. Rapheal has refused to clarify beyond vague descriptions of a gradual decoupling, so maybe there is some way that they are amping their own arbitrage/routing down, eg by keeping lower balances on stamp and topping up less frequently.

[zimmah]

Valid point about Bitstamp's reduced market share. The order book picture is much less clear on Bitfinex, with much wilder swings in either direction. I suspect that's because of the possibility to trade (and fill the order book) on margin.

In any case, the order book history is only one possible "snapshot" of the situation. Daily Chaikin Money Flow paints a similar picture, as does volume, which is anemic compared to volume during the bear market.

I find that the Bitstamp charts are a much better market barometer than Bitfinex. Bitfinex charts are full to the brim with margin traders switching positions every 5 minutes with erratic spikes and dips that come about due to margin calls in a thin market with very often illusory Ask/Bid wall depth. I have never witnessed Bitfinex take the lead in any direction and the rest of the market follow. On two occasions at recent top of market, Bitfinex broke to upside, Huobi and even BTC-e followed, but Bitstamp never budged. Bitstamp spent the following few days below the average spot price of all other exchanges, but in the end, Bitcoin went the way of the Bitstamp charts.

And I concur. The market right now is being held up more by a lack of willingness to sell other than by buying pressure/support. There are a 101 different indicators which could be used to paint a similar picture as your Bid/Ask ratio graph. The more I look at it, the more short term bearish I am becoming. I think a correction down to mid/upper $500s in the first instance is looking increasingly more likely than even a move up to $630.

Just how many more corrections does the market need? We're already down a lot from previous mini-rally and at the low side of the fibonaci fans. I don't think your conclusion is wrong but i just wonder why the market wants so many corrections even with all the good news and also the timing is about right for the next rally.

It just feels too bearish atm.