nrd525 Market Tracker

[nrd525]

I was a bear because most startups fail and the huge number of scams and really bad Bitcoin startups that were obviously going to fail.   I'm also politically biased against libertarians (I'm an anarchist) - so I figured this was a great case of capitalism without regulation and speculation gone wild!

In 2011 it was easy to be bearish because the currency had gone from $1 (or even $0.01) to $32 and didn't have any serious business/projects behind it.  Bitcoin didn't really establish itself (in terms of projects and also media attention) until 2013.   There were a ton of joke companies listed on GLBSE (bitcoin stock exchange).

In 2012, I didn't really think about it.  I was upset about losing money on the Bitcoinica hack.

In 2013, I started to see it becoming more serious.  There were actually businesses using Bitcoin that you could trust.  Then I realized that capitalists love to speculate/gamble and Bitcoin was a good fit for our society with its massive economic inequality, quantitative easing, and fascination with high tech startups.  Since then, I've seen all the alt-coins fail to succeed. Previously I thought that there was infinite inflation as you could have an infinite number of easily created cryptos.  We've seen hundreds of them created, but Bitcoin still has 90-95% of the market share.

It's also possible that I'm just extremely jealous that about people who bought in earlier and am making a terrible mistake

[zakalwe]

TH1 continues to be over-valued. The price is up over the past 10 days - when it should be declining each day.  The difficulty outlook is good (next increase might be 0%, but I'd expect 7% increases afterwards).  I expect a sharp correction within the next 0-40 days.

I started a TH1 speculation thread:
https://bitcointalk.org/index.php?topic=802718

BTC is slowly falling and approaching the year all time low.  I think it's a great time for a new investor to buy.  It's a decent time to buy if you are fine with increasing your BTC asset allocation.  For me, I'm just sad about all the money I'm losing.  As another user wrote, the fundamentals are good but the technicals are bad. That said, I prefer to use fundamentals - so I'm optimist.  

LTC is doing well given these circumstances.

Do you think BTC will have a dramatic mini flash crash (high volume, loss of 5-10% in maybe 1-2 hours) before it reaches the bottom?  Or will it just have a small bounce that reverses the long-term slow decline, and then turns into a slow recovery?

Lately it's really hard to predict numbers. I think there is a mining reason why price is dropping. Large capitals got into mining hardware so because of ROI and also because of who has large mining farm wants somehow to keep price low to keep others out of the game, they are dumping.
But as you said, fundamentals are great and I, like you do, don't day trade but look for good positions.

BTC, LTC and DOGE in my opinion are the best three horses by now.

[nrd525]

I agree on the mining economy affecting the general bitcoin economy.

When people started discussing the transition to ASICs, I thought that the impact of high capital costs and low marginal costs would ruin a lot of miners and miner manufacturers - as people would continue to run their ASIC so long as it produced more than the cost of electricity, but they'd never get the ROI.   And manufacturers would continue to manufacture so long as their marginal cost of production was lower than the sale price (even though most of them wouldn't make ROI due to the high design costs of the chips).   We managed to avoid that because bitcoin prices went up by a factor of 100 and, to a lesser extent, because the initial batches of miners were smaller and less efficient. I didn't forsee that there would be such large differences between early and later ASICs.

Currently a lot of people are losing money on mining. Though I really have no idea how much money we're talking about.  People are losing even more money on cloud mining.

[nrd525]

I bought 8 bitcoins at $303.70 on Circle -- partially to transfer funds to Bitfinex and to replace some of the bitcoins I've been paying out in dividends on my TH1 shorts.  Circle was 1.2% above Bitstamp ($300), but lower than Bitfinex ($307).  Previously I saw a 0.5% premium at Circle. I'm not sure how they set their prices.

But this does increase my general Bitcoin position as a percent of my liquid assets. Frankly I'm a bit over-invested and it's a very risky position.  Though it's easy for me to take risky positions as I can save 20-30% of my income each month as my living expenses are dirt cheap.

Just looked now and there is a decent arbitrage opportunity. Buy at Bitstamp for $300 (or Circle - though not as great) and sell at Bitfinex ($312).  As the gap isn't that large it makes most sense to use it if you were planning on transferring funds to Bitfinex.

[001sonkit]

I wonder with the IQ and skills of calculation of most GH investor, it will be 1.3 until like 15 Dec lol....

And for Bitfinex, you actually don't have to back anything, you just pin point the pool and no one knows if we/you actually own the hash rate. You guys can just issue extra 3500-500=3000 more shares for free and take the profit in the middle (issue price-actually mined which is almost impossible to reach your ridiculous price)

PS: I am sure placing on the orderbook is much easier but they go for private whale negotiation. Transparency low as fuck

[nrd525]

I've closed most of my TH1 short.  I think it might be manipulated - so it isn't safe to short it until the last 30 days and you know what your swap costs will be (if you can get a 30 day swap).

[nrd525]

I've closed all of my TH1 short. That was painful!  I lost approximately $3000.  I think there is a small possibility that Bitfinex will realize their mistake and reverse the trades.  

I'm now considering going long to take advantage of the bad design of the contract.  I'm not even sure it needs a manipulator. It is possible that a large enough number of mining enthusiasts would inflate the contract price and then eventually realize that they can make a killing because the contract's design is so bad.  However this is an extremely risky idea, and I really shouldn't do it.  I need to focus on lowering my risk (or I need to work more hours at my consulting job).

-
Buying the 8 bitcoins at $303.70. Wow - looks like a great call so far!  That's the third falling knife I've caught near the bottom, and there is one rising knife that I caught at the top (when I sold at $700-$800, 6-12 hours before it flash crashed).  Though in this case it was pretty easy to catch as there were 30,000 bitcoins sold at that price.

[nrd525]

In the last 24 hours the price is up 15% to around $430.  Are there any fundamentals behind this?

Last I heard the Australian government was going to auction some seized bitcoins, OKcoin's 20x leverage (actually a futures difference contract)  is popular and other Chinese exchanges are adding new future option, and NCR is adding bitcoins to one of their payment systems.

The NCR story could be big - but I frankly have no idea.  

After months of low activity, the Bitcoin Trust has bought 14,000 bitcoins in the past week.
https://bitcointalk.org/index.php?topic=337486.0

Other than that, there is a constant stream of innovation which might be pushing the price up.

[BuildTheFuture]

7 day average transactions excluding popular addresses is hitting an all time high. Overall usage seems to perhaps be growing to the point it is impacting price?

[hodlmybtc]

The whole world seems to be buying with little brakes 

I hope you all bought the majority of your coins already.

This is gentlemen!

[nrd525]

S&P all-time high is bullish for bitcoin.

Unlike others who believe that bitcoin will benefit from financial crises and bank crises, I think it benefits more from a prosperous global economy.  I think it is helped by real economic growth, quantitative easing, and economic inequality.

[nrd525]

S&P 500 hits another all-time-high.

Bitcoin Trust - buys approximately 6500 bitcoin/week, four weeks in a row.
https://bitcointalk.org/index.php?topic=337486.0

Google Bitcoin search trends are flat, or slightly down, since May.
http://www.google.com/trends/explore#q=bitcoin&date=1%2F2014%2012m&cmpt=q

[nrd525]

Stock market continues to reach records.  The third quarter of US GDP growth was very high (annualized to 5%).

Google trend for bitcoin is up.

Price is hanging out at the $300-$320 area. Normally I don't put much faith in resistance levels, but this one seems strong.  We rebounded off $300 pretty hard when someone put up a 6000 (or was it 5000?) BTC ask wall at $300 on Bitstamp several weeks ago.  But overall technical sentiment is very bearish as the year long bear market continues.

I think we're near the bottom, but I said that before and this time am not putting any money on i unless it goes below $300.

Bitfinex has a bot selling 0.1 BTC every six seconds or so. Doesn't seem too significant until you realize that it can add up to 1440 BTC/day if it keeps going. I think the last one only went for a couple hours or maybe an entire day?

[nrd525]

Bitfinex USD swap rates have fallen to an all-time low (or at least an all-time low since Bfxdata.com started to track it (and lower than I can remember it being in February 2013).  The flash rate is down to 0.027%/day (or 10.3% APR, minus 15% fee if you are lending out). By contrast the flash rate for the entire 2014 year averages around 40% after compounding (note in practice you would have got a lower return as the capital is not always used, and don't forget the 15% fee).  And I think in 2013 the USD APR was around 100%.  This is evidence that there are fewer long term bulls.

By contrast BTC swap rates are up to 0.06%/day - much higher than the 2014 flash average of 7.3% APR. Might be long or short term shorters that are accumulating profits.  Though I wouldn't expect the rates to stay that high for too long as the spikes are typically short term and then it goes down to 2% APR.

Icbit.se (now called orderbook.net) effective USD swap rates are occasionally much better for their Sept 15 BTC/USD contract.  As you can buy the BTC now for $315 and sell it for $350-$360 on Sept 15.  Note I'm not an Orderbook user.  Can anyone explain in simple terms how you might make a 10-12% profit by this process?

[nrd525]

Winklevoss files to launch Bitcoin ETF
http://www.reddit.com/r/Bitcoin/comments/2qx1sz/winklevoss_bitcoin_trust_files_to_sell_201/

BTC price went up from 310 to 320 after this announcement.  It's hard to say how much this will increase investor demand, but making it easier to purchase bitcoins is positive.

[bigtimespaghetti]

Winklevoss files to launch Bitcoin ETF
http://www.reddit.com/r/Bitcoin/comments/2qx1sz/winklevoss_bitcoin_trust_files_to_sell_201/

BTC price went up from 310 to 320 after this announcement.  It's hard to say how much this will increase investor demand, but making it easier to purchase bitcoins is positive.

Agree it's hard to gauge the demand that this could create and that it can only be positive bringing it more mainstream and user friendly.

[nrd525]

Watching the price fall dramatically from 310 to 260.  At around 290, I moved my bid orders down (from as high as 275) to mostly be at 235.  So I'm bidding for 6 at 235 and 1 at 245.

There doesn't appear to be any real news driving the slump.  Maybe it's the lack of New Year's rally?  Stocks (or at least US stocks) are more likely to go up in January as people sell in December to realize capital losses for taxes.

[nrd525]

A small percent of the overall bear market is due to the USD falling versus other currencies by 9-10% in 2014.  I'd expect a 10% increase in the USD value, to cause a 5-8% decrease in the BTC USD price (if the US share of the market was 20-50%).
http://www.marketwatch.com/investing/index/dxy

The Japanese police think that only 1% of the MtGox bitcoins were stolen by hackers, and that the remaining 99% were stolen by fraud. I'm not sure of how this should impact the market.  It is possible that the MtGox CEO lost the money in trades. This is what Trendon Shavers did with his ponzi money (Bitcoin Savings and Trust), along with spending it on his expensive lifestyle.  Though nobody seems to have any idea as to where the money went.  If the money (or even half the money) is recovered and returned to its owners as BTC this would be very bullish. If it is auctioned off for USD, that will be crazy (drive the price down, but on the other hand the creditors will have the wealth effect and may decide to receive their credit in BTC instead of USD).  If the bitcoins have been sold during the 2014 bear market, that could explain a lot of the price decrease - but on the other hand they could have been used to prop of the 2013 bull market.

If Bitcoin's main current function is to be an asset, then it might have lost most of that function during the 2014 bear market.  By contrast the gambling and drug markets seem to be doing fine (JustDice and SilkRoad original shut down, but there are many replacements.  The bitcoin merchant payments (Bitpay, Coinbase, etc) market is taking off - though it might have a ways to go before becoming strong enough to be a major driver of demand as it is starting at a low number.

Are there any solid numbers on how much BTC in 2014 was used gambling, drugs (grey or black markets), or merchant processing?

...

I'm not panicking about the price yet...

[bigtimespaghetti]

Interesting thoughts. The price has a lot of people panicky though. Enough for more lows perhaps. I think that psychologically that the market is approaching it's despair phase.

[nrd525]

For the past 2-3 days there has been a $5-$11 price difference between Bitfinex and the top three Chinese exchanges.  Currently it is around $9-$10.  This is over 3%!

This is a decent arbitrage opportunity (unfortunately I lack accounts on any Chinese exchange), and a puzzle.  I don't recall ever seeing such a large premium for Bitfinex over the Chinese exchanges last for more than a day. 

In the 2013 bull market, the Chinese exchanges had a premium over all of the other USD markets. Gox was second place (because withdrawing USD was hard), Bitfinex and Bitstamp third, and then BTC-E was fourth (typically 0.5% below Bitfinex/Bitstamp).

A forum user wrote that Bitfinex sales of 0.1, 0.4, or 0.8 BTC executing every 6 seconds are a product of an arbitrage bot.  This sometimes goes on for hours, but recently has been more sporadic. So if there is an arbitrage bot then it must have inadequate funds to narrow the gap.

In the past it didn't make as much sense to arbitrage small differences between Bitfinex and other markets, as you could lend your USD swap out for 0.07%-0.2%/day on Bitfinex.  But now that the rate is 0.024%/day - arbitrage is more competitive.

Does anyone have an explanation for why this premium is so large and not being arbitraged away?

With Bitstamp closed and Bitfinex diverging from the Chinese exchanges - it is harder to identify what the market trend is.