nrd525 Market Tracker

[nrd525]

Bought 1 BTC at $267 on Bitfinex.  I've got several bids in the 200s.  I blame this on the fact that I just watched "The Rise and Rise of Bitcoin" documentary.  The documentary is very positive.

It was fun, but a bit on the corporate side.  A lot of talk about Bitcoin helping the "unbanked" poor people of the world, but instead everyone was focused on helping the upper-middle class in the US, Europe, and China to speculate and buy stuff they don't need.

More buying
1 BTC at $262
1 BTC at $257
1 BTC at $247
1 BTC at $236

[nrd525]

This may be the bottom or very near the bottom.

1. Market falls almost 20% in the last 24 hours without any real news.  It recovered a bit and is now down 13% in the last 24 hours.

2. Price hasn't recovered in a V shape. The V shape - fast fall, but also fast recovery is more typical of bottoms.  This is evidence that we're not at the bottom.

3. Volume is very high

4. The number of short positions (BTC swap) on Bitfinex fell from 24k to 18k, but have since recovered to 21k.  On the other hand there are still more longs ($17 million) and the longs are also down by $2 million in the past day.

5. General sentiment is negative.  

6. Alt coins are doing better than I'd expect at a BTC bottom. For instance, LTC has historically been more volatile than Bitcoin and is down by 31% versus Bitcoin in the past 30 days. However, I'd expect worse.

7. Business development continues. Bitpay firing seven people is a good example of how Bitcoin is having a lot of trouble breaking into payments (lots of merchants accept it, but the amounts are generally insignificant).

8. Bitstamp hack is negative.  Looks like they'll reimburse people which is positive.

9. Pending government auction of Silk Road coins, especially in this bear market, could trigger another sell-off.  Or could it be delayed for a long time as the legal proceedings go on?

10. 2011 Bear Market did a 93% retrace (fell from $32 to $2).  By contrast we're "only" down 75-80%.  While I'd expect volatility to decrease as the market matures, it could be that speculation has increased as there are more exchanges, options, and margin trading than ever before. The market may be more immature!

[nrd525]

I've been buying on the way down. This is not as fun as buying on the way up, but hopefully more profitable in the long run.

The crash to $152 (Bitstamp), $166 (Bitfinex), $145-$150 (China hit 900-930 Yuan) or $168 (Btc-e: acting weird as historically they've been the lowest priced USD exchange) is the type of desperate fast crash that happens at the absolute bottom of the bear market.    Though it was easier to say this when the price has recovered to $200.  Now that we're sitting at $186 (Bitfinex) or $180 (Bitstamp), and Bitfinex BTC swaps are still high - the recovery is still looking a bit shaky.

Anyways, I've been buying lots of bitcoins on BFX:
1 BTC at $226
1 BTC at $216
2 BTC at $206
1 BTC at $197
2 BTC at $192
2 BTC at $187
2 BTC at $182
2 BTC at $177
2 BTC at $172
1 BTC at $167

$167 was the lowest bid that I had on the order book and it got filled!
An advantage of having bid orders already issued is that I didn't have to madly place any bids at the bottom when the price was fluctuating by as much as 5% in a single minute.

Over the past several days, I've doubled my number of BTC to around 40.  Time will tell whether this was a good move.

[nrd525]

Positive news: Quantitative easing in Europe, Coinbase $75 million funding round, Winklevoss twins plan a US exchange, and possible ETF soon.

On the other hand, the world economy is looking fairly fragile. The US economy is great, but Europe is very weak (near zero growth), Japan is in recession, Russia is probably going into a recession, and China's growth has slowed (though to 7%).  There is also a risk of another asset bubble, possibly from housing - as central banks keep interest rates very low (see the nearly zero five year yield on the German and Japanese treasuries).  For instance, in Vancouver Canada the median single family home price is over $1 million, and one the west side of Vancouver the average price is over $2 million.

If the housing market bubbles - the pop will hurt.

Litecoin is up 30% in the past 24 hours.  Might be worth shorting (and would probably reduce your risk if you are long in BTC).

[nrd525]

The Coinbase exchange launch is exciting, but in retrospect the impact on the price was totally overblown.  22% gain in 24 hours!  Watching it I got overwhelmed with irrational exuberance - though not to the point of buying anymore BTC.

My overall break-even point on bitcoin investments is somewhere around 310. So it was great to go over that! My cost basis is closer to 350 but the difference is due to swap lending and some capital gains in 2013.

I especially liked how long it held above 300 and the high volume in the recent move.

I continue to think that $150-$166 was probably the bottom of the year-long bear cycle.

Syriza's win in Greece might be slightly bullish for Bitcoin as it could increase exchange rate chaos. I'm a radical so I'm pretty happy about it - though I'm worried that Syriza will sellout - like most left wing parties do after they win power.  Though in the long-term if Greece leaves the EU monetary union - it might be bullish for the Euro and negative for Bitcoin.  Greece has been providing more instability to the EU than the benefit from including its relatively small economy.

Last 24 hours, Bitcoin now up almost 8%.  Litecoin down almost 8%.  The last post's recommendation on shorting Litecoin was a good guess.  I hope my countless faithful subscribers pulled in some large profits!  I know I didn't.

[nrd525]

The number of both USD swaps ($15 million - lowest since March 2014) and BTC swaps (12k, lowest since Dec 2014) at Bitfinex is decreasing to recent lows. Does this mean that people are unsure which way it will move?  Or are traders moving their money to other platforms?  The rates are very low for both (0.02%/day).

Interesting book on Bitcoin by Tim Swansom which points out a lot of the limitations:
https://www.scribd.com/fullscreen/235826409?access_key=key-aBLslM47TikhTtq3GmHB&allow_share=true&escape=false&view_mode=scroll

[nrd525]

You can follow an interesting group of traders on TeamSpeak: http://vaughnlive.tv/whaleclub
Only has audio when the traders are up, and if the market is active.  So often there is no audio for hours.  They seem to all be doing very short-term trades, so I'm unsure as to whether it is informative.  But it'll be entertaining to follow even for minor market moves.

[nrd525]

We are still in a very strong long-term bear market.  A lot of people are talking about how we might need to flash crash to 156-166 again (what we hit in January) and have it hold. This is known as a "double-bottom".

So this long term bear market could be driven by technical analysis, or it could be the product of bitcoin losing its value to speculators and not breaking through into payments (a lot of merchants accept bitcoin payments, but the payment volume is lower than expected).

I'm the type of person that likes to closely track their expenses and be very careful about what I spend.  Most Americans don't do this.  So for me the goal of reducing the 2% fee that credit card companies take is a great one.  However most Americans aren't going to care, and businesses are going to be reluctant to put enough pressure on consumers to change.

If you think BTC might fall to 170, you could make a killing shorting LTC.  Of course shorting LTC is very dangerous.  I'm just more bullish on BTC than LTC.  If you are a longterm BTC holder, you could reduce your risk by shorting LTC (currently Bitfinex is offering very low rates for doing this - 0.02%/day).

[nrd525]

Bitfinex USD swap rates have increased from around 0.022%/day to 0.033%/day and are showing signs of going up even more.  This could be a sign that more people think the bear trend is reversing.

If the long term bear trend reverses (or people learn that it has already reversed), it is likely that these swap rates will spike to 0.1-0.2%/day.  However, the stronger the spike - the shorter it will last as new money will come in.

I've been listening to the "WhaleClub" teamspeak. There is all sorts of crazy trolling, including someone last night who said that he'd worked for MtGox for five months and that Mark Karpeles was going to dump 30k coins and the price was going below $200 within the next ten hours (he was ridiculed by everyone else). This hasn't happened.  The teamspeak is also littered with conspiratorial talk about both bitcoin whales and banks controlling the economy.  There might be a couple people there with insider connections - but it is difficult to say who is telling the truth.

[nrd525]

Positive News: Bitcoin Investment Trust gets approved by some financial authority so I think you can put it in your tax sheltered US retirement plan (401 k).

Price: Bitcoin has gone up a lot. From around 210 to 285 in the past 20 days, and the rate of increase is increasing.

The news is very positive, but I think the market is over-reacting to news that should have been priced in.

Bitfinex USD swap rates are up to almost 0.06% on the Flash Return Rate (highest level since Dec 18).  BTC rates are lower (0.019%) and more significantly have a large amount of untaken offers at that rate (currently 6000 BTC).  The amount of USD swap that is lent out is up by about 2 million over the past three weeks (from $16 million to $18 million).  And the amount of BTC swaps lent out is down from the peak of 23k to 16k.

There is an upcoming March 5th auction of 50k Silk Road BTC. I think each of these auctions tends to have less impact than the prior one, but in this case with a bullish market it could have greater impact.

[nrd525]

Reviewing my past posts, I think I did a good job of calling the bottom.  And more importantly, I did a great job of buying at the bottom.

The latest US government auction of 50k bitcoins went off without a hitch. We don't know who bought them (someone really needs to FOIA this information!).

I'm very happy with the rise to $290, but am concerned about the lack of significant news.  It looks like we're breaking the long term bear trend, but I'm not sure how to tell this for certain. It is unlikely that we'll reach a new high within the next year.  I guess reaching $400-$500 would be a clear reversal of the trend, especially if we can stabilize above $400.

Latest tool: cryptowatch.ch beats bitcoinwisdom.com for market watching as it includes more markets (like OkCoin future contracts - which are volatile, but often more fun to watch).

US stock market is hitting new highs. Job growth is strong and the Fed might start to increase interest rates this year.  I'm not sure how the US economy is able to be so healthy given the problems in Europe and slowdown (only 7% growth) in China, but maybe so long as first place and third place trading partners Canada and Mexico are doing ok - the US could be fine (http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States).
On the one hand inflation is good for Bitcoin, but quantitative easing was also good.

[Morecoin Freeman]

I appreciate the reasoning behind your investment decisions. Nicely done.

[chriswen]

You can follow an interesting group of traders on TeamSpeak: http://vaughnlive.tv/whaleclub
Only has audio when the traders are up, and if the market is active.  So often there is no audio for hours.  They seem to all be doing very short-term trades, so I'm unsure as to whether it is informative.  But it'll be entertaining to follow even for minor market moves.

You can also actually join in on the discussion if you want.  theres multiple rooms which is also sometimes why its quiet.

[hodlmybtc]

As always A+ nrd525!

I think the clear trend reversal happens before $400 but we definately need to stabilize first at $300+ and then $350+

[nrd525]

The venture capital news is strong.  

$116 million for "21 inc".
http://blogs.wsj.com/digits/2015/03/10/secretive-bitcoin-startup-21-reveals-record-funds-hints-at-mass-consumer-play/


The $1 billion estimate is a bad case of using extrapolation on a small data set.  We're probably going to hit anywhere from $300 million to $3 billion in venture funding this year:
http://insidebitcoins.com/news/bitcoin-venture-capital-funding-pace-1-billion-2015/30665

Also - BFX USD swap rates are spiking to 0.7%/day.  Lowest offered rate is currently 0.33%/day. Which is super-crazy and a great rate for your USD investments.

I recently added some USD money to my BFX account to lend out. I bought at Circle (seems to have a 0.9% premium / disguised fee over Bitfinex) and also at Coinbase (1% fee) - and sold BTC at Bitfinex at approximately the same time.  For small amounts it is cheaper than using wire transfers.  I wish I could have bought coins at the Coinbase exchange (zero fee until March 30th), but I'm in one of the US states that they don't cover.  So I pay around 1.1% in fees (BFX + Circle/Coinbase) to transfer USD.  Hopefully swap rates will stay high and I'll make the money back within 2-3 weeks.  At 0.02%/day, it could take a lot longer.

Hopefully Coinbase or somebody registers in my state, so I can get money from bitcoins into USD at a lower fee rate than 1% (and use ACH transfers to my bank account).

[nrd525]

EU to limit credit card fees to 0.3% and debit cards to 0.2%.
http://www.europarl.europa.eu/news/en/news-room/content/20150306IPR31705/html/MEPs-put-an-end-to-opaque-card-payment-fees

It looks like centralized payment schemes are going to have the lowest fees for small to medium sized transctions, not Bitcoin. Though in the US we're still waiting for lower fees as we pay 2-3% on credit cards (solutions like Dwolla aren't making inroads).


Small inroads into the remittances market:
http://www.independent.co.uk/news/business/news/bitcoin-is-being-used-by-african-migrant-workers-to-send-money-home-10098169.html

[nrd525]

Money is flowing in pretty quickly to BFX and USD swap rates are heading down, even though total outstanding swap is still going up.

On the plus side, this means that the number of long positions could increase - probably at a "sustainable" rate of 10%/week (eg. from $20 million to $22 million in one week, and to $40 million in 7 weeks) at 0.10% daily interest - if the market goes very bullish.

[nrd525]

Darkmarket Evolution gets hacked for an unknown amount of bitcoins.  I've seen two different numbers (one staff member estimates three times the earlier reported number).

BFX price at $254 (after falling to $249).  I'm guessing a bounce-back to $270.  Considering going in on the margin...

[nrd525]

Went long 10 contracts at $249.20 on the second dip.

[nrd525]

Closed my position within the past hour at 261.20 - for a nice $120 profit (or more like $110 after fees).  This is my best day trade ever!

Note: do not day trade, unless you want to ruin your life and/or lose all your money, or you have insider information.  Day trading is gambling.  Stay tuned for future posts where my luck runs out =)

That said - if you've made a large profit from this move, you can PM me and I'll send you my bitcoin address for a donation =)