Gold is Bitcoin is Gold

[miscreanity]

There's definitely a STEMI, indicative of MI. I'm sure plenty of people experienced that shortly after buying at $30.

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[sunnankar]

You're right on needing to assess additional factors. ...

If you think of any other major factors, I'm all ears.

To compare BitCoin and gold and their trading patterns really misses the mark, in my opinion, due to the massive difference in fundamentals.

In gold you have an asset where the price is being suppressed, not supported, and not by users, but by owners, and not for the obvious reason. The largest owners do not act as other purposeful market participants because of the the extreme differences they have. Thus, the price of a portfolio asset, for the largest owners, is worth infinitely less than the ability to retain their monopoly on issuing what billions of people use as currency. BitCoin, unlike gold, currently poses no material threat to disrupting this monopoly.

In other words, to discuss the gold market and not discuss GATA's work is pure folly.

[arepo]

ITT:

[bb113]

Right, noone here is publishing the correlations or Pr(B|A)'s.

[Bro]

So much charting..

[miscreanity]

To compare BitCoin and gold and their trading patterns really misses the mark, in my opinion, due to the massive difference in fundamentals.

In gold you have an asset where the price is being suppressed, not supported, and not by users, but by owners, and not for the obvious reason. The largest owners do not act as other purposeful market participants because of the the extreme differences they have. Thus, the price of a portfolio asset, for the largest owners, is worth infinitely less than the ability to retain their monopoly on issuing what billions of people use as currency. BitCoin, unlike gold, currently poses no material threat to disrupting this monopoly.

In other words, to discuss the gold market and not discuss GATA's work is pure folly.

In the OP, I suggested that Bitcoin is experiencing suppression - though not explicitly. Patterns in the leverage games are virtually identical between Bitcoin at Bitcoinica and gold in the major futures markets - the same methods of attempting to squeeze weak, leveraged positions. What made things particularly unsettling was the frequency and similarity, as well as the correlation - until massive physical demand in gold surfaced recently. Keep in mind the similarities have not just been in price movements, but also behind the scenes in volume, stop-hunting probes and forced liquidations; too much to be purely coincidental.

There does seem to be a difference, as you note, between the motive of the Bitcoinica moves and gold's - the former seems to be more profit-oriented than those in the latter. In other words, Bitcoin seems to offer an opportunity to grow wealth while extrication from a bad situation dominates the feel of gold trading. In addition, Bitcoin has far less of a derivative environment clouding its unit value - the equivalent of gold prices being driven by physical metal instead of leveraged positions.

You're right about Bitcoin not being a material threat yet, but it is possible that it could be perceived as one despite deterioration of the existing monetary regime being a greater priority for those institutions built upon it. Whether that perception is the present situation, and whether there's a wait-and-see approach being taken or active attempts at control by more than independent professional traders, I'm not sure.

What I do know is that there has been political attention and banks' traders dabbling with it, so I think it's safe to assume that there's some level of awareness, even if it may not be a priority consideration. The scramble to facilitate mobile payments points to an effort that may have been influenced in part by Bitcoin's potential to dominate that area.

[miscreanity]

ITT:

You're missing Sarah Palin's impregnation rate plotted against funny Whitney Houston jokes.

[miscreanity]

A 3% spike in Bitcoin - now gold futures should make a similar move before the week is out.

There is enough pressure in both to result in potentially explosive upward moves.

[notme]

A 3% spike in Bitcoin - now gold futures should make a similar move before the week is out.

There is enough pressure in both to result in potentially explosive upward moves.

There's actually been fairly similar action in gold the past hour or two:
http://www.kitco.com/charts/livegold.html

[miscreanity]

There's actually been fairly similar action in gold the past hour or two:
http://www.kitco.com/charts/livegold.html

Yes, there's something going on there - it might be the beginning of a push up to retest $1680-1700. That's the target I'm expecting after Bitcoin's jump.

[bb113]

I've been thinking about this. Take hourly gold and hourly bitcoin price for the last couple weeks or whatever period during which you think you are detecting similar patterns, convert the prices into pitch, and leave time as time. Then listen to the two of them while adjusting the tempo of each continuously until they match up. This may be a more intuitive way of detecting similarities occurring over variable time scales. Better if you take the first and second derivatives of price/time and code that to correspond to different sounds.

Then in the end you could have a plot of bpm vs time for each price which would show how the "tempos" of the two may be related.

[bb113]

Then finally, release your new dubstep track.

[miscreanity]

Then finally, release your new dubstep track.

It'd finally be possible to say, "This is what a Bitcoin sounds like."

As for what's happening right now: isn't it amusing how Bitcoin took off right at the end of trading for the week - on top of this being an options expiration day?

Gold will rise next week. It looks like Bitcoin's derivative environment doesn't allow for as much selling pressure as there can be in gold.

Bitcoin has a capping effort in place, making no real progress and dipping only slightly through the 17th. On the 18th - precisely at midnight UTC, it takes off to retest and obliterate the $5 level, after which there's the typical short effort attempting to squeeze new longs out - this time unsuccessfully. Looking at Bitcoinica's data confirms the same methods of attack.



Sure enough, one day later gold shoots up exactly at the opening bell for New York trading and experiences the same short pressure immediately after its peak. The difference here is that gold was pressured much lower in relation to Bitcoin.



Again, I attribute gold being pushed relatively lower to the wider range of derivative instruments available with which to move the perceived value of the underlying asset. If Bitcoin options and futures markets were more mature, there would almost certainly have been a greater decline from its April 18th peak as well.

Now that Bitcoin has spiked after a rally to ~$5.45 the (most likely leveraged) selling pressure is back on. No surprise there. The same should occur in gold either up to CoT cut-off (Tuesday) or very shortly thereafter.

It's going to be 3 steps forward, 2 steps back until the next catastrophic event.

[miscreanity]

Vicious takedown at exactly midnight UTC. It's the same pattern of attack, yet again.

So far this week, gold hasn't seen the spike. I attribute this to there being effectively unlimited sell-side force in the form of unrestrained fiat currency supply and the ability to apply that pressure through mature derivatives markets. The perceived supply of gold can therefore be expanded as rapidly as desired by utilising the derivatives, clouding the actual value of the underlying asset.

With Bitcoin, short side supply must be obtained either from freshly-generated blocks, or via trading because there is no derivative capable of obfuscating Bitcoin supply - for example, by enticing new momentum buyers on spikes from $4.70 to $5.45 and then exerting pressure to force them out, additional BTC can be employed to control the exchange price. Leveraged long liquidation simply hands more power to the manipulative side. Trading technicals is extremely dangerous when playing on margin in this environment.

The MO is the same as with gold. Buy the dips, sell 1/3rd on rallies - rhino horn shapes, as Jim Sinclair puts it.

[miscreanity]

A relatively major spike down in Bitcoin yesterday from ~USD$5.10 to $5.02 was followed by an immediate uptick to the stable range of around $5.10-$5.14 which has held for some time now.

A relatively major spike down in gold began yesterday and continued today to yet another retest of December's low, also followed by intense buying pressure that pushed it back up to the stable range pivoting around USD$1550-$1570 that's held for the past week.

To reiterate: I do not think this is a coincidence. Rather, I see this correlation as an indication that Bitcoin offers a better indication than the paper gold market offers for physical gold, primarily because paper gold markets are proving themselves more related to fiat currencies than the underlying metal. This is not even accounting for Bitcoin dark pool pricing, which is not reflected in the usual exchange rates and may be higher by 10% or more.

[miscreanity]

Funny how major markets finally close for the weekend, and BItcoin takes off like a miniature rocket.

What Bitcoin is doing now and throughout the weekend will be what gold and silver do during the rest of June.

[cypherdoc]

Funny how major markets finally close for the weekend, and BItcoin takes off like a miniature rocket.

What Bitcoin is doing now and throughout the weekend will be what gold and silver do during the rest of June.

no, seriously.  i've always said that when NYSE traders close up shop at 4pm they wheel their computers over to the Bitcoin Room.

[silverbox]

Funny how major markets finally close for the weekend, and BItcoin takes off like a miniature rocket.

What Bitcoin is doing now and throughout the weekend will be what gold and silver do during the rest of June.

Me likes the sound of that! 

[miscreanity]

no, seriously.  i've always said that when NYSE traders close up shop at 4pm they wheel their computers over to the Bitcoin Room.

And DDoS mining pools, apparently. Buggers

[miscreanity]

Bitcoin continues to foreshadow movements in gold. Since there's more pressure on gold, there's a divergence. Since they're both subject to similar fundamentals, that separation can only last so long.

It's finally time. Gold will follow Bitcoin upward, probably doubling before hitting a correction.