Ahhh Shi! Correlation does not equals causation......

[YoYa]

I don't know, but I had been taken on by the thought that Bitcoinica's introduction of the ability to short the market and it's size as a counter balance to trading on Gox had lead us to this point of stability.

Given that Bitcoinica is gone, that doesn't appear to be the case unless I'm being too quick to judge. Makes one reassess the origins of this price stability.

[MatthewLM]

Maybe because bitcoin had a big bubble that people learned from.

[Serge]

I don't know, but I had been taken on by the thought that Bitcoinica's introduction of the ability to short the market and it's size as a counter balance to trading on Gox had lead us to this point of stability.

Given that Bitcoinica is gone, that doesn't appear to be the case unless I'm being too quick to judge. Makes one reassess the origins of this price stability.

could be that bitcoinica clients haven't gotten their funds yet to have a chance to move them over to mtgox

[YoYa]

Maybe because bitcoin had a big bubble that people learned from.

People never learn! Just give em time, and the boom/bust always comes to fruition.

could be that bitcoinica clients haven't gotten their funds yet to have a chance to move them over to mtgox

It's a possibility, but if you got that much in funds in the first place, chances are you would have hedged some funds in Gox anyway, the hacking of bitcoinica is a prime example of why you don't keep all your eggs in the one basket.

[Spekulatius]

could be that bitcoinica clients haven't gotten their funds yet to have a chance to move them over to mtgox

even if so, it equals less participants in the market --> higher volatility because less orders. Therefore it can be discarded as factor of stability.

[miscreanity]

Stabilising effects from speculative interests may not dissipate for a while, especially in the absence of external factors such as QE or war.

There are also other instruments that have had time to develop in Bitcoinica's shadow. They may be contributing and could have picked up a good amount of Zhou's business.

[S3052]

Stabilization is only temporary, as with all financial assets, and so it will be for bitcoin. In the next weeks and couple of months, we will again see 10%, 20% swings per day.

[Mageant]

It will possibly just take some time.

[S3052]

It will possibly just take some time.

correct.

[molecular]

But but... I thought the speculators (bless their souls!) were doing God's work! How dare anyone suggest that the speculative trading might be a closed loop and irrelevant to the stability of the system?

Don't people realise that if a speculator borrows funds and skilfully creates the perfect trading pattern, the pretty geometric shapes will hypnotise the sheeple and cause them all to react in a predictable (and highly profitable) manner?

haha, you made me laugh. awesome post.

[tvbcof]

I've long held that Bitcoinica probably didn't have much impact on Bitcoin valuations although I was somewhat skeptical of my own intuition here.  This Bitcoinica dead-time has been most interesting to me from that perspective.  I remain open to an argument that people who wish to liquidate are taking advantage of what would be an organic increase in value in the absence of Bitcoinica driven speculation are doing so...but see no obvious evidence of this.

And thanks for the chuckle several posts above, blablahblah.  Nailed it!

[YoYa]

Stabilization is only temporary, as with all financial assets, and so it will be for bitcoin. In the next weeks and couple of months, we will again see 10%, 20% swings per day.

Not that I don't agree with you, but in terms of stocks as an asset class, you see them go months between large swings and not days. I'm not taking anything for granted, be it stability or volatility, but in lieu of that I'm still wondering what the hell is going on and what the originating factors of the current stability are.

[cytokine]

Stabilization is only temporary, as with all financial assets, and so it will be for bitcoin. In the next weeks and couple of months, we will again see 10%, 20% swings per day.

Agreed. Long periods of low volatility are often followed by dramatic moves.