Topic: Analysis - page 7. (Read 941582 times)

Those models don't cause BTC to be uncorrelated to any assets. That's just a hope you have.

Bitcoin's bull market takes place in the context of a much larger asset bubble. It may end up going much higher than stocks or gold, but that certainly doesn't mean there is no correlation to other assets. It also doesn't mean the context of central bank money printing is irrelevant to BTC.

I'm not sure why you are so troubled by the positive asset correlations. They will exist until they don't, and then we can discuss a new paradigm at that point. I also don't see the value in debating predictive models that are based on an incredibly small sample of historical price data. They are in the back of my mind as possibilities, that's all.


Again, BTC and stocks have been strongly correlated since price discovery began in 2010. You repeating that it's only a short term correlation doesn't make it true.

When the paradigm actually shifts, we can recognize it. I prefer to observe and react, not speculate and assume. Sticking to that mindset has made me significantly more profitable as a trader.


I'm not sure why you keep saying that. I have said over and over that BTC's fundamentals are an important force, particularly in terms of the magnitude of price moves. I've been saying for years to expect million dollar valuations when others here can barely imagine six figures.

You just refuse to recognize that all markets are intimately connected.

Let me ask you this. Had the Fed and other central banks done absolutely nothing and the lockdowns went on indefinitely from March, what would you expect to have happened to stocks, BTC?

Sure, we are repeating themes, but it is NOT like we are sending private messages back and forth, and accordingly,  clarification, reemphasis, restatements may need to be carried out for the benefits and considerations of others.

By the way,  exstasie, you cut out half of my post (the second paragraph) in which I attempted to illustrate further upon the ideas of the first paragraph - and of course, I had not mentioned in terms of fundamental drives the three BTC price prediction models that I had already mentioned in other posts (and you have already poo pooed such models as non-correlation explanations) - which are: 1) stock to flow, 2) 4-year fractal and 3) s-curve exponential adoption based on networking and metcalfe principles.  

Largely those three price prediction models are entwined with fundamentals that drive them in their predictive direction in a complicated combined kind of way and cause BTC's price to NOT be correlated to stocks, gold, currencies and various other assets previously listed in the cut out portion of my previous post.  

Don't get me wrong, the models are not causing the BTC's price to move, but they help us to better understand where we have been, where we are and where we are more likely to go... of course, in a non-correlated way from my reading and characterization of the situation.  

I am not even poo pooing short-term correlation, the effects of liquidity or even the effects of various kinds of momentum (which may be explained in chart analysis).. but merely the fact that some of these other short term influences are affecting BTC price dynamics - they are likely ONLY able to go so far in terms of longer term movements because of how BTC's fundamentals are distinguishable from all other previous asset categories - in a should be recognized paradigm shifting kind of way.  

You can look back at BTC's price from it's inception - and of course, I don't really like to go all the way back to the beginning, because it is NOT really fair based on how small the BTC market was and how narrow the ways to engage in price discovery... but going back to mid 2012 - is largely fair enough - even though BTC was still quite budding at that time, too...  but anyhow, we need to start somewhere... And, even if we go back to 2012, we do not just have a "magnitude" change in BTC's price appreciation, we also have price curves that do not follow the stock market, equities, gold etc.. and you can say, it is just magnitude.. blah blah blah.. NON-SENSE....  
BTC's price curves are different from any other asset... so see what you like, but I see that they are different, and there are many other people in the space that appreciate bitcoin as a different kind of asset class and are able to see different also.

Good luck with your under appreciating of the power of king daddy... even though you do seem to prepare yourself for UP, too... so you are not going to totally get reckt by your non-appreciation of the power of king daddy's UPpity - and hopefully you are not misunderstood by others in such a way that they are mislead or fail to buy, under invest, sell too much BTC too soon, buy some stupid ass shitcoin(s)(ICO, Defi, yield farm baloney) etc.  


There is quite a bit of information out there that Microstrategy bought the about 38,250 BTC on exchanges (one set of buys that were around 21.5k btc with 10s of thousands of transactions and the other set of buys for the remaining balance of about 16.75k BTC with another 10s of thousands of transactions (so that is not considered OTC), .... and they spread out there BTC buys over several weeks.. but still accomplished such buys pretty quickly in the whole scheme of things without seeming to have much effect on the spot price (not much slippage - which surprised their CEO Michael Saylor.. regarding how much BTC can be bought in a relatively short period fo time without moving the BTC price very much).

Here's a tweet from about a week ago that explains the first part of the transactions:

https://twitter.com/michael_saylor/status/1306636046948610049

Quote:
>>>>>>We acquired 21,454 BTC via 78,388 off-chain transactions, then secured it in cold storage with 18 on-chain transactions.  #Bitcoin scales just fine as a store of value.<<<<<

   I didn't get the impression that it was OTC...

Have the recent large moves into BTC from Microstrategy had an impact on your thinking vis-à-vis the above?  I am still digesting it.  That amount of OTC buying certainly had to have had an effect on the spot market and probably dampened volatility and must have a palpable effect on the OTC markets, and it was big enough to probably do things to the price trajectory for the next 6 months in spite of whether other public companies follow that lead over the next 9-12 months and beyond.  This is especially true in light of the halving.  I feel like these forces are triangulating and they are going to... .... that's where it gets a little foggy for me.

The more I think about it the more I think we are in for an interesting shift fundamentally...  I do not understand it yet.

I'm not saying fundamentals do not matter. Not at all.

This is a bit like the conversation we had about stock market correlation vs. magnitude. I see liquidity (and for the foreseeable future that means dollar liquidity) as the primary driver in terms of direction and trend. That also speaks to the positive correlation between stocks and BTC.

Fundamentals (like Bitcoin's monetary properties) have more to do with magnitude.

Of course, the way the money printing is carried out is meant to help to support the investments of the well-to-do folks in society - through equities (which are tied to 401ks, pensions, etc), and even though bitcoin receives a decent amount of the trickle down (or whatever you would want to call it), that does not mean that fundamentals do not matter.

In other words, ignore fundamentals to your detriment (peril) in the event that you believe that BTC does not have any meaningful and substantial difference (in terms of fundamentals) from various other manipulated assets and currencies, eg.. equities, gold (including other Pms), collectibles, property, debt (including govt bonds), cash (USD as compared to other fiats) and/or any other place in which value might be stored or manipulated  (stealing of time, too?).

I don't put too much emphasis on the conspiracy theory angle for the same reason. I just don't have enough information.

It's obvious to me the markets are not free though. Manipulation by the Fed and other central banks is rampant, and how the markets react to it is a monument to the fact that markets are driven more so by liquidity than the true underlying fundamentals of investment assets.

As central banks pile debt onto their balance sheets (QE), this frees up more and more cash which is injected into all markets. BTC, precious metals, stocks, bonds, real estate......it doesn't matter. Every asset benefits in terms of price. The whole idea is to inject enough cash that sellers can't cause the markets to fall beyond "acceptable" levels, which would then begin to threaten the equity (stock portfolios, retirement funds, real estate) of the middle class. If the middle class falls, then the jig is up and the banks would completely collapse.

One could argue this sort of manipulation is done for the sake of economic stability and prosperity, not just to line the pockets of Wall Street. From where I stand, both arguments are equally viable and it doesn't really matter.

What really matters is that we understand the ultimate driving force in the market. It's liquidity, not fundamentals, and this is why Fed policy is the #1 concern of investors. This is the true nature of asset bubbles, and for the past few generations humans have been building the biggest asset bubble in history.

Why not both?



You cannot appreciate a situation, drays, in which there is both manipulation of the market and difficulties to manipulate going on at the same time?

I would argue that BTC had much more of a free-market reaction to and recovery from the March 12, 2020 liquidation event than did traditional markets such as equities, gold and fiat systems - however, BTC does NOT live in a vacuum, either.

It's not like BTC is not or cannot be affected by various governments printings of trillions of more dollars on an ongoing basis this year, and seeming injecting those dollars in a variety of ways that are purported to be strategic, but are likely fucking things up more than they are fixing things, especially with the level of non free-market reaction to an overall market correction that was likely needed but at the same time various non free-market reactions that are aimed at saving folks and institutions that likely do not deserve to be saved.

I would argue that BTC is much less attached from those many shenanigans than people like to argue it to be, but of course, in the short term, we are going to see some levels of synchronized price movements... and so my point remains that it seems to me that we can have both manipulation and non-manipulation going on at the same time including ONLY so far that manipulation can happen before free market forces are likely going to cause various explosions in one direction or another and hopefully, each of us is able to adequately prepare for such possible (and likely) explosions, even if we cannot have considerable certainty regarding how they are going to play out with any kind of precision.

It all comes down to whether you believe the markets are free and are moving according to how traders actually feel about each particular asset; or you believe markets are conspiratorially manipulated by some super-powered entities. As to me, I don't have enough convincing evidence to prefer either view. It seems to me we might never know the answer.

Mostly unrelated offtopic generalization: its like everything else - one could think things in life depend on the actions of a man, others prefer fatalistic approach and think everything is determinated, while some believe things are defined by a powerful supervising force... And there is basically no way to prove either theory, everything could be explained based on either belief, so almost any kind of belief or religion (including atheism) exists indefinitely, coexisting with hundreds of other beliefs.

Though of course in case of markets there is at least some chance we might find the truth - only if appropriate internal documents leak out.

My level of my English isn't quite enough for complex topics... so I'd stop here..

I agree that government and even traditional banking institutional systems have a lot of incentives to create and to use a variety of financial tools (new ones at their disposal) to manipulate BTC in such a way that causes BTC to NOT appear any different from any other kind of investment (meaning that bitcoin is not necessarily correlated even though they are attempting to make BTC look as if it were correlated), and sure they are going to try and sure they are going to give it every last boyscout effort to accomplish - but are they going to succeed?  

That is the million dollar question.  What do you believe Marcus?

I am thinking that you can keep the BTC price within a range, until you can't.

We have witnessed those same kinds of "keeping BTC within a range" issue several times in the past with BTC... at around $500 in early 2016 and at around $2k in mid 2017.. and surely there are other historical BTC price examples of the bearwhales losing control of the situation and unable to keep BTC prices down any lower for any longer.

Bearwhales tried as fuck to keep BTC prices as low as they can and for as long as they can and below certain threshold points, but they lost control... over and over.. This time is different?  

Sure, they will try again, and they likely are trying as we post these message.  

Concededly, these days bearwhales have more tools that they can attempt to play to push the BTC price down, and if they are attempting to print BTC that they do not have, they make  well find themselves on the wrong side of a trade, too, which could be quite costly, and sure there is also more money in bitcoin now, too, including some BIGGER players like Microstrategy and some other folks who come from the traditional financial sector and who are taking various degrees of long BTC positions.  Are some of those traditional financial players just going to roll over if attempts at BTC manipulation are out of control or based on fractional reserve BTC (rehypothication), and are some of those folks who are investing into BTC continuing to buy BTC behind the scenes, after they have already taken a stake in BTC.   Have the HODLers and buyers of BTC run out of money to buy MOAR BTC?  Are they able, or not, to push BTC prices up and/or to stop BTC prices from being manipulated down, staying flat or going below certain price points... ?

BTC's 200 week moving average, for example, has been going up nearly $200 per week in recent times, and currently it is at about $6,700.  
It was at about $5,500 during the March 12, 2020 crash(dipped below $5,500 for fewer than 8 days).
It was at about $3,100 in December 2018, during the lowest BTC price point on that correction (did not get broken).
It was at nearly $1,200 in December 2017 during the most recent ATH of $19,666.
It was less than $300 in October 2015, at the start of the 2017 bullrun (that largely took two years to play out with a culmination of a blow off top from October to December 2017).

So, sure, the powers that be could attempt to manipulate BTC prices down, keep them sideways, or disallow them from going up to cause such BTC prices to appear as if they were correlated to traditional asset classes, such as equities and gold.  

Surely, I am not ruling out the possibility that they could continue to have short term success.. but how long can they keep it up? 1 year?  2 years?  4 years?  Is it possible?

Personally, I doubt that they are going to be successful to continue to argue that correlation actually exists beyond having some evidence to make short-term claims and for those failing and refusing to zoom out or to actually see BTC's actual price performance rather than what they wish it to be based on short-term charts.

...  manipulation via leverage of cash futures makes it inevitable that powerful (government money) forces who would rather BTC didn't present a haven for fast money looking for uncorrelated assets in times of crises.

... they've been doing this with gold and silver since LTCM derivatives implosion and the Asian financial crises circa 1998

I think so too. The fact is that BTC is only a decade old, and it's a brand new asset class. That sort of by definition makes it a speculative, risk asset that is going to behave like stocks as people speculate about its long term growth prospects.

Institutions are the next wave of traders who plan to treat BTC as just another stock. As institutional involvement in the Bitcoin market increases, maybe the correlation will even strengthen.

Sure there is a correlation. Better to say BTC is correlated to S&P the same way all stocks (and even metal ETFs!!) are correlated to the common index. When S&P500 goes up or down being dragged by mega-cap movements, almost all stocks do the same, without any apparent reason. It is almost funny to watch them moving as a herd. Sure few stocks are moving in different direction at any given moment, some may wildly surge or plunge regardless of S&P trend, but the main mass is moving with the index...

It looks like BTC is also somewhat correlated to this herd (today's movements are just another example), which could probably mean there is a big number of traders who consider BTC as just 'yet another stock', alas. I cannot be sure, but I assume that's probably the ones who entered in 2017-2020 period.

It does. Correlation is about dependency. When one goes up, does the other go up and vice versa? The correlation between stocks and BTC is not perfect but it's very obvious.


They've always been positively correlated, all the way back to when BTC price discovery began in 2010. I've discussed this at length in my thread. https://bitcointalksearch.org/topic/m.55178480

Bitcoin price and S&P500 index are not correlated, I read so many of similar posts last few months but they are not correlated, just because both crashed in March and recovered since does not mean there is a correlation whatsoever. Why would they suddenly become correlated when it wasn't the case in 2019, 2018 and of course 2017  

Wait for a few months and you will see both price trajectories will be very distinct.

I suspect he is correct about the weekly candle closing above $10K. That still leaves room for a panic wick into the $9,000s and a fill of the $9,600 CME gap from July.

The S&P 500 is still indecisive and hovering at mid-term support, threatening a breakdown of the 50-day MA. The index is at 3,338 and support is at 3,333. If it breaks down and holds below, it will probably represent a good buying opportunity as Masterluc suggested. A shakeout. The same goes for BTC.

New post by masterluc: https://www.tradingview.com/chart/BTCUSD/KF0wThdz-Regarding-current-market-actions/

Plus if you view the situation from a fundamental standpoint, Bitcoin is still very small. How many actual, dedicated users does it have? Less than 1% of the global population, but it's priced at "only" a 5-figure valuation.

Bitcoin's price ceiling is VERY high in my opinion.

That wouldn't surprise me in the least 

What do you make of it? It's almost a perfect spinning top doji. I take that to mean shorter term market indecision. https://www.investopedia.com/terms/s/spinning-top.asp

In the first half of 2017, we saw multiple similar dojis followed by severe shakeouts (March-April, June-July), even though the broader market trend was ultimately bullish. I wonder if we're looking at a similar situation now.