Topic: How to Recognize a Bubble (for the stock market.... see any similarities?) (Read 4441 times)

Schiff also denies btcs have intrinsic value. Otoh, Voorhees says that btcs' intrinsic value exists due to the payment network and the network effect.

In the context of intl remittances, export/imports, store of value versus fiat, it appears that btcs have intrinsic value.

Possibly, Btc price is a function of hoarding and the size of the payment network. As long as the payment network is expected to expand, hoarders are likely to keep hoarding.

This? [from wikipedia]

That's not true at all and you obviously have never invested in a stock before. Money invested is used by the issuing companies to grow by hiring employees and developing assets and IP. Investors share in this growth through increased valuation and dividends.

Your comment actually represents bitcoin -- fiat money being swapped around, and early investors rising off the backs of later ones. Since there is essentially no intrinsic value other than the volunteer mining network. It's open source, so there is no IP or or similar assets. While I maintain that bitcoin basically behaves in the manner of a publicly traded stock, if anything, this lack of intrinsic value serves to make it an even riskier asset, similar to a penny stock or worse. High reward/high risk.

the difference is stocks swaps around existing gov FIAT money supply so they all swim in that pool of money neither creating or destroying money or wealth just swapping it round and changing the velocity of the money. By printing more money makes any individual denomination less valuable.

BTC is competing with the FIAT pool itself. That is an entirely different proposition to a stock. The fluctuations come from the un even transfer of value in an out of BTC but mainly in as the log graph shows rather convincingly

How Bubbles Grow: 12 Easy Steps

1. A believable concept offers a revolutionary and unlimited path to growth.
>>no limited coins, and s curve event so not unlimited

2. Surplus of funds and lack of opportunities lead to buying or investing in anything available.

>>no its an evaluation even the "funds" are the over printing, devaluation and bad economic decisions of the banks/gov for oh, 100+ years


3. An idea is complex and cannot be totally explained or related to an investor. [/b]
its easy, we bank now.

4. The crowd imitates the leader. All Aboard! Even the gardener has a tip!?
nope a fraction of a fraction know about BTC in any meaningful way.

5. Prices fluctuate from traditional level to overvalued level, THEN to all new ground and all time highs.
there are no traditonal levels nothing had been done like this before

6. New levels are sanctioned by experts. "We are in a new Paradigm!"
the "experts" decry BTC


7. Fear of missing the boat takes over.
Cloning of the idea occurs as many new overvalued competitors enter the market.[/b] this may be true

8. Lending practices are eased. Money flows like water to anything or anyone with a new idea.
no alot of forces make it hard to get FIAT in
 
9. Cult figures emerge for the new paradigm. The media promotes lifestyles, not substance.
No satoshi disappeared at the beginning...because he realized the implications of what he had just done....

10. The Bubble lasts longer than expected. Critics are dismissed. The last suckers are sucked in.
This think has gone up and down to the complete misitification of the "experts" who have pronounced BTC dead several times.




11. Fraud emerges as partly responsible for the bubble as the first cracks show in the bubble.
Nope. If anything the opposite.


12. Finally, everyone has a reason why it cannot continue. But nobody dumps, and all hold onto their profits. No new buyers. Market stalls.
Ok some truth, but the reason no one dumps is because they have seen it happen too many times, eg dumping, then the price going and order of 10 leaving them with FIAT never to be able to buy back in.

this is a good point.

It is very comforting seeing the Frozenlock avatar and not having to read Ardana.

That's what I'm talking about.
It is 50% more usefull then early 2013.
50% growth is huge!

But the price is way ahead of market implementation.
20-30$ would be a reasonable price compared to the infrastructure.

And yes, bitcoin will allways be usefull to buy stuff regardless the price.

For pure speculation you may try some altcoin. Bitcoin is usefull already, but price affected by speculation. If the price drops under $100, Bitcoin is still usefull to buy stuff online

That's stupid..
If there would be greater utility the number of transactions would have grown much faster.

That has nothing to do with the price. It's still 1 transaction if I pay 100 BTC worth 10$ each or 1 BTC worth 100$ to buy my new bike.

So the numbers of transactions has to grow, if there is really more utility in real life applications. That is not related to the price.

You should know that if you ever had a course about statistics.


Growth of wealth measured purely speculative price increase? That's a flawed logic.

same number of transactions, much much greater amount of wealth transacted. you should multiply the first graph (# of transactions) by the second (price) to get approximation at the growth of wealth being sent over bitcoin network.

150-500 million usd daily volume.

Undervalued compared to possible future uses.
Right now bitcoins are overvalued and not a small amount.

Just check this out:


Bitcoin is pure speculation. But that's fun -> great profits to take.

Just look at what it is. bitcoin is an online payment protocol, a store of value, a currency. That makes it as valuable as gold, paypal, and fiat put together. Also unhackable (by brute force, up to the individual whether or not to install trojans and keyloggers), and can't be confiscated without your cooperation, so more valuable in fact.

All that's needed is awareness. So, yeah, undervalued.

pretty ambiguous. not saying it wont happen, but.....

On my prediction Bitcoin used as prefered payment network on internet in few years

yes, this is another one of those assertions.....

On what basis is it undervalued?

Buble is if some stock or commodity is overvalued. Bitcoin is now undervalued, so you cant see buble now

Glad to see someone else calling people out on this bullshit. Just because bitcoin isn't a company issued stock doesn't mean that it won't react to the same market psychology and supply/demand forces.

ok. a lot of people say this, though, without adequately explaining how its price movement does and will differ, specifically. in other words, it is an excuse to do no analysis whatsoever.

They say you can tell a bubble when the taxi driver is talking about the stock haha that one always makes me laugh.  don't see how this relates to the current Bitcoin price but that is just an opinion.

This is interesting and useful but as all the others say BTC Is NOT A STOCK and will never be one.

bitcoin can grow forever because there are multiply ways to get it like selling goods and services.... You dont just have to buy it! Think about it!!!! Yes if the onlything i could do with a bitcoin is trade it for cash then yes I would be like hmmm how much higher can this thing go, but when you can trade something for a fraction of it... It has potential to go to the moon and beyond. And goods and services will just keep getting cheaper and cheaper.... Will be like Thiland in the US... and Thiland x 100 in Thiland! Since they will be the last to jump on board. So quit with the F#cking bubble shit already, Sell you coins or the 1 coin you have and leave! I will need a gardner,a butler, and maid in the future so dont buy any bitcoins and sell the ones you have!

The force says: no buyback before $400.

Ardana was never me to begin with.
He's just some other guy. I have no idea why he's using my picture. Huge man crush I suppose.  


Tan tan taaaan!

Since the market took a pleasure in showing me how wrong I was, I decided to learn from Masterluc's teacher (Waveaddict).

No prediction here. Just a warning.
Redditors are throwing money at this hoping to become rich overnight...

I am. (But I profited awesomely form this rise.  )

There's no "burden of proof" because nobody can declare whether bitcoin is a bubble or not, unless they own a time machine. Viewing in retrospect is key here, which we simply can't do yet.

First we have to determine if there is in fact a bubble. The burden of proof is on the accuser.

I think what this tells us is that Bitcoin has characteristics that make it prone to become a bubble. It does not tell is if it has become a bubble yet or not. The bubble might be only starting when it goes above 10k per coin for example.

Also remember that becoming a bubble does not make something a scam or worthless. Real estate markets often bubble, but housing always has value and utility in general.

For cryptocurrencies, I think that list could use another one between 3 and 4:

Idea draws in amateur 'heroes' and 'revolutionaries' from inexperienced backgrounds with delusions of grandeur, imbuing the investor with a false sense of 'mission' or 'camaraderie' that seems to override the 'petty' concerns of personal greed and self-congratulations.


I really wonder, how many of the so-called libertarians and political/economic experts on this forum actually ever held a position of real power in their respective national governments/financial institutions? In fact, how many of them have actually experienced true political, financial and social power that those who move nations and policies employ on a daily basis? Have they actually experienced the position and power of those they claim to 'rise up against'?

I have only seen glimpses of them, and never experienced them personally. I don't think reading Ayn Rand gives me a moral guide to judge what I have not experienced. But throw in a new currency idea that you can use to 'fite da powa' and all of a sudden every monkey on a typewriter is a goddamn che guevarra.

Also, I hope everyone's joking about this 'illuminati' bullshit. I question the motivation of such talk more than the content, but still the content is pretty damn foolish on its own.


On the other hand, as many of stated, I believe the concept of cryptocurrency is a cat out of the bag. Whatever direction in whatever form it goes from this point on, with or without bitcoin, crypto is here to stay and earn its place in the world.

But before that it will have to adjust itself to some realities. Bubbles will pop.

I still believe in new things although bubbles tend to be created around them, mostly because we behave like sheep and we don't really think. It all boils down to good management of expectations IMHO.

Good article though. Thanks!

I will quote this again because it is a good summary.

'Before we relegate a speculative event to the fundamentally inexplicable or bubble category driven by crowd psychology, we should exhaust the reasonable economic explanations. Such explanations are often not easily generated due to the inherent complexity of economic phenomena, but bubble explanations are often clutched as a first and not a last resort. Indeed, “bubble” characterizations should be a last resort because they are non-explanations of events, merely a name that we attach to a financial phenomenon that we have not invested sufficiently in understanding. Invoking crowd psychology—which is always ill defined and unmeasured—turns our explanation to tautology in a self-deluding attempt to say something more than a confession of confusion.' - Garber, Peter M; Famous First Bubbles

I understand the press like to tell the easy story, but we can only truly know a bubble after it has occurred.  For my money the volatility in Bitcoin is very unlike other bubble patterns and may be a good indicator of an explosive technology rather than a bubble.   

True. I keep catching myself being unrealistic in bearishly thinking that it will stay under $1,000,000. Hyperinflation will likely take care of that.

Saying that bitcoin is a bubble is so 2011. There should be a point in your point list:

13. If it blows but never lower than it was before then raises again then it is no bubble, silly

Hi Frozenlock

So ardana is retired now?

Worst

Edit: this guy is a top fud spreader who staunchly said that btc wouldn't see 100$ again this summer. Be careful listening to him.

I used to think that bubbles could be defined by charts that hadn't had corrections to the daily ema to support the price in a while, and the price was just kind of floating up too fast without any support. At $1250 I thought we were definitel'y NOT in the bubble phase yet and that  I was home free because there had already been a strong correction (on Dec 1) and the price was now supported.  Then the whole China thing happened. Due to a lack of support by Chinese buyers, and fear, and exact replication of a bubble pop occurred. It took me completely by surprise. So now I am clueless and back to the drawing board.

"7. Fear of missing the boat takes over. Cloning of the idea occurs as many new overvalued competitors enter the market."

This is the one that makes the most logical sense to me. The others that you bolded can be said of pretty much anything.

Fresh out of wit, I am trying though.   Check my post on the godislove thread...   https://bitcointalksearch.org/topic/m.3912114

I was laughing the entire time.   No love for the joke on the thread though. Has no one seen fight club?

because everything that happens happens exactly the same way

Are you out Frozen?

Let's all try to post a witty remark about the bubble anatomy chart.

Oh yes, have never seen a bubble anatomy chart..... every day.   

Can confirm, never seen the anatomy of a bubble chart on here or reddit.

could you post it please, never saw that one? 

I think there's a chart knocking about somewhere which shows the anatomy of a bubble...

+1

Bitcoin is not Speculation-proof. Even though it may have value, people can still put unrealistic expectations on Bitcoin.

Interesting, Ibian has a point that this is not a stock in the sense that unlimited supplies are available etc...    I think it falls down at least in point 3 and 1.

bitcoin still aint a stock

http://www.solerinvestments.com/Online-Trading/Stock-Market-Crash.htm


I found that very interesting.

Some of you might too.