I have to say that this recent cycle has taught me a lot of things about trading. It seems that for the short term and mid term fundamental real world events have actually very little effect, they simply either strengthen or weaken the current momentum. We had a downward momentum and then some bad news came, which accelerated that momentum and here we are.
This cycle and the emotions people go through is so spot on that I'm pissed that I didn't see this as clearly before. I still believe fundamentals have a say in the long term picture though and that is why I'm not worried, for example the usage of the Bitcoin network has been on a strong uptrend ever since the Good Wife episode. We have already recovered to the levels of August/September in transaction counts.
Another point is that the bad news we've recently experienced are best categorized as "reverse hype", meaning that there is really nothing to them. Paxum was not crucial to Bitcoin, nor was Tradehill. No one lost their money either. Nothing significant has happened lately on the negative side of things. Excluding the pain caused by the price crash itself, I'd say there is actually more reason to be happy about the state of Bitcoin than to be unhappy about it.
Finally, I would say that we are currently somewhere between capitulation and depression. The only thing I'm pissed about is that I missed the profit opportunities of this cycle. It was an important learning process though, in the future I will not talk about fundamentals when it's a question of predicting short or mid term market behaviour. They have very little say in it.
I have told you before, your "fundamentals" are completely meaningless. Your transaction numbers can be easily manipulated and provide nothing of value. They are not a leading indicator for price.
Price is the leading indicator for fundamentals, you have seen it now and you will see it everytime again. The bad news come out AFTER, and perhaps in some cases BECAUSE the price drops.
