Topic: Investor Cycles of Emotion, Ignorance - page 2. (Read 2615 times)

'Churning' is the right term. The swings are wild. Between 180 PH and 280 PH in 20 days.

Forgive me if my speech style comes across as odd. English is not my first language. Other Germanic languages have held closer to the grammar and syntax of older variations of English, so I am mildly amused by your characterisation . I also am partial to the natural expressiveness of English as that is mostly absent therefrom, so please bear with my pomp . Of course I do not mean to come across as arrogant. It just feels a deep shame to witness the state of the forum at a time when Bitcoin as a project is really flourishing.

Now, I must correct you in your false assumption. My experience comes mainly from observation of the Bitcoin price specifically. To counter your point, that I have truncated from the quote, there is plenty reason to believe that the price will bounce back, as it has many times before. Putting it in perspective, I was lurking the forums and studying the price back when Pirate was a celebrity and the 12,00 BTCUSD rate was something to be excited about, even as it had not advanced beyond the 33,00 BTCUSD bubble peak of previous summers. More perspective can be gained from remembering the the BTCUSD rate was 1/4 of what it is today, even yet, in this time of near desperation, just 1 year ago.

I see that you are a relative newcomer. For this I cannot fault you your pessimistic attitude, and I can appreciate that you seem to have a competent outlook which by itself is better than most. I urge you to take not a closer look but a broader view of the price graph at this moment. The overarching upwards trend has not yet been broken. This bear market can be depressing, but its contours should not be surprising. All of the action since the peak earlier this year obeys basic technical rules of price behavior, as I pointed to in the topic head, specifically the shape of a market in consolidation.

The reason I have "called the bottom" with such confidence is because even the intermediate contours since the peak have exhibited scale-invariance. If we look at the movement from the peak to the recent low, and then from the peak of the smaller rally to the present low, we see striking similarity. I am not calling for a resumption of the upwards movement towards a new ATH, but only a shorter-term reversal and another iteration of this pattern. This is currently playing out at the exchanges as I type.

Most of the "speculation" that goes on around these parts seems wildly misinformed, myopic, and unelephantine. It would do the community a great deal of good to take a little focus. Panicked and/or greedy traders which do not understand even the basics of the protocol do not make rational market participants. This increases risk, general unpleasantness, and negative reputation.

Hashrate is churning 6.32 blocks per hour. That's not declining. That's normal.

What are you? Some kind of mock-Victorian dandy, with long frilly shirt cuffs?
With all your flowery and pretentious language, not to say deeply arrogant and self-obsessed, you are making one fundamental flaw.

All of your thinking around behavioural finance, and in particular endogenous cycles due to herd behaviour, are based on experience from real commodity markets, equity markets and foreign exchange markets. All of these underlying assets have a real value - an anchor - to the wider economy.

Firstly, commodities have a fundamental real economic value to major users outside of the market. Copper is useful to manufacturers who are not speculators, for example. This role of copper cannot be easily replaced, not without massive investment in alternative technologies at least.

This is categorically not the case with BTC. In theory, BTC might gain an important role in the economy in the future, as a payment system, but this is not the case at present. BTC has no intrinsic value at present. It only has value as (some) people expect it to have value in the future.

Equities are similar to commodities, as they have real value to investors, who are not speculators, as the company continues to produce profits (dividends) whatever the share price. BTC produces no dividends.

Nor, like a currency, does BTC have a government managing its value. No one is going to increase the interest rate (there is no interest rate typically) to defend the value.

It's all down to what people perceive it to be worth, with no anchor.

Without an anchor, all of the dynamics change. Now you have a pure bubble situation, which is not often witnessed, but examples like the Dutch tulips come close (tulips have real value, but far lower than the bubble prices).

This means there is no reason to think that the price will rebound in the next few weeks. Frankly, the price could do anything, as there is no anchor. It's a pure gamble.

But history teaches us that late entrants to such bubbles lose money. This tells me that the price is more likely to keep falling, than rise strongly.

No doubt my negativity will be written off as trollism...

Nothing having to do with the technical aspects of the protocol significantly lowers the supply per day other than a block halving. To state this another way, we get the same number of bitcoins per day no matter what the difficulty or hash rate is, accounting for slight variances here and there. The only thing that can lower the available supply from the perspective of the miners is for them to hold their bitcoins instead of selling them down through these price walls on the exchanges.

Anyway, these sell-offs have been of larger volume than the number of new bitcoins being mined daily, so it's more likely that whales, miners, or any other individuals who have hoarded their bitcoins over a long period of time are now selling them off in large amounts, not the freshly mined coins being sold off, that is dropping the price.

He he.

The irony in light of intighet's previous post.....


Bitcoin adjusts the difficulty of mining so that the average emission of new blocks (== new coins) roughly stays the same.
The interval of re-targeting is 2016 blocks

[edit] unless you refer to exactly that 2016 block interval of lowered supply. But in the overall scale of things it is probably still quite negligible

I agree that the decline in hashrate could be a good sign as producing BTC at this prices isn't profitable anymore. That means mining equip has to be shut down, which lowers supply and results in an increasing price. Why investors forget? Easy. Put them in a nine months long bear market where they lose 2/3 of the previous high with no sign of recovery. Their emotions will overrule any memory on fundamentals, basic investment strategies (buy low, sell high; never lose money, etc) and turn 90 percent of them into whiny bears. After that a new cycle is starting with a rise.

edit: typo

Protracted bear market declines test even the finest minds, sending impoverished newbies into the dark world of trollery, senior members feel the icy fingers of doubt intrude and the Heroes continue unabashed spouting faintly encouraging burblings and whimsy.

Also have been hearing this not too seldom. Notice that, again, this is not a newbie member:


Just a blatant misunderstanding of the mechanism of difficulty re-targeting.

While it tends to be in my experience in this subforum as a lurker that this is no place for discussion of any depth, I am making an attempt. Indeed, that is to be tangentially relevant to the theme of this topic.

I am consistently astonished at the lack of understanding of the Bitcoin ecosystem and markets in general from users who have stuck through many cycles, and others who claim and otherwise air a general sense of economic learning. Case:


Jorge, though pessimistic, has some temporary insights. Follow the quote-link for the full context of the above. But, like many woefully ignorant speculators, falls into the line of thinking that news moves price. News does not move price, traders move price.

This assumption is so obvious to him, but obviously wrong to the minority who can see the clearer picture. This assumption is so obvious to him that any unexplained or inexplicable price movement must be attributable thereto. Let me share something with you, Jorge, and with the rest of the community.

Bitcoin price exhibits a certain type of scale-invariance. The contours of the price movement from the 2014 peak is merely and absolutely a large-scale version of the same flag-, pennant-, and other-patterns that pop up routinely on daily scales. The pseudo-rally that lifted the price, as Jorge notes, is clearly traders following some unseen and chaotic law of herd behavior. I will urge the reader to glance again at the YTD price graph and consider this that I am saying.

But intighet!- one may exclaim - you cannot claim that such a vertical movement can not be sourced to some real-world event! Let me ask you, dear reader, regarding the same triangular patterns in the daily candles, are each and every oscillation sourceable to a micro-event? Or is the contour of the price graph a mostly self-contained characteristic? It is my firm belief that the latter is truer than the former, by shades.

Moving on...


Wonderful! We must be close to a market bottom. How is it that such a senior member of the forum suffers from such self-blindness, myopia, and unelephantine memory that they can truly believe that this time, this terrible bear market, is the true death of Bitcoin?

But what, then, can explain the sharp decline? I will allow sgbett to elucidate this item:


Let us discuss this strange phenomenon of forgetting. It is not just the new traders. Funnily, I do imagine that if this kind of understanding extended beyond a minority that these mostly obvious patterns would be disrupted. We can discuss this very interesting characteristic as well, if there is intrigue.

Also, to distinguish myself from the throngs of patent idiots, I will make an outright prediction. When the events unfold I hope that I may earn some prestige. I project that we will see the beginning of another fractal-esque echo-bubble this week. What I mean is this; $365 does look like a "market bottom" on the same time-scale as the last bulge. We will see.

Note: This thread will be moderated, but not censored. Be forewarned that if you return to find your precious thoughts has vanished, it is not because I disagree with you, it is because your thoughts were far less precious than you believed.