Like many indicators, money at the exchange is also a lagging indicator.
There is little money needed at the exchange to bid up the price. All that is needed is that people on average are bullish. This will make buyers more impatient than sellers, who take their time, and the price goes up.
Inversely, a lot of money at the exchange may not avoid the price going down. All that is needed is that people on average are bearish. This will make sellers more impatient than buyers, who take their time, and the price goes down.
Just like google trends, media coverage, or hashrate, more money at the exchange is a result from the price going up. Not a cause.
Sure there is a strengthening feedback loop, more media coverage, higher hashrate, more money at the exchange pushes up the price even more, but what needs to happen first is the price going up, and then all the rest follows.
Inversely, when the price goes down, there is a weakening feedback loop, less media coverage, less hashrate, and less money will come to the exchange, driving the price even lower.
Kind of - but when there is no money on MtGox then it will go down no matter how bullish people are - because there will be some bears and they'll push it down and vice versa when there is so much money then even if people just try out without really changing moods, but just checking the winds - even that can push the price up and I believe that this is what is just happening.
Amount of deposits in exchanges follows price rise: I agree
Positive feedback loop of price rise and deposit rise: I agree
Now pls mind the following:
When there is stagnating price or even falling price but still an increase of deposited amounts in exchanges, what does this entail?..
Correct, a powerful correction to the upside! Because all this fiat money only has one way to go once it is in the exchanges: -> ฿TC.
