Topic: My Opposite Take on the "UP UP UP!" Mentality. (Read 3952 times)

Yes, I know about these things. Point was just to illustrate approximately how price was on a stable exponential growth over the last year, except for a rise before Pirateat40 closed his Ponzi followed by a crash and recently with all the news hype.

Not to say that the price will return to that line or anything. Just illustrating that the recent movement was a strong and sudden variation to the stable prices we had before (Well stable for BTC anyway). What I think was a bubble (price fuel news which fuel more people to join and boost price in a loop).

Bitcoins are just bits and bytes. It's a great medium of exchange in times of low volatility, but also a poor store of value over the long term.

That's a nice graph you got there. Kind of proves your point, doesn't it? Only, it has as much to do with your selection of the time interval as it does with anything else. Oh, and the fact that your trendline is going through the lowest points of the graph. Which is not a problem per se, but it implies that you're trying to predict the likely lower bound/minimum price of btc.

How about this: Let's take a log chart of the entire duration of btc trading (okay, almost the entire duration, let's start ~12 weeks in, when we have some data, and volume picked up).

What would a straight line in this log chart look like if it would run from the price at time (0+12 weeks) to the price now. In other words, what would an arbitrary (but fixed) exponential function look like that is accurate at time 0 and now?
 


 
 
Looks kind of different, doesn't it?

Disclaimer: I'm absolutely, totally not claiming that this is the actual (or even most likely) growth function that governs btc price. I'm just putting it up to point how arbitrary your selection of a time interval and intersections points was.

Now, you could perhaps argue that the time interval you selected was actually somewhat motivated, maybe because of the news picking up the bitcoin topic, and the loads of dumb newbie money flooding the market as a result. Again, nothing wrong with that argument per se, but I could construct a similar argument as well:

My exponential function shows that both the 2011 peak, and the 2013 peak were outliers (as they should). And so was the (now corrected) drop to 50 following the recent peak. Interestingly enough, according to my -- admittedly somewhat retarded :) -- function, during almost all of 2011 btc were overvalued, while they were undervalued nearly all of 2012 and even during the beginning of 2013.

I'll say it again: I'm not seriously arguing that the function I plotted is the actual growth function of btc price. I simply wanted to point out that your projection was somewhat arbitrary.

On the other hand, your decision to sell at 250 was almost certainly right, who would seriously argue otherwise? The open question is if we're now moving (slowly? rapidly?) upwards from the current position, or if we're in for a long, painful correction.

I think we might reach $150, or even $200 before correcting downwards for good. There's a lot of dumb money still around.

+1 its no secret that lucif sold at 250 and called the top now he wants a reset to 10 bucks and it ant gunna happen hahaha

Now blood red day... not looking good friends

I think the price started to creep up slowly as early as November with Wordpress accepting Bitcoins and also withBitPay processing a high amount of sales in Bitcoins (Mostle for sales for Butterfly Labs's ASICs). It generated a bit of news and I believe it started ramping up from there. When hysteria peaked and with increasing wild guesses about Bitcoins reaching the moon, with the latest candles zooming almost vertically, I decided to sell, at 230-250 USD/BTC. Decision I do not regret.

Without a quick recovery, I believe news will slow fade away and with it exposure to new speculators and flow of new funds. Prices will deflate in a classic bubble trend. This is just my opinion of what I think is likely to happen, not that I believe it to be a certainty. But anything otherwise would surprise me quite a lot. I remain a proponent of Bitcoins, I just don't think the latest prices are sustainable/reasonable for the time being.

Anyone cares to discuss trigger event that occured in mid Jan?

I don't think Bitcoin have enough foothold in the public mindset to be used as a store of value with any kind of stability. Gold is strongly ingrained in the public mind.

Bitcoins could be breached one day, it relies on SHA-256 being strong enough not being possible to be brute forced or no weakness being found. Bitcoins could also be replaced by another cryptocurrency.

Also, an exponential curve on linear chart and a straight line on a log chart are very similar. Log chart shows a strong deviation from the usual exponential growth of Bitcoins:


Although I am unsure Bitcoins can continue such exponential growth right now, the current trend of the last few week was way over the top and the predictions for Bitcoins, short of ridiculous and overoptimistic, in my opinion.

Not sure if price goes up with news or news goes up with price!

OP: The main value of Bitcoin is as a store of value, and that invalidates most of your concerns. Also Y U NO LOG CHART?!

ElectricMucus: You seem to have elevated grasping at straws to a fine art I don't have you on ignore, but this is becoming a real pattern. I did enjoy your exponential growth history post, or the idea of much slower exponential growth as a pessimistic possibility (still very bullish long term).

Very good risk analysis.

Next step: Look at the reward.

Being in Canada, one of the countries that is considering a Cyprus type bail-in plan... I'm seriously like 50/50 undecided at this point whether I'd rather risk holding more of my money in a bank long term or bitcoin cold storage wallets long term, both are pretty uncertain to me at this point.

You never know what bitcoins are worth next morning.
Or after 15 minutes

Can somebody explain me how it ever can/will be used for something serious ?
I dont see how price ever will be stabile.

Uh? This is not about not believing in Bitcoins or hating them. Just that I believe they are currently overvalued (vs others who think they are undervalued). It's not like I'll be going away from Bitcoins anytime soon. Well albeit the views expressed in this thread by some might be a bit on the extreme catastrophic scenario. Just to say although I'm bull on a time span of years, I'm bearish for the next months.

You should rename your post "I need to come up with my own material instead of biting off of smoothie's"

Lol haha

That's kind of a chicken and the egg problem.

Here is one simple (naive) scenario of what could happen: Somebody owning a datacenter -> webhoster -> e-commerce site -> producer of 3D-Printing supplies -> producer of hard-disk hot-swap cases -> datacenter.
If such a closed loop supply chain is provided prices can become more and more independent of the exchange rate.

I am very sceptical this will ever happen with Bitcoin though  

I don't like the hype and I totally agree with you regarding the much slower actual adoption rate of Bitcoin.
However, I don't see Bitpay hurting Bitcoin in any way. The alternative would be that merchants implemented something like Bitpay in their checkout process themselves (i.e. pricing stuff in Bitcoin based on the current exchange rate +2% and doing a timely exchange on MtGox). There is no real other way you can do it because Bitcoin can be very volatile at times, with or without companies like Bitpay.

It will take a very long time before Bitcoin can be used as a somewhat stable unit of account and it might very well never happen at all.

You should rename your post to: Reason to not take smoothie serious when posting in the speculation forum.
Get a hold of yourself, I know you can post something insightful, yet witty.

It doesn't need to be that easy. Many smart people will use it whether it is easy or not. Maybe it won't overtake the USD/JPY any time soon, but just because it isn't easy yet doesnt mean that smart people won't learn.

Lol rename this thread to "reasons to hate bitcoin so the price goes down so I can buy cheap"

Sorry, but that is just FUD.

If a company defrauds customers it is this company that is likely to face problems but not their payment processor. While I am not too familiar on US regulations in these matters, at least BitPay is a FinCEN registered MSB and I know of several other (non-US) services which are at least in the process of getting licenced as a payment service provider in their respective countries.

Stating that all Bitcoin intermediaries are potential scammers and that there are "no regulations" is plain wrong.

Lets say "a certain amount" of volatility. You do recognize that they do play the market with their clients funds?
The thing is: We can't know what volatility would be without them doing it.

And finally: They do increase volatility in a sense that they contribute to the hype. Now if you want to ride that hype it is clear that you actually like that. What you have to consider though is that real adoption takes place, albeit at a slower rate. That is sites accepting bitcoin directly, for donation proposes.
What I am suggesting is that without bitpay we would already be seeing more of that plus some stuff actually priced in bitcoin.

You can also argue that anything that might hurt Bitcoin in the long run (e.g. too high volatility) is diametrical to Bitpay's interests.
I don't really buy the "Bitpay is manipulating the market to hurt competition" argument.

Except one thing: It is in the best interest of bitpay to have volatility as high as their system can handle in order to make it unfeasible to accept bitcoins directly.
They admitted to playing the market with their clients funds before (for ex, "short squeezing pirate), and it would be easy and more profitable for them to continue doing it, both from a profit perspective and for maintaining their business model.

 
If it just were for using them for merchant payments there are other ways this can work, without a payment processor. Using pre-generated adresses from an offline wallet is as secure and as easy to implement.

That's like saying "do you think wordpress and others will switch to another scammer when they will be screwed by their credit cards processor?"

I understand that you think bitcoins are overpriced and all (with pretty good arguments), but this one is just dishonest.

Good. Do you think wordpress and others will switch to another scammer when they will be screwed for good amount of fiat?

That's why there's also BIPS.

Bad use. Bitcoin intermediaries are all potentional scammers, as no regulation here.

FTC BFL investigation -> Bitpay suspect -> Bitpay close -> Wordpress, Namecheap, 1000+ accounts leave without money. -> RUMORS!

or

WHATEVER -> Bitpay close -> Wordpress, Namecheap, 1000+ accounts leave without money. -> RUMORS!

Very bad usage.

You can't really separate Bitcoin the currency from Bitcoin the payment network either.

If a company accepts Bitcoin as an alternative for existing payment networks without ever really holding Bitcoin itself (by using some automated conversion service) then that's also a perfectly good use of Bitcoin. Bitpay can operate at a profit while still saving their clients money over other payment methods (e.g. Paypal). Even if Bitpay (or Mt.Gox for that matter) was shut down for whatever reason, there would soon be others to take its place because it is simply a profitable business model and it will remain so as long as traditional payment services don't lower their prices or increasing regulation for Bitcoin makes converting it considerably more expensive.

Let's face it: Bitcoin is not something people have to believe in for it to work. Bitcoin is a working technology that can be used to build quite profitable businesses on. People just using it to pay without speculating on future exchange rates is not a problem for Bitcoin at all.

Hehe. Bitpay laundered money for this crime. Stay tuned =) 25 millions dollars.

I think the most risk comes from the inside of those ventures. They both operate without oversight and have a near monopoly.
There are so many things that can go wrong, ticking timebombs.

The other thing is BFL which is as shady as ever which actually may serve as a premature trigger.

Not mtgox and/or bitpay, but this bubble. Instantly fall to hell.

Well i have to oppose. The fluctuation was due to a lack of liquidity in the market. It's currently leveling out. No more big buys, this will soon be a non issue.  Ever tried to buy stocks? The trading system for stock holds is a bit smoother but purchasing in is still about the same amount of effort if not more. You just got lucky and got in early when purchasing is a bit more tedious, but the gains are higher

MtGox and BitPay are pretty big, attackable targets to attack if someone wanted to hurt Bitcoins, don't they?

Bitcoin itself might not be closed down anytime soon but all this is now pretty valuable for something still so risky.

+21000000

My five cents.

All this bubble only exists due two companies: MtGox (which is moving its funds to democracy fortress) and Bitpay.

All "adoption" is based only on these two, as no one will accept bitcoin directly due to its current volatility.

If something will go wrong with either MtGox or Bitpay... Everything will disappear in just one moment.

"Wordpress accepts Bitcoin" and (real) "Wordpress accepts Bitpay" is really two different statements. And looks like most people mislead them.

Well, I see a lot of bulls showing exponential growth with everyone getting rich still. I see a dead cat bounce.



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Bitcoins


I certainly do agree with the qualities of Bitcoins. But they don't appeal that much to the mass, but to a fringe community of users. They're much harder to use than older payment methods and unless someone absolutely needs/wants anonymity, will probably not go through the trouble of getting Bitcoins.

I also think these wild rides up followed by crash reduces relegate Bitcoins to a joke, at least for now, in the eyes of most out there. Albeit we're gradually getting more exposures/interest in Bitcoins, I believe.

The wild fluctuations are a nuisance which will delay Bitcoin adoption, in my opinion. It makes it a casino. A gambling speculative toy and reduces it's efficiency as a currency.

The software is also still quite immature and the limits imposed on transactions and the size of the current blockchain are already put under strain. We need more years of development before it becomes suitable for day to day usage, if ever.


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The Bubble


I currently see a bubble, fueled by hype. The current upswing being the "dead cat bounce" after the crash, albeit it's losing speed. There was more and more news along the way up. There's still a lot going out albeit less and I believe it will keep going lower and lower for that part. Now that we peaked and crashed, the topic is less sensational and I expect medias to slowly move away, for the time being. Search trends for Bitcoins has been on the decline. Will it keep going that way?


If it does, the influx of new money might be cut short. The latest uptrend might be just a dead cat bounce, latecomers going for the "cheap" Bitcoins, but if the influx isn't maintained, the buying spree might get short of breath. I see a rebound that is running out of momentum.



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How I trade


So I have a completely opposite view to most out there it seems, not really being much interested in daytrading. Plotting charts might work well over the short term for a matter of hours/days, or even a few weeks. But on the long term, nothing beats the hype cycles which peak with media attention and mass enthusiasm. And those are fairly hard to predict in advance seeing one could start anytime with good news drawing more attention, more involvement and further fueling more news/enthusiasm in a self-feeding loop. Albeit once they start, the outcome is easy to guess. I started some time ago in the lows following the first Bitcoin bubble. I sold at the peak of the news, far fetched stories of various hypothetical scenarios where Bitcoins were about to go even more exponential in prices, when the amount of enthusiasm and imagined outcomes was stepping close to mass madness. Prices promptly came crashing down. Where did you sell at?

Many disruptive technologies were adopted fast, but it still took years for everyone to start using them. The telephone wasn't adopted in a few weeks. Computers were not adopted in a few weeks. The Internet was not adopted in a few weeks. Social networking sites like Facebook didn't become popular in a few weeks. It takes time for new things to mature into something that can make their way out there, if they ever do. Bitcoins might not even be the cryptocurrency to make it, if any cryptocurrency ever makes it.

My answer: