Topic: speculation: the frenzy growth continues despite stalled for the day (Read 2245 times)

The truest thin about bitcoin is that there is no such thing as "never again".

I completely agree that the West has more than enough to fuel a massive run-up, especially via the BIT, but I think it would have been more like Jan-March 2013 all over again, rather than this jerky wild sprinting and retraction, which feels like a battle between summer 2011 and spring 2013.

Thanks for the very insightful look on the average Chinese trader. I found the part on how they treat Gov. manipulation the same way we treat the weather very interesting.

This is definitely new ground we've reached. The question is where will it go from here? Every time the price drops there are people waiting to buy up cheap coins. Have we really reached the point of no return and bitcoin prices will rarely every reach $100 again?

We have to wait and see how the traders in China react to a panic sell.

Yes but when will these things be ready?

An excellent analysis of the Bitcoin market in China. I am far from convinced though that the west will be holding back China as a "rottweiler on a leash" much longer. The big elephants in the room Second Market's Bitcoin Investments Trust and the Winklevoss Twins and their Bitcoin ETF have the potential to create a massive demand for Bitcoin in the United States.

The interesting question is what happens when "2011 meets 2013." China is having its 2011 insane fever run, while the rest of us are looking for a nice, controlled bull run, hawkishly perched to sell a bit and cool the rally whenever things go double-exponential.

The result may be wildly unpredictable, but I'll take a first shot at laying some groundwork for analysis.

1) A lot will depend on how tight the arbitrage is between the exchanges. The tightness of the arbitrage is like the length of the "leash" the rest of the world uses to keep China's maniacal streak in check, but keep in mind that China is big enough to pull everyone else around quite a bit as well, like a rottweiler on a leash held by a 12-year-old kid. I'm guessing it will get pretty tight over the coming weeks since there is a lot of money up for grabs, but on the other hand the speed of the growth and the difficulties with Chinese capital controls could place a hard limit on how tight the arbitrage can be.

2) When China overheats severely, MtGox and Bitstamps will tend to sell off, and even if the arbitrage relationship isn't that tight, the strength of the difference will be powerful. That is, the kid holding the leash gains a lot of extra strength, even if the leash stays pretty long. Which is more powerful, Chinese exuberance or Western fears of repeating the April overheat and crash?

3) Perhaps there is something to be said for a cold mathematical approach, something like an average between the 2011 bubble growth rate and the early 2013 bubble growth rate. It took 10-12 days for the price to double during the 2011 bubble, and about 30-35 during the early 2013 bubble (until the final frenzy where it went much faster), so we can say the 2011 bubble was about three times as steep as as the early 2013 one. Maybe we will simply end up compromising at a three-week doubling time. This is actually more or less what we've seen in the past month:



Note how, instead of the very steady growth in Jan-March 2013, we're getting more "rottweiler on a leash" yo-yo growth with China zooming ahead but then getting pulled back, then zooming ahead and getting pulled back, as we rise.

Fear doesn't always equal collapse.  I don't really consider weekend trading to be relevant because the real trends take place during the week.  Monday will tell the tale of the bubble.

The volume has fallen 25% in one day and yet some of you believe this bubble isn't about to collapse?

Stability will need a minimum of 5 zeros tagged to it
Until then the constant desire of the moon and worry of the end will keep this a speculation game

What's interesting about btc is it is the first time we have a single market were the trading styles and beliefs of many countries (china eu america russia etc) are all mixed up together.

The US stock exchange is dominated by US trading patterns,  china stock exchange by china trading patterns, etc.

But with BTC everything is mixed, if chinese behavior is to dump maybe strong hands in the EU jump in and limit the effect. It makes for an interesting but unpredictable market.

I hope that changes long term when buys and sells are more the result of Payment processing rather then speculation. The price will be more normal I think when it's determined more by the movement of an active economy the speculation.

Of course, thats a looooonnng way off. :-)

Everything is almost always either mania or panic. The only time Bitcoin isn't in either mania or panic is when its safely below the long-standing ATH, but also not directly after a crash, but also trending upward slowly. Its time to either become maniacal or start panicking whenever Bitcoin isn't in a state of mania or panic.

interesting read indeed!

I think many of us 'older timers' have been a bit worried about the relative newness of Bitcoin in China. We've already been through multiple crashes to harden us against Panic, but I suspect a large new market that might feel relatively insulated like China could just as easily fall victim to panics as to mania.

As for 'playing the game', i think just as many in other markets are just 'playing the game'. However, if bitcoin works, those 'playing the game' get slowly converted over into believers. Many people sold in bulk at $50, $100 and higher thinking, "Thats it!" only to buy back in either lower or higher as their sentiment changed.

As much as I LOVE crazy high bitcoin prices, it's bad for business. Slow growth is reliable growth. We want a price that reflects sober investment and solid logic, not mania and panic. 

Actually, it is good news - for the bears!

So you're saying China is mostly a bunch of weak hands? That's not good news.

I was following QQ discussion when the price drop below 2000 around 12:00 (Beijing time) there wasn't any sign of capitulation. People are eager to buy. Many are speculating the next move of 庄家 ("big fish" in the above paragraph), even though without analysing the data I cannot tell for sure there 庄家 is manipulating price at all.

In my last post I said, on 22th Oct (1200CNY)

So I was right. You may think I made money. No, that's another story, see end of this post*.


Yesterday the price had topped 2680CNY and this morning (in China) at 2200CNY for the whole morning.

My esitmation of the sentiment is, like before, that people (Chinese) don't hold positive outlook of the future of digital currency, but we play it. This is a Chinese thing; the fun is in the game. We played it in A-share stock market and name the game 搏傻. To summarize the culture background: When psycology is at work there isn't much debate of currency's future value. That means capitulation comes more complete than in the west.

So as I observed. The price dived -200CNY or -300CNY a few times in the last 24h hour, there are players who are ready to quit the game. But the price was pushed back also as quickly. It is hard to believe this would happen if you just look at the order book - usually the sell queue is more dense than the buy queue, the space between sell order is usually 1 to 3 CNY and the space between buy orders, 10CNY. In this case, market should crash, but it didn't. Why?

It means there are a lot of 'hidden' contract, whose master is defending certain lines, or using the crash opportunity to build profolio. The question is who are they. Are they the mod? I think this behaviour is not inline with the sentiment I observed.

To me it means there are bigger fish in this small pond. I assume they talk less in QQ (I hang there for some time) and is using the same tactic they did with stock market. They are late in the party and need time to build profolio. I couldn't verify this with data models (as I do stat in GNU R from time to time) as I am travelling in Thailand and couldn't concentrate, yet there is no time for the prudence to post well verified theory here. They used hidden contracts a lot back in the days they manipulate Shanghai A-share, urben ledgent of such people was popular. (hidden contracts are market orders that is placed when the price reaches a threshold).

The big fishes are not value-based investors - to build a lasting currency against government manipulation is simply out of the line of the Chinese zeitgeist I observe - the zeitgeist is to try to take advantage of government manipulation - you may notice there are rarely cursees and resentment towards government in bitcoin forums and qq in China like you would observe here, despite Chinese government being not any kinder. Fewer believed it is a better world if BTC replaces fiat currency. We take government mainpulation as you take nature: use it, keep it, not to fight it. In China we do to the nature like you do to your goverment: criticize it, ask more from it, ask even more from it, and blame its failure.

So are the big fishes satiated? I feel not. It takes a lot of effort to build data model to study this, by the time I can deliver a report it would be too late. But consider the size of China and lack of investment outlet for the rich, I feel the fishes are not satiated with the current 35billion CNY market size. The small players who mined hard and ready to leave the game is being replaced by the professionals - and professional gamblers too, who are also ready to quit the game at later stage. These big fishes are satiated when most small players give out their holding. That's my take. This could be very wrong, if the trade data is carefully studied. It is not backed by hard evidence and the hidden contracts has other explanations, like worried speculators.

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* So why I didn't make money even I betted the right horse? My homebrew tradebot caught unaware when BTCChina changed their API's behaviour (of accepting Null in an API call -> changed from string 'false' to digit 0 then to boolean False, and the change was without announcement, even the API document is not downloadable, had to fetch from search engine cache to see the change). It caused my pet trade bot to misbehave, reaping the flower before it boom (sold all before the hike). I am not going to take legal action or try getting money back from BTCChina, other Chinese on the forum knows it doesn't work. BTCChina offers such rudimentary API and change it as their wish, awaring of the disruptive nature at the current stage means speculators are to cover themselves.

Even worse, right after my pet trade bot misbehaved, I engaged a tight-planed trip, and have no time to correct until today, and the price doubled since. That's why I really want to partner someone to work on bitccoin trading (in my signature I said I am open to partnership), so when I am really engaged in something others can cover me.

And I am welll aware of BTCChina's problems, I even wrote an post: "World's biggest, China's safest" exchange BTCChina.com is far from professional, had to live with the world's biggest trading platform, I experimented with 6 trade platforms, ANY other markets have better API but ANY other markets' spread is too wide for a trade bot.