Topic: Vague similarities... (Read 4263 times)

I personally believe a substantial number of coins (but still less than 50% of total volume) are sold off-exchange these days, but I admit, there is no way for me to prove my claims either. My main reason for this belief being that there is enough evidence by now that big (or at least: bigger than hobbyist's) money is entering the market, but at the same time, I have a hard time imagining them wiring a few millions over to Japan or Slovenia.

Here's one smaller observation that perhaps matters in this context: If I look at the order book at all, I only consider relative bid/ask ratios, and their change over time, to be half-way reliable. But isolating for a moment the raw ask sum over time, there is, I believe, a pretty clear downwards trend visible over the past years, not easily accounted for by the reward halving alone. Whether that means more holding or more OTC is of course just anybody's guess again. 'Holding' would be bullish across all time frames, while 'OTC' would introduce an element of uncertainty ("maybe they're selling way below mtgox price?!") that could, at least short/medium term, be quite bearish.

Zero fees + bots = huge volumes even if it's just the same 20 btc going round and round in circles.

Daily volume under these circumstances is pretty meaningless. 

Situation are much more different now, miners do not need to cash out on exchanges, they could sell the coins to just their friends dues to much higher public interest, and they can even purchase something from overstock.com

The only thing worries me is that huge trading volume on some exchanges in china, are those real volume or just artificially made by exchanges? If they are real, it seems the speculators in china indeed put large amount of capital in the game and they might create heavy volatility in bitcoin. It feels like all the money printed by FED ends up in china and used to pump and dump the bitcoin

Of course you don't. I said this because 10 days ago, you wrote, "This rise was not of the bullish type!" I was not sure what time frames we were talking about here.

Much appreciated, thank you.

First things first...
Why would you phrase this like this? Do I come off as a permabear? Because I assure you I am not. I am just objective in my analysis. A realist, if you will.

On to my reasoning...
Because there is a slightly bullish feel amongst (what I believe to be) a greater bearish mid-term, I do believe it is more likely to rise out of the triangle. While there is the possibility to break down (shown in fig.1) there are other reasons to break up (the rest)


Fig.1

Illustrated here, you have two outcomes. One where a typical 4th wave triangle (EM, I don't want to hear any shit ) pattern breaks up, and out, (labeled in cyan) and is the whole consolidation for wave-4. The other would be a larger ABC where the triangle is the B-wave (labeled in red).

The target I mentioned is only an estimate using the height of the a-wave of the triangle. This is a typical target for triangles, though it can fall short and it can rise above it, but it gives you an idea where to look for exit points. Even with this uncertainty, you have clear stop points if it goes against your trade. Since nothing is perfect in EW or TA, having well defined stops are a great way to minimize risk. You would set a stop-sell just below the lower trend line, or a stop buy above the upper trend line.

Enough about the usage.

This all plays into a larger picture that is a real possibility. The chance of a larger 4th wave triangle on the Daily-Weekly time frame (fig.2). A breakout would complete the triangle B-wave before reversing back down in the C.


Fig.2

Ok. As long as we can agree that we are all just speculating. However, I would argue that miners may not be a dumb as you make them out to be - and by dumb I mean not networking within their ranks to understand what channels exist outside of exchanges. For instance, if I was a decently sized miner, I'd love to procure as many options for selling as possible.  I would also be interested in price stability.

For instance, I doubt Loaded is the only broker operating in the world, nor do I believe is the only large broker operating in the world. Remember, ALOT of people want anonymity and now exchanges no longer offer that. Have you considered how BIG this reality may actually be? I mean there is a reason that trillions are in offshore accounts, right?

I'm aware of the possibility, and as I've said before, it's impossible to prove or disprove this.

However, mining is fairly distributed and, because of the ASIC boom, the distribution probably changed from the previous GPU one. I'm not sure how hedge funds would go on about contacting miners due to that distribution, or vice versa. There is no real futures market I'm aware of. If you want to make that case, then I think it's more likely for hedge funds to set up mining operations of their own; purely for accumulation.

In any case, there will be a large portion of the daily mined coins that goes to miners who have no channels to reliably sell Bitcoins other than exchanges – that is my speculation and I believe it's a reasonable and educated guess based on the things I listed here and the previous post.

Right now, supply on exchanges is mildly increasing and if you add up multiple exchanges together, it is not all that low. If there is accumulation, then the accumulators either ran out of powder or they don't wish to accumulate anymore. Of course, this is all too easily visible based on SecondMarket's change in buying behavior alone: https://bitcointalksearch.org/topic/gbtc-bitcoin-investment-trust-observer-337486

Guessing.

I just think that the argument about invisible rising selling power is no less possible than invisible buying power.

Since this clearly can't be proven either way, where does that leave us?

How many newly mined coins are being sold off exchange? Prove to me that it is not a substantial amount and I will give your theory more credibility.

And before you scoff, just think if the above question is true. What are the implications in future price?

During the first run up in China back in November when it went to 8000, the exchange was literally running out of coins. Was this just because of miner's greed or could there be other potentials factors? I think it's important to analyse all possibilities, not just the ones you saw in effect in 2011.

As much as it is fun comparing bubbles the fact is they happened for different reasons and have resolved differently. I said the China bubble would resolve higher [EDIT: in proportion] than previous bubbles and I think it's going to keep going as is. We'll see!  

I forgot about that. Even though I'm not sure a week of market suspension (just looked it up on the charts, there's data from 19th and after that, 26th of June) is enough to disturb that, it's a good argument particularly in conjunction with an initial drop of the same magnitude, thanks for reminding me.

I have to say though, in 2011, we did bounce off 10 to 25, an enormous bull trap in proximity of the 32 high, and on the 13th of June, it left this price behind to 18-17, so I'm leaning towards discounting this week's pause. The difference is that this countertrend rally off 10 lasted a mere 1-2 days. At the time, I would have easily believed MtGox's 1068 to be equivalent to that 25 since it was a countertrend of only 3 days.

The problem with the 2011 bubble deflation is that Gox was hacked and closed down for several days, in the middle of wave B, so the equivalent of this 6th January rise to 1093$
is missing from the 2011 charts. Remains to be seen how low it will drop now, in 2011 it dropped to about 11.5$ on the 5th July, that was a 64% drop from the 32$ peak.
For comparison, 64% of 1240$ is 445$, so this bear market still may be closer to 2011 than to 2013.

In the real world 90% or more of all diamonds mined have been held back from market creating artificial scarcity. This is starting to break down now and diamond prices are starting to fall.  

http://depletedcranium.com/the-facts-about-diamonds-and-why-i-dont-like-de-beers/

Thanks for your explanations.

I have heard one miner claim that a single block eruptor has enough processing power to process all current transactions on the entire bitcoin network.  

Obviously it would be massively profitable on transaction fees alone (without even thinking about block reward) so I don't think we need to worry about running out of processing power.

I don't know of any elaborate writings on this, but I can tell you that it's not a problem for the network: Difficulty would just decrease. The network functions fine at any difficulty. Remember, Satoshi mined on his own in the beginning. The only problem could possibly be an extremely abrupt decrease so that transactions take too long to go through, but at 10 minutes per block, how likely is that?

Electricity in some parts of the world or situations is free, and ASICs have an extremely high efficiency, so it probably won't happen for a longer time. Once an ASIC is unprofitable, the owner will simply sell it to another who has lower costs. Mining is a professional business, the resources will get allocated to those who can make best use of it.

Let's just say for the sake of argument that mining becomes so clearly unprofitable that miners start pulling out. With the network where it's at, at what stage does this become an obstacle to the network's ability to function usefully (timely confirmations etc.)? Can you point me towards any recent study of this?

Yes … Charts.

Here are charts for difficulty (alltime log chart included): http://bitcoin.sipa.be/ Compare them with the price chart and it is easy enough to see.

Mining difficulty doesn't increase the price of Bitcoin, it is a common error. Certainly noone is refraining from buying Bitcoin because the difficulty is too low or selling them due to this. As always, price is the leading indicator.

edit: Sorry, I missed the bolded part. Unfontunately, it is probably impossible to show this, but the source of my suspicions rests on the fact that exchanges are seeing very little influx of Bitcoin even in times when prices don't increase. It would be extremely difficult for Bitcoin to become as illiquid as it did if you had a constant influx of 3600 BTC/day. Aside from that, simply sentiment: It makes sense for miners to become irrational and get caught up in the Bitcoin hype so that they don't sell a single coin more than necessary to cover expenses. There are also anecdotes of miners confirming this.

Do you have some sources to back this up? I would be interested to read up on this.
The counter-argument goes that mining difficulty increasing will raise the price of Bitcoin, isn't it?
Thanks for any sources!