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Comment by acjohnson55 | Hacker News Reader

What's interesting to me is that no amount of bad news appears to affect the price of BTC. I'm not a professional or amateur trader (I've got no position on BTC at all) but the price fluctuations really seem dominated by sentiment over any sort of fundamentals.

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It does seem to have some effect. Bitcoin "crashed" last week quite a few pecentage points (see https://coinmarketcap.com/currencies/bitcoin/#charts click 1M or 3M and see September 15th). Like stocks though, it is always hard to pinpoint why, because it's a market with lots of different opinions.

Wouldn't sentiment based fluctuations smooth out over the maturity of the instrument. Bitcoin is an infant compared to stocks... so volatility will be 100% based on youth/ignorance/fear of what is happening with said insturment

Bitcoin price volatility is decreasing over time: https://bitvol.info/

Here's another way to look at it. If I have a stock which has bad news, I need an exchange to panic on. No exchange? Then no way to dump the stocks. So if Chinese are thinking of dumping bitcoin on account of the bad news they need liquidity to do so. Currently with all (most?) exchanges gone where do they, if they really want to, dump their bitcoins? On that note it did go from 5k to current price.

This point is so chronically under-appreciated. And it doesn't even have to be "no exchange" -- it can be "high friction at the exchange" or "overwhelming tax burden to covert to fiat."

> no amount of bad news appears to affect the price

> price fluctuations seem dominated by sentiment

Are these not two contradictory statements?

Maybe the GP reads the word 'sentiment' as the root of 'sentimental' and interprets it as only referring to good sentiment, a synonym for rose-colored glasses?

Trends have been more or less identical for Bitcoin, Ethereum, and Litecoin over the past month or so. The following picture only spans a week, but it shows the exact same rise and fall in prices for all 3 -- https://i.imgur.com/GjsCMUZ.png.

Trying to fit models to that picture (or the other way around) seems like trouble, but it stuck out as interesting.

I think that when bitcoin takes a hit it propagates to all other cryptocurrencies, since BTCs are often seen as an archetype of all cryptomoney.

Well it crashed hard when rumors got serious, like $4k to $3300, but came back within like a week

It crashed from $5k.

$5k was the all-time high. Most assets crash from their all-time high, unless they're at an all-time high, of course.

So, no crash to speak of at all. Crash is when it devalues to a lot less than what we're seeing now.

It went as low as $3.3k. That’s a bit lower than we’re at now.

The same holds true for most securities. Markets are efficient, and news is quickly priced in -- often before it's published news.

How often have you read "Company XYZ beat estimates -- stock price falls?"

From the article:

> Chinese trading volumes now account for only around 5% – 10% of bitcoin’s or ethereum’s global trading volumes. With price there significantly lower.

Price is determined by market forces, and the Chinese part of the Bitcoin market is relatively small. So it makes sense when this type of news doesn't really impact it.

It's a 24/7 market; the price responds a lot faster than other markets. So looking at day-over-day price isn't a good gauge. Additionally, by the time a story is known at large, it's usually been known for a bit among those who follow Bitcoin, so you'll see it already priced in.

Yes. I guesstimate that the China exchange and miner crackdown has been priced in for weeks, if not months.

It’s only priced in if everyone knows about it. In this case most of the volume was clearly not aware.

The evidence suggests that it was priced in. Just as the BCC/BCH business was priced in. Why do you say that it wasn't?

> It's a 24/7 market; the price responds a lot faster than other markets

Weighted by volume or capital flow, most markets are 24/7.

Could you explain what this statement means?

I think their point is that while most investors in e.g. equities (stocks) regard out-of-ours trading as "not counting" because it's a much smaller volume than in-hours trading, the amount of money that moves into or out of stocks in out-of-hours trading is still much larger than the amount that moves into or out of bitcoin (at any time). So it doesn't really make any sense to say that stocks are a 9-5 market and bitcoin is a 24/7 market.

out-of-ours = out-of-hours, for any non-english speakers reading^. (not criticising you lmm, only trying to help)

Yeah, 'twas a stupid typo, unfortunately I only noticed after the edit window had expired :(.

Foreign exchange, many government bonds, even some institutional bond markets—none of these have a single exchange and thus all trade 24/7. A minority of markets, e.g. the public stock markets, have “market hours”.

How much people are trading in value at a given time period.

Are you sure? Doesn't the need to mine block slow down transaction to a bare maximum per block?

And if miners in china close operations won't time between block increase?

Thus maybe BTC is actually responding slower than other market... what do you think?

I'm by far not a keychain expert so I will gladly be corrected if I'm wrong.

Time to generate blocks isn't the same as what happens to price. They are loosely correlated, but not the same thing. Price is as much psychological as technical.

However to answer the question: If mining in China went offline, it would affect time to blocks. However, difficulty adjusts every 2016 blocks (about 2 weeks), so if China has 75% of mining, at worst, it'd be 8 weeks before everything went back to normal in terms of block times. Bitcoin Cash actually has mechanism to adjust far more frequently, within a few hours if necessary. (but also subject to miner manipulation)

Bitcoin adjusts block generation to 10 minutes irrespective of the miners. What does change is difficulty, hashrate and transaction fees.

The bitcoin hashrate has remained more or less the same in last 2 months: https://blockchain.info/charts/hash-rate?timespan=60days

This is in contrast with last 3 months where the hashrate nearly doubled: https://blockchain.info/charts/hash-rate?timespan=180days

Fees peaked around 25th August but still pretty high: https://bitinfocharts.com/comparison/bitcoin-transactionfees...

Hashrate has not remained constant:

- 7 day avg of last 3 mo: https://blockchain.info/charts/hash-rate?timespan=180days&da...

- 7 day avg of last 2 mo: https://blockchain.info/charts/hash-rate?timespan=30days&day...

Going from 6 to 7.5 EH/s it's not more or less the same (it's a 25% increase)

The exchanges don't typically create a blockchain transaction when you trade, so block mining times do not factor in here. It's just an open market with buy/sell orders that anyone can place at any time.

I'm not sure which of us has misunderstood something, but I don't see why the speed of mining would affect the reaction time of the market.

The network self adjusts to generating a block every 10 minutes. This will have no effect on block generation rate.

This doesn't happen in real time, but adjusts every 2016 blocks. So loss of hash rate will temporarily affect block generation time until the next adjustment.

I view it more like the war on drugs. Cracking down on cocaine at it's source basically just increases the value thus price. If the mining slows, it will just mean there is more money in mining.

But in the long run, this won't significantly affect the supply of bitcoin because the hash difficulty will just adjust, right? That's in contrast to cocaine, where the crackdown may very well lead to long-term supply shifts, causing the price to rise. But I guess maybe if a significant amount of coins get trapped in accounts held by Chinese citizens, it would make a difference.

>no amount of bad news appears to affect the price of BTC.

This is what btc was created for, ie such government actions are fundamentally priced and architected in. At least that is what cypherpunk religion is about.

I think it's worth remembering that Bitcoin is not a real currency or commodity yet and has little real value. The only value number we can put on it is the number that the hardcore loyalist place on it.

If the only people dealing with Bitcoin are the people trying to prop up Bitcoin then it makes sense why the price isn't affected much in the long run. The loyalist have no plans to dump their Bitcoin (and realistically couldn't if they wanted to) and there are not really any normal traders in the system who would buy and sell things like this based on actual value.

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