Bitcoin Crashing | Hacker News Reader

Bitcoin Crashing

markmaunder.com

88 pointsmmaunder66 comments

There were many cries of "It's Crashing!" a week or two ago when it mtGox hit $1000 and then started falling. It stabilised around $800 before climbing up again.

This may be the same, or it might not. I can't tell, and probably neither can you. What you can be assured of is those who scream "It's a Crash!" at the first sign of a drop have generally been wrong more often than right. Some will be right when it does crash, but how much of that is luck, wisdom, or the fact that they got it right by calling it enough times that they were bound to hit the mark when it did happen.

Looks like it's exactly the same.

Kevin Rose, Digg founder and VC, just made a post about Bitcoin's fall on /r/bitcoin:

http://www.reddit.com/r/Bitcoin/comments/1rutkt/bitcoin_is_f...

Funny the Digg founder has to post to reddit.

Digg actually has more content and less shitty image macros these days. Oh how I pine

Reddit is actually selling brain-rot, not content. So I agree.

He sold at $300, I bet he regrets that decision.

https://twitter.com/kevinrose/status/398865551730036736

I sold at $30 two and a half years ago.

I regret it.

> Then, as has happened before, it will climb back up to $1200 and beyond, probably up to somewhere between $4K and $10K before the next big crash. If you do want to speculate on crypto currencies, wait a day or three and you’re about to get a great deal on Bitcoin.

These kind of statements are a red flag for me. The majority of the people trading bitcoins seem to be interested in capital appreciation or alternative assets (e.g. Chinese stashing assets), rather than using it as a currency for transactions. Currencies are embraced for their stability and predictability... that's why the USD is a reserve currency for the rest of the world.

The Economist sums some of this up in their recent article: http://www.economist.com/news/leaders/21590901-it-looks-over...

If Bitcoin drops to around $200, it's just following long term exponential growth trend with of booms and corrections.

If Bitcoin drops much below $100 we can talk about crash.

Most people aren't willing to put a day and a price on their predictions. I will look forward to another post in two days of you either celebrating cause you spotted something, or explaining why your prediction didn't pan out.

Will do. BTC-e has already crashed down from $930 to $750 in the last 1.5 hours and volume is spiking there too. (it tends to be cheaper to buy BTC because of greater risk)

Why is BTC-e greater risk?

Because it's based in Bulgaria and no one knows who actually owns it. But it's good software and one of the few places you can trade other currencies like Feathercoin and Litecoin with plenty of liquidity.

...and funny you ask because a commenter just posted on my blog that Sheep Market Place was scammed out of $40 million in BTC which is a possible cause of all the selling:

http://www.techienews.co.uk/973470/silk-road-like-sheep-mark...

If this theory is true, it shows that BTC lacks book depth and the current price is just speculation on the edges, not a true price for the entire stock of BTC. (That is, if a large portion of BTC users wanted to get out of BTC, they couldn't realize the nominal market price.)

Where does the Bulgaria thing come from? BTC-E is clearly a russian site.

Not sure what is your source, but BTC-E says the following:

"A cryptocurrency exchange based in Bulgaria where users can trade Bitcoins, Litecoins, and Namecoins, for Dollars, Euros and Rubles."

Thanks, I found it now. Though, they speak Russian and support predominantly Russian payment methods while supporting zero Bulgarian payment methods so either they are lying or the Bulgarian company is just a shell.

What a stupid comment. So if say Blackberry is selling mainly to US and European customers, it's clearly just a Canadian shell ...

Interesting analogy. A publicly traded company with transparent financials and corporate hierarchy vs. a web site that has an unknown company behind it, run by anonymous CEO.

Yeah sure, you're right. The CEO is probably an alien. There is no way a Bulgarian company could see the majority of it's customers are from Russia and adapt by offering convenient payment methods. Never mind that Russia is the biggest country in Europe and it's heavily policing outgoing bank transfers.

I decided to buy some as it fell. In the fifteen seconds it took to press F5, enter bid (of $25 below prevailing price) and click OK, the price had fallen by $70. So I think for the first time ever I ended up paying less than my offer.

It ended up at $690, about 15-20 minutes ago I think. Now? It's $840 again. (My investment in bitcoin is turning out quite well, but I'm actually quite glad I didn't spend all that much in the first place.)

I used BTC-e to sell 25 bitcoins and transferred the money into my EU bank account. It went through without a hitch, and I had the money in my bank account in 5 days.

Compare that to Mt Gox who would not accept my US identification + German residence & bank account at all, and even if they did it takes up to 6 weeks to get your money now.

BTC-e is legit. BTC-e also doesn't require nearly as much ID verification.

Indeed, because they know nothing. If they did it would be as pointless as this article.

Bitcoin Wisdom[1] is a great chart to watch for those interested. Very detailed.

(I am not affiliated with BW in any way.)

1: http://bitcoinwisdom.com/

This dip looks like a dump and pump.

How so? As a noob in trading, I find it fun to ponder all the psychological factors. People buying fuels mania leading to more people buying fueling more mania. Until some turining point when too many people start to sell fueling a depression making more people sell fueling more of a depression...

Obviously people with enough money can try to artificial trigger those processes, but what are the conditions for that to work? Maybe the overall trade volume needs to be small enough?

How does an artificially triggered cycle look different from a "normal" cycle?

I suspect going from 100$/BTC to 1000$/BTC as a "pump and dump" would have required a lot of money for pumping?

The candlesticks on the sell where extremely sharp, meaning it could be a naturally occuring sell of a huge account, but the very similar volume of the candle at the bottom of the dip lead me to believe they are related.

And now the pack mentality has taken over and the volume is racing up.

Having watched in real time, that's what I was saying as it happened. I think you're exactly right.

So it would be a reverse pump and dump - sell a lot, count on falling prices, then buy again?

Yes. Think of it as pushing a couple of rocks over and hoping to start an avalanche. In this case it worked.

I can highly recommend the one minute view. Quite the rollercoaster ride.

I wish i would know more about algorithmic trading. On all these markets a lot of bots are fighting right now on various strategies.

And the price jumps are insane right now going from 850-930$

There are bitcoin trading bots? That sounds interesting. How would that even work, and how would you set one up?

Very simple - Bitstamp, MtGox, BTC have trading APIs.

I had a bot doing cross-exchange trading a few months ago, but than MtGox made the withdraws extremely slow and Bitcoins price started raising exponentially.

Shameless plug: I'm creating a course about building your own bitcoin arbitrage bot.

https://uludum.org/funds/2

I am honestly surprised this link is on the front page of HN right now. It reminds me of what the newest tab on r/bitcoin looked like two weeks ago: http://imgur.com/C2fncy2

How is this post different from any other thread on the bitcointalk.org speculation forum[1]?

[1] - https://bitcointalk.org/index.php?board=57.0

I wonder when BitCoin will stop being tech news and start being financial news. That will be a watershed.

It won't. :)

I don't think anyone doubts that possibility at this point.

It's been financial news for a while: https://www.google.com/search?q=site%3Awsj.com+bitcoin

Once Bitcoin starts moving with fundamentals. I don't think it will happen soon, or at all though.

Well bud. Congrats on demonstrating to the world that your "analysis" was fucking retarded.

The biggest problem with Bitcoin is the lack of liquidity, and this is why we're always going to see massive price fluctuations with this currency. And, until the liquidity problem is fixed, no way in hell is this going to ever be close to the reserve currency. Who wants to own an asset which prices may fall precipitously if you decide to sell all of your holdings at once?

You mean like stocks, bonds, or any other commodity in existence? Yeah, the value is fairly unstable currently, largely because the current valuation is being driven almost entirely by speculation, however that is set to change. There's already a lot of interest being shown by various retailers in accepting bitcoin as a form of payment. Currently as an actual currency you can use to buy stuff (as opposed to a commodity being traded) it's fairly rare, but as it becomes increasingly common you should see the price fluctuations start to damp down as more and more real world goods starting having their values tied to the value of the currency.

I'm definitely shocked by the rapid climb in price we've seen recently. It's unclear if this is a short term bubble driven by rampant speculation and renewed media interest, or if this represents the new "normal" and with the new interest the currency was effectively massively under-valued before now. It's even possible that if there's significant interest shown by some major players (say if for instance amazon and facebook signed on to allow payments/money transfers via bitcoin) we might see yet another massive upward valuation of the currency.

" If you’ve been watching BTC price for a while you’ll recognize this as just another profit taking crash after a big runup."

aka correction. http://en.wikipedia.org/wiki/Market_trend#Secondary_market_t...

I wouldn't touch BTC yet in any form or shape, but I really wish for people diving into this from an investment point to learn fundamentals of technical analysis, fundamental analysis (not all that applicable for BTC) and especially risk management. Folks, don't get burned please. You don't have to.

I'm interested only in the uses of bitcoin after this settles down but I would be interested in your take on what the fundamentals of investing are (serious question really)

I'm not sure if you're asking about fundamental analysis or investment fundamentals in general?

In a nutshell:

- Technical analysis are technical indicators over price, such as charts and overlays over those prices which would in theory provide you with an insight where price will go based on past performance/situations by only looking at the price action. Namely, charts and patterns as well as trends is all you need. Though there is more. Whether you 'believe' in it or not, turns out it's a self-fulfilling prophecy because lots of people 'believe' in it, so it's a good mechanism to rely on in general.

- Fundamental analysis is where talk, politics and outside factors (earthquakes, scandals, stuff) influence price action. Some people monitor news and trade based on that, some do it only by TA (technical analysis), smart ones use both.

- Risk management is how you calculate how much you will trade, how much you will take out once your trade goal is reached, or how much you will lose if your position is losing - and where you will take the loss. In my opinion this is the most important part of investing in anything. Good rule in trading is to make positions in such a way that they allow you at least 2:1 ratio of profit. Meaning that for each win you'd have to incur two losses to wipe that win out.

Those three things are the pillars of investment fundamentals. In my opinion, good defensive risk management strategy is over half the battle, if not more.

Isn't the efficient-market hypothesis dispute the effectiveness of both fundamental analysis and technical analysis?

Maybe, but that's in the realm of philosophy though. People use metrics and it's certainly debatable if it works or not.

thank you - really interesting and pretty much what I was looking for cheers

I have a question. Is BTC inherently crash resistant right now? Due to the difficulties of withdrawing large amounts of money at once from BTC, wouldn't that make the currency pretty resistant to a crash?

No. Lack of liquidity makes it more prone to crashing and the friction between the Bitcoin world and the real financial system makes it slow for people to add liquidity (for example, exchanges cannot receive wire transfers on the weekend).

Which difficulties? When you sell on coinbase they ACH you your dollars within 2 business days. The problems you're talking about only affect a single exchange (MtGox) out of many.

This is nowhere near the end for this currency, but I'm sure the speculation is going to make for a wild ride the next couple days.

'currency' and speculation never go well together. You really only get one or the other.

Seriously how does this nonsense get this high on HN while perfectly good articles from Hackaday get penalised into oblivion?

Sweet! I was hoping for a nice quick crash so I could buy at an opportune time.

A few hours != a trend, this is ridiculous speculation.

Not at all! This is just what in the olden days they would have called "Internet Time".

The big crash will coincide with the next equity market correction. The recent run-up in Bitcoin is a reflection of people's irrational risk appetite. It will be a chain reaction.

What stops another crypto currency from replacing bit coin?

It is retarded that this has been upvoted to the main page. I am disappointed in all of you.

Here here.

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