Rally

I wrote my last post around the time that the US$ price on MtGox was breaking through the top of my bear fork. Since then theres been quite a nice rally up to about $800 where we are now. As pointed in comments there has been some positive news with overstock.com now accepting payments in bitcoins, I confess I never heard of them until then but still, its hard to argue is not good news for bitcoins. My feeling is that the rally may have been more fueled by speculators switching long after seeing that down trending line being broken.

Anyway heres that rally shown with my MtGox bear fork on a chart with 4 hour candles.

You should quickly spot again Ive shown a divergence in the momentum, seems to be a lot of these lately. This time I wonder if the bulls are running out of steam. I have also stuck in a cloned trendline from the fork, time will tell if this slope is still playing a part in the shape of the price, I have a suspicion it will, perhaps not excatly where I have placed it though. Not going to show the chinese bear fork but the story is the same on that one more or less.

Even with positive news and a break up through the down trend I cant shake off a nagging bearish feeling. I have accumulated some bitcoin prior to this rally but if I was using a proper trading website might have been tempted to sell them again and take those profits. With the spread on localbitcoins only longer term trades make any sense. (On that note if anyone recommends a good trading website I might decide to dabble a bit more with shorter term trades).

Reasons I still feel bearish in the short to medium term has been discussed in a previous post but goes back to how the long term log chart looks. Assuming this is a bubble collapsing, this time fueled by authorities clamping down in China (and India I think I also heard?) it looks like there is still more downside before this fully corrects to me. Don’t hate me if I’m wrong and remember your trades are not my responsibility πŸ˜‰

Merry Christmas!

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19 thoughts on “Rally

  1. Heres another chart I just came across showing a regression channel plotted onto the MtGox chart, again with 4 hour candles.


    https://www.tradingview.com/x/uR8Fn3ZT/

    I wont claim credit for it a user called Hellork posted his one on TradingView recently. The regression channel is not a tool I have used before but after playing about with it just now I have to say it does look interesting.

  2. I am back all in at 725, i am quite perplexed as to what is driving this bubble. My thinking is that the China chilling effect is overblown, panic took over and we saw a big drop. China to me is the big story here. It seems that speculation and the sheer potential of Bitcoin is starting to take over again.

    One point that may discount the Chinese announcements is that I am in the USA and I have not been able to deposit anything into Gox myself. I have bought all of my bitcoins using local bitcoins. My Gox deposit is in limbo somewhere in wire hell, yet i still buy and speculate in Bitcoin, maybe the Chinese are still hungry for this coin.

    I am still fearful of a $300 range bottoming but at this point i think I holding long and will suffer through the drop…. uggh

    1. You could well be right to go all in again, would be hard to sit through a drop down like that as you say but in time you will be happy when the next bubble mania kicks off. The alternative might be worse which is waiting for cheaper bitcoins that never materialise you end up buying back in eventually at a higher level with far less bitcoins than you started with, thats a possibility I have had to come to terms with.

      I’ve converted some bitcoins to physical precious metals myself. My fears about the blockchain scalability are still concerning me. Maybe I should elaborate on that in a post some time or this comment might turn into an essay.

      Its an interesting question if the chinese are keen to find other ways to trade bitcoins, eg cash for bitcoins like local bitcoins offers or if obedience to the state will scare them off. This situation may play out all over the world if governemnts all start trying to clamp down.

      1. after further evaluation and chart mesmorization i am back out at $792 haha.

        my concerns for btc are in this order: governments, alt coins, protocol flaws (blockchain et cetera)

        i have gold, but i think crypto currencies are the future. Just trying to pick the right one. As I write down my bitcoin concerns I am more and more wary of an alt coin that takes over because they will better address govt concerns and have better software to deal with global size issues. the general population truly doesn’t care about privacy anymore, so they will buy a crypto coin that keeps track of who they are as easy as one that doesn’t – especially if they can make money doing it.

        Bitcoin’s niche play against centralization and government domination will become a critical flaw in my opinion. Unless i see some dramatic changes in the protocol in 2014, risk is still very, very, high for Bitcoin.

  3. http://bitcoinmagazine.com/7781/satoshis-genius-unexpected-ways-in-which-bitcoin-dodged-some-cryptographic-bullet/

    some interesting reasons why bitcoin is much better then some alts and why some alts may not even have any legs to stand on. If any of you guys have a good understanding of the theory discussed here in I’d love some discussion. Personally I don’t have any computer science background so I rely on faith that others interpretation of the computer science part is accurate, while I reserve the judgement based on those interpretations πŸ˜‰

    1. Utterly perplexed by the recent rally, I have been researching up and down and calling all my buds in China and elsewhere to try to get a reason for the rally. I got nothing.

      And Andrew, thanks for the article. CS background here. Let’s talk?

      1. Mcgullen,

        First, I’m wondering how the future would potentially look for alt coins with the rise of quantum computing? Are they still clones of bitcoin in this regard?

        Second I wonder how the alt coins with greater than 21million area effected?

        Lastly, regarding the ECC choice of alt coins, are they a direct clone of bitcoin again or are they different?

        I’m curious how the Alt coins differ in these respects since they appear so be some critical functional and security aspects that alt coin architects may or may not thought of / stumbled upon? Could any of these characteristics be what ultimately prevent altcons from becoming successful?

        Thanks for entertaining my questions!

  4. i’ll play the tinfoil guy for a second and leave you with some interesting articles of the past and present:

    Papers of a guy named Okamoto (Yeah, close to Nakamoto):
    from ’91 http://link.springer.com/chapter/10.1007%2F3-540-46766-1_27
    from ’96 (with the NSA) http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm

    considering this articles from the early 90s that describe 100% accuratly what bitcoin is (and even use the same lingo as in current implementation “wallet”, “coin”, “message”), it somewhat plausible Satoshi is a NSA taskforce themselfs, led by mr okamoto. His resumee has Crypto writtel all over it:
    http://www.informatik.uni-trier.de/~ley/pers/hd/o/Okamoto:Tatsuaki

    And for the “what does NSA have to do with money” bit… an article from the present Snowden leaks:
    http://www.techdirt.com/articles/20131218/14533925607/intelligence-task-force-hints-nsa-manipulating-financial-systems-changing-amounts-bank-accounts.shtml

    putting off the tinfoil hat now, because stuff like that gives me the bearshits, and waiting for the next low to buy back in. stuck in fiat now and anticipate the lower 500 for rebuy πŸ™‚

    1. Nothing wrong with the material of choice for your hat or it’s color! ;D

      Wouldn’t it be a great thing if this individual actually saw the corruption that was going on within the N SA and released a thing such as bitcoin that resolved all the security flaws that the N SA may have been trying to build into such a system (assuming that they were working toward something such as bitcoin).
      …day dreaming

  5. Oh another Bear…. Let me tell you something, I first heard of Bitcoin when it was at $7, when I first looked at it my immediately response was: “This is a bubble! I’m out!” few moths later I looked at it again and it was at $17, my thoughts were: “Its going to collapse soon, glad I didn’t step in.”. Few months later I looked at it again and it was at $100 and my thoughts were “Why the fuck I didn’t step in!!!!!” since then I invested heavily in Bitcoins and other crypto currencies and I made 2000% in few months. Sure this can collapse nobody knows what tomorrow brings, but let me tell you something: Bitcoins are something like never before, the supply is technically designed to be scarce and we all know what happens when some asset is scarce and the demand increases, its like the first rule of economics. Bitcoins is designed to go like this in value:

    $0.01
    $0.1
    $1
    $10
    $100
    $1000 <—- We are here
    $10000
    $100000
    $1000000
    and so on…

    We reached already the $1000. The next boom is going to hit $10000, sooner or later. Along this path, during the $0.01, $0.1, $1, etc… there were always bears saying to step out. Guess what: they were all wrong.

    Supply and demand my friends its all what it is about, just look at the bitcoin difficulty. (http://bitcoindifficulty.com/)

    Oh and here is a song for you:

  6. a bit off topic, see how chinese government declaration has drastically decreased BTCchina volume :
    12-18 : 94 KBTC/day
    yesterday : 4KBTC/day. Crazy !
    During these last 24h :
    – 1st : MTGOX.USD (12.2KBTC/day) <– back in its former position
    – 2nd : BISTSTAMP.USD (11KBTC/day)
    – 3rd : BTCCHINA.CNY (4.7KBTC/day). <– TA from this exchange has now weak signification
    ________________________________________________

    AF you wrote you still have a bearish feeling, but what do you think about MACD crossover in dailytime scale? In the past, often it has been a strong buying signal!

    Ok chinese gov. declaration is a bad news for BTC but overstock news is a good one ! I'm seeing more and more websites accepting bitcoin donations.

    The revolution is on the move! πŸ˜‰

      1. Uhhhh is this bitcoinity chart for real? How is Huobi not all over the Bitcoin forums with that volume. Not only am I surprised, I am dumb founded. What in the world is going on with Huobi volume!?!?!?!?

        Starting to to panic because I feel my limited knowledge of Bitcoin ecosystem and trading economy just took a major blow to the chin…. I knew little, now i know nothing….

        can anyone provide some insights??? My conspiracy theory:

        1. China dumps on BTC, crashes values
        2. China insiders buy up all BTC as scared investors sell hoping for ultimate crash to $500 USD that never comes…..
        3. China switches world economy to BTC overnight…

        haha but seriously that volume is unbelievable….

      2. Another thought, it appears Huobi because of its banking ties has a “workaround” that they are using to keep the dollars flowing.

        So Huobi alone is keeping BTC high, if allowed to continue could boost Bitcoin through this lull as more momentum gathers. We may never see sub 800 again after tomorrow.

        OR China makes another decision that plugs the Huobi loophole, which would send BTC downwards to ????

        Which will it be……

    1. Just been trying to look at MACD crossover you mentioned but my internet is not playing ball anymore.. Its frustrating. Agree that is a bullish sign, wish i could see it. will try again later.

      1. not really down, they’re glitched on the default parameters. if you change the parameters of any stuck indicator it will show up again (macd to 13,26,9 for instance or ema 200 to 199). i know its not the fix you might want to have, but a temporary solution. they’re obviously under heavy user load lately, their chat also seems to suffer problems keeping the data flowing.

  7. Thanks for all the comments and discussion. In the world we live in I think the ones with the best tin foil hats will prosper, I like to wear one most the time. Hadnt heard of Hobi, good to know.

    I base most of my anaysis around technical picture because I tend to think that basing it on news will nearly always be basing it on incomplete information. Heres a little update to my chart.

    https://www.tradingview.com/x/f1xq170p/

    It looks like the trend line did provide a fair bit of resistance. I was surprised to see it break to the upside, thought it would go down. However its not enough to switch me back to bul mode yet. At best I am still neutral.

    For what its worth, that regression channel I was looking at seems to show a break above about $850 is needed to get out of that downtrend.

    https://www.tradingview.com/x/RApuRhqG/

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