A few thoughts - Thursday, April 17, 2014

Post by **Steve Sokolowski** » Thu Apr 17, 2014 12:00 pm

Today's thoughts:

1. I stated at least three times last week that this was purposeful manipulation by the Chinese government in an attempt to kill bitcoins. Many people ignored that post and stated that "China didn't ban bitcoins" or that April 15 passed without any issues. Today's news should serve as a reminder that the Chinese will be doing this for months to come. It will happen again tonight, or Sunday night, or Monday night, or some other night next week.

2. Chinese news never occurs on weekends, and therefore, the price has moved little on weekends lately.

3. One can get bogged down in TA and in news, but there is only one (1) single concrete rule with bitcoins: the bubble cycle. No matter what happens, the bubble cycle supersedes all other indicators and trends. There have always been people who say "this is the last bubble" both at the top and bottom of bubbles, and they are always proven wrong. The only surefire way to lose money has been to bet against the bubble cycle (ask /u/moral_agent), and his charts seem to indicate that this is the upward phase of the cycle.

4. The next few months will be a war between the Chinese and Wall Street. Wall St will win eventually, marginalizing the Chinese and putting an end to these swings simply because Wall St will have more money invested.

5. The flair counts on this subreddit have held steady for the past month. This is completely unlike in December despite higher volatility, which makes me wonder if anyone plays the flair game anymore. As such, they have lost all their predictive capacity and I won't be making any decisions influenced by the bulls to bears ratio from now forward.

6. Where has /u/emocmo gone? He's a much better forecaster than any of us. Instead of posting point and figure charts, he's been offering his advice in threads with titles like "should I tell him I want to suck his ****?"

7. Finally, a word about prices and off-market trades. Some people seem to misunderstand how prices work. The closer of a trade sets the price. In January, I put a broken grill in front of my house with a paper that read "$50." Someone knocked on the door and said he would pay $35. I declined and the grill sat out in the snow until someone else came along and paid $35 for it. Likewise, I could create a bid for 50 bitcoins at $10,000, but nobody would sell them and it would sit there for months. This happened in October, when I watched many asks sitting around from April at Mt Gox suddenly being filled. It's not until a seller contacts me and agrees to pay $10,000 that the bitcoins are sold, and the seller has set the price at $200.

8. This lesson about buying and selling is important because transactions aren't as simple as "every sale has a buyer and seller." When bitcoins exchange hands off-market, the person who closes the deal is the one who determines if the price goes up or down. The closer, who wants to transact more quickly than the other party, can do two things: he can refuse the offer and go to the market (where the price moves directly), or he can accept the offer (and market participants later discover that coins which would otherwise have been transacted at that price are missing from the market). Either way, the price still moves, but not as violently or immediately.

9. I edited this post to add one more thought. I realize that people are trying to help, but these automated Google translations of Chinese news are as good as nonsense. The markets move on insinuations and what is between the lines, and reading this stuff might actually cause people to make worse decisions. Unless we can get a real Chinese person here to understand the nuances of what is being said, I say that we should stop posting these translations.