1.
I want to reiterate my stance that bubbles are caused by nothing. There is no "trigger" for a bubble, just as the crashes afterward have no causes.
There are some people saying that there is presently no available "trigger" for the next bubble, and that the entry of Chinese market participants is something that does not exist this time around. That would be a serious concern, if there had been a lot of Chinese participants (see below) or if there were any one thing that caused bubbles.
The bubble cycle repeats regardless of outside events if the fundamentals remain the same. There is no cause to bubbles other than that enough time has passed since the last crash, bitcoins are still around, and the last round of get-rich-quick people have all sold out.
2.
I also don't agree with the popular sentiment that the Chinese were a big part of the last increase in price. First, remember that the price went up $300 during the Senate hearings, which were in the middle of the night in China. It is unlikely that most normal Chinese people were sitting at their computers in the middle of the night following bitcoins.
It is true that Chinese exchanges had high volume, but they were also the only exchanges that had zero fees. If I were a daytrader, I would go there and trade for zero fees too. Huobi became a place of bot wars.
The goal of people like Bobby Lee was to introduce and spread bitcoins through China, which was why he produced that zero-fee model. In China, the goal seems to be to eliminate your competition and then make money later. But what actually ended up happening is that people from across the world started to use Chinese exchanges because they were free.
I doubt that there ever were many Chinese people at all who knew about or accepted bitcoins. The only way that we could prove there were a lot of Chinese citizens using bitcoins is for those exchanges to release yuan withdrawal figures, which they have not done.
3.
It's interesting to see how the Chinese are out of options with bitcoins. They can't arrest people, because citizens will investigate what is so important about these small companies that CEOs are being arrested. Similarly, they can't make a big announcement of a ban, because then people will want to know what was banned and will realize that, unlike QQ coins, these coins can't be seized or shut down. And as long as there are no arrests and bans, new entrepreneurs know there is money to be made and that the government isn't taking tough enough action to discourage them.
They can close down more banks, but bank shutdowns are old news and the markets aren't reacting to them anymore. And if they shut down one exchange for some obscure law, other exchanges will pop up that comply with whatever law that was.
The Chinese seem to recognize that they are running out of time. Once the next bubble hits, bitcoins could get out of hand there if there is any infrastructure left whatsoever.
I do like the idea that's floating around where they could try to frame an exchange as being bankrupt due to poor management or theft, and cause investors to take losses like Mt Gox. Then, they could publicize a long and drawn-out bankruptcy process that ends up in people getting nothing. However, since most of the money in the exchanges is from the West, they might have difficulty finding people to trump up in front of the cameras to say that they lost a lot of money.
4.
The Chinese also have a new thorn in their side with Bobby Lee. I strongly disagree with the people on /r/bitcoin who are calling for the Bitcoin Foundation to be dissolved, because it is very difficult for anyone to take action against BTC China with Lee elected to the foundation.
If he gets arrested, or if his exchange is shut down, many people will now rally to his defense. It will make China look evil and further discount any news from China in the prices.
5.
I edited this post to point out that the RSI is not a good indicator to use to trade bitcoins. If you followed it, you would be selling at the beginning of every bubble, because it goes so far overbought that it's ridiculous. It might work for other stocks, but you can't use it in bitcoins, especially during the uptrends of the cycles.
Other
- It's great to see that 24-bit music is finally going to take off in the next month. It looks like Sony is in on it: http://www.digitaltrends.com/music/sony ... re/#!NcBRY. Apparently, Apple bought Beats Audio, which means they recognize that previous attempts to upgrade from 16-bit audio have been harmed by not having control of the entire audio chain. It always amazes me how many people say that there is no benefit to 24/96 music, but then those same people say that they listen to their music on a cell phone with a 50-cent 16-bit DAC and earbud headphones. You can't appreciate how poor MP3s are unless you have a decent receiver and speakers, or (now that is will be possible) a phone with a quality 24/192 DAC and good noise-cancelling headphones.
- Days until July 24: 71