

Bitcoin Crashing - mmaunder
http://markmaunder.com/2013/12/01/next-bitcoin-crash-begins/

======
Lerc
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.

~~~
phaed
Looks like it's exactly the same.

------
redschell
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...](http://www.reddit.com/r/Bitcoin/comments/1rutkt/bitcoin_is_falling_again_here_is_why_it_really/)

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

[https://twitter.com/kevinrose/status/398865551730036736](https://twitter.com/kevinrose/status/398865551730036736)

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

I regret it.

------
jdkuepper
> 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...](http://www.economist.com/news/leaders/21590901-it-looks-overvalued-
even-if-digital-currency-crashes-others-will-follow-bitcoin)

------
nabla9
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.

------
Articulate
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.

~~~
mmaunder
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)

~~~
legutierr
Why is BTC-e greater risk?

~~~
mmaunder
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.

~~~
mmaunder
...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...](http://www.techienews.co.uk/973470/silk-road-like-sheep-marketplace-
scams-users-39k-bitcoins-worth-40-million-stolen/)

~~~
judk
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.)

------
shocks
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/](http://bitcoinwisdom.com/)

~~~
frankydp
This dip looks like a dump and pump.

~~~
knowitall
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?

~~~
frankydp
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.

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

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

------
spdy
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$

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

~~~
behold-
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.

------
awhitty
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](http://imgur.com/C2fncy2)

------
yuvadam
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](https://bitcointalk.org/index.php?board=57.0)

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

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

------
laichzeit0
Well bud. Congrats on demonstrating to the world that your "analysis" was
fucking retarded.

------
mililani
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?

~~~
orclev
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.

------
Keyframe
" 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...](http://en.wikipedia.org/wiki/Market_trend#Secondary_market_trend)

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.

~~~
lifeisstillgood
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)

~~~
Keyframe
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.

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

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

------
theboss
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?

~~~
gst
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.

------
JeremyMorgan
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.

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

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

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

~~~
to3m
Not at all! This is just what in the olden days they would have called
"Internet Time".

------
pcurve
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.

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

------
e1l1
What stops another crypto currency from replacing bit coin?

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

~~~
phaed
Here here.

