Tracking the Bitcoin Bubble in Real Time?

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bridge
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by bridge » Wed Nov 29, 2017 3:57 am

$1 - 2/2/2011
$10 - 6/2/2011
$100 - 4/1/2013
$1000 - 11/28/2013
$10,000 - 11/28/2017

bridge
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by bridge » Wed Nov 29, 2017 4:07 am

Epsilon Delta wrote:
Wed Nov 29, 2017 12:55 am
A typical transaction fee is something like 40,000 satoshi (~$4), so while you could spend a satoshi it would be rather inefficient.
Whilst this is true, it is worth noting that it is still possible to make transactions for 2,000 - 4,000 satoshi (the equivalent of $0.20 - $0.40) or less if you have no time pressure, and are willing to wait (hours/days) for it to confirm

Most bitcoin wallets lets recommend quite a high fee, aimed at inclusion in the next block, whereas users can reduce the fee significantly if they don't mind waiting a few blocks to confirm. At very busy periods the wait may be very long though.

mws13
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by mws13 » Wed Nov 29, 2017 5:26 am

Can you imagine a large business, like Starbucks to do all of their revenue in bitcoin? How would shareholders like Starbucks if overnight they could go bankrupt because bitcoin dropped 40% and they couldn't pay the bills?

AGREED, BUT THE CONCEPT OF BITCOIN IS IN PART TO GET BANKING TRANSACTIONS TO THE UNBANKED - https://www.forbes.com/sites/emilydrewr ... 3220f55972




What average worker would want to be paid in a currency that could cause their paycheck from month to month fluctuate by huge margins causing you to maybe not be able to make the house payment?

WORKERS IN AFGHANISTAN, ARGENTINA, AND OTHER COUNTRIES WHERE THE PEOPLE DONT TRUST THEIR GOVERNMENTS. BITCOIN MAY NOT BE THE ANSWER TODAY BUT...

What average person would be willing to hold their checking/savings accounts in bitcoin, the market burps and they can't make rent? Would you really risk living on the street to use such a currency?

I STARTED AT 3% OF MY PORTFOLIO, AND NOW IT IS 20-25% AS THE MARKET HAS GROWN AND IT HAS MATURED AND FOR NOW IS TRENDING UP. I WILL PERSONALLY MAINTAIN THOSE PERCENTAGES UNTIL I HIT MY PERSONAL NET WORTH MAGIC NUMBER AND THEN HOLD ALL FOR MY KIDS.

But what if Bitcoin became like the dollar, a steady value day in day out with no appreciation. How many people today would be running out to buy bitcoin if they thought it won't increase or decrease? Very few because almost all of today's use of bitcoin is not in consumer use but speculative betting on the future value.

I PERSONALLY VIEW IT AS A MEDIUM OF EXCHANGE FOR THE FUTURE. LOOKING AT IT SIMPLY AS A CURRENCY OR AN ASSET IS INCORRECT, I THINK. I VIEW IT MORE LIKE A POWER PLANT IN THE 1900'S THAT I CAN OWN.

In terms of a great technology why should large businesses looking to transfer large sums of money want to do so with a currency that is so volatile?

AGREED BUT AS STATED, I DONT SEE IT AS A CURRENCY. HERE IS A LIST OF ALL FIAT STYLE CURRENCIES IN THE USA - https://en.wikipedia.org/wiki/List_of_c ... ted_States

Why wouldn't someone like Amazon create the Amazon coin and offer the blockchain technology in the cloud to large businesses, banks, etc run on their servers for a specific fee, completely off the public network? Therefore if the technology is so useful why wouldn't businesses figure out how to use the technology without using the public coins and thus a large part of the currency market will never need a coin like bitcoin?

OVERSTOCK'S CEO HAS BEEN A LONG BELIEVER IN THE BLOCKCHAIN - https://www.coindesk.com/regulated-icos ... n-trading/


The other fallacy often mentioned is the fixed # of bitcoin at 21 million. This in no ways says anything about the potential future market cap because it assumes bitcoin will have some percentage of market cap. But we already see 1000s of other coins popping up and the 21 million number (already 17million are mined) is completely arbitrary. If the technology is so useful why do we need to have a fixed number of coins (except to artificially drive their price up)?

THIS IS ONE COMPLEXITY (SPEED AND COMPUTING POWER FOR BITCOIN ARE OTHERS) THAT JUSTIFIES OTHER COINS POPPING UP, INCLUDING ETHEREUM - https://en.bitcoin.it/wiki/Controlled_supply NOTHING IS PERFECT AND WHEN PEOPLE ASK ME, I OFTEN SAY, 'FIRST THERE WAS NETSCAPE, THEN ALTA VISTA, AND THEN THERE WAS GOOGLE."

Valuethinker
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Valuethinker » Wed Nov 29, 2017 5:29 am

SimpleGift wrote:
Tue Nov 28, 2017 3:43 pm
TheTimeLord wrote:
Tue Nov 28, 2017 2:55 pm
I think Bitcoin should be cautionary tale for those who underestimate the pace at which disruption can and will move in the future.
The speed with which the Bitcoin price run-up is occurring seems remarkable. The tulip bulb mania took several years to reach its peak (from 1634 to 1637). The dot.com bubble was also a multi-year affair (from 1997 to 2000). But the financial mania around Bitcoin appears to happening over just months — though of course we don't exactly know what stage of this run-up we are currently observing, if indeed it turns out to be a classic bubble.
Manias are essentially social phenomena.

The internet allows social phenomena to spread far far more rapidly.

This is another sign of the acceleration of the modern world.

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SimpleGift
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by SimpleGift » Wed Nov 29, 2017 6:06 am

^^^ It would appear so. This is the velocity of Bitcoin price increases year-to-date, for 2017:
  • $1,000-$2,000: 138 days
    $2,000-$3,000: 23 days
    $3,000-$4,000: 63 days
    $4,000-$5,000: 61 days
    $5,000-$6,000: 10 days
    $6,000-$7,000: 13 days
    $7,000-$8,000: 17 days
    $8,000-$9,000: 7 days
    $9,000-$10,000: 2 days (!!)
Note: Time periods are based on closing prices for the Bitcoin Price Index at Coindesk.
Source: Visual Capitalist
Cordially, Todd

Valuethinker
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Valuethinker » Wed Nov 29, 2017 7:21 am

SimpleGift wrote:
Wed Nov 29, 2017 6:06 am
^^^ It would appear so. This is the velocity of Bitcoin price increases year-to-date, for 2017:
  • $1,000-$2,000: 138 days
    $2,000-$3,000: 23 days
    $3,000-$4,000: 63 days
    $4,000-$5,000: 61 days
    $5,000-$6,000: 10 days
    $6,000-$7,000: 13 days
    $7,000-$8,000: 17 days
    $8,000-$9,000: 7 days
    $9,000-$10,000: 2 days (!!)
Note: Time periods are based on closing prices for the Bitcoin Price Index at Coindesk.
Source: Visual Capitalist
FOMO - Fear of Missing Out

The scramble of hedge funds into the "asset class" of cryptocurrencies is palpable. The old human instinct to gamble.

Also see Michael Lewis re Tversky and Kahneman (also Shiller). Humans believe in narrative, not factual argument.

There's a narrative here, about a crypto future. And also, of course, a story line about missing out on a huge run.

It's really fascinating, because what can take months or years in most markets (think US housing bubble, really began 2002-3?) is taking place at internet speed. Warp factor 8, Mr Sulu.

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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Valuethinker » Wed Nov 29, 2017 7:22 am

[edited]
Last edited by Valuethinker on Wed Nov 29, 2017 10:36 am, edited 1 time in total.

Valuethinker
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Valuethinker » Wed Nov 29, 2017 7:25 am

Jonathan wrote:
Tue Nov 28, 2017 11:43 pm
I believe shorting on Coinbase's GDAX exchange might be among the most accessible and best-insured shorting methods now. On the bitcoin daytrading forums, people take combinations of different positions: long, short, leveraged, etc.

Why don't the bitcoin bubble-predicting people short bitcoin? Is this just a logistical issue? So perhaps they've studied bitcoin enough to publicly advocate a position, but they don't know the mechanics of shorting it? I can accept that, but not forever; shorting bitcoin is mainstreaming.

Or is the failure to short a tell? Because the pro-bitcoin crowd is taking a real position in the market, but the anti-bitcoin crowd is not?
Consider the problems of Dr. Michael Bury (Christian Bale in the movie) in The Big Short. He struggled to find someone to be the other side of his short (i.e. to write CDS on CDO tranches) and then his own investors tried to pull their money from the fund.

You can be right about something, but too early. In fact (see Schlifer, Andre Inefficient Markets) the rational thing to do, in a market with "noisy traders" who trade on momentum, is to follow the trend up, not to bet against it.

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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Valuethinker » Wed Nov 29, 2017 7:28 am

Fudgie wrote:
Tue Nov 28, 2017 6:52 pm
As of a month ago, William Bernstein doesn't think that Bitcoin meets his criteria for a bubble because:

1.) It has not yet become the primary topic of social gatherings

2.) People aren't quitting high-paying jobs to speculate in Bitcoin

3.) Skeptics of Bitcoin aren't yet met with anger.
1 and 3 we have most definitely crossed the line on.

I have not heard of 2 BUT they are advertising trading in cybercurrencies with CFDs on the London Underground. That's pretty close in my view.
He also said that he will not be participating in the Bitcoin Rush.

He expains here:
https://www.google.com/amp/s/www.cnbc.c ... ubble.html
One could say not yet?

It should be understood that every financial bubble has its own unique characteristics.

AFAIK no one has dug holes under the sidewalk of every city in the world to string fibre optic cables yet (the late 1990s Tech Media Telecoms bubble). Nor for that matter have I seen any new canals being built in London (canal bubble of the 1820s and 1830s).

keystone
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by keystone » Wed Nov 29, 2017 8:35 am

Valuethinker wrote:
Wed Nov 29, 2017 7:28 am
Fudgie wrote:
Tue Nov 28, 2017 6:52 pm
As of a month ago, William Bernstein doesn't think that Bitcoin meets his criteria for a bubble because:

1.) It has not yet become the primary topic of social gatherings

2.) People aren't quitting high-paying jobs to speculate in Bitcoin

3.) Skeptics of Bitcoin aren't yet met with anger.
1 and 3 we have most definitely crossed the line on.

I have not heard of 2 BUT they are advertising trading in cybercurrencies with CFDs on the London Underground. That's pretty close in my view.
+1. We have definitely crossed the line of 1 and 3.

At my latest work gathering, I was astounded to see a show of hands of all the people at my company who are "investing" in bitcoin. It was eye opening to see this topic even come up, but even more so when I noticed it was generally the millennials who do little to no stock market investing. Bitcoin was also the topic of conversation at my Thanksgiving dinner. In my book it most definitely is a primary topic at social gatherings, very similar to the dot.com and real estate bubble eras.

I'm a regular at a few non-finance discussion forums and the boards have been filled with bitcoin threads and the skeptics are definitely met with significant resistance, borderline anger.

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Epsilon Delta
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Epsilon Delta » Wed Nov 29, 2017 11:02 am

bridge wrote:
Wed Nov 29, 2017 4:07 am
Epsilon Delta wrote:
Wed Nov 29, 2017 12:55 am
A typical transaction fee is something like 40,000 satoshi (~$4), so while you could spend a satoshi it would be rather inefficient.
Whilst this is true, it is worth noting that it is still possible to make transactions for 2,000 - 4,000 satoshi (the equivalent of $0.20 - $0.40) or less if you have no time pressure, and are willing to wait (hours/days) for it to confirm

Most bitcoin wallets lets recommend quite a high fee, aimed at inclusion in the next block, whereas users can reduce the fee significantly if they don't mind waiting a few blocks to confirm. At very busy periods the wait may be very long though.
Bitcoin is limited to something like 500,000 transactions per day. Globally. This is a function of the block size and the rate at which blocks are created. Both of the block size and rate are built into the design of the system. If Bitcoin has any degree of popularity transactions will be a scarce resource. The market deals with scarcity by raising prices. If Bitcoin becomes the global banking system any transaction less than about the cost of a new car must be priced out of the market. It won't matter how long you wait, there will be no cheap transactions. And it's not just a question of doubling the transaction rate by doubling the block size, it's many orders of magnitude too small.

IMHO any system with a global ledger that contains all transactions inherently fails to scale. This means Bitcoin is fundamentally flawed as a commercial banking system, although it might be able to operate as a central bank.

If a system like Bitcoin that can only handle 500,000 transactions per day, at a cost of $4 per transaction, taking ~1 hour per transaction is a suitable bank alternative for Afghani women that says more about the awfulness of the Afghan banking system that the disruptiveness of Bitcoin.

garlandwhizzer
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by garlandwhizzer » Wed Nov 29, 2017 11:57 am

Personally I don't understand Bitcoin well enough to offer an opinion on its ultimate worth. Having said that, the graphs look bubble-like. Herd behavior and fast MOM money can drive prices solely on sentiment in the absence of any fundamentals. What the graphs say is that some people have faith in the long term Bitcoin story, that it will revolutionize finance, and that there are endless numbers of performance chasing MOM investors. Personally I am an old fashioned guy who believes in fundamentals and indexes. I wouldn't touch Bitcoin, Amazon, or Tesla with a ten foot pole, but that's just me. I'm not a betting man, but if I were, I'd bet that all 3 will end badly at some point, perhaps soon, perhaps not.

Garland Whizzer

Jonathan
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Jonathan » Wed Nov 29, 2017 12:41 pm

Swelfie wrote:
Wed Nov 29, 2017 2:53 am
An interesting issue is the amount of addresses that are not spendable. Since transactions are the same cost regardless of size and not a percentage of the size, there is an immense amount of Bitcoin tied up in addresses that cannot be consolidated because the transaction fees are more than the value.
Good point. Tiny amounts of crypto are called "dust". If you have multiple dust addresses, there are some tricks for sweeping them into a wallet and consolidating them. I'm not sure how immense the total bitcoin dust amount is, although I imagine we could find it using a block explorer of some sort. Is it significant? Or is it more like all of the loose change in peoples' sofas all over the world? Valuable in sum but negligible in relative amount?

Dust transactions are sometimes used to influence cryptocurrency markets.

You can send a transaction with a lower fee, with the expectation that it will take longer to gain confirmations. The fees also vary with network congestion, so you can wait for a lower-fee time to transact. Various websites track current expected fees vs. confirmation times. There are some other nuances in transaction fees; look up "child pays for parent" and "replace-by-fee".

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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Ketawa » Wed Nov 29, 2017 12:47 pm

Valuethinker wrote:
Wed Nov 29, 2017 7:25 am
Consider the problems of Dr. Michael Bury (Christian Bale in the movie) in The Big Short. He struggled to find someone to be the other side of his short (i.e. to write CDS on CDO tranches) and then his own investors tried to pull their money from the fund.

You can be right about something, but too early. In fact (see Schlifer, Andre Inefficient Markets) the rational thing to do, in a market with "noisy traders" who trade on momentum, is to follow the trend up, not to bet against it.
I have to admit, I am tempted to do this again with a hard sell at something like -20% from peak. This would be the second time; I lost money in 2013. I haven't learned my lesson.

gilgamesh
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by gilgamesh » Wed Nov 29, 2017 2:01 pm

Nate79 wrote:
Tue Nov 28, 2017 6:52 pm
For those that like statistics I found this page interesting:
https://www.statista.com/topics/2308/bitcoin/

It is very hard for me to reconcile bitcoin and all the other cryptocurrencies as a useful currency because what is driving the interest today hurts it's usefulness. Almost all of those holding bitcoin are holding because of the believe the value is going to go up up up. But this type of behavior in a currency kills it's ability to be implemented widely.

Can you imagine a large business, like Starbucks to do all of their revenue in bitcoin? How would shareholders like Starbucks if overnight they could go bankrupt because bitcoin dropped 40% and they couldn't pay the bills?

What average worker would want to be paid in a currency that could cause their paycheck from month to month fluctuate by huge margins causing you to maybe not be able to make the house payment?

What average person would be willing to hold their checking/savings accounts in bitcoin, the market burps and they can't make rent? Would you really risk living on the street to use such a currency?

But what if Bitcoin became like the dollar, a steady value day in day out with no appreciation. How many people today would be running out to buy bitcoin if they thought it won't increase or decrease? Very few because almost all of today's use of bitcoin is not in consumer use but speculative betting on the future value.

In terms of a great technology why should large businesses looking to transfer large sums of money want to do so with a currency that is so volatile? Why wouldn't someone like Amazon create the Amazon coin and offer the blockchain technology in the cloud to large businesses, banks, etc run on their servers for a specific fee, completely off the public network? Therefore if the technology is so useful why wouldn't businesses figure out how to use the technology without using the public coins and thus a large part of the currency market will never need a coin like bitcoin?

The other fallacy often mentioned is the fixed # of bitcoin at 21 million. This in no ways says anything about the potential future market cap because it assumes bitcoin will have some percentage of market cap. But we already see 1000s of other coins popping up and the 21 million number (already 17million are mined) is completely arbitrary. If the technology is so useful why do we need to have a fixed number of coins (except to artificially drive their price up)?
I like this...

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Fudgie
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Fudgie » Wed Nov 29, 2017 7:10 pm

:oops:
Last edited by Fudgie on Fri Dec 08, 2017 6:52 am, edited 1 time in total.

bawr
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by bawr » Wed Nov 29, 2017 10:40 pm

Epsilon Delta wrote:
Wed Nov 29, 2017 11:02 am
Bitcoin is limited to something like 500,000 transactions per day. Globally. This is a function of the block size and the rate at which blocks are created. Both of the block size and rate are built into the design of the system. If Bitcoin has any degree of popularity transactions will be a scarce resource. The market deals with scarcity by raising prices. If Bitcoin becomes the global banking system any transaction less than about the cost of a new car must be priced out of the market. It won't matter how long you wait, there will be no cheap transactions. And it's not just a question of doubling the transaction rate by doubling the block size, it's many orders of magnitude too small.

IMHO any system with a global ledger that contains all transactions inherently fails to scale. This means Bitcoin is fundamentally flawed as a commercial banking system, although it might be able to operate as a central bank.

If a system like Bitcoin that can only handle 500,000 transactions per day, at a cost of $4 per transaction, taking ~1 hour per transaction is a suitable bank alternative for Afghani women that says more about the awfulness of the Afghan banking system that the disruptiveness of Bitcoin.
Solutions to the scalability problem described above are already in the works:

https://en.wikipedia.org/wiki/Lightning_Network

https://lightning.network

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siamond
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by siamond » Thu Nov 30, 2017 12:05 pm

Wall Street Journal front page today: "Bitcoin Mania: Even Grandma is In".

We do seem to be well into Phase 3. :wink:

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ruralavalon
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by ruralavalon » Thu Nov 30, 2017 12:57 pm

Can I buy food, clothing, shelter and medical care with bitcoins?
Last edited by ruralavalon on Thu Nov 30, 2017 1:03 pm, edited 1 time in total.
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Re: Tracking the Bitcoin Bubble in Real Time?

Post by Hawkeye_Saver » Thu Nov 30, 2017 1:03 pm

ruralavalon wrote:
Thu Nov 30, 2017 12:57 pm
Can I buy food, clothing, shelter or medical care with bitcoins?
Of course. You just have to sell your bitcoins and convert to dollars first. :D

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Re: Tracking the Bitcoin Bubble in Real Time?

Post by White Coat Investor » Thu Nov 30, 2017 1:15 pm

SimpleGift wrote:
Tue Nov 28, 2017 2:49 pm
For those of us who are not invested in Bitcoin and are just disinterested observers today, I'm thinking there's a wonderful opportunity to see if the real world behavior of a financial market matches the academic model of an asset bubble (at right below).

Image
Source: CoinMarket

However this extraordinary price run-up of Bitcoin turns out, it will surely inform the field of bubble research for years to come!

Thoughts?
I agree it's pretty interesting to watch as a disinterested outsider.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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