A few thoughts - Thursday, May 1, 2014

Post by **Steve Sokolowski** » Thu May 01, 2014 12:00 pm

I'm going to try a new format for today's comments, after there were some suggestions about how to overcome reddit's formatting limitations.

#1

I'm not sure I agree with how /u/moral_agent changed the lower boundary of the bubble chart; it seems like a straight log chart is better, instead of trying to apply curve fitting just because the current data is slightly off.

But the bubble-watch is remarkable, isn't it? The red line just tracks directly on top of the other lines, sometimes within hours of the dips and falls.

#2

Look at how odd it is that China would choose a Saturday as its next deadline for banks to close accounts. Every other deadline has been on a weekday. It is no coincidence that the bitcoin conference is on the same day as this deadline.

It will be interesting to see how the Chinese react. Will they take this as the opportunity to declare bitcoins illegal and try to arrest people attending the conference? A better way might be to set up now and then be ready to shut down all the exchanges right in the middle of the conference for maximum disruption, making it difficult for the conference to get anything accomplished.

I know if I were a speaker and I just heard that the government had closed all exchanges, I would be very careful what I said. This is why I criticize people who say that the United States isn't a free society; they have no idea.

#3

The Bloomberg ticker news is being significantly underestimated. Financial types use Bloomberg as the place to get quotes and information about assets. If it isn't in Bloomberg, it doesn't exist.

#4

This is the start of the phase where Wall St is increasing its influence, and the Chinese have little influence left. The day that Wall Street's influence is greater than the Chinese will likely coincide with the "crossover" people have been talking about, and the start of the upswing into the next bubble.

#5

Assuming that the next bubble proceeds successfully, and there is no reason to think that it won't, the conversation around here is going to fundamentally change. Right now, people are afraid that bitcoins will never catch on and will become useless. After Wall St invests in bitcoins, it will be clear that the only way that bitcoins will fail is if there is a protocol disaster. For five years now, bitcoins have always had a cloud over them about whether they would fail or not. It will be difficult for people here to adjust to that change in reality.

It will be even more difficult to adjust for people at bitcointalk.org, who have been following a set of electronic tokens that were considered a waste of electricity, but which are now listed on Bloomberg as a new asset class and which the People's Republic of China is failing in its efforts to destroy even with full government support.

Once it is clear that bitcoins won't fail, it would also stand to reason that the bubble cycle will be dampened somewhat. Wall St investors don't panic as quickly as all the script kiddies and drug dealers do. Bubbles will continue for some time, but perhaps two bubbles from now would go from $6k to $12k, instead of the 6x increases that have been common before that.

#6

Note, however, that if you buy bitcoins now, a 2x increase two bubbles from now is still better for you than a 6x increase would be now. A 1.6x increase three bubbles from now is even better yet. The slowdown in the rate of increase will only hurt those who get in late, not the people here right now.

#7

There is a strategy called "turtle investing" that doesn't require you to look at complex charts or take huge risks in calling the bottom. You simply buy when the price crosses the all-time high, and sell at the first crash of 25% or so. You may not become a millionaire, but people who followed this strategy for the last two bubbles would have made 2.5x each bubble.

Days until July 24: 84