Organic interest versus manufactured interest
There seems to be a lot of buzz lately about articles that draw attention to bitcoin "milestones" at companies. For example, the article about Intuit yesterday reported that more people are using Quickbooks for bitcoin purposes than originally anticipated. I think we need to be careful about the difference between what amounts to company press releases, and what Google would term as "organic" news.
Organic news originates from the market, from the bottom up. An example of such news would be someone who saved $10k buying a Tesla at a 10% discount and who posts about it, or the increasing popularity of a site as reported by its users. Press releases originate from the top down and tend to have two flaws. First, they leave out key information, and second, they don't appear at all when bad news happens.
Overstock has an interest in reporting raw numbers but leaving out actual customer feedback. Numbers exceeding expectations are easy to understand by everyone, but they don't show any support or excitement over bitcoin technology. Companies that have announced bitcoin acceptance never post press releases when they stop accepting bitcoins. Excitement from users is what we should be looking for in predicting future adoption, price rises, and bubbles. Be careful and try to distinguish which news is coming from the bottom and which news is falling from the top down.
Worth noticing
It's worth noticing that an increasing number of people are theorizing that the actual number of claims by Mt Gox creditors may be 100% of the number of bitcoins they found, not the larger number that is claimed was lost. If so, those extra bitcoins never existed nor were owed, and the people who used bitcoinbuilder at 3 cents on the dollar will walk away with the best investment of their lives. It will be worth performing some research to see if these claims have any basis and what the impact will be if they are true.
Price crashes through the lower boundary for the first time
Today, something unprecedented happened. The price crashed through the lower boundary ($596) for the first time. /u/moral_agent states that the price has to close below the lower boundary for three consecutive days in order for the divergence to be proven; however, even one day below the boundary is significant. It would difficult to use moral_agent's charts for predictive purposes if the pattern has diverged. My interpretation of what he predicts is that the model will have been proven wrong if this divergence is confirmed, but I disagree and say that the charts were correct, given the fundamentals that had held for all those years. The model predicted perfectly that as long as the fundamentals held, the cycle would continue in regular periods. But if the divergence has occurred, then it means that the fundamentals changed, not that the model was wrong.
Whereas moral_agent would prefer to adjust the model so that it can explain the additional data, I think the model was right, and now that the conditions have changed, a new model is required that would begin now. My belief is that the key fundamentals that have not held are the transaction volume having decreased, and the lack of development progress. I still maintain that these things are what drives the price trends and that short-term news generally follows the trends.
Bitcoins are not dead, and growth is likely to continue. It is even likely that there will be further periods of exponential growth in the future. However, the lower boundary is rising at $4/day now. Even if the price stays steady, the trend will break within a few days. My flair remains bearish as it has since bitcoins were worth $630, but I'm not going to sell because the future will eventually arive.
People don't like bearish predictions
Several months back, I stated that if the price did not start to move, then there would be a crash around today because people would realize that growth isn't happening as it had in the past. I believed that such losses would occur within a week or two around the date, but never believed it would happen exactly when people woke up on July 24. More recently, I changed my flair to bearish and reiterated that belief.
What's interesting is that almost all of the posts I make to /r/bitcoinmarkets now that have anything negative to say about bitcoins are immediately downvoted, despite having correctly predicted the fallout. I also made some positive comments, and they were upvoted, even though they were intentionally wrong.
I had always thought that people in /r/bitcoin were insulated in a collective where press releases from major companies carry far too much weight, and the stereotype was that /r/bitcoinmarkets was always negative. That obviously isn't the case. I've noticed that many contributors who post comments to the negative are downvoted regardless of what they say. I've started clicking to expand comments that are downvoted because they often present a more balanced view.
Other
- There is nothing to count down to. The end of this cycle aligned perfectly with the price falling below the lower boundary, so both of the countdowns expired on the same day.