A few thoughts - Sunday, June 15, 2014
Posted: Sun Jun 15, 2014 1:18 pm
Good morning! I'm not writing that much this weekend because, if things go well, our pool will reach feature-completion at the end of the day. I'll announce to see if anyone is interested in joining during a proof-of-interest and testing phase in a few weeks.
Brilliant PR
Petamine recently left GHash.io and moved their miners to P2Pool, which is a brilliant PR move. I need to write down that whenever there is a villian, there is a way to make yourself look like the hero. In this case, they are probably raking in more customers in the past 24 hours than they did in the entire month before that.
What's interesting, however, is that what is happening is simply that people are creating pools on P2Pool. This is a stopgap measure, because the P2Pool difficulty rises along with the bitcoin difficulty. In a year, finding a P2Pool share will be as difficult as finding a bitcoin block is today, so we could end up with a pool dominating the P2Pool network.
GHash.io controversy is blowing over
The GHash.io controversy is blowing over. As you can see, GHash.io's hashrate is declining, and people are changing pools. Note that the pool never conducted any attack and that it is disputable that it even reached 50% at all.
People who were panic selling don't recall that this has happened at least twice before that I can recall, with both the BTC Guild and GHash.io. Unless "it's different this time," the same thing is generally going to happen. And there really isn't anything that was different this time, except that a long squeeze coincided with the controversy.
This was a long squeeze
What happened to the price over the past few days was a long squeeze. I'm not convinced there was anything more complicated to it than that. It's easy to place blame for the price fall on any of the events that happened over the past few days, but those events had only a minor impact.
What I think happened is that, on Tuesday or Wednesday, people in the know found out about this impending sale and started getting out. The price started moving downward for an unexplained reason, and so smart people figured out that there was something they didn't know and sold too. When the sale was announced, a few more people sold, and that triggered margin calls, crashing all the way down until most of the people who were 2.5:1 or greater were wiped out. The GHash.io controvery didn't come to a head until after all the people trading on margin had been destroyed already.
If you agree with me, then a long squeeze is certainly not a reason for panic and worry, because it doesn't affect any of the bitcoin fundamentals.
There are people on the other side of the screen
There are several people who were sending me messages and making posts in various places trying to get my attention yesterday. While I welcome criticism, the discussion at /r/bitcoinmarkets yesterday was deplorable. There are real people on the other side of the screen. I'd like to see some of those people walk up to me or the other people they were railing against and say the sort of things they were saying to someone's face. If they acted the way they did in a restaurant or a public venue, they would have been thrown out.
I will not respond to people who use profanity and personal attacks against me or others. That is not acceptable behavior, and I will not respect people who have no respect for others. I permanently ignored three people who did engage in such attacks yesterday.
I also need to state that you cannot have a civil discussion unless everyone is correctly representing the viewpoints of the people they are discussing. I clearly said that I do not believe in debt, even for houses, which is probably a controversial opinion itself. People who are stating that I suggested buying on margin are lying. Others are lying that I said that this bubble has somehow aborted or ended. Finally, I made it clear that I spent what was at the time about 2% of my wealth on bitcoins, and that I now have about 6% of net worth as bitcoins (it would be about 12% but the stock market has risen so significantly). People are lying that I have huge amounts of money in bitcoins.
Finally, and this confuses me the most, people are spreading a particularly strange lie that I told them to buy bitcoins when they were worth $680. I made clear many times that I put in a lot of money at the low of $440, I repeatedly said that I had a lot of money in the bank ready to invest at the time, and I have not held any bitcoins I bought since then because I have reached my maximum exposure and do not ever plan to hold any more.
Instead of lying, read what I have to say carefully and don't infer things that are not stated in the posts.
This bubble will continue
The next two weeks are going to be interesting. At some point, the price is going to begin to rise in anticipation of this auction. I like the predictions that the higher prices fetched for the auction bitcoins is going to start what /u/moral_agent would refer to as the last phase of this cycle.
This makes sense in terms of psychology. If a particularly high number comes out of the auction process, and I believe it will for the reasons I stated yesterday, then people will be shocked that Wall Street believes that bitcoins are worth so much. The price will probably rise above what Wall St pays for the bitcoins at auction as people realize that if Wall St is willing to pay 25/50/whatever percent greater than market value, then bitcoins must be worth far more.
Other
Brilliant PR
Petamine recently left GHash.io and moved their miners to P2Pool, which is a brilliant PR move. I need to write down that whenever there is a villian, there is a way to make yourself look like the hero. In this case, they are probably raking in more customers in the past 24 hours than they did in the entire month before that.
What's interesting, however, is that what is happening is simply that people are creating pools on P2Pool. This is a stopgap measure, because the P2Pool difficulty rises along with the bitcoin difficulty. In a year, finding a P2Pool share will be as difficult as finding a bitcoin block is today, so we could end up with a pool dominating the P2Pool network.
GHash.io controversy is blowing over
The GHash.io controversy is blowing over. As you can see, GHash.io's hashrate is declining, and people are changing pools. Note that the pool never conducted any attack and that it is disputable that it even reached 50% at all.
People who were panic selling don't recall that this has happened at least twice before that I can recall, with both the BTC Guild and GHash.io. Unless "it's different this time," the same thing is generally going to happen. And there really isn't anything that was different this time, except that a long squeeze coincided with the controversy.
This was a long squeeze
What happened to the price over the past few days was a long squeeze. I'm not convinced there was anything more complicated to it than that. It's easy to place blame for the price fall on any of the events that happened over the past few days, but those events had only a minor impact.
What I think happened is that, on Tuesday or Wednesday, people in the know found out about this impending sale and started getting out. The price started moving downward for an unexplained reason, and so smart people figured out that there was something they didn't know and sold too. When the sale was announced, a few more people sold, and that triggered margin calls, crashing all the way down until most of the people who were 2.5:1 or greater were wiped out. The GHash.io controvery didn't come to a head until after all the people trading on margin had been destroyed already.
If you agree with me, then a long squeeze is certainly not a reason for panic and worry, because it doesn't affect any of the bitcoin fundamentals.
There are people on the other side of the screen
There are several people who were sending me messages and making posts in various places trying to get my attention yesterday. While I welcome criticism, the discussion at /r/bitcoinmarkets yesterday was deplorable. There are real people on the other side of the screen. I'd like to see some of those people walk up to me or the other people they were railing against and say the sort of things they were saying to someone's face. If they acted the way they did in a restaurant or a public venue, they would have been thrown out.
I will not respond to people who use profanity and personal attacks against me or others. That is not acceptable behavior, and I will not respect people who have no respect for others. I permanently ignored three people who did engage in such attacks yesterday.
I also need to state that you cannot have a civil discussion unless everyone is correctly representing the viewpoints of the people they are discussing. I clearly said that I do not believe in debt, even for houses, which is probably a controversial opinion itself. People who are stating that I suggested buying on margin are lying. Others are lying that I said that this bubble has somehow aborted or ended. Finally, I made it clear that I spent what was at the time about 2% of my wealth on bitcoins, and that I now have about 6% of net worth as bitcoins (it would be about 12% but the stock market has risen so significantly). People are lying that I have huge amounts of money in bitcoins.
Finally, and this confuses me the most, people are spreading a particularly strange lie that I told them to buy bitcoins when they were worth $680. I made clear many times that I put in a lot of money at the low of $440, I repeatedly said that I had a lot of money in the bank ready to invest at the time, and I have not held any bitcoins I bought since then because I have reached my maximum exposure and do not ever plan to hold any more.
Instead of lying, read what I have to say carefully and don't infer things that are not stated in the posts.
This bubble will continue
The next two weeks are going to be interesting. At some point, the price is going to begin to rise in anticipation of this auction. I like the predictions that the higher prices fetched for the auction bitcoins is going to start what /u/moral_agent would refer to as the last phase of this cycle.
This makes sense in terms of psychology. If a particularly high number comes out of the auction process, and I believe it will for the reasons I stated yesterday, then people will be shocked that Wall Street believes that bitcoins are worth so much. The price will probably rise above what Wall St pays for the bitcoins at auction as people realize that if Wall St is willing to pay 25/50/whatever percent greater than market value, then bitcoins must be worth far more.
Other
- Days until July 24: 40