Original author: Stan Higgins
Coin News
AMD’s new card is pricey and designed with enthusiasts in mind, so few miners will be willing to pay the premium for an elaborate hybrid cooler. What’s more, an increasing number of scrypt miners are looking beyond Radeon graphics processing units (GPUs) for their mining needs.With that in mind, the dual-GPU Radeon R9 295X2 is starting to sound like a swan song for GPU mining, at least as far as scrypt goes.Meet the R9 295X2, AMD’s new flagshipThe Radeon R9 295X2 is the latest card in a long line of dual-GPU graphics cards from AMD. It is based on the 6.2bn transistor Hawaii XT GPU, the same chip used in the R9 290X. Each GPU packs 2816 stream processors, 176 texture units and 64 ROPs. The GPUs are paired with 4GB of GDDR5 on a 512-bit bus. In essence it’s like having two R9 290X cards on a single printed circuit board.The closed loop hybrid air/water cooler helps the card maintain high boost clocks, which was not the case with the reference R9 290X design, which quickly ran up against the thermal barrier in AMD’s Uber mode. AMD says the R9 295X2 can consume up to 500W. The suggested retail price is $1,499, or €1,100 plus VAT in Europe.The price makes it more or less pointless for GPU miners, as they would much rather invest in two R9 290X cards, with a suggested retail price of $549. However, buying an R9 290X at that price has been next to impossible for months due to strong demand. This appears to be changing.Miners are saving their cash for scrypt ASICsAMD has been struggling to meet demand for Hawaii-based cards for months. The R9 290X was on allocation for a while and the shortage also led to plenty of price gouging, especially in Europe and North America.Contrary to many reports, the shortages were not caused solely by miners, although they contributed to them. AMD’s Hawaii cards tend to offer good value for money compared to Nvidia’s high-end cards and AMD sweetened the deal with Mantle, a proprietary API that enables developers a “close to metal” approach and eliminates plenty of CPU overhead. The Mantle API still lacks support, but there are plenty of studios that have already signed up, making the cards a bit more appealing.Demand for Radeon R290-series cards has dropped over the past few weeks. Miners have been scooping up Hawaii-based and Tahiti-based Radeon cards by the dozen for the past few months. However, retailers and distributors say demand is finally cooling down. It appears that miners are waiting for more scrypt ASICs, which is understandable.It should be noted that this only applies to scrypt. There is always a chance that someone out there will come up with a popular altcoin based on a new ASIC-proof algorithm, but don’t hold your breath. There is already plenty of altcoin fatigue.Performance-per-watt conundrumRadeons still account for much of the computing power behind scrypt altcoins such as litecoin and dogecoin. However, they are no longer the money making machines they once were. Difficulty is going up and the first ASICs capable of handling scrypt are rolling out.One example is the GridSeed ASIC hybrid miner, which can mine both scrypt and SHA cryptocurrencies. GridSeed offers a range of miners ranging from $205 to $27,195.For example, GridSeed’s Set B – 5X 2M package features five 55nm ASICs capable of churning out 330-450KH/s at 4-7W. It is priced at $1,375, so it costs about as much as a pair of Radeon R9 290X cards and it’s roughly on par in terms of performance, as the R9 290X delivers about 1MH/s. However, the Radeons consume up to 250W each, but in reality the number can go up to 300W under load, especially if some overclocking is involved.On top of that you’ll need a motherboard, power supply unit, CPU and a few other components to build a GPU mining rig, which basically means you will end up spending more to get inferior performance-per-watt.As if that isn’t bad enough, comparing Radeons to upcoming scrypt miners paints an even bleaker picture for GPU mining. KnCMiner recently updated the spec for its upcoming Titan miner, which will now deliver up to 250MH/s and will require a standard 800W-1000W power supply unit. To get that sort of performance out of Radeon-based rigs a miner would need about 250 cards rated at 250W each, not including the consumption of other components.Possible RMA falloutGPUs still have one advantage on their side. Miners can use them for weeks or months and then simply sell them as used graphics cards. Selling used ASICs is a lot harder, especially in small markets. While miners would probably find a lot of interest for used ASICs in places like the US, Germany or China, in many smaller countries they would have to look abroad, with all the bureaucratic mess that entails. Unloading unneeded GPUs is a lot easier and depreciation tends to be much lower.However, there is a problem. Many miner cards have a lot of mileage on them. Bear in mind that these are consumer products, and were not designed to run under full load for months at a time. The average gamer does not push the graphics card to its limits more than a few hours a day. These are the numbers AMD takes into account when it works out its return merchandise authorization (RMA) scenarios. Some cards are always expected to die an untimely death, so AMD and its add-in-board partners are usually willing to replace them free of charge.However, they can refuse to do so if the cards were abused.This may be a problem for some miners. Serious miners with dozens of cards tend to buy the cheapest available cards, namely reference cards with stock coolers rather than overclocked cards with non-reference coolers. In many cases the cards will be underclocked rather than overclocked, trading performance for efficiency. There are exceptions though – some miners overclock their cards.A card that has spent six months mining for altcoins has more than 4,300 hours on it, under full load. The same card in a gaming rig, with two hours of load per day for six months, had to deal with just 360 hours of full load, if that. Games don’t push cards to 100% load all the time, so two hours of full load is usually what gamers get from extended gaming sessions. All the load takes its toll on various components, ranging from voltage regulator modules to fans and GPUs themselves.In other words, people who know what they are doing will avoid mining cards in the second-hand market, so they may not be as easy to unload as some miners expect. Selling a couple of cards shouldn’t be hard, but selling dozens at once will, as many gamers will stay away from them to avoid possible RMA issues.Photo creditNermin Hajdarbegovic is a freelance opinion and news writer for CoinDesk: his opinions do not necessarily reflect those of CoinDesk.AMDRadeonscryptscrypt ASICScrypt mining
Original author: Nermin Hajdarbegovic
Bob Swarup has extensive global experience in financial markets, macroeconomics and regulation, and recently released his new book Money Mania: Booms, Panics, and Busts from Ancient Rome to the Great Meltdown. Here, he presents his view on why bitcoin is fated to repeat the perennial cycle of boom and bust.
It is human nature to believe that whatever happens to us is unique. Bitcoin is no exception to this rule.Discussions about bitcoin and its impact are everywhere at the moment.If you are a supporter, bitcoin is a digital messiah and an unprecedented paradigm shift in the evolution of currency. The rapid escalation in its price over the last year is based on clear fundamentals, such as its clear advantages over traditional currency and its growing permeation into wider society.The recent spate of unwelcome headlines, like the ones inspired by Mt. Gox, is an unfortunate part of building this brave new world, the broken fortunes of a few paving the path to good money for us all.“Hyperbole is the clearest evidence yet that bitcoin is fated to repeat the perennial cycle of boom and bust.”If you are a detractor, bitcoin is an irrational delusion. It is anarchic and the tool of choice for the modern cyber criminal. It destabilises our attempts to forge a more resilient economy, particularly after the last few years of financial turmoil, with Mt. Gox being but the latest example to show how truly Wild West this digital frontier is. Our only hope lies in effectively corralling Pandora’s new technology genie before it can do too much harm.Both are partisan positions, charged with emotion. Their hyperbole is the clearest evidence yet that bitcoin is fated to repeat the perennial cycle of boom and bust, seen with every hopeful innovation since records began.Two decades ago, the internet was going to produce hyper growth, destroy the business status quo and create a world without boundaries. It changed the world eventually, but this journey was also punctuated by the painful roller coaster of the dot-com boom and bust.A century earlier, the Western world underwent a bicycle boom as mechanised transport began to replace horses. The bicycle’s durability, ease of use and low upkeep – how much does a bicycle eat? – were clear attractions.In a chauvinistic world, there was also talk of hyper growth as women could ride these, making the market instantly twice as large. In the ensuing boom, bicycle shares soared and money poured into anything remotely related. The Wright Brothers, the inventors of the airplane, funded their famous experiment through a bike shop they owned. The first major roads were built between towns in anticipation of hordes of future cyclists. Over time, the bicycle thrived but the companies did not as they lost the race to newer forms of transport such as the car.Both episodes are evidence of how human emotion can extrapolate hints of promise today into near certainty tomorrow, particularly when there are fortunes to be made. Despite its mathematical robustness, Bitcoin is not immune to this either and it would do well to understand the lessons of the past if it is to live up to its potential.The problem with fundamentalsBoom and bust are part of our socioeconomic DNA. Since the first recorded financial crisis in the 4th century BC – when ten Greek city states defaulted on their loans from the Temple of Apollo at Delos – we have traced a reliable pattern of emotional volatility throughout our history. Whether it be banking crises in ancient Rome, hyperinflation in medieval China, recurrent railroad panics in the 19th century or our more recent escapades, speculation seems to be an integral part of progress.The reason is simple. As humans, we have a constant desire for security and status – both natural reactions to dealing with an uncertain world. Alongside, the psychological mechanisms that drive us have not changed in thousands of years. What we term rationality is actually bounded on all sides by our emotions, environment and peers.Money provides leverage to all this. Through its existence, it binds a society closer together by giving us a common medium and a store of future value. At the same time, it accentuates divisions by giving us numbers to compare. The result is a constant race to build up little hoards that allow us to sandbank an uncertain future.
This soon evolves into the complexity of an economy. Some create goods or services for sale. This is commerce. Others then take it one step further and aid the ambitions of the first by providing them arenas of exchange and lending them money. This is finance. Soon, new players arrive who are impatient to rush ahead and begin to play the changing emotions, the ebb and flow of confidence, and the flows of money around them. This is speculation.Booms and busts are driven by this intoxicating mix of human bias and monetary leverage. Innovation always promises to accelerate change, provide growth and enrich society. This promise will always attract those seeking fortune and enhanced status. However, as early promise is fulfilled and more come to the mix, an avalanche effect is soon set in motion where the rationality of the participants becomes increasingly bounded.With more people, more interactions and more money, it becomes increasingly hard to fathom the complexity of this new market by ourselves, and so we rely all the more on others for direction. In extremis, our decisions come to rely almost solely on shortcuts and a self-affirming groupthink rooted in blind trust.The fundamentals then become just an ex-post expression of collective optimism and a bubble is born. As people extrapolate near term promises into the infinite, they become willing to pay any price for growth and soon overextend themselves. As returns disappoint or events shake faith in this paradigm, that same groupthink can now work in reverse, creating a panic and eventually a bust. The new fundamentals are now just an expression of collective pessimism.In other words, the shifting sands of perception lead to their own bubbles. Bitcoin is but the latest case in point.Reading tea leavesWe may not be able to prevent this cycle of boom and bust, not without excising human emotion. But knowing how to manage our journey and minimize the wider impact is still important, particularly for bitcoin. Bitcoin is proof that we can create an economy and speculation out of thin air if we want – as long as there are other people and transactions to be done.But financial crises and the speculative booms that birth them have important and lasting effects on economies. This is because economies are not closed cocoons but have social, political and international dimensions.Bitcoin is currently in a nascent stage. It has huge promise because of its natural affinity to a world that is driven increasingly by information and where globalisation is likely a permanent state of being, going forward.Today only a small fraction of all the money in the world trades as physical currency. The domination of electronic channels means that the distinctions are blurred between real-world and crypto-currencies, with the only real difference being one of acceptance. Leaving the latter point aside for a moment – that itself is a debate – bitcoin encodes simple advantages such as superior divisibility, information security and ease of transfer.
However, like any financial market, it is also a vast pool of emotions, representing the hopes, greed and fears of countless participants, jostling to get ahead. Like any economy, it is also dependent on transactions between countless individuals. Both depend on the tenuous fabric of credibility to subsist and thrive.Bitcoin’s success should be measured not by the current value or exchange rate vis-a-vis the dollar or others, but rather by the growth in the real economy. That means businesses being able to transact easily in bitcoins, people being able to execute everyday transactions, institutions accepting it as a valid form of exchange, and so on.If bitcoin is to achieve its lofty currency ambitions, this structural groundwork needs to be put in place. Economies are complex entities, thanks to the countless interactions they embody.For example, businesses and individuals like stable exchange rates, because it allows them to predict future cashflows. How does bitcoin evolve a deeper and more liquid market, where the speculator is a minority?Debt is a structural part of the landscape in every economy but is also dependent on future growth in income. How will this work within the realm of bitcoin, particularly when there is ultimately an upper limit to the quantum?That same limitation also means that Bitcoins theoretically should accrete in value over time. That may be great for speculators but it also encourages hoarding as you know it will likely be worth more tomorrow. That would mean fewer bitcoins floating around, fewer transactions and a starving economy. How will that tension be managed and resolved?These are all important questions for any currency with global ambitions. Most importantly, every one of these innovations will bring with it its own little boom and bust as the complexity of the Bitcoin economy grows.As human emotion overwhelms mathematics periodically, the resulting crises will also grow more far-reaching with each iteration, seeping further and further into society. Resolving them will become ever more critical. The important question then becomes how to develop effective mechanisms that can prevent trust from evaporating and financial pain transmuting into social tension.It is important to be cognizant of all this. Bitcoin has many challenges still to overcome on its journey. The danger is that we focus so much on a volatile price chart that we confuse hyperbole and rising numbers with the promise of future domination. And when that bubble inevitably emerges and bursts, we are left woefully unprepared for the deluge of emotion that follows.World economics graph photo via Shutterstockbubbleeconomicsspeculation
It is human nature to believe that whatever happens to us is unique. Bitcoin is no exception to this rule.Discussions about bitcoin and its impact are everywhere at the moment.If you are a supporter, bitcoin is a digital messiah and an unprecedented paradigm shift in the evolution of currency. The rapid escalation in its price over the last year is based on clear fundamentals, such as its clear advantages over traditional currency and its growing permeation into wider society.The recent spate of unwelcome headlines, like the ones inspired by Mt. Gox, is an unfortunate part of building this brave new world, the broken fortunes of a few paving the path to good money for us all.“Hyperbole is the clearest evidence yet that bitcoin is fated to repeat the perennial cycle of boom and bust.”If you are a detractor, bitcoin is an irrational delusion. It is anarchic and the tool of choice for the modern cyber criminal. It destabilises our attempts to forge a more resilient economy, particularly after the last few years of financial turmoil, with Mt. Gox being but the latest example to show how truly Wild West this digital frontier is. Our only hope lies in effectively corralling Pandora’s new technology genie before it can do too much harm.Both are partisan positions, charged with emotion. Their hyperbole is the clearest evidence yet that bitcoin is fated to repeat the perennial cycle of boom and bust, seen with every hopeful innovation since records began.Two decades ago, the internet was going to produce hyper growth, destroy the business status quo and create a world without boundaries. It changed the world eventually, but this journey was also punctuated by the painful roller coaster of the dot-com boom and bust.A century earlier, the Western world underwent a bicycle boom as mechanised transport began to replace horses. The bicycle’s durability, ease of use and low upkeep – how much does a bicycle eat? – were clear attractions.In a chauvinistic world, there was also talk of hyper growth as women could ride these, making the market instantly twice as large. In the ensuing boom, bicycle shares soared and money poured into anything remotely related. The Wright Brothers, the inventors of the airplane, funded their famous experiment through a bike shop they owned. The first major roads were built between towns in anticipation of hordes of future cyclists. Over time, the bicycle thrived but the companies did not as they lost the race to newer forms of transport such as the car.Both episodes are evidence of how human emotion can extrapolate hints of promise today into near certainty tomorrow, particularly when there are fortunes to be made. Despite its mathematical robustness, Bitcoin is not immune to this either and it would do well to understand the lessons of the past if it is to live up to its potential.The problem with fundamentalsBoom and bust are part of our socioeconomic DNA. Since the first recorded financial crisis in the 4th century BC – when ten Greek city states defaulted on their loans from the Temple of Apollo at Delos – we have traced a reliable pattern of emotional volatility throughout our history. Whether it be banking crises in ancient Rome, hyperinflation in medieval China, recurrent railroad panics in the 19th century or our more recent escapades, speculation seems to be an integral part of progress.The reason is simple. As humans, we have a constant desire for security and status – both natural reactions to dealing with an uncertain world. Alongside, the psychological mechanisms that drive us have not changed in thousands of years. What we term rationality is actually bounded on all sides by our emotions, environment and peers.Money provides leverage to all this. Through its existence, it binds a society closer together by giving us a common medium and a store of future value. At the same time, it accentuates divisions by giving us numbers to compare. The result is a constant race to build up little hoards that allow us to sandbank an uncertain future.This soon evolves into the complexity of an economy. Some create goods or services for sale. This is commerce. Others then take it one step further and aid the ambitions of the first by providing them arenas of exchange and lending them money. This is finance. Soon, new players arrive who are impatient to rush ahead and begin to play the changing emotions, the ebb and flow of confidence, and the flows of money around them. This is speculation.Booms and busts are driven by this intoxicating mix of human bias and monetary leverage. Innovation always promises to accelerate change, provide growth and enrich society. This promise will always attract those seeking fortune and enhanced status. However, as early promise is fulfilled and more come to the mix, an avalanche effect is soon set in motion where the rationality of the participants becomes increasingly bounded.With more people, more interactions and more money, it becomes increasingly hard to fathom the complexity of this new market by ourselves, and so we rely all the more on others for direction. In extremis, our decisions come to rely almost solely on shortcuts and a self-affirming groupthink rooted in blind trust.The fundamentals then become just an ex-post expression of collective optimism and a bubble is born. As people extrapolate near term promises into the infinite, they become willing to pay any price for growth and soon overextend themselves. As returns disappoint or events shake faith in this paradigm, that same groupthink can now work in reverse, creating a panic and eventually a bust. The new fundamentals are now just an expression of collective pessimism.In other words, the shifting sands of perception lead to their own bubbles. Bitcoin is but the latest case in point.Reading tea leavesWe may not be able to prevent this cycle of boom and bust, not without excising human emotion. But knowing how to manage our journey and minimize the wider impact is still important, particularly for bitcoin. Bitcoin is proof that we can create an economy and speculation out of thin air if we want – as long as there are other people and transactions to be done.But financial crises and the speculative booms that birth them have important and lasting effects on economies. This is because economies are not closed cocoons but have social, political and international dimensions.Bitcoin is currently in a nascent stage. It has huge promise because of its natural affinity to a world that is driven increasingly by information and where globalisation is likely a permanent state of being, going forward.Today only a small fraction of all the money in the world trades as physical currency. The domination of electronic channels means that the distinctions are blurred between real-world and crypto-currencies, with the only real difference being one of acceptance. Leaving the latter point aside for a moment – that itself is a debate – bitcoin encodes simple advantages such as superior divisibility, information security and ease of transfer.However, like any financial market, it is also a vast pool of emotions, representing the hopes, greed and fears of countless participants, jostling to get ahead. Like any economy, it is also dependent on transactions between countless individuals. Both depend on the tenuous fabric of credibility to subsist and thrive.Bitcoin’s success should be measured not by the current value or exchange rate vis-a-vis the dollar or others, but rather by the growth in the real economy. That means businesses being able to transact easily in bitcoins, people being able to execute everyday transactions, institutions accepting it as a valid form of exchange, and so on.If bitcoin is to achieve its lofty currency ambitions, this structural groundwork needs to be put in place. Economies are complex entities, thanks to the countless interactions they embody.For example, businesses and individuals like stable exchange rates, because it allows them to predict future cashflows. How does bitcoin evolve a deeper and more liquid market, where the speculator is a minority?Debt is a structural part of the landscape in every economy but is also dependent on future growth in income. How will this work within the realm of bitcoin, particularly when there is ultimately an upper limit to the quantum?That same limitation also means that Bitcoins theoretically should accrete in value over time. That may be great for speculators but it also encourages hoarding as you know it will likely be worth more tomorrow. That would mean fewer bitcoins floating around, fewer transactions and a starving economy. How will that tension be managed and resolved?These are all important questions for any currency with global ambitions. Most importantly, every one of these innovations will bring with it its own little boom and bust as the complexity of the Bitcoin economy grows.As human emotion overwhelms mathematics periodically, the resulting crises will also grow more far-reaching with each iteration, seeping further and further into society. Resolving them will become ever more critical. The important question then becomes how to develop effective mechanisms that can prevent trust from evaporating and financial pain transmuting into social tension.It is important to be cognizant of all this. Bitcoin has many challenges still to overcome on its journey. The danger is that we focus so much on a volatile price chart that we confuse hyperbole and rising numbers with the promise of future domination. And when that bubble inevitably emerges and bursts, we are left woefully unprepared for the deluge of emotion that follows.World economics graph photo via ShutterstockbubbleeconomicsspeculationOriginal author: Bob Swarup
Tuur Demeester is an economist and investor focused on personal and financial freedom and bitcoin, and editor in chief at Adamant Research. With all the commotion in the market, now is an interesting moment to take a step back and look at some price patterns. I think especially the price behavior of China versus US/EU can be instructive to assess what to expect from the markets going forwards.Back in december, based on two previous cycles in Bitcoin, I projected a bottom between late February and mid March, from the peak of $1,150 to between $400 and $500. On February 24, following the Mt. Gox closure news, we saw a panic sale during which the price dropped to $400 on Bitstamp. From then on I’ve suspected the bottom was in, or at least close: 
My thoughts on the price of Bitcoin over time Indeed the price recovered, to as high as $705 on march 2nd, yet after that it declined again to a low of $382 today.Question now is whether this period of mid-April is giving shape to a final bottom, or whether it is just another down leg in a trend towards a retest of the $260 April 2013 high or an even further decline.Below is the bitcoin price in Bitstamp, yesterday it briefly dropped below the December 17 support levels to $382, only to bounce back above it today. The close of today will tell us more about whether this level has enough bids under it to support it:
Will Bitcoin stay above the technical support of $382? If we look at Litecoin, we see a similar pattern, with technical support at $9.1 briefly violated:
Litecoin bulls and bears are also in a fight over the $10 support/resistance level. Here’s the BTC/CNY situation in China, where the technical support level lies lower, at the USD equivalent of $325:
CNY 2000 ($325) is support for China So China seems to suggest that we are heading lower. But how influential are the Chinese markets for the global Bitcoin price?Judging from the price action of the past few months, it definitely seems like China and US/Europe each have their own internal dynamic. Let’s crunch some numbers (scroll down for the graphs):For what follows, I’ll be using BTCChina as proxy for China*, and Bitstamp as proxy for US/Europe. To make make the spreads more apparent, I’ve converted CNY to USD using the historical converter on oanda.com.For China, the first leg of the rally arguably started on November 1st, from $203. The rally then became supercharged on November 16, from $453, and peaked on November 29, at $1,237. From then we saw a quick crash down to $623.5 on December 6, and another down to $329 on December 17. On January 5, we completed a false recovery to $977.7, only to fall back to a low of $498 on February 24. The most recent low of April 2nd was the equivalent of $392.For US/EU, the first leg of the rally arguably started on November 1st, from USD 201. The rally then became supercharged on November 16, from USD 434, and peaked on November 29, at USD 1163. From then we saw a quick crash down to USD 543 on December 6, and another down to USD382 on December 17. On January 5, we completed a false recovery to $995, only to fall back to the low of $400 on February 24. On April 2nd, we touched $416.I’ve summarized these findings in a couple of graphs below.We see that China’s price extremes were …indeed more extreme:
Trading in China has been more volatile: The rallies in China were significantly stronger (total rally in CNY from the start on July 7 was a 19x move, vs. a 17x move for the western markets):
Stronger rallies… And most declines in price were significantly stronger, too:
… and stronger declines I think the different price behavior in China vs. US/Europe shows how the Chinese market is a bit more immature, hence the higher volatility.The most interesting datapoint for me are the spreads:
Spreads communicate which market is pushing the prices up or down: In November, China was the locomotive of the rally, pulling the prices higher in the US/EU as well.Then in late december, regulatory panic ensued in China, which explains why the selloff there pulled prices lower than elsewhere. The recovery was orderly, resulting in a small spread early January.The collapse of Mt. Gox affected US/EU psychology to a much greater extent than that of China, which is why on February 24 prices went +20% deeper in the West.Interestingly, despite the latest bearish news from China, the spread is now positive, meaning that the Chinese are willing to pay more for a Bitcoin than we are.This could be a sign that we are underestimating the resourcefulness of Chinese buyers in converting Yuan into Bitcoin going forward.Let’s take a look at some other fundamentals to try and see whether there is support for a +/-$400 price in the markets.Here is the weighted bull/bear ratio from the r/bitcoinmarkets subreddit (now 14k traders).
Interesting how traders there were as bearish on December 17 as they were before the entire rally in late September. Current levels are moving consistently higher but far from bubble territory.Looking at the order book of the largest USD exchange Bitstamp (+/- 30% of USD exchange volume): 
Sellers are in the market for liquidating 25,000 BTC, and buyers have put less than $7M on the line to scoop them up – the lowest level since the crash of December 17-18. This is a sign of pessimism, i.e. could be a contrarian buy signal. (graph is from yesterday)Over to the margin traders on Bitfinex: 
The blue line represents the daily interest rate for borrowing dollars on the platform. We can clearly see how the market got overheated by late december. Right now we can see how it is quite cheap to borrow dollars there (0.095%), but the interest rate is still higher than during the Mt. Gox collapse (0,068%) and also higher than the low of the January 1st crash (0.087%).A retest of the $260 April high would form a strong bottom for a new rally to be built on – a drop below $350 will likely lead us there – but based on the data above (and the strong signs that Wall Street is getting ready to move in), I suspect that if it happens, such a drop would be short lived. I’m still not convinced prices will dwindle significantly lower than the $380 levels.With likely troubles ahead for the Western stock markets, and with that also the legacy banks and governments, I expect wind in the sails for hard money by summer or fall.Finally, I encourage the reader to take this analysis for what it is, a very rough estimate based on available historical data. I see these analyses as exercises to prepare myself psychologically for what could be ahead. Personally I don’t trade with more than 2-3% of my bitcoin holdings.Knock on wood: so far this strategy has helped me dodge quite a number of bullets in this exciting Wild West of Money.This article originally appeared on Medium, and has been republished here with permission.
My thoughts on the price of Bitcoin over time Indeed the price recovered, to as high as $705 on march 2nd, yet after that it declined again to a low of $382 today.Question now is whether this period of mid-April is giving shape to a final bottom, or whether it is just another down leg in a trend towards a retest of the $260 April 2013 high or an even further decline.Below is the bitcoin price in Bitstamp, yesterday it briefly dropped below the December 17 support levels to $382, only to bounce back above it today. The close of today will tell us more about whether this level has enough bids under it to support it:
Will Bitcoin stay above the technical support of $382? If we look at Litecoin, we see a similar pattern, with technical support at $9.1 briefly violated:
Litecoin bulls and bears are also in a fight over the $10 support/resistance level. Here’s the BTC/CNY situation in China, where the technical support level lies lower, at the USD equivalent of $325:
CNY 2000 ($325) is support for China So China seems to suggest that we are heading lower. But how influential are the Chinese markets for the global Bitcoin price?Judging from the price action of the past few months, it definitely seems like China and US/Europe each have their own internal dynamic. Let’s crunch some numbers (scroll down for the graphs):For what follows, I’ll be using BTCChina as proxy for China*, and Bitstamp as proxy for US/Europe. To make make the spreads more apparent, I’ve converted CNY to USD using the historical converter on oanda.com.For China, the first leg of the rally arguably started on November 1st, from $203. The rally then became supercharged on November 16, from $453, and peaked on November 29, at $1,237. From then we saw a quick crash down to $623.5 on December 6, and another down to $329 on December 17. On January 5, we completed a false recovery to $977.7, only to fall back to a low of $498 on February 24. The most recent low of April 2nd was the equivalent of $392.For US/EU, the first leg of the rally arguably started on November 1st, from USD 201. The rally then became supercharged on November 16, from USD 434, and peaked on November 29, at USD 1163. From then we saw a quick crash down to USD 543 on December 6, and another down to USD382 on December 17. On January 5, we completed a false recovery to $995, only to fall back to the low of $400 on February 24. On April 2nd, we touched $416.I’ve summarized these findings in a couple of graphs below.We see that China’s price extremes were …indeed more extreme:
Trading in China has been more volatile: The rallies in China were significantly stronger (total rally in CNY from the start on July 7 was a 19x move, vs. a 17x move for the western markets):
Stronger rallies… And most declines in price were significantly stronger, too:
… and stronger declines I think the different price behavior in China vs. US/Europe shows how the Chinese market is a bit more immature, hence the higher volatility.The most interesting datapoint for me are the spreads:
Spreads communicate which market is pushing the prices up or down: In November, China was the locomotive of the rally, pulling the prices higher in the US/EU as well.Then in late december, regulatory panic ensued in China, which explains why the selloff there pulled prices lower than elsewhere. The recovery was orderly, resulting in a small spread early January.The collapse of Mt. Gox affected US/EU psychology to a much greater extent than that of China, which is why on February 24 prices went +20% deeper in the West.Interestingly, despite the latest bearish news from China, the spread is now positive, meaning that the Chinese are willing to pay more for a Bitcoin than we are.This could be a sign that we are underestimating the resourcefulness of Chinese buyers in converting Yuan into Bitcoin going forward.Let’s take a look at some other fundamentals to try and see whether there is support for a +/-$400 price in the markets.Here is the weighted bull/bear ratio from the r/bitcoinmarkets subreddit (now 14k traders).
Interesting how traders there were as bearish on December 17 as they were before the entire rally in late September. Current levels are moving consistently higher but far from bubble territory.Looking at the order book of the largest USD exchange Bitstamp (+/- 30% of USD exchange volume): Sellers are in the market for liquidating 25,000 BTC, and buyers have put less than $7M on the line to scoop them up – the lowest level since the crash of December 17-18. This is a sign of pessimism, i.e. could be a contrarian buy signal. (graph is from yesterday)Over to the margin traders on Bitfinex: The blue line represents the daily interest rate for borrowing dollars on the platform. We can clearly see how the market got overheated by late december. Right now we can see how it is quite cheap to borrow dollars there (0.095%), but the interest rate is still higher than during the Mt. Gox collapse (0,068%) and also higher than the low of the January 1st crash (0.087%).A retest of the $260 April high would form a strong bottom for a new rally to be built on – a drop below $350 will likely lead us there – but based on the data above (and the strong signs that Wall Street is getting ready to move in), I suspect that if it happens, such a drop would be short lived. I’m still not convinced prices will dwindle significantly lower than the $380 levels.With likely troubles ahead for the Western stock markets, and with that also the legacy banks and governments, I expect wind in the sails for hard money by summer or fall.Finally, I encourage the reader to take this analysis for what it is, a very rough estimate based on available historical data. I see these analyses as exercises to prepare myself psychologically for what could be ahead. Personally I don’t trade with more than 2-3% of my bitcoin holdings.Knock on wood: so far this strategy has helped me dodge quite a number of bullets in this exciting Wild West of Money.This article originally appeared on Medium, and has been republished here with permission.Original author: Tuur Demeester
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