OK, let me try.  Who is going to buy at Overstock using Bitcoin?

• a) Random Joe who has USD but no Bitcoin;
• b) Speculator who is trading in order to get hold of as much Bitcoin as he can;
• c) Speculator who is cashing out and leaving the market;
• d) Believer who is certain that 1 BTC will be worth 10,000 next year.
• e) Speculator who is trying to convince others to buy his bitcoins at higher price.

My guess is

• only a few of (c), namely those who would have bought at Overstock with USD anyway;
• only a few of (d), namely those who are willing to waste a few of their precious Bitcoins for the Good of the Cause;
• perhaps some (e);

but in all three cases the total amount of BTC spent will be small; my guess is a couple thousand BTC at most.  So the good news will flop when it becomes public that only 0.01% of Overstock's turnover is in BTC.  On the other hand, all three cases imply cash will leave the market, driving the price down.

"Fake volume" is someone (possibly the exchange owner) selling to himself, either through one account or multiple accounts.  I suspect that some 5.000 BTC of MtGox's volume was "fake" in this sense, intended to mask the low real volume and/or to convince naive traders that the price was going up.

Robots selling to robots is not "fake volume" if the robots belong to competing traders.

EDIT: 5.000 BTC of MtGox's daily volume

It is evident that all the markets, including China, have been tied together to this day.  Since its volume is 5x that of any other market, its is a reasonable guess that it is the elephant that is dragging the dog rather than the other way around.

Whoever is the leader, the reaction on the others is very quick. Perhaps one can tell who is the leader by looking at the minute-by-minute trade data. 

(Methinks that it does not matter whether the Huobi volume is due to humans or robots. Manual day traders generally use "dumb" strategies that make them behave like robots, only slower ones.)

One cannot claim a profit until the bitcoins have been exchanged for old money, merchandise, or services.

Those who profited 1000% are those who bought at 100 USD and sold at 1000 USD. Obviously they do not have the bitcoins any more and cannot "grab profits" again.

Those who have bought at 100 USD and not sold yet may want to cash out with profit at any time, most likely when they suspect that the price will not rise fast enough in the future. 

Those who have bought at 1000 USD will only be able to make a profit if the price rises again above that level.  They may despair and sell at a loss.

That is the same as saying "sell your bitcoins".  Good for hoarders, bad for the price...

As others have pointed out, people buying things with bitcoins (whether through Bitpay or similar service, as seems to be generally the case, or by direct barter) is the same thing as selling them.  Besides acting to lower the price of bitcoin, that is the opposite of "hodling", right?

Ordinary people still have no reason to use bitcoins (rather than old money) to buy things on retailers like Overstock.  So that option should not bring more old money (USD etc) to the Bitcoin market.

Speculators and miners who want to leave the Bitcoin game now have the option to cash out in merchandise (at a few merchants) rather than in old money.  That only makes it a bit easier for them to decide to leave, and hence take old money out of the market.

So the Overstock news is "good news" only for True Believers, who did not need it to believe anyway...

I am referring to the people who bought after the price was near 1000, just before the peak. The volume exploded during the rally; it is unlikly that the buyers were all Believers.  Besdes, for every buy there was a sell, so many of those who bought before the rally clearly were not Believers either.

I would guess that almost all the trade we see, in all exchanges, is due to speculators trying to earn old money by exploiting Bitcoin's volatiliy (or trying to minimize their losses before jumping out). That includes any robot trading and manipulation that may be happening.

Because they bought only after the rally was well under way. If they believed in Bitcoin they would have bought much earlier. Even if only half of those late buyers are speculators, their holdings must be much more than what shows up in the order books.

That is called "arbitrage trading". As far as I can tell, it is happening all the time and is keeping all markets in lockstep, even those of other cryptocoins. 

The difference between MtGox and the others seems to be due to the difficulty and cost of getting USD out of there; it cannot be exploted for arbitrage, on the contrary it is arbitrage that keeps the ratio relatively constant in spite of the large price fluctuations.

Please excuse my insistence, but keep in mind that there are (by my estimates from the charts) somewhere between 50,000 and 300,000 bitcoins out there that were last bought in late nov/2013 at 950 USD or more.

Many of the owners of those coins must be speculators that were attracted by the fast and steady rise in price. (True believers presumably bought all they could much earlier.)

Being speculators rather than believers, they must now be looking for a way out of this unpredictable and unregulated roller coaster without losing much money.

Therefore, those owners must be waiting for the price (and enough bids) to get back to the 1000 USD level to sell their thousands of coins. (There is no reason to assume that the asks in the exchanges' books represent the true volume of coins that will be sold at those prices).

Therefore I expect the price to wander at or below that mark for quite a while. Note that the suckers new investors who will buy those coins will be in the same situation.

The gap means that having 1.00 USD in a MtGox account is as good as having ~0.85 USD in a Bitstamp or other exchange's account.  The widening means that the "Gox dollar" is losing value.

I was going to post that Huobi just touched 4600, but before I got a round tweet it was already 4500. But presumably the roller coaster will go on for months...

Edit: In the time it took me to write this post, it fell to 4300 4200 back to 4500 for now.

Huobi fell from ~5020 to 4818 in a few minutes, then recovered somewhat and is hovering around 4900.

But there is no need to follow it, Bitstamp and MtGox are doing it for us.

Could there be also robots that place large buy orders just below the curent price, to give the illusion of strong support, only to cancel or lower the bds as the price gets lower?

You all saw this I suppose:
http://techcrunch.com/2014/01/05/taiwans-government-says-no-to-bitcoin-atms/

See my signature. I am a skeptic...

I strongly suspect that at least 5000 BTC/day of MtGox volume is fake (the ping-pong I mentioned earlier). Then there are spurts of higher volume when the price is changing fast, obviously due to speculation.

The non-speculative (commercial) trade seems to be less than 5000 BTC/day. How much less?

Thanks!

Why do people claim that Huobi's volume is faked?

If I read the charts correctly, Huobi has 10x the volume (in BTC) of MtGox, Bitstamp, and BTC-China.

If that is the case, Huobi defines the price of Bitcoin, the others  basically follow it through arbitrage trading (except that 1.00 USD in a MtGox account is worth only 0.90 USD at Bitstamp, for some reason).

Am I reading the charts right? Huobi is trading 100 kBTC per day?