Perhaps one needs some indicator of order depth that is less sensitive to truncation? E.g., weighted total sum of order size (BTC), where the weight decays exponentially with the difference between order price and current price?

With such a formula, one could compute relatively tight upper and lower bounds for the indicator, even from a truncated order book.

That too, there may be many miners who sell their coins at the Chinese exchanges.

You may not know it, but bitcoins can be easily moved between markets, even across currency exchange barriers.    

Arbitragers move coins to China whenever the price there is higher than in the West.  The price shoot by a factor of 10 in October/November when the Chinese market exploded, all because of demand in China  They must have slurped most of the coins available in the Western markets at the time.  

So I would guess the opposite: last January, the coins available in the Western exchanges (not counting the large hoards of long-term investors, nor the fictitious GOXCoins) were only 1/5 to 1/10 of those that were available in the Chinese exchanges.  (That is just a guess, based on nothing more than this simplistic price argument.) But that number must have been decreasing together with the price.

EDIT: fixed(?) wrong attribution of quote.

Why would they bother to show the entire order book (which may well be larger than MtGOX's?)? For the vast majority of traders, the detailed book near the spread is all that matters.

Their website server has to query the database server, format the data, post it on the page, and serve the page to their clients  Depending on the size of the order book and on the volume of requests to both servers, showing the entire order book may be too expensive for them too.  (And they may even use the same API as the chart sites.)

On the other hand, the truncation may indeed be intentional. They probably would like to hide their bid/ask sums to avoid comparisons with other exchanges.  Huobi and OKCoin were clearly competing for the "largest exchange" title...

PS. By the way, it is not just the Chinese exchanges that truncate the reported order books.  One could clearly see the truncation in some of the @Chartbuddy plots of MtGOX, when that exchange was alive.

The API specified by bitcoincharts is described here.  Presumably the other chart sites depend on this same API. 

I cannot see how the exchange could report their total bid/as sum through that API except by reporting the entire detailed order book.  In fact I see no reliable way to tell whether the book was truncated or not.  If the book is truncated, the bid/ask sums computed from it are wrong and mostly meaningless.

OOPS, sorry! Re-editing my post now,

The API used by chart sites to extract the data from the exchanges requires that the entire detailed order book be returned every few seconds or so to every API client.

That API was designed by chart sites assuming that order books would contain only a couple thousand entries at most.  But robots and lack of trading fees generate LOTS of small orders on the Chinese exchange books.  Understandably, the largest exchanges truncate the book after a few thousand entries, which may cover only a narrow range of prices around the spread.

Chart sites should indicate the truncation with "..." or something.  Since they don't, their unwary clients keep assuming that what they see on the chart is the entire order book.

The chart-reporting API should be redesigned to return the order book SUMMARY in log scale (namely, total orders up to to 5, 10, 50, 100, ... USD above and below the spread; or, conversely, what the final price would be if one sold/bought 5, 10 50, 100, ... BTC or USD in one go.  But even that may be too expensive for the Chinese sites to compute and deliver in real time.

The reasons why people consider their volume suspect are

(1) After the December decree, BTC-China chose to use some sort of voucher system for deposits and withdrawals, whereas Huobi and (later) OKCoin managed to work with bank transfers. As a result, BTC-China's volume fell to nearly zero,  while the volume at Huobi and OKCoin kept growing to about the level that BTC-China used to have before the decree;

(2) Bobby Lee, the CEO of BTC-China, is a Westernized Chinese and an old member of the bitcoiner gang; whereas the CEOs of Huobi and OKCoin are unknown Mainland Chinese guys, who don't even speak decent English and show absolutely no respect for the Great Leaders of the Western Bitcoin World.  

(3) Western bitcoin startups would hardly find investors and customers if they admitted that, since last October, the price of BTC has been entirely determined by a bunch of short-term speculators in Mainland China who, by and large, do not understand the technical aspects and do not care for its long-term potential for internet commerce etc.

An alternative to the claim "their volume is mostly fake" is "most of their traders are Westerners". Westerners who, for some mysterious reason, do not trade between 3:00 am and 6:00 am China time, trade much less during the Chinese holidays, and react only to Chinese media news.

It has been determined by the most critical users in this thread that a Technical Analysis chart is not convincing if the lines do not trace the outline of a dinosaur.

The pioneering work that led to that conclusion was posted here a couple of months ago IIRC, perhaps by user @magicmexican.  Others have tried to follow that lead, but with not as much success.

EDIT: Oops, the inventor of Dinosaur Analysis was @spooderman it seems.

RE-EDIT: Ooops again, it was @magicmexican indeed!

Dear @luttinen, why are you still trying to defend the blatantly indefensible?

Is Mr. Brewster any relation or close friend of yours?

Well, I don't think that there has ever been a situation like this in the stock market: all the largest exchanges being ordered to stop using banks to transfer client money in or out, within the week.  The theory for that case probably does not exist, and certainly has not been tested.

Chinese Slumber Method prediction for Saturday April 12

Prediction valid for: Saturday 2014-04-12, 19:00--19:59 UTC (not before, not after)
Huobi's predicted price: 2634 CNY.
Bitstamp's predicted price: 422 USD.





Plot legend

The data point of Apr/10 UTC, although fairly good according to the Slumber Volume criterion (S = 0.0038, W = 0.754), was way off the previous trend.  However, the next point, of Apr/11, although rather weak (S = 0.0066, W = 0.414), was very close to that line.  Therefore, it seems reasonable to assume a straight line trend fitted by weighted least squares to the points of Apr/07--Apr/09 and Apr/11.  Namely, A + B*(d-d0), where d-d0 is the number of days since Apr/07, A = 2798.22, B = -32.75.

The Bitstamp prediction, as usual, is the Huobi prediction divided by the currency conversion factor R, which was assumed to be 6.24 CNY/USD. It was 6.32, 6.16, 6.16, 6.15 at the last four Slumber Times; the jump may have been due to momentary failure of arbitrage, or adjustment to the official rate (6.21).
 
Checking the previous prediction

Prediction was posted on: Wednesday 2014-04-09, 22:00 UTC
Prediction was valid for: Thursday 2014-04-10, 19:00--19:59 UTC (~21 hours later)

Needless to say, the prediction was totally ruined by the Huobi bank closure notice:

Huobi's predicted price: 2717 CNY.
Huobi's actual price (L+H)/2: 2448 CNY
Error: 269 CNY (~43 USD)

Bitstamp's predicted price: 441 USD.
Bitstamp's actual price (L+H)/2: 396 USD
Error: 45 USD
 
NOTE: "Like so many contemporary philosophers, he especially enjoyed giving
    helpful advice to people who were happier than he was." -- Tom Lehrer

Neo&Bee news, may be of interest:

  Cyprus police issues arrest warrant for bitcoin entrepreneur
  http://cyprus-mail.com/2014/04/11/cyprus-police-issue-arrest-warrant-for-bitcoin-entrepreneur/

  More comments on the thread: https://bitcointalk.org/index.php?topic=529946.msg6175206#msg6175206

AFAIK the reversal from ~Dec/19 to ~Jan/6 has an obvious explantion: Huobi concluded that they could still operate via bank accounts instead of the big 3rd party processor (Alibaba?), and their clients gradually migrated to that medium.  In fact their volume increased after Dec/16, perhaps because OKCoin and BTC-China clients moved in.

OKCoin's volume dropped by 90%  after Dec/19, but apparently they "fixed" their CNY channels around Jan/2 and recovered to some extent.

BTC-China's volume crashed much harder after Dec/19. They did not want to (or were uanble to) use banks,and tried some voucher-based system instead.  As a result, their volume never recovered from the post-crash lows.

The survival of the exchanges restored some of the demand for BTC in China, even it now it was mostly for speculative trading; and increased demand (and availability of money) pushed the price up again, in a slow raly that endedaround Jan/02.

Anyway, to me it is obvious that the Western exchanges are NOT reacting to Chinese FUD or news.  It is the CHINESE traders who react to them; and, since October, the Western markets are just dragged along, like four poodles tied to seven huskies.  Western traders should not care about PBoC decrees, just as the Chinese don't care about  SecondMarket or the US tax rules.

Indeed it is hard to tell what the Western market would do if it was not tied to the Chinese one.   At some times when the Chinese volume was lowest, I think I saw signs that the Western exchanges wanted UP.  However, I have not verified that systematically.  It may be that, without China, the Western exchanges would just stay put, with buys and asks just staring at each other from opposite sides of a wide spread.



 

Where? Why, here on this thread o course!   

I know well what it means in general (e.g. in the context of free software, a decade ago).  But here sometimes it seems that any negative fact or opinion is promptly dismissed as "FUD trolling, ignore" 

Long term investment is a sensible choice, if the odds are favorable. For company stocks, it is even the "right" strategy.

But cutting losses and short-term trading are sensible choices too, in other conditions.

So why is it forbidden to express negative opinions that imply "don't buy" or "sell"?  When "FUD" means "Facts and Unambiguous Data", any fear, uncertainty, and doubts that may result are good things.

I don't think he did.  To me it looks like just incompetence and arrogance, at least until the failure became too obvious to ignore.  But some foul play probably happened after that point.



That is correct, but the bare protocol is not enough.  Even of bitcoin succeeds (in my definition, not just as a black market currency) ther will be a need for banks and such things.


I see many promises.  As for Silbert's fund, esterday I posted a rough analysis. It seems that the average investor lost money so far (although some have already made nice profits, and the rest may too if the BTC price goes up).  On the other hand, SecondMarket will profit in any case from fees, and perhaps more if they can buy coins below market price, e.g. from a private mining outfit.

At least I am distinguishable from the standard bull troll who tries to convince suckers to buy AND HOLD so that the price can go up to the level where he can sell at a profit. 

Thanks! However, those regulations do not include insider trading or fractional BTC holding, correct? Banks do those things all the time, and the Canadian "Fed" surely does not regulate BTC holdings.  Insider trading laws are specific to stock and commodity markets.

Great, we will see...


The Euro bosses and Cypriot banks, IIRC, "stole" 6--10% from all bank accounts in Cyprus.  Neo & Bee's Danny Brewster then told Cypriots that his bitcoin-based bank would keep their money safe from further bank and government theft.  Eventually he disappeared, leaving behind many debts to contractors and staff, having spent all the 12,000 BTC he got from investors without any accounting or revenue, and after allegedly selling to two Cypriot citizens several thousand euros's worth of bitcoins that were not delivered.  Oh, and there are also allegations of insider trading of Neo & Bee shares on his own bitcoin-based securities trading platform, which of course was unregulated.

So much for bitcoin protecting us from greedy and unscrupulous bankers.