Looks like the prediction will be dead wrong again (less than 2 hours for the price to fall 240 CNY, from 3640 to 3396...) 

But perhaps this will be another sleepless night in China, and I will be excused because of that.

As for what will happen when MtGOX unclogs the drain: note that they already said that withdrawals would be limiited for some time.

The question is what wil happen after that time.  WIll they remove the limits, or declare insolvency? 

To those who are puzzled by the difference in prices between MtGOX and other exchanges:

The BTC prices at all functioning BTC exchanges and in all national currencies are pretty much the same, even between China and the rest of the world, presumably because of arbitrage (professional traders buying BTC at one exchange and selling it at another, whenever the prices get out of sync).

As long as MtGOX does not allow withdrawals, arbitrage between them and the rest of the world is not possible.  The "BTC price" there is the ratio between "goxBTC" and "goxUSD", two virtual currencies that are basically numbers in MtGOX's internal ledgers.  By trading among themselves, MtGOX clients decided that 1 goxBTC is worth ~100 goxUSD; that is, being owed 1 BTC by Mark is about as good as being owed 100 USD by him.  It is not known whether this conclusion is based on some inside information, or is just a blind collective guess.  

It is also not known at this time what is the value of 1 goxBTC in real BTC (or 1 goxUSD in real USD).  That will be known only if and when MtGOX resumes withdrawals, if and when some market starts actively trading one for the other,  or if and when the company goes bankrupt and gets liquidated (i.e. whatever assets it still has are forcibly sold and the money is distributed among clients and other creditors).

EDIT: grammar, wording, quotes "BTC price"

In 1994 Brazil changed currency for the umpteenth time to the current BRL (Real). At first the exchange was fixed 1 BRL = 1 USD.  People were not aware then, but to maintain this rate the government had to borrow wildy from the IMF and banks, sometimes at 40%/year interest. (Today ~60% of the tax revenue goes to pay interest on that debt, and yet the debt keeps growing.) The apparent stability was highly praised and the president got re-elected because of it. 

Shortly after the election, the BRL suddenly devalued to 0.50 USD.  People who had savings in BRL were badly hurt of course. Larger investors, with their money in stocks or real estate, were not, of course.  I had debts in BRL at the time, so I was actually happy.

In 1990, when I was still out of the country, the government had tried to control inflation by freezing all bank accounts above some ridiculous amount, a few thousand dollars.  I know people who had just sold their home and were about to pay for a new one.  Inflation dropped alright (to ~10%/year), but the economy of course collapsed.  The frozen money was released only after a year or two, with ~6% adjustment, when the inflation was again climbing towards the usual levels of 40%/year.

I am sorry, what was your question, again?   

Volume in the Chinese exchanges increased substantially, from 196 kBTC yesterday  to 344 kBTC today (Friday feb/21).

On the other hand, volume in exchanges outside China (excluding MtGOX) shrunk a little to 84 kBTC.  Thus, today China was ~80% of all trade,

Bitfinex (28.46 kBTC) got closer to Bitstamp (29.61) and away from third-place BTC-e (23.64).

Daily volumes of BTC trade to/from USD and other national currencies (in kBTC):


             !    Thu !    Fri !    Sat !    Sun !    Mon !    Tue !   Wed !    Thu !    Fri !                     
  EXCHANGE   !  02/13 !  02/14 !  02/15 !  02/16 !  02/17 !  02/18 ! 02/19 !  02/20 !  02/21 ! Currencies considered

  Bitstamp   |  28.15 |  63.38 |  20.76 |  26.40 |  19.90 |  14.83 | 20.76 |  34.97 |  29.61 | USD                 
  BitFinEx   |  17.17 |  53.68 |  10.83 |  16.75 |  15.69 |   8.47 |  4.71 |  25.27 |  28.46 | USD                 
  BTC-e      |  18.53 |  52.18 |   9.16 |  21.75 |  15.07 |   8.08 |  5.84 |  23.37 |  23.64 | USD,EUR,RUR         
  Kraken     |   0.93 |   1.79 |   0.41 |   0.91 |   0.89 |   0.51 |  0.38 |   1.60 |   1.15 | EUR                 
  Bitcoin.DE |   0.78 |   1.63 |   0.22 |   0.57 |   0.57 |   0.38 |  0.54 |   0.70 |   0.76 | EUR                 
  CaVirtEx   |   0.41 |   1.16 |   0.15 |   0.15 |   0.15 |   0.21 |  0.11 |   0.75 |   0.60 | CAD                 
  CampBX     |   0.21 |   0.41 |   0.05 |   0.07 |   0.28 |   0.10 |  0.14 |   0.73 |   0.24 | USD                 

  SUBTOTAL   |  66.18 | 174.23 |  41.58 |  66.60 |  52.55 |  32.58 | 32.48 |  87.39 |  84.46 |                     

  Huobi      |  82.39 | 236.27 | 122.80 | 110.57 | 130.41 |  74.04 | 34.12 | 131.14 | 187.12 | CNY                 
  OKCoin     |  62.49 | 147.26 |  51.45 |  63.63 |  63.05 |  51.46 | 26.29 |  53.49 | 140.75 | CNY                 
  BTC-China  |   8.02 |  24.87 |   7.55 |   9.08 |   7.86 |   3.86 |  2.04 |  10.97 |  15.23 | CNY                 
  Bter       |   0.65 |   1.54 |   0.74 |   0.56 |   0.48 |   0.35 |  0.37 |   0.77 |   0.63 | CNY                 

  SUBTOTAL   | 153.55 | 409.94 | 182.54 | 183.84 | 201.80 | 129.71 | 62.82 | 196.37 | 343.73 |                     

  TOTAL      | 219.73 | 584.17 | 224.12 | 250.44 | 254.35 | 162.29 | 95.30 | 283.76 | 428.19 |                     

  MtGOX      |  33.85 |  79.56 |  60.15 | 104.46 |  65.69 |  63.50 | 40.75 | 127.48 | 103.06 | USD,EUR,GBP,AUD,JPY 



All numbers were collected by hand from the site http://bitcoinwisdom.com. Beware of possible errors.

For each exchange, the numbers include only the trade volume to/from the currencies listed in the rightmost column. Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Dates on the header line are UTC. Specifically, "01/15" means "from 01/15 00:00:00 UTC to 01/15 23:59:59 UTC". (Beware that Bitcoinwisdom uses your local time, so the date may appear to be off by 1 day.  For example, if you are 2 hours west of Greenwich, it may show "01/14 22:00" when the UTC time is "01/15 00:00".)

NOTE: MtGOX has suspended withdrawals of Bitcoins and national currencies.  Therefore it is essentially isolated from other markets, and its price is completely out of the norm.  The exceptional trade volumes above may be meaningless.

(I don know whether I should be flattered by having so much attention focused on my person.  Perhaps I should start a separate "Jorgeology" thread?   )

I don't think either.  As I said before, I do not like gambling, even when the odds seem favorable.

When you are choosing where to invest, a "good investment" is one that has expected returns of inflation plus 5% or so.   An investment that has negative expected returns is a bad investment.  These labels do not change if, after the fact, the "good investment" turns out to be a flop and the "bad investment" yields gold.

For example,  buying a lottery ticket is a bad investment, a foolish decision; even it wins the jackpot, that would still be a foolish decision --- that happened to pay out, but only by amazing luck.

I wasn't paying attention to bitcoin before last November.  Buying some may have been a good investment then, if there was reason to belive that the market would expand and therefore the price would go up.   Right now, that epectation is not warranted, as I see it.

Not in any way that couldn't be gotten around in 3 nanoseconds. Protocol changes, encryption, side-channel communications, steganography, VPNs...
[/quote]

It seems that your definition of success is substantially more modest than mine, namely "at least some hackers will be able to use it".  Correct?

My definition of "success" is "it is used by many people for ordinary payments because it is cheaper/faster/safer than using a bank or credit card". That will not happen if it illegal to use it. 

Since december, even a foreign tourist cannot pay for a hotel bill or meal in China with bitcoin.  So the bitcoin project is already dead in China.

The Chinese government still allows trading inside the exchanges only because they feel that it is harmless. If they saw a threat there, they could easily close the exchanges, and block access to the network if necessary.   

Again, I do not see how the blockchain could be maintained if the US government decided to ban bitcoin.

I understand that technical analysis of price charts does not help much with traditional markets either (although it is widely used, perhaps for the lack of any better tool).

However, I have tried to explain  here why I think that the "Chinese Slumber Method" works with Huobi (and only there, although Bitstamp tracks it very closely most of the time.) 

Basically, Huobi appears to be a relatively simple market, and my theory is that while the price swings randomly during the day, the traders apparently thend to reset their favorite BTC:CNY position at the end of the day; with the effect that the price returns to a value that is determined by some slowly-varying "external" variables -- such as the total amont of money and bitcoins available for trading, and the general feeling of traders about bitcoin.  So the analysis is trying to pick the trend in those variables, not of the market price per se.

As I wrote in that long post, I wish the success of the bitcoin project (providing an internet payment method that is safe etc.)  So obviously I will be very happy if it succeeds.

But I presume that by "successful" you mean "1 bitcoin (not 1 dogecoin) will be worth a billion dollars".  In that case I will probably feel a bit bad for not having bought one BTC today. Just as I feel a bit bad that I did not buy Apple or Google stock when it was cheap.  Or Enron or Worldcom or OGX at the IPO, and then sold at the peak.

However, if I ever become convinced that bitcoin will succeed in that sense, I can always get a loan and buy one when the price gets to a million dollars.  I don't think I will feel too bad for having made only a $999,000,000 profit, instead of a $999,999,000 profit. 

As I wrote before, those claims were and still are being made by some bitcoin enthusiasts.  Ditto for the claim that Governments cannot stop bitcoin.   I was arguing with one such enthusast on twitter a couple of days ago, and have seen people write that somewhere in this forum.

And those claims were believed, obviously, by all the clients of SilkRoad and other similar sites.

There are occasions and places were anonymous and untraceable communications, including payments, would be necessary. (Wikileaks, Arab spring, ...) However, it is precisely where anonymity and privacy would be most necessary, that they are least likely to be possible.   In those situations, the mere attempt to use a secure channel will make you a criminal.  I wish there was a way to get around that problem, but there seems none in sight.



I have already stated what part of bitcoin I am extremely "anti" about.


I suppose I do not know what libertarianism is exactly.   I have read two short bios of Ayn Rand, which included a summary of her ideas, and a lot of statements by people who declare themselves "libertarians".  Some of the latter sounded like they hated any form of government.  For example, some people on this forum were against suing MtGOX, and I understood that it was because that would be an "un-libertarian" thing.  I have seen many oppose any form of regulation of exchanges and such, apparently for that reason.  Perhaps I was mistaken?

From what those people say, I got the impression that libertarians are rather varied in their views.  Would you agree that some of them, at least, are against any form of government, or want extremely reduced governments (e.g. with no support for education, health, trasportation, etc)?

Would you agree that some libertarians, at least, are rooting for the collapse of governments and banks?

I say that I was somewhat embarassed by the failed prediction, but I will stubbornly carry on until the Chinese learn to pay attention to my postings. 

End of Chinese Slumber Method stuff for today.  You may open your eyes now. 

Chinese Slumber Method prediction for Feb/22

Today Feb/21, Huobi's volume for 19:00 -- 19:59 UTC (3:00--3:59 AM China Standard Time) was only 407 BTC, which, by the criteria I have been using, makes it a True Slumber Point.

Also by those criteria, one must conclude that the trend that fitted neatly all the 7 True Slumber Points from Feb/11 to Feb/19 (gray line) is no longer valid.  It seems that the "Second Karpeles Catastrophe" (the unsatisfactory release by MtGOX) on Feb/20 caused a sudden and permanent drop in price by ~350 CNY.

For the next prediction, therefore, I must assume a new trend.  By the rules, I have only one valid data point, 3425 CNY at Feb/21. I will therefore assume that the new trend goes though that point and has the same slope as the previous trend, namely minus ~29 CNY per day.  For Bitstamp, as usual, I will use Huobi's prediction divided by R = 6.12.

And I will pray that MtGOX does not post a new press release.

Therefore:

Prediction valid for: Thursday Saturday 2014-02-22, 19:00--19:59 UTC (not before, not after)
Huobi's predicted price: 3396 CNY.
Bitstamp's predicted price: 555 USD.



NOTE: Again, if you lose money because you trusted these predictions, you made at least two serious mistakes.

EDIT: Feb/22 is Saturday not Thursday, of course.

Checking the Chinese Slumber Method predictions for feb/21

The prediction for today Feb/21 was again way off the mark:

Prediction posted on: Friday 2014-02-21, 01:35 UTC
Prediction valid for: Friday 2014-02-21, 19:00--19:59 UTC

Huobi's predicted price: 3772 CNY
Huobi's actual price (L+H)/2: 3425 CNY
Error: 347 CNY

Bitstamp's predicted price: 616 USD
Bitstamp's actual price (L+H)/2: 563 USD
Error: 50 USD

During most of the day the price was rising steadily, recovering from yesterday's fall and aiming straight towards the prediction. But around 14:00 UTC (22:00 China Standard Time) there was another sudden and significant drop to 3400, and was still there when the traders went to bed. 

The Huobi prediction in question is the rightmost blue rectangle on the chart below.  The light blue-gray rectangles are the previous predictions.  The orange and grey dots are the True and False Slumber Points, the mean prices at 19:00 UTC every day.  The orange line is the trend that was assumed for the prediction.


The following chart shows the Bitstamp prices and predictions. The orange and grey dots are Huobi's prices at 19:00 UTC every day, divided by R (6.40 for Feb/07--09, 6.12 for all other days).  The orange line is the trend used in the prediction, which is Huobi's trend divided by R.

Warning - another dose of Chinese Slumber Methd stuff to follow shortly.